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<s>[INST] Summarize the following judgement: Appeal No. 14 of 1959. Appeal by special leave from the Award dated February 21, 1958, of the Central Government Industrial Tribunal, Nagpur at Bombay, in Reference CGIT No. 12 of 1957. Sachin Chaudhury, section N. Andley, J. B. Dadachanji and, Rameshwar Nath, for the appellant. A. section R. Chari and Y. Kumar, for the respondents. April 4. The Judgment of the Court was delivered by WANCHOO, J. This is an appeal by special leave in an industrial matter. The appellant is The Chartered Bank, Bombay (hereinafter called the Bank). There was a dispute between the Bank and its workmen regarding the termination of the service, of one Colsavala (hereinafter called the respondent) who was working as an assistant cashier in the Bank. The system of working in the cash department of the Bank is that there is a chief cashier and under him are about thirty assistant cashiers. The Chief Cashier has to give security for the work of the cash department. Consequently all assistant cashiers are employed upon the introduction of the Chief Cashier who guarantees each such employee. By virtue of this guarantee the Chief Cashier alone is unconditionally responsible to the Bank for any shortage which might occur in the cash department and no security is taken from the assistant cashiers working therein. In view of this guarantee by the Chief Cashier there has been a longstanding practice in the Bank that at the end of the day when the cash is locked up under the supervision of the Chief Cashier, all the assistant cashiers have to be present so that the cash may be checked before 443 being locked up. Assistant Cashiers therefore can only leave the Bank before the locking up of the cash after obtaining permission of the Chief Cashier. On January 4, 1957, the Chief Cashier reported to the management that the respondent had been leaving the Bank without his permission for some time past before the cash was checked and locked up in spite of the issue of a departmental circular in that behalf on December 24, 1956, by which all assistant cashiers (including the respondent) were reminded of the longstanding practice that no assistant cashier should leave the Bank without the permission of the Chief Cashier before the cash was checked and locked tip. The Chief Cashier therefore stated that he was unable to continue to guarantee the respondent and that unless the respondent 's service was dispensed with his conduct will affect the security of the cash department. As the Bank was not prepared to change the system in force in the cash department, the management decided to dispense with the service of the respondent in accordance with the mode of termination prescribed by paragraph 522(1) of the All India Industrial Tribunal (Bank Disputes) Award of March, 1953 (hereinafter referred to as the Bank Award). The Bank was also unable to employ the respondent in any other department. It therefore informed the respondent on March 29, 1957, that as the guarantee covering his employment had been withdrawn by the Chief Cashier the Bank was unable to continue to employ him. The notice required under paragraph 522(1) was given and the amount due to the respondent including retrenchment compensation was paid to him and his service was terminated. Thereupon a dispute was raised by the workmen of the Bank and a reference was made by the Central Government to the Industrial Tribunal with respect to the "alleged wrongful termination of the services of Shri N. D. Colsavala by the Chartered Bank, Bombay, and the relief, if any, to which he is entitled. " The case on behalf of the respondent was that he had been working in the Bank since September 1, 1937, honestly and efficiently as an assistant cashier in the cash department The previous Chief Cashier who 444 was the father of the present Chief Cashier however became hostile to him since 1943, because he claimed his legitimate dues for overtime work and leave which the then Chief Cashier was not prepared to allow. Further the respondent 's letter of appointment did not oblige him to give any security or to procure any guarantee and if the Chief Cashier had given any guarantee to the Bank, the respondent was not concerned with it and had even no knowledge of it. He was given no opportunity to contest the reasons for the withdrawal of the guarantee by the Chief Cashier; nor was he asked to furnish security or give a fidelity bond, even if the Chief Cashier had withdrawn the guarantee. In consequence the discharge of the respondent from service on the ground given by the Bank was entirely illegal, wrongful and unjustified and he was entitled to reinstatement or in the alternative to full compensation for loss of employment. The case of the Bank was that it was entitled to terminate the service of the respondent under paragraph 522(1) of the Bank Award and it was not incumbent on it to state the reasons for such termination and the reasons could not be inquired into or examined by the tribunal. In the alternative it was submitted that if the tribunal was of the opinion that it was open to it to inquire into the reasons, the Bank 's case was that the respondent was not dismissed or discharged by way of punishment for any misconduct and that the Bank merely terminated his service under paragraph 522(1) of the Bank Award, as his guarantee had been withdrawn by the Chief Cashier and it was impossible to continue to employ him in the circumstances, the Bank being. unprepared to change its system of working which has already been mentioned above. It was also said that the Bank was not bound to transfer the respondent to another department and in any case the respondent 's training, experience, ability or record did not fit him for work in any other department of the Bank. The tribunal held that even though the Bank had chosen to follow the procedure laid down in paragraph 522(1) of the Bank Award which provides for termination of employment "in cases not involving 445 disciplinary action for misconduct, by three months ' notice or on payment of three months ' pay and allow. ances in lieu of notice", this did not preclude it from inquiring into the reasons for the termination of service and into the legality and/or propriety of the action taken by the bank and that paragraph 522(1) did not give a free hand to the Bank to dispense with the service of a permanent employee at will. It also held that it was always open to the tribunal to inquire into the bona fides as well as justifiability of the action taken. It then went into the circumstances in which the termination of service took place and was of opinion that this was in fact and in reality a case of termination of service for misconduct, and that it was the duty of the Bank to follow the procedure for taking disciplinary action for the alleged insubordination and persistent disobedience of the orders of the Chief Cashier by the respondent with respect to leaving the Bank without his prior permission before the cash was checked and looked up and inasmuch as the Bank failed to follow the requisite procedure as was laid down in paragraph 521 of the Bank Award, the termination of the service of the respondent was illegal and improper and he was entitled to reinstatement with full back wages and other benefits. It is this order which is being challenged before us by the Bank. The main contention on behalf the Bank is that the view taken by the tribunal that in every case where there may be some misconduct the Bank is bound to take disciplinary action under paragraph 521 of the Bank Award makes paragraph 522(1) completely otiose and is erroneous. Further it is contended that in the peculiar position obtaining in the cash department of the Bank whereby the Chief Cashier guarantees all the assistant cashiers working under him, the Bank did not want to go into the squabble between the Chief Cashier and the respondent and as the Chief Cashier had withdrawn the guarantee of the respondent, the Bank decided without apportioning any blame between the Chief Cashier and the respondent to act under paragraph 522(1) of the Bank Award. It is urged that paragraph 522(1) of the Bank Award is 57 446 particularly meant to meet situation,,; like this which may arise in a banking concern. The first question that arises therefore is the scope of the power of the Bank to act under paragraph 522(1) of the Bank Award, particularly in the peculiar situation prevailing in the cash department of the Bank. The position in the cash department of the banks was considered by the Bank Award in Chapter XXI with respect to giving of security. In para graphs 417 and 418, the existing practice in various banks is summarised and it takes one of three forms, namely (i) every member of the staff is to give security, (ii) the head cashier gives a guarantee on behalf of all the cashiers working under him, and (iii) where the treasurer system prevails, the treasurer enters into a contract with the bank and recommends the employees for employment in the cash department and guarantees their fidelity and they are thereupon appointed by the bank. The tribunal was not right in saying that the system which was prevailing in the Bank was peculiar to it and was not mentioned in the Bank Award. It will be seen that the system in the Bank is of the second kind noticed in the Bank Award where the Chief Cashier guarantees all those working under him. It is also mentioned in the Bank Award that the Chief Cashier generally takes security deposits from persons working under him but that did not appear to be the invariable rule, and in the Bank the Chief Cashier does not take any security from his subordinates. In such a system the Bank has to depend upon the security given by the Chief Cashier and his guarantee of the employees working under him. It is impossible to accept that this way of working was not known to the respondent. The Bank has produced the respondent 's application for employment and it is significant that it is addressed to the Chief Cashier and not to the management of the Bank and this bears out the contention of the Bank that the subordinates in the cash department are employed on the recommendation of the Chief Cashier who gives guarantee for them. Nor does the Bank 's contention that no one employed in the cash department leaves without permission till the cash is checked and locked up appears 447 improbable, for the practice seems necessary for the security of the cash department. Therefore when the Bank was faced with the report of the Chief Cashier dated 4 1 1957, it had to decide in the special circumstances of this case what action should be taken on that report. Two courses were open to it: it could have taken disciplinary action under paragraph 521 of the Bank Award or it could have acted under paragraph 522(1). The submission on behalf of the Bank is that it did not want to go into the squabble between the Chief Cashier and the respondent and as the Chief Cashier had withdrawn his guarantee with respect to the respondent it acted bona fide in proceeding under paragraph 522(1) and thus no question arose of its taking disciplinary action against the respondent. There is no doubt that an employer cannot dispense with the services of a permanent employee by mere notice and claim that the industrial tribunal has no jurisdiction to inquire into the circumstances in which such termination of service simpliciter took place. Many standing orders have provisions similar to paragraph 522(1) of the Bank Award, and the scope of the power of the employer to act under such provisions has come up for consideration before labour tribunals many a time. In Buckingham and Carnatic Company Ltd., Etc., vs Workers of the Company, etc. (1), the Labour Appellate Tribunal had occasion to consider this matter relating to discharge by notice or in lieu thereof by payment of wages for a certain period without assigning any reason. It was of opinion that even in a case of this kind the requirement of bona fides is essential and if the termination of service is a colourable exercise of the power or as a result of victimisation or unfair labour practice the industrial tribunal would have the jurisdiction to intervene and set aside such termination. Further it held that where the termination of services is capricious, arbitrary or unnecessarily harsh on the part of the employer judged by normal standards of a reasonable man that may be cogent evidence of victimisation or unfair labour practice. We are of opinion that this correctly lays down the scope of the power of the tribunal to (1) 448 interfere where service is terminated simpliciter under the provisions of a contract or of standing orders or of some award like the Bank Award. In order to judge this, the tribunal will have to go into all the circumstances which led to the termination simpliciter and an employer cannot say that it is not bound to disclose the circumstances before the tribunal. The form of the order of termination is not conclusive of the true nature of the order, for it is possible that the form may be merely a camouflage for an order of dismissal for misconduct. It is therefore always open to the tribunal to go behind the form and look at the substance; and if it comes to the conclusion, for example, that though in form the order amounts to termination simpliciter it in reality cloaks a dismissal for misconduct it will be open to it to set it aside as a colourable exercise of the power. It is on these principles therefore that we have to judge the action taken by the Bank in this case. In the statement of claim put in by the workmen there was no allegation of victimisation or unfair labour practice. An affidavit was filed by the respondent later before the tribunal in which it was said that the Bank had acted mala fide in removing him from service. But in this affidavit nothing was said as to how the management of the Bank as distinct from the Chief Cashier had any reason to act mala fide against the respondent. The tribunal also has not recorded any finding that the action of the Bank in terminating the service of the respondent was mala fide or amounted to unfair labour practice or was a case of victimisation. It ordered reinstatement on the ground that this was a case where disciplinary action must and should have been taken and that was not done. In one part of the award the tribunal has remarked that if it is found that the Bank has merely in colourable exercise of the power made the order under paragraph 522(1) of the Bank Award, the order would not be sustainable. But there is no finding that the action taken in this case was a colourable exercise of the power under paragraph 522(1). It is, however, urged on behalf of the respondent that even though there is no such finding by the tribunal a perusal of the entire award seems 449 to show that this was what the tribunal thought inasmuch as it has said that this was a case in which disciplinary action must and should have been taken. However, as we read the award of the tribunal, the impression that we get is that its view was that where there is an allegation which may amount to misconduct against an employee of a bank, the procedure under paragraph 521 must always be followed and that the procedure under paragraph 522(1) can never be followed; and that is why the tribunal did not give any finding that the action of the Bank was a colourable exercise of the power under paragraph 522(1). But as learned counsel for the respondents has urged before us that the action in this case is in any case a colourable exercise of the power under paragraph 522(1) we propose to look into this aspect of the matter ourselves. It is true that there was some kind of allegation by the Chief Cashier which may amount to misconduct in this case and if we were satisfied that the termination of service of the respondent was due to that misconduct and that the form of the order was merely a cloak to avoid holding a proper enquiry under paragraph 521, no doubt there would have been no case for interference with the order of the tribunal. But this is a peculiar case depending upon a peculiar system prevalent in the cash department of the Bank. That system is that the Chief Cashier gives security for the entire working of the cash department and is unconditionally responsible for any loss that might be occasioned to the Bank in that department. The appointments in that department are made on the recommendation of the Chief Cashier and he gives a guarantee about each employee and is unconditionally responsible to the Bank for any shortage which might occur. It is in these circumstances that the Bank was faced with the report of the Chief Cashier by which for the reason given by him he withdrew the guarantee so far as the respondent was concerned. The security of the cash department was thus involved and if the Bank decided as it seems to have done in this case that it would not go into the squabble between the Chief Cashier and the respondent and would use paragraph 522(1) of the 450 Bank Award to terminate the service of the respondent it cannot be said that the Bank was exercising its power under paragraph 522(1) in a colourable manner. It may have honestly come to the conclusion that in this situation, as it was not possible for it to change its system in the cash department, there was no option for it but to dispense with the service of the respondent under paragraph 522(1) of the Bank Award without going into the rights and wrongs of the dispute between the Chief Cashier and the respondent. In the peculiar circumstances therefore obtaining in the cash department of the Bank it cannot in our opinion be said that the use of the power under paragraph 522(1) by the Bank in the present case was a colourable exercise of that power. Nor do we think that the failure of the Bank to provide alternative employment for the respondent would lead to any such inference,, for the Bank may very well be right when it says that it is a specialised institution and considering that the respondent has been working in one department for the last twenty years he was not fit to be absorbed in another department. In the circumstances of this case therefore we are not prepared to hold that the termination of the service of the respondent was a colourable exercise of the power under paragraph 522(1) of the Bank Award. The mention of the fact that the service was being terminated because the Chief Cashier had withdrawn the guarantee of the respondent in the notice of. discharge will not change the nature of the termination, for the reason was given obviously to avoid the charge that the termination was entirely capricious or arbitrary, and therefore not bona fide. We therefore allow the appeal and set aside the order of the tribunal by which the respondent was ordered to be reinstated with full back wages and other benefits. In the circumstances we pass no order as to costs. Appeal allowed. [/INST] The system of working in the cash department of the appellant Bank was that there was a Chief Cashier and there were about thirty Assistant Cashiers under him. The Chief Cashier had to give security for the work of the cash department; the Assistant Cashiers were employed upon being introduced by the Chief Cashier who guaranteed each such employee. There was long standing practice in the Bank that at the end of the day when the cash was locked up under the supervision of the Chief Cashier, all the assistant cashiers had to be present so that the cash could be checked before being locked up. In spite of reminders C, an Assistant Cashier, had been leaving the Bank without the permission of the Chief Cashier for some time before the cash was checked and locked up. The Chief Cashier reported the matter to the management, withdrew his guarantee in respect of C and stated that unless the services of C were dispensed with his conduct would affect the security of the cash department. The Bank terminated the services of C in accordance with the provisions of para. 522(1) of the All India Industrial Tribunal (Bank Disputes) Award, 1953, without holding any enquiry against C. The Industrial Tribunal to which the dispute was referred held that this was in fact and in reality a case of termination of services for misconduct and the Bank ought to have followed the procedure laid down in para. 521 of the Bank Award for taking disciplinary action, that the termination of service was illegal and improper and that C was entitled to reinstatement with full back wages and other benefits : Held, that the services of the Assistant Cashier were properly terminated by the Bank. There was no doubt that an employer could not dispense with the services of a permanent employee by mere notice and claim that the industrial tribunal had no jurisdiction to inquire into the circumstances of such termination. Even in a case of this kind the requirement of bona fides was essential and if the termination of service was a colourable exercise of the power or as a result of victimisation or unfair labour practice the tribunal had jurisdiction to interfere. Where the termination of service was capricious, arbitrary or unnecessarily harsh that may be cogent evidence of victimisation or unfair labour practice. In the present case the security of the 442 Bank was involved and if the Bank decided that it would not go into the squabble between the Chief Cashier and C and would use para. 522(1) of the Bank Award to terminate the services of C it could not be said the Bank was exercising its power under para. 522(1) in a. colourable manner. It was not necessary that in every case where there was an allegation of misconduct the procedure under para. 521 for taking disciplinary action should be followed. Buckingham and Carnatic Company Ltd. vs Workers ' of the COmpany, , approved. </s>

<s>[INST] Summarize the following judgement: Appeal No. 121 of 1959. Appeal by special leave from the Award dated June 3, 1957, of the Second Industrial Tribunal, West Bengal. N. C. Chatterjee, D. L. Sen Gupta and Dipak Datta Choudhri, for the appellants. C. K. Daphtary, Solicitor General of India, H. N. Sanyal, Additional Solicitor General of India and section N. Mukherjee, for the respondents. March 24. The Judgment of the Court was delivered by WANCHOO, J. This appeal by special leave raises the question of bonus. There was a dispute between the workmen of B. N. Elias & Co. Ltd. (hereinafter called the appellants) and their employers, B. N. Elias and Co. Ltd. and others (hereinafter called the respondents) with respect to bonus for the years 1954, 1955 and 1956. The case of the appellants was that they were entitled to bonus as a condition of service irrespective of profit or loss on the following scale: I Clerical staff. 1 month 's basic pay as bonus in April, 1 month 's basic pay as bonus in August, 1 month 's basic pay as bonus in December. II Subordinate staff. 1 month 's basic wages as bonus in April, 1 month 's basic wages as bonus in August, 1 month 's basic wages as bonus at Puja time, 1 month 's basic wages as bonus in December. According to the appellants this bonus was always paid from 1942 to 1952. Later as there were some disputes between the appellants and the respondents, the respondents wanted to stop the payment of bonus from 1953, though something less was paid that year in 1954 the amount of bonus was further reduced. Consequently, a dispute was raised which was referred by the Government of West Bengal in May 1956. Subsequently another dispute was raised with respect to the bonus for the years 1955 and 1956 and this time it was claimed as a customary bonus or as a condition of service payable at regular intervals of four 384 months and at a uniform rate. Thereupon a consolidated reference was made by the Government of West Bengal in September 1956 with respect to all the three years, i. e., 1954, 1955 and 1956, to the same tribunal. When the matter came up before the tribunal, the respondents contended that they were not in a prosperous condition and were unable to pay any further bonus besides what had already been paid for the years in dispute. It was admitted that since about 1942 the respondents had been making ex gratia payments to their employees in addition to wages and salaries. These payments were made at the rate of one month 's basic wage each time but their number in the course of one year used to vary. At one time four ex gratia payments were made to clerical and subordinate staff but later the number of ex gratia payments was reduced for the clerical staff to three per year but it remained at four for the subordinate staff until the year 1952. As, however, the trading result in 1952 deteriorated as compared with the previous years, the respondents made only two ex gratia pay ments to clerical staff and three to subordinate staff for the year 1953. A dispute was then raised by the workmen with regard to that year but the Government refused to make a reference to the tribunal. In 1954 and 1955 two ex gratia payments were made to clerical staff and two to the subordinate staff. In 1956, no ex gratia payments were made at all. The respondents denied that these payments were made as a condition of service or as an implied term of agreement irrespective of profit or loss. They also denied that these were customary payments irrespective of profit and loss. It was alleged that they were truly and strictly ex gratia payments made by the respondents voluntarily out of goodwill in circumstances in which no tribunal would award a bonus. The respondents therefore resisted the claim for any further payment as bonus for these three years. Before the tribunal, the appellants abandoned their claim for bonus on the basis of the Full Bench formula. They however pressed their claim on the 385 ground that bonus was payable as An implied condition of service and had also acquired the status of customary bonus. The tribunal, however, negatived the contention that the payment of bonus as claimed had become an implied condition of service. It also held that the case of the employees based on custom was not tenable. In consequence it refused to grant any further bonus for the years 1954 and 1955 beyond what the appellants had been already paid and reject ed the claim for 1956 altogether. Shri N. C. Chatterjee for the appellants has mainly pressed the claim for bonus on the ground that it is a customary bonus and relies on The Graham Trading Co. (India) Ltd. vs Its Workmen (1). Before we deal with this aspect of the matter we may shortly dispose of the claim based on an implied agreement or condition of service. The evidence shows that though payment was made uninterruptedly from 1942 to 1952 three times a year to the clerical staff and four times a year to the subordinate staff, it was made clear every time the payment was made that it was an ex gratia payment. Further the receipts given by the employees, a sample of which was produced, show that the bonus was accepted as ex gratia bonus. As is pointed in The Graham Trading Co. (1) it would not be possible to imply a term of service on the basis of an implied agreement when the payment was clearly made ex gratia and had even been accepted as such, as in this case. Therefore, the contention of the appellants that the bonus claimed by them has become an implied term of agreement or a condition of service must fail. Our attention in this connection was drawn to a letter of appointment issued to one C. V. Thomas in which under the head " other allowance ", the following appears " Equivalent to a month 's salary every 4th month will be allowed after your confirmation in employment. " That is, however, an express term in the contract between the National Tobacco Company of India Limited (which is one of the respondents before us) (1) ; 386 and Thomas and cannot be a basis for a finding of an implied term of agreement to give bonus three times a year. Thomas may have a claim on the basis of this term of agreement between him and the company, about which we say nothing. Another letter of appointment also of National Tobacco Co. of India Limited with respect to one Ram Shankar Misra was referred to. In that letter, however, among the terms we find a term relating to bonus at the rate of Rs. 15 per month after confirmation. That is again an e press term between that employee and the National Tobacco Co. of India Limited and cannot support the case of an in lied term of agreement by which a month 's bonus is paid thrice a year in April, August and December. The tribunal was therefore right in rejecting the contention based on the implied term of agreement or condition of service. Turning now to the case of customary bonus which has been pressed before us on the authority of The Graham Heading Co. (1) we may point out that that was a case of a customary and traditional bonus payable at Puja which was a special festival of particular importance in Bengal. That case cannot be held to have laid down that there can be customary bonus as such unconnected with some festival. It is difficult to introduce a customary payment of bonus between employer and employee where terms of service are governed by contract, express or implied, except where the bonus may be connected with a festival whether Puja in Bengal or some other equally important festival in any other part of the country. The principles laid down in that case for governing customary and traditional bonus connected with a festival cannot in our opinion be extended to what may be called a customary bonus unconnected with any festival. We are therefore of opinion that the appellants having failed to prove (except in one matter with which we shall deal presently) that there was an implied agreement or condition of service for payment of bonus, they cannot ask for payment of any bonus on the basis of any customary payment unconnected with any festival. (1) ; 387 This brings us to one of the payments to subordinate staff which was " one month 's basic wages as bonus at Puja time ". It will be noticed that this payment to the subordinate staff at Puja time is in addition to the other payments which are common between the clerical and the subordinate staff. This payment of one month 's basic wage as bonus at Puja appears to have continued uninterrupted from the time it started in 1942 or thereabout upto the time the dispute arose in 1954. The payment was invariably of one month 's basic wage and it appears that it was paid even in a year of loss, vide exhibit E. We are therefore of opinion that the principles laid down in The Graham Trading Co. (1) apply to one month 's Puja bonus payable to the subordinate staff and it should be held that this payment has become customary and traditional in the respondents ' concerns when the dispute was raised for the first time in 1954. We have no doubt that if the judgment in The Graham Trading Co. (1) was available to the tribunal it would have held that one month 's basic wage as bonus at Puja time to subordinate staff had become customary and traditional in the respondents ' concerns. We therefore partly allow the appeal and hold that one month 's basic wage as Puja bonus to the subordinate staff has become customary and traditional in the respondents ' concerns and we order the respondents to pay that for the year 1956 for which no bonus whatsoever has been paid. The rest of the appeal fails and is hereby dismissed. In the circumstances we order the parties to bear their own costs. Appeal allowed in part. [/INST] Since 1942 the respondents had been making ex gratia pay ments to their employees (appellants) in addition to wages and salaries, but these were not regular and in 956, no ex gratia payments were made at all. The appellants claimed that their right to be paid bonus had become an implied term of agreement or a condition of service and, at any rate, it should be paid as customary bonus, and relied on the case of The Graham Trading Co. (India) Ltd. vs Its Workmen, ; The evidence showed that though the payments were made from 1942 to 1952 it was made clear every time that the payments were made as ex gratia: Held, (1) Where payments are made to workers ex gratia and are accepted as such, it is not possible to imply a term of service on the basis of an implied agreement to pay bonus. (2) that there cannot be a customary payment of bonus between employer and employee where terms of service are governed by contract, express or implied, except where the bonus may be connected with a festival, whether Puja in Bengal or some other equally important festival in any other part of the country. The Graham Trading Co. (India) Ltd. vs Its Workmen, ; , explained. (3) that for the year 1956 one month 's basic wage should be paid as Puja bonus to the subordinate staff as it has become customary and traditional in the respondents ' concerns, 383 </s>

<s>[INST] Summarize the following judgement: N: Civil Appeal No. 130 of 1959. Appeal by special leave from the Award dated September 5, 1958, of the Industrial Tribunal, Bombay, in Reference (I.T.) No. 187 of 1958. C. K. Daphtary, Solicitor General of India, G. B. Pai and Sardar Bahadur, for the appellants. H. R. Gokhale, section B. Naik and K. R. Chaudhury, for respondent No. 1. 1960. April 6. The Judgment of the Court was delivered by WANCHOO, J. This is an appeal by special leave in an industrial matter. The appellant is The Standard Vacuum Refining Company of India Limited (hereinafter called the company). A dispute was raised by the workmen of the company (hereinafter called the respondents) with respect to contract labour employed by the company for cleaning maintenance of the refinery, (plant and premises) belonging to the company. The system in force in the company is that this work is given to contractors for a period of one year from October 1 to September 30. At the time when the reference was made the contract. was with Ramji Gordhan and Company for the period from October 1, 1957, to September 30, 1958. On April 27, 1957, the respondents made a demand for abolition of the contract system that prevailed in the company and for absorbing the workmen employed through the contractors into the regular service of the company with retrospective effect from the date of their employment in the company through the contractors. The case of the respondents was that the contractor used to change sometimes from year to year with the 468 result that the workmen employed by the previous contractor were thrown out of employment. As an instance, it was said that previous to October 1, 1957, the contract was with Gowri Construction Company. That company employed 67 workmen to do the work. But when the contract was given to Ramji Gordhan and Company, all these 67 workmen were thrown out of employment, though 40 of them were subsequently re employed as fresh employees by Ramji Gordhan and Company. The result of the system therefore was that there was no security of service to the workmen who were in effect doing the work of the company. Besides the contractors were paying much less to the workmen than the amount paid by the company to its unskilled regular workmen. Further, the workmen of the contractors were not entitled to other benefits and amenities such as provident fund, gratuity, bonus, privilege leave, medical facilities and subsidised food and housing to which the regular workmen of the company were entitled. The work was of a permanent nature, but the contract system was introduced to deny the workmen the rights and benefits which the company gave to its own workmen. The dispute was taken to the conciliation officer. When conciliation failed, the Government of Bombay made the following reference on May 13, 1958. " The contract system for cleaning the premises and plant should be abolished and workers working in the refinery through the Ramji Gordhan and Company should be treated as workers of the Standard Vacuum Refining Company of India Limited, Bombay, and wage scales, conditions of service, etc., that are applicable to the workers of the refinery be made applicable to them. Past service of these workers should be counted and they should be treated as continuously in the service of the Stanvac refinery from the date of their entertainment. " The company resisted the claim and raised two main contentions. In the first place it was contended that the reference under section 10 of the , No. 14 of 1947 (hereinafter called the Act), was incompetent. In the second place it was contended 469 that the work done by the contractor 's workmen was not germane to the manufacturing process and was therefore entrusted to the contractor. If the workmen of the contractor were not satisfied with the conditions of service, they could take up the, matter with the contractor and the company had nothing to do with it. As to the difference between the wages and benefits and amenities of the regular workmen of the company and the contractor 's workmen, it was said that the work of the two sets of workmen was very different and that in any case this was a matter between the contractor and its workmen. The contractor was an independent employer and it was incorrect to say that the real employer was the company. It was for the company to decide what was the best method of carrying on its business and the industrial tribunal should not interfere with that function of the management. The tribunal held that the reference was competent. On the merits it was of opinion that the work which was being done through the contractor was necessary for the company and had to be done daily, though it was not a part of the manufacturing process. It further held that doing of this work through annual contracts resulted in the deprivation of security of service and other benefits, privileges, leave, etc., for the workmen of the contractor. Therefore considering the nature of the case it was of opinion that this was a proper case where a direction should be given to the company to abolish the contract system with respect to this work. In the result the company was directed with effect from November 1, 1958, to discontinue the practice of getting this work done through contractors and to have it done through workmen engaged by itself. The other part of the demand, namely, that all the workmen of the contractor should be taken over by the company and their past services should be counted and that they should be given the same wage scale and conditions of service, etc., which were applicable to the regular workmen of the company was rejected. The company was further directed to engage regular workmen for this work and in so doing it was to give preference to the workmen employed by Ramji 60 470 Gordhan and Company. Wage scale and other benefits to be given to these workmen were left to the company to be determined by it. Learned. Solicitor General appearing for the company raised two contentions before us, namely, (i) is this dispute an industrial dispute and therefore the reference was competent ? and (ii) is the tribunal justified in interfering with the management function as to how it should get its work done ? Re. (i) : The contention under this head is that there is no dispute between the company and the respondents and that it was not open to the respondents to raise a dispute with respect to the workmen of some other employer (in this case, Ramji Gordhan and Company). Reliance in this connection was placed on the definition of " industrial dispute " in section 2 (k) of the Act and the judgment of this Court in Workmen of Dimakuchi Tea Estate vs The Management of Dimakuchi Tea Estate (1). The definition of " industrial dispute " in section 2 (k) requires three things (i) There should be a dispute or difference; (ii) The dispute or difference should be between employers and employers, or between employers and workmen or between workmen and workmen; (iii) The dispute or difference must be connected with the employment or non employment or the terms of employment or with the conditions of labour, of any person. The first part thus refers to the factum of a real and substantial dispute, the second part to the parties to the dispute and the third to the subject matter of the dispute. The contention of the learned Solicitor General is two fold in this connection, namely, (i) that there is no real or substantial dispute between the company and the respondents, and (ii) that the subject matter of the dispute is such that it cannot come within the terms of the definition in section 2 (k). The first submission can be disposed of shortly. There is undoubtedly a real and substantial dispute between the company and the respondents on the question of the employment of contract labour for the (1) ; 471 work of the company. The fact that the respondents who have raised this dispute are not employed on contract basis will not make the dispute any the less a real or substantial dispute between them and the company as to the manner in which the work of the company should be carried on. The dispute in this case is that the company should employ workmen directly and not through contractors in carrying on its work and this dispute is undoubtedly real and substan tial even though the regular workmen (i.e., the respondents) who have raised it are not employed on contract labour. In Dimakuchi case (1) to which reference has been made, the dispute was relating to an employee of the tea estate who was not a workman. It was nevertheless held that this was a real and substantial dispute between the workmen and the company. How the work should be carried on is certainly a matter of some importance to the workmen and in the circumstances it cannot be said that this is not a real and substantial dispute between the company and its workmen. Thus out of the three ingredients of section 2(k) the first is satisfied; the second also is ,satisfied because the dispute is between the company and the respondents ; it is the third ingredient which really calls for determination in the light of the decision in Dimakuchi case (1). Section 2(k), as it is worded, would allow workmen of a particular employer to raise a dispute connected with the employment or non employment, or the terms of employment or with the conditions of labour of any person. It was this aspect of the matter which was considered in Dimakuchi case (1) and it was held that the words " any person " used in section 2(k) would not justify the workmen of a particular employer to raise a dispute about any one in the world, though the words " any person " in that provision may not be equated with the words " any workman ". The test therefore to be applied in determining the scope of the words " any person " in section 2(k) was stated in the following words at pp. 1174 75: " If, therefore, the dispute is a collective dispute, the party raising the dispute must have either a direct interest in the subject matter of dispute or a (1) ; 472 substantial interest therein in the sense that the class to which the aggrieved party belongs is substantially affected thereby. It is the community of interest of the class as a whole class of employers or class of workmen which furnishes the real nexus between the dispute and the parties to the dispute. We see no insuperable difficulty in the practical application of this test. In a case where the party to a dispute is composed of aggrieved workmen themselves and the subject matter of the dispute relates to them or any of them, they clearly have a direct interest in the dispute. Where, however, the party to the dispute also composed of workmen espouse the cause of another person whose employment or non employment, etc., may prejudicially affect their interest, the workmen have a substantial interest in the subject matter of dispute. In both such cases the dispute is an industrial dispute. " We have therefore to see whether the respondents who have raised this dispute have a direct interest in the subject matter of the dispute or a substantial interest therein in the sense that the class to which the respondents belong is substantially affected thereby and whether there is community of interest between the respondents and those whose cause they have espoused. There can be no doubt that there is (community of interest in this case between the respondents and the workmen of Ramji Gordhan and Company. They belong to the same class and they do the work of the same employer and it is possible for the company to give the relief which the respondents are claiming. The respondents have in our opinion also a substantial interest in the subject matter of the dispute, namely, the abolition of the contract system in doing work of this kind. The learned Solicitor General particularly emphasised that there was no question of the interest of the respondents being prejudicially affected by the employment or nonemployment or the terms of service or conditions of labour of the workmen of Ramji Gordhan and Company and placed reliance on the words " may prejudicially affect their interest " appearing in the observations quoted above. We may, however, mention that 473 the test laid down is that the workmen espousing the cause should have a substantial interest in the subjectmatter of the dispute, and it was only when illustrating the practical application of the test that this Court used the words "may prejudicially affect their interest ". Besides it is contended by Mr. Gokhale for the respondents that even if prejudicial effect on the interest of the workmen espousing the cause is necessary, this is a, case where the respondents ' interest may be prejudicially affected in future in case the contract system of work is allowed to prevail in this branch of the work of the company. He submits that if the company can carry on this part of the work by contract system it may introduce the same system in other branches of its work which are now being done by its regular workmen. We do not think it necessary to go into this aspect of the matter as we have already indicated that prejudicial effect is only one of the illustrations of the practical application of the test laid down in Dimakuchi case (1), viz., substantial interest in the sense that the class to which the aggrieved party belongs is substantially affected thereby. It seems to us therefore that the respondents have a community of interest with the workmen of Ramji Gordhan and Company who are in effect working for the same employer. They have also a substantial interest in the subject matter of the dispute in the sense that the class to which they belong (namely, workmen) is substantially affected thereby. Finally the company can give relief in the matter. We are therefore of opinion that all the ingredients of section 2(k) as interpreted in Dimakuchi case(1) are present in this case and the dispute between the parties is an industrial dispute and the reference was competent. (ii) : We now come to the question whether the tribunal was justified in giving the direction for the abolition of the contract system in the manner in which it has done so. In dealing with this question it may be relevant to bear in mind that industrial adjudication generally does not encourage the employment of contract labour in modern times. As has been observed by the Royal Commission on Labour " whatever the merits of the system (1) ; 474 in primitive times, it is now desirable, if the management is to discharge completely the complex responsibility laid upon it by law and by equity, that the manager should have full control over the selection, hours of work and payment of the workers ". The same opinion has been expressed by several Labour Enquiry Committees appointed in different States. We agree that whenever a dispute is raised by workmen in regard to the employment of contract labour by any employer it would be necessary for the tribunal to examine the merits of the dispute apart from the general consideration that contract labour should not be encouraged, and that in a given case the decision should rest not merely on theoretical or abstract objections to contract labour but also on the terms and conditions on which contract labour is employed and the grievance made by the employees in respect thereof. As in other matters of industrial adjudication so in the case of contract labour theoretical or academic considerations may be relevant but their importance should not be overestimated. Let us then consider the contract labour system in the present case. The contract in this case related to four matters. But the reference is confined to one only, viz., cleaning maintenance work at the refinery including premises and plant and we shall deal with that only. So far as ' this work is concerned, it is incidental to the manufacturing process and is necessary for it and of a perennial nature which must be done every day. Such work is generally done by workmen in the regular employ of the employer and there should be no difficulty in having regular workmen for this kind of work. The matter would be different if the work was of intermittent or temporary nature or was so little that it would not be possible to employ full time workmen for the purpose. Under the circumstances the order of the tribunal appears to be just and there are no good reasons for interfering with it. Our attention in this connection was drawn to D. Macropollo And Co. (P) Ltd. vs D. Macropollo And Co. (P) Ltd. Employees ' Union (1) and it was urged that the tribunal should not have interfered with the (1) A.I.R. 1958 S.C. 1012. 475 management 's manner of having its work done in the most economical and convenient way that it thought proper. It was pointed out that this was not a case where the contract system was a camouflage and the workmen of the contractor were really the workmen of the company. It may be accepted that the contractor in the present case is an independent person and the system is genuine and there is no question of the company carrying on this work itself and camouflaging it as if it was done through contractors in order to pay less to the workmen. But the fact that the contract in this case is a bona fide contract would not necessarily mean that it should not be touched by the industrial tribunals. If the contract had been mala fide and a cloak for suppressing the fact that the workmen were really the workmen of the company, the tribunal would have been justified in ordering the company to take over the entire body of workmen and treat it as its own workmen. But because the contract in this case was bona fide the tribunal has not ordered the company to take over the entire body of workmen. It has left to it to decide for itself how many workmen it should employ and on what terms and has merely directed that when selection is being made preference should be given to the workmen employed by the present contractor. In Macropollo case (1), this Court held that the reorganisation had been adopted by the employer for reasons of economy and conveni ence and was bona fide. In that case the main business of the concern was the selling agency of various cigarette manufacturing concerns. Before 1946 the concern used to employ distributors for the purpose and these distributors used to employ salesmen. In 1946 there were communal riots in Calcutta and therefore the concern took over the salesmen in its direct employment in order to reorganise them on communal basis in the then prevailing circumstances. In 1954 the concern decided to close down its own outdoor sales department and revert to the distributor system. It was in that context that certain workmen had to be retrenched, and this Court held that the reorganisation scheme adopted in 1954 for reasons of economy and convenience was bona fide (1) A.I.R. 1958 S.C. 1012. 476 and if it resulted in retrenchment that was inevitable. These facts would show that in that case there was reorganisation of the business resulting in retrenchment. In the present case no such thing arises and the only question for decision is whether the work which is perennial and must go on from day to day and which is incidental and necessary for the work of the refinery and which is sufficient to employ a considerable number of wholetime workmen and which is being done in most concerns through regular workmen should be allowed to be done by contractors. Considering the nature of the work and the conditions of service in the present case we are of opinion that the tribunal 's decision is right and no interference is called for, except that the date ;should now be changed, for such a direction cannot be put into force with retrospective effect from November 1, 1958. It appears that a few months remain before the present contract will come to an end. We think that for these few months the present system may continue. We therefore dismiss the appeal with this modification that the order of the tribunal will be carried into effect from such date on which the present contract in force in the company comes to an end. The respondents will get their costs from the company. Appeal dismissed subject to modification. [/INST] A dispute was raised by the respondents, the workmen of the appellant company, with respect to contract labour employed by it for cleaning maintenance work at the refinery including premises and plant belonging to it. They made a demand for abolition of the contract system and for absorbing the workmen employed through the contractors into the regular service of the company. The matter was referred to the Tribunal under section 10 of the . The company objected to the reference on the grounds (1) that it was incompetent inasmuch as there was no dispute between it and the respondents and it was not open to them to raise a dispute with respect to the workmen of some other employer, viz., the contractor, and (2) in any case, it was for the company to decide what was the best method of carrying on its business and the Tribunal could not interfere with that function of the management. The Tribunal held that the reference was competent and on the merits it was of opinion that the work which was being done through the contractor was necessary for the company to be done daily, that doing this work through annual contracts resulted in the deprivation of security of service and other benefits, privileges, leave, etc., of the workmen of the contractor and that therefore the contract system with respect to this work should be abolished: Held, (1) that the dispute in the present case was an industrial dispute within the meaning of section 2(k) of the , as interpreted in Workmen of Dimakuchi Tea Estate vs The Management of Dimakuchi Tea Estate, , because (i) the respondents had a community of interest with the workmen of the contractor, (ii) they hall also a substantial interest in the subject matter of the dispute in the sense that the class to which they belonged, namely, workmen, was substantially affected thereby, and (iii) the company could give relief in the matter. The reference was, accordingly, competent. (2) that the direction given by the Tribunal that the contract system should be abolished was just in the circumstances of the case and should not be interfered with. D. Macropollo and Co. (P) Ltd. vs D. Macropollo and Co. (P) Ltd. Employees ' Union, A.I.R. 1958 S.C. 1012, </s>

<s>[INST] Summarize the following judgement: minal Appeal No. 119 of 57. Appeal by special leave from the judgment and order dated the 24th August, 1955, of the Calcutta High Court in Criminal Revision No. 596 of 1955. C. B. Agarwala and Sukumar Ghose, for the appellant. B. Sen and S.N. Mukherjee, for the respondents. March 23. The Judgment of the Court WAS delivered by SHAH, J. M/s. Lalji Raja & Sons who will hereinafter be referred to as the respondents are the owners of an oil seed pressing factory known as the Gouranga Oil Mill situated within the limits of the Bankura Municipality in the State of West Bengal. For extracting oil, the respondents import mustard seed from different areas. The respondents also hold a license for the @ale of mustard Seed. On the application of the Sanitary Inspector of the Bankura Municipality, the Sub Divisional Officer, Bankura, issued a search warrant directing seizure of 900 bags of "rotten and decomposed mustard seed", 600 bags stored in the mill godown and 300 bags stored 360 in the court yard of the rice mill at Hanseswar Maji. Pursuant to the search, a large quantity of mustard seed spread out for drying in the Gouranga Oil Mill was seized, and certain bags lying in the rice mill were also seized. On the report made by the Sanitary Inspector, the Chairman of the Municipality applied to the District Magistrate of Bankura on March 10, 1950, for action under sections 431 and 432 of the Bengal Municipal Act, No. XV of 1932, alleging that the mustard seed seized was " in a highly decomposed state and gave out an offensive stench" and that the same was unwholesome and unfit for human consumption. The proceedings started on the petition of the Chairman of the Municipality had a chequered career. it is unnecessary to sit out for the purposes of this appeal the diverse orders which were made from time to time by the District Magistrate and which were set aside by the High Court of Judicature at Calcutta. It may be sufficient to state that on May 26, 1950, the District Magistrate ordered restoration of the mustard seed bags to the respondents and that order was set aside bags Division Bench of the Calcutta High Court in revision. Another order passed by the District Magi strate in April 1951 directing that the contents of the bags be disposed of as " manure or fodder " was set aside by the Calcutta High Court and the proceedings were directed to be retried. The District Magistrate again held an enquiry and by his order dated November 10, 1954, held that the mustard seed was lawfully seized in accordance with the provisions of the Bengal Municipal Act, 1932, that it was unwholesome and unfit for human consumption on the date of seizure and directed in exercise of the powers under section 431(2) of the Act that the same be made over to the Commissioners of the Bankura Municipality for disposal either as manure. or as cattle feed. The High Court at Calcutta by order dated August 24, 1955, in exercise of its revisional jurisdiction, set aside the order of the District Magistrate holding that section 431 of the Bengal Municipal Act under which the order was made, had no application to a case of seizure of unwholesome food seized under a warrant issued under section 430. 361 Against the order of the High Court, this appeal is filed with special leave. The only question which falls to be determined in this appeal is whether articles of food seized under a warrant issued by a Magistrate in exercise of the powers under section 430 of the Bengal Municipal Act may be ordered to be destroyed under section 431(2) of the Act. In order to determine this question, it is necessary to refer to certain provisions of the Bengal Municipal Act, 1932. Section 421 prohibits, amongst other acts, selling or storing for sale of unwholesome articles to be used for human consumption. Section 427 (in so far as it is material) authorizes the Commissioners and certain other officers of a Municipality to enter upon and inspect any place in which any article of food is deposited for the purpose of sale or preparation for sale or to which any article of food intended for human consumption is brought for such purpose, and also to inspect the articles of food which may be found in the place inspected. Clause (1) of section 428 confers upon the Commissioners and the officers designated in section 427 power to seize articles of food intended for human consumption if, in the course of inspection, it appears that the same are unwholesome or unfit for human consumption. Section 429 provides that the articles of food referred to in section 428 which have been seized under that section may, with the written consent of the owner or the person in whose possession they are found, be ordered to be destroyed. If the consent of the owner or the person in possession is not obtained and the articles are of a perishable nature, the officer seizing the same may take them before a Magistrate who may, if it appears to him that the articles are unsound or unwholesome or unfit as human food, condemn the same or order them to be destroyed. Section 430 (in so far as it is material) provides that if any Magistrate is satisfied on the application of the Commissioners, Health Officer, Sanitary Inspector or any other officer authorized by the Commissioner in this behalf that there is just cause to believe that any food which is unsound, unwholesome or unfit for human food is in the possession of any person for the 362 purpose of being sold or offered or exposed for sale within the limits of the Municipality for such consumption, he may grant a warrant authorizing entry upon the premises of such person and search for and seizure of such articles of food. Section 431 by the 1st subsection (in so far as it is material) provides that where any article of food, seized under section 428 is not destroyed by consent under sub section 1 of section 429 or when an article of food so seized which is perishable is not dealt with under sub section 2 of that section, it shall be taken before a Magistrate as soon as may be after such seizure. Sub section 2 provides that if it appears to the Magistrate that any such food is unsound, unwholesome or unfit, for human food, he shall cause the same to be destroyed or to be otherwise disposed of by the Commissioners so as not to be capable of being used as human food. It is evident from this resume of the relevant legislative provisions that the municipal authorities are entitled to enter upon and inspect places where articles of food are stored or prepared for sale. If the municipal authorities find that any article of food stored or prepared for sale is unwholesome or unfit for human food, they may seize them and destroy the same with the written consent of the owner or person in possession, and if such consent is not forthcoming and the articles are perishable, destroy them under the orders of a Magistrate. But section 428 is not the only procedure under the Act authorizing seizure of articles. of food which are unwholesome or unfit for human food. The municipal authorities may move a Magistrate for the issue of a warrant for seizure of articles of food which are unsound, unwholesome or unfit for human food, and under the authority of the warrant, such articles may be seized. Articles of food seized under section 428(1) which are not disposed of under section 429 are required to be taken before a Magistrate as soon as may be after seizure and under sub section 2 of section 431, the Magistrate is authorized, if it appears to him that the articles of food are unsound or unwholesome or unfit for human food to order destruction or disposal thereof Evidently, the expression "such" used in sub s.2 of section 431 refers. to the articles of food described in sub.s. 1 of 363 that section and section 431(1) only deals with articles seized under section 428. There is no express provision made by the legislature either in section 431 or elsewhere in the Act authorizing destruction ' or disposal of articles of food which are seized under a warrant issued under section 430. Counsel for the Municipality contends that the legislature intended that all articles seized, whether on inspection under section 428 or under a warrant issued under section 430 must be dealt with under section 431 and the High Court was in error in holding that the authority of the Magistrate to order destruction or disposal of articles of food could be exercised only in respect of articles seized under section 428. But the words used in section 431(2) clearly authorize the Magistrate to order destruction or disposal of articles seized under section 428 and not dealt with under section 429, and it is difficult to uphold the plea that the legislature intended, even though it did not so expressly provide, that the articles seized under a warrant issued under section 430 may also be dealt with under sub section 2 of section 431. Counsel for the Municipality submits that it could not even have been the intention of the legislature that the Magistrate can order seizure of unwholesome food but cannot order its destruction, though he may order destruction of unwholesome articles of food seized by the officers of the Municipality. It appears, however, that a person storing unwholesome articles of food may be prosecuted for infraction of the provisions of section 421 and in the course of or on the conclusion of those proceedings, it would certainly be open to the Magistrate, having seizin of the complaint, to pass an appropriate order under the Code of Criminal Procedure for destruction of the articles seized. In view of this, we are not prepared to say that the absence of an express provision relating to the disposal of articles seized under section 430 is not deliberate; but even if we are constrained to hold that there is a lacuna in section 431, we do not think that we would be justified contrary to the plain words used by the legislature, in attempting to remedy the same by holding that a Magistrate exercising power under sub section 2 of section 431 has authority to 364 order destruction of articles seized in pursuance of a warrant issued under section 430. The argument advanced by counsel for the Municipality that the seizure was in exercise of the powers under section 428 and not under section 430 has, in our judgment, no force. The report of the Chairman of the Municipality dated March 10, 1950, makes it abundantly clear that the search warrant was issued by the Sub Divisional Officer in exercise of his authority under section 430 of the Bengal Municipal Act. 'Any admission by the respondents that the seizure was under section 428 of the Act in proceedings for resisting the order which the Municipality claimed to obtain against them can have no value. Section 428 does not contemplate a seizure of articles of food which are unwholesome, under the authority of a Magistrate, and section 430 is expressly the provision which authorises a Magistrate to issue a warrant, for such seizure. The powers under section 431(2) are expressly directed to be exercised by the Magistrate in respect of articles seized under section 428, and there is nothing in the former provision which may justify the view that those powers can also be exercised in respect of articles seized under a warrant issued under section 430. In our opinion, the High Court was right in its conclusion. The appeal therefore fails and is dismissed. Appeal dismissed. [/INST] The respondents were the owners of an oil seed pressing factory situated within the limit of a municipality. They used to import mustard seeds from different areas and they also held a (1) (1952) L.A.C.103. (2)(1958)1 L.L.J. 63. (3) A.I.R. 1959 Bom. 359 licence for selling Mustard seed. On a report of the Sanitary Inspector of the Municipality, the Sub Divisional Officer issued a search warrant directing seizure of a large quantity of " rotten and decomposed mustard seed " from the possession of the respondents. The Chairman of the Municipality applied to the District Magistrate for action under section 431 and section 432 of the Bengal Municipal Act. The proceedings started on the petition of the Chairman of the Municipality had a chequered career. Ultimately the District Magistrate found that the mustard seed was unwholesome and unfit for human consumption on the date of seizure and directed, in exercise of the powers under section 431(2) of the Act, that the same be made over to the Commissioners of the Municipality for disposal either as manure or as cattle feed. The High Court in revision set aside the order of the District Magistrate holding that section 431 of the Act under which the order was made did not apply to a case of seizure of unwholesome food under a warrant issued under section 430. On appeal by the Municipality by special leave: Held, that the powers under section 431(2) of the Bengal Munici pal Act (XV of 1932), were expressly directed to be exercised by the Magistrate in respect of articles seized under section 428, and there was nothing in section 431(2) which might justify tile view that those powers could also be exercised in respect of articles seized under a warrant issued under section 430. </s>

<s>[INST] Summarize the following judgement: minal Appeal No. 217 of 1959. Appeal by special leave from the judgment and order dated September 10, 1959 of the Punjab High Court in Criminal Misc. No. 559 of 1959. Appellant in person. section M. Sikri, Advocate General for the State of Punjab, Mohinder Singh Punnan, T. M. Sen and D. Gupta, for the respondent. March 25. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. On December 10, 1958, Mr. M. L. Sethi lodged a First Information Report against the appellant Mr. R. P. Kapur and alleged that he and his mother in law Mrs. Kaushalya Devi had committed offences under sections 420 109, 114 and 120B of the Indian Penal Code. When the appellant found that for several months no further action was taken on the said First Information Report which was hanging like a sword over his head he filed a criminal complaint on April 1, 1959, against Mr. Sethi under sections 204, 211 and 385 of the Indian Penal Code and thus took upon himself the onus to prove that &he First Information Report lodged by Mr. Sethi was false. On the said complaint Mr. Sethi moved that the proceedings in question should be stayed as the police had not made any report on the First Information Report lodged by him and that the case started by him was still pending with the police. After hearing arguments the learned Magistrate ordered that the appellant 's complaint should stand adjourned. Thereupon the appellant moved the Punjab High Court under section 561 A of the Code of Criminal Procedure for quashing the proceedings initiated by the First Information Report in question. Pending the hearing of the said petition in the said High Court the police report was submitted under section 173 of the Code on July 25, 1959. Subsequently, on September 10, 1959, Mr. Justice Capoor heard the appellant 's petition and held that no case had been made out for quashing the proceedings under s.561 A. In the result the petition was dismissed. It is against this order that the appellant has come to this Court by special leave, 50 390 The material facts leading to the proceedings against the appellant lie within a very narrow compass. It appears that in January 1957 the mother in law of the appellant and his wife entered into an agreement with the owners of certain lands in village Mohammadpur Munirka to purchase lands at Rs. 5 per sq. Earnest money was accordingly paid to the vendors and it was agreed that the sale had to be completed by April 13, 1957; by consent this period was extended to June 13, 1957. Meanwhile, on March 8, 1957, notifications were issued by the Chief Commissioner under sections 4 and 6 of the Land Acquisition Act, 1894, for acquiring considerable area of land which included the lands belonging to the vendors; this acquisition was intended for the housing scheme of the Ministry of Works, Housing and Supply in the Government of India. The proposed acquisition was treated as one of urgency and so under section 17 of the Acquisition Act possession of the land was taken by the Collector on June 8, 1957. Some of the persons concerned in the said lands filed objections against the validity of the action taken under section 17. It was under these circumstances that the sale deeds were executed by the vendors in favour of Mrs. Kaushalya Devi and certain other vendees on June 12, 1957. It appears that the vendees presented their claim before the Land Acquisition Collector and an award has been made in Septem ber 1958 by which Mrs. Kaushalya Devi has been allowed compensation at Rs. 3 8 0 per sq. That is how the title of the lands in question passed to Mrs. Kaushalya Devi. The First Information Report filed by Mr. Sethi alleges that he and the appellant were friends and that on January 4,1958, the appellant dishonestly and fraudulently advised him to purchase 2,000 sq. of land in Khasra Nos. 22, 23, 24 and 25 in the aforesaid village Mohammadpur Munirka on the representation that as owner of the land in the area Mr. Sethi would get a plot of desired dimensions in the same area developed by the Ministry under its housing scheme. The appellant also represented to Mr. Sethi, according to the First Information Report, that since under the scheme no person would, be allotted more than one 391 plot he would have to surrender a part of his land; that is why as a friend he was prepared to give to Mr. Sethi one plot at the price at which it had been purchased. According to Mr. Sethi the appellant dictated an application which he was advised to send to the Secretary of the Ministry of Works and he accordingly sent it as advised. The First Information Report further alleges that the appellant had assured Mr. Sethi that the land had been purchased by his mother in law at Rs. 10 per sq. Acting on this representation Mr. Sethi paid Rs. 10,000 by cheque drawn in favour of Mrs. Kaushalya Devi on January 6, 1958. This cheque has been cashed. Subsequently a draft of the sale deed was sent by the appellant to Mr. Sethi in the beginning of March 1958 and on March 6, 1958, a further sum of Rs. 10,000 was paid by cheque. The draft was duly returned to the appellant with a covering letter in which Mr. Sethi stated that he would have liked to add one clause to the deed to the effect that in the event of the authorities not accepting the sale for the purpose of allotment, the amount of Rs. 20,000 would be refunded to him; and he expressed, the hope that even if the said clause was not included in the document the appellant would accept it. The sale deed in favour of Mr. Sethi was registered on March 21, 1958. It is this transaction which has given rise to the First Information Report in question. Broadly stated the First Information Report is based on four material allegations about fraudulent misrepresentation. It is alleged that the appellant fraudulently misrepresented to Mr. Sethi that the land had been purchased at Rs. 10 per sq. ; that the appellant fraudulently concealed from Mr. Sethi the pendency of the proceedings before the Land Acquisition Collector, Delhi, and of the acquisition of the said property under section 17 of the said Act; he also made similar fraudulent misrepresentations as regards the scheme of housing to which he referred. As a result of these misrepresentations Mr. Sethi entered into the transaction and parted with Rs. 20,000. That in brief is the nature of the complaint made by Mr. Sethi in his First Information Report. The appellant urged before the Punjab High Court that the case started against 392 him by the First Information Report should be quashed under section 561 A of the Code. The Punjab High Court has rejected the appellant 's contention. The question which arises for our decision in the present appeal is: Was the Punjab High Court in error in refusing to exercise its inherent jurisdiction under s.561 A of the Code in favour of the appellant ? Before dealing with the merits of the appeal it is necessary to consider the nature and scope of the inherent power of the High Court under section 561 A of the Code. The said section saves the inherent power of the High Court to make such orders as may be necessary to give effect to any order under this Code or to prevent abuse of the process of any court or otherwise to secure the ends of justice. There is no doubt that this inherent power cannot be exercised in regard to matters specifically covered by the other provisions of the Code. In the present case the magistrate before whom the police report has been filed under section 173 of the Code has yet not applied his mind to the merits of the said report and it may be assumed in favour of the appellant that his request for the quashing of the .proceedings is not at the present stage covered by any specific provision of the Code. It is well established that the inherent jurisdiction of the High Court can be exercised to quash proceedings in a proper case either to prevent the abuse of the process of any court or otherwise to secure the ends of justice. Ordinarily criminal proceedings instituted against an accused person must be tried under the provisions of the Code, and the High Court would be reluctant to interfere with the said proceedings at an interlocutory stage. It is not possible, desirable or expedient to lay down any inflexible rule which would govern the exercise of this inherent jurisdiction. However, we may indicate some categories of cases where the inherent jurisdiction can and should be exercised for quashing the proceedings. There may be cases where it may be possible for the High Court to take the view that the institution or continuance of criminal proceedings against an accused person may amount to the abuse of the process of the court or that the quashing of the impugned proceedings would secure the ends of 393 justice. If the criminal proceeding in question is in respect of an offence alleged to have been committed by an accused person and it manifestly appears that there is a legal bar against the institution or continuance of the said proceeding the High Court would be justified in quashing the proceeding on that ground. Absence of the requisite sanction may, for instance, furnish cases under this category. Cases may also arise where the a11egations in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety, do not constitute the offence alleged; in such cases no ques tion of appreciating evidence arises; it is a matter merely of looking at the complaint or the First Information Report to decide whether the offence alleged is disclosed or not. In such cases it would be legitimate for the High Court to hold that it would be manifestly unjust to allow the process of the criminal court to be issued against the accused person. A third category of cases in which the inherent jurisdiction of the High Court can be successfully invoked may also arise. In cases falling under this category the allegations made against the accused person do constitute an offence alleged but there is either no legal evidence adduced in support of the case or evidence adduced clearly or manifestly fails to prove the charge. In dealing with this class of cases it is important to bear in mind the distinction between a case where there is no legal evidence or where there is evidence which is manifestly and clearly inconsistent with the accusation made and cases where there is legal evidence which on its appreciation may or may not support the accusation in question. In exercising its jurisdiction under section 561 A the High Court would not embark upon an enquiry as to whether the evidence in question is reliable or not. That is the function of the trial magis trate, and ordinarily it would not be open to any party to invoke the High Court 's inherent jurisdiction and ' contend that on a reasonable appreciation of the evidence the accusation made against the accused would not be sustained. Broadly stated that is the nature and scope of the inherent jurisdiction of the High Court under section 561 A in the matter of quashing 394 criminal proceedings, and that is the effect of the judicial decisions on the point (Vide: In Re: Shripad G. Chandavarkar (1), Jagat Ohandra Mozumdar vs Queen Empress (2 ), Dr. Shanker Singh vs The State of Punjab (3 ), Nripendra Bhusan Ray vs Govind Bandhu Majumdar(4 ) and Ramanathan Chettiyar vs K. Sivarama Subrahmanya Ayyar (5).) Mr. Kapur, who argued his own case with ability before us, strongly relied on the decision of the Punjab High Court in section P. Jaiswal vs The State & Anr. (6) and contended that in the interest of justice and in order to avoid unnecessary harassment to him we should ourselves examine the evidence on record and decide whether the said evidence can possibly lead to his conviction. In that case Jaiswal was charged with having committed offences under 'section 147 and section 452 of the Code and it does appear from the judgment of the High Court that the learned judge elaborately considered all the evidence on which the prosecution relied and came to the conclusion that the proceedings taken against Jaiswal and his co accused should be quashed. It is, however, clear from the judgment that the learned judge was very much impressed by the fact that the police had reported that there was no case or at the most only a technical offence against Jaiswal but the district magistrate had interfered with the statutory duty of the police and had directed the police officer concerned to prosecute him. On these facts the learned judge was inclined to take the view that there was a violation of the fundamental right guaranteed to Jaiswal under article 21 of the Constitution. Besides, in the opinion of the learned judge the evidence on which the prosecution relied showed that the essential ingredients of the offence charged were missing " and the very essentials were non existent". It is on these findings that the criminal proceedings against Jaiswal were quashed. It is unnecessary for us to consider .whether the fundamental right guaranteed under article 21 had really been contravened or not. We have merely referred to the relevant findings recorded by (1) A.I.R. 1928 Bom. (2) (1954) 56 Punjab L.R. 54. (3) Mad. (4) Cal. (5) A.I.R. 1924 Cal. 1018. (6) (1953) 55 Punjab L.R 77. 395 the learned judge in order to emphasise the fact that this decision cannot be read as an authority for the proposition that an accused person can approach the High Court under section 561 A of the Code and ask it to appreciate the evidence adduced against him and quash the proceedings in case it thought that the said evidence did not justify the charge. In fact, in dealing with the case the learned judge has himself approved of the several decisions which have construed the nature and scope of the inherent jurisdiction under section 561 A and so the decision must be confined to the basic findings recorded by the learned judge in that case. This being the true legal position the question which falls for our decision is: Does the appellant show that his case falls under any of the three categories already mentioned by us. There is no legal bar to the institution of the present proceedings or their continuance, and it is obvious that the allegations made in the First Information Report do constitute offences alleged against the appellant. His argument, however, is that the evidence on record clearly and unambiguously shows that the allegations made in the First Information Report are untrue; he also contends that " certain powerful influences have been operating against him with a view to harm him and debar him officially and otherwise and have instigated and later seized upon the false First Information Report filed by Mr. Sethi against him". In this connection he has naturally placed emphasis on the fact that the investigating agency has acted with extraordinary dilatoriness in the matter and that for several months the police did not make the report under section 173 of the Code. It is true that though the complaint against the appellant is essentially very simple in its nature the police authorities did not make their report for nearly seven months after the First Information Report was lodged. We have already indicated how the appellant was driven to file. a complaint on his own charging Mr. Sethi with having filed a false First Information Report against him, and how the Report in question was filed after the appellant moved the High 396 Court by his present petition under section 561 A. It is very much to be deplored that the police officers concerned did not act diligently in this matter, and it is not surprising that this unusual delay has given rise to the apprehension in the mind of the appellant that the object of the delay was to keep the sword hanging over his head as long as possible. It is perhaps likely that the appellant being the senior most Commissioner in the punjab the investigating authorities may have been cautious and circumspect in taking further steps on the First Information Report; but we are satisfied that this explanation cannot account for the inordinate delay made in submitting the report under section 173. It is of utmost importance that investigation into criminal offences must always be free from any objectionable features or infirmities which may legitimately lead to the grievance of the accused that the work of investigation is carried on unfairly or with any ulterior motive. Even so it is difficult to see how this conduct on the part of the police officers can materially assist the appellant in his prayer that the proceedings which have now reached the criminal court should be quashed. We must, therefore, now proceed to consider the appellant 's case that the evidence on record is demonstrably against the allegation of Mr. Sethi that he was induced by the appellant to part with Rs. 20,000 as a result of the several misrepresentations alleged in the First Information Report. He contends that the principal allegation against him is two fold, that he fraudulently and dishonestly concealed from Mr. Sethi any information about the pendency of the proceedings before the Collector, and fraudulently re presented to him that the land had been purchased at Rs. 10 per sq. According to the appellant, if the correspondence on the record is considered, and the statements made by Mr. Sethi and his wife and their conduct at the material time are taken into account, it would irresistibly show that the whole story about the fraudulent misrepresentations is untrue. The appellant has taken us Through the relevant correspondence and as referred us to the statements and the conduct of the parties. We are anxious not to express 397 any opinion on this part of the appellant 's argument. All we wish to say is that we would inevitably have to consider the evidence ourselves and to appreciate it before we pronounce any opinion on the validity or otherwise of the argument. It is not a case where the appellant can justly contend that on the face of the re. cord the charge levelled against him is unsustainable. The appellant no doubt very strongly feels that on the relevant evidence it would not be reasonably possible to sustain the charge but that is a matter on which the appellant will have to satisfy the magistrate who takes cognisance of the case. We would, however, like to emphasise that in rejecting the appellant 's prayer for quashing the proceedings at this stage we are expressing no opinion one way or the other on the merits of the case. There is another consideration which has weighed in our minds in dealing with this appeal. The appellant has come to this Court under article 136 of the Constitution against the decision of the Punjab High Court; and the High Court has refused to exercise its inherent jurisdiction in favour of the appellant. Whether or not we would have come to the same conclusion if we were dealing with the matter ourselves under section 561 A is not really very material because in the present case what we have to decide is whether the judgment under appeal is erroneous in law so as to call for our interference under article 136. Under the circumstances of this case we are unable to answer this question in favour of the appellant. Appeal dismissed. [/INST] One S lodged a first information report against K. When K found that no action was taken on the report for several months he filed a criminal complaint against S contending that the report lodged by S was false. At the instance of S the magistrate ordered K 's complaint to stand adjourned till the police made its final report on the first information report. Thereupon K moved the High Court under section 561 A of the Code of Criminal Procedure for quashing the proceedings initiated by the first information report. Pending the hearing the police submitted its report under section 173 of the Code. Subsequently the High Court dismissed the petition. K obtained special leave and appealed: Held that no case for quashing the proceedings was made out. The inherent 'Jurisdiction of the High Court could be exercised to quash proceedings in a proper case either to prevent the abuse of the process of any Court or otherwise to secure the ends of justice. The following are some categories of cases where the inherent jurisdiction could and should be exercised to quash proceedings: (i) where there was a legal bar against the institution or continuance of the proceedings; (ii) where the allegations in the first information report or complaint did not make out the offence alleged; and (iii)where either there was no legal evidence adduced in support of the charge or the evidence adduced clearly or manifestly failed to prove the charge. In exercising its jurisdiction under section 561 A of the Code the High Court cannot embark upon an enquiry as to whether the evidence in the case is reliable or not . In the present case there was no legal bar to the institution of the proceedings or to their continuance; the allegations made in the first information report did constitute the offences alleged and it could not be contended that on the face of the record the charge was unsustainable. In re: Shripad G. Chandavarkar, A.I.R. 1928 Bom. 184, jagat Chandra Mozumdar vs Queen Empress, Cal. 786, Dr. Shankar Singh vs The State of Punjab, (1954) 56 Punj. L.W. 54, Nripendra Bhusan Ray vs Govind Bhandhu Majumdar, A.I.R. 1924 Cal. 1018 and Ramanathan Chettiar vs K. Sivarama Subrahmanya Ayyar, Mad. 722, referred to. S.P. Jaiswal vs The State, , distin guished, 389 </s>

<s>[INST] Summarize the following judgement: minal Appeal No. 160 of 1959. Appeal by special leave from the judgment and order dated October 30, 1958, of the Allahabad High Court (Lucknow Bench) at Lucknow in Criminal Appeal No. 105 of 1957, arising out of the judgment and order dated February 12, 1957, of the Second Temporary Civil and Sessions Judge at Barabanki in Criminal Sessions Trial No. 102 of 1956. G. C. Mathur and C. P. Lal, for the appellant. The respondent did not appear. April 1. The Judgment of the Court was delivered by SARKAR, J. The respondent was prosecuted before the Judicial Magistrate, Barabanki, for offences under cls. (i) and (iii) of section 7 of the , for selling adulterated milk and for selling milk without a licence. The learned Magistrate found that the offences had been proved and further that, the respondent had committed the offences for the third time. Under cl. (a) (iii) of sub sec. (i) of section 16 of the Act, in the absence of special and adequate reasons to the contrary, for a third offence the imprisonment to be awarded cannot be for less than two years and the fine to be imposed not less than three thousand rupees. Section 32 of 429 Criminal Procedure Code however provides that a Magistrate of the first class shall not have power to impose a sentence of fine exceeding rupees two thousand. Under the impression that his power as a Magistrate of the first class to impose sentence was limited by s.32 of the Code the learned Judicial Magistrate committed the respondent to stand his trial before the Court of Session, presumably acting under section 347 of the Code of Criminal Procedure. The respondent was thereupon tried by a learned Sessions Judge of Barabanki who found him guilty of the offences with which he had been charged. The learned Sessions Judge however came to the conclusion that the offences had been committed by the respondent for the second time and not the third. He observed that the learned Judicial Magistrate was competent to award the minimum punishment prescribed by the Act for a second offence and should not have committed the case to the Court of Session at all. He however convicted the respondent and awarded the minimum sentence prescribed by the Act for a second offence, namely, rigorous imprisonment for one year and a fine of rupees two thousand and, in default, rigorous imprisonment for a further period of six months for each of the offences and directed the sen tences of imprisonment to run concurrently. The respondent then appealed to the High Court at Allahabad. Mulla, J., who heard the appeal pointed out that the learned Judicial Magistrate had overlooked the "Provisions of section 21 of the Act which provides that notwithstanding anything contained in section 32 of the Code it shall be lawful for a Magistrate of the first class to pass any sentence authorised by the Act in excess of his powers under section 32 of the Code. The learned Judge observed that the learned Magistrate was therefore quite competent to award all punishments that the law required and had no reason to commit the respondent to a Court of Session. He took the view that a Court of Session could try only those cases which were legally and properly committed to it by a Magistrate and that section 21 of the Act was not only an enabling provision but also a disabling one. He held that section 21 of the Act prevented a commitment to 55 430 the Court of Session by a Magistrate of the first class. He observed, " Where a special Act has made a special provision for punishment to be awarded by a Magistrate irrespective of the limitations placed upon his powers under the Criminal Procedure Code, it amounts to an abrogation of the general law and the provisions of section 347 of the Criminal Procedure Code cannot be applied to such a case." In this view of the matter he held that the learned Judicial Magistrate had no power to commit the respondent to the Court of Session for trial and the learned Sessions Judge had no jurisdiction to try the case. He thereupon set aside the order of conviction and the sentence passed against the respondent and remanded the case to the District Magistrate of Barabanki to be transferred by him to the Court of a competent Magistrate for trial and disposal. The State has appealed to this Court against the judgment of Mulla, J. We are unable to agree with the view of Mulla, J., that the learned Sessions Judge had no jurisdiction to try the case. We do not think that section 21 of the Act is a disabling provision. All that it does is to authorise a Magistrate of the first class to award a sentence beyond the limits prescribed for him under section 32 of the Code. It does not affect the provisions of sections 207 and 347 of the Code, nor has it anything to do with the jurisdiction of a Court of Session. The section does not make commitment by a Magistrate competent to award the full sentence Prescribed by the Act, a nullity; nor does the section interfere with the jurisdiction of a Court of Session to deal with a matter committed to it in spite of its provisions. The jurisdiction of a Court of Session depends upon the Code. It has jurisdiction to try any case which is committed to it. The case against the respondent had been committed to a Court of Session by a Magistrate having power to commit. Further, the Magistrate did not lack territorial jurisdiction to commit. It may be that the Magistrate was competent to try the case and award all punishments prescribed by law. It is also true that the Magistrate was not compelled to commit the case to a Court of Session. We are unable to subscribe to the view that a commitment in 431 such circumstances is itself void. Neither do we understand Mulla, J., to take the view that apart from section 21 of the Act, the commitment was void because the learned Magistrate could himself have awarded the maximum sentence provided. We have said that section 21 does not take away the power of the Magistrate if he has such power, to commit, nor affect the jurisdiction of a Court of Session to try a case committed to it by a Magistrate empowered to do so. Therefore it seems to us that the learned Sessions Judge had full jurisdiction to try the case against the respondent. In the result we allow the appeal and set aside the order of the High Court. The case will now go back to the High Court to be heard on merits. Appeal allowed. [/INST] The respondent was prosecuted for offences under section 7 of the . The Magistrate found the offences proved and he further found that the respondent had 428 committed the offence for the third time for which he was liable to be awarded a sentence of imprisonment for not less than two years and to a fine of not less than Rs. 3,000. Section 21 of the Act specifically empowered the Magistrate to impose this sentence, but as he was under the impression that section 32 of the Code of Criminal Procedure limited his power to impose sentences he committed the respondent to stand his trial before the Court of Session. The Court of Session found the respondent guilty and convicted him. On appeal the High Court held that the Magistrate had no power to commit and that the Sessions judge had no Jurisdiction to try the case, set aside the conviction and sentence and remanded the case for retrial to the Magistrate Held., that the commitment was not illegal and that the Sessions judge had jurisdiction to try the case. Section 21 of the Act was not a disabling provision and it did not make commitment by a Magistrate competent to award the full sentence prescribed by the Act, a nullity; it did not take away the power of the Magistrate to commit. The Magistrate had both the power and the territorial jurisdiction to commit, and the commitment was good. </s>

<s>[INST] Summarize the following judgement: on No. 62 of 1956. Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights. N.H. Hingorani and A. N. Sinha, for the petitioner. R. Ganapathy Iyer and T. M. Sen, for the respondent. April 14. The Judgment of the Court was delivered by KAPUR, J. Prior to the integration of the Indian States with the Union of India on the promulgation of the Constitution of India there was in Kathiawad a State of the name of Vadia, succession to the Rulership of which was by primogeniture. Its Ruler then was Darbar Saheb Shri Surag Vala Bavavala. He had two sons Kumar Shri Krishan Kumar and the petitioner Kumar Shri Vira Vala Surag Vala. Kumar Shri Krishan Kumar being the elder son was the heir apparent. On July 5, 1943, the Ruler Darbar Saheb Shri Surag Vala executed two documents in favour of the petitioner granting him in perpetuity and in heredity a village called ' Mota Pithadia ' in the State for enjoyment as ' Kapal Giras ' as ' Bhayat '. The word ' Bhayat ' means a cadet or the descendant of a younger branch of a Talukdar 's family where the State followstheruloofprimogeniture. 'Kapal Giras 'means a grant in appanage as a birthright to a share in the patrimony. Sometime in or about August, 1947,the State of Vadia acceded to the Dominion of India on the terms contained in an instrument of accession then executed. Thereafter, on January 23, 1948, various States in the Kathiawad area entered into a covenant forming the United State of Kathiawad, also called the United State of Saurashtra. In terms of this covenant the 523 assets of each State excepting the private properties of the Ruler, became the assets of the United State. The covenant also provided that the Ruler of each State shall be entitled to receive a certain sum as his privy purse from the revenues of the United State, to retain ownership of all private properties to be determined in the manner provided and to all personal privileges, dignities and titles. The Government of India concurred in the covenant and guaranteed all its provisions. The State of Vadia was a party to this covenant and its assets therefore became vested in the United State. On September 13, 1948, the United State of Kathiawad executed a fresh instrument of accession to the Dominion of India cancelling the instrument of accession executed by the covenanting States in or about August, 1947. On November 13, 1949, the United State of Kathiawad agreed to adopt the Constitution to be framed by the Constituent Assembly of India and further that the Constitution of India as from the date of its commencement would supersede and abrogate all other constitutional provisions inconsistent therewith in force in the United State. On the promulgation of the Constitution of India on January 26, 1950, the United State merged in the Union of India and became Saurashtra, a Part B State mentioned in the Constitution. The United State and therefore its component States since then lost all separate existence. It is not in dispute that upon such merger all the assets of the United State became vested in the Union of India. On January 27, 1950, Kumar Shri Krishan Kumar, the elder son of the Ruler Darbar Saheb Shri Surag Vala died and thereafter on May 16, 1950, the Ruler himself died. On February 12, 1951, the President of India issued a notification recognising the petitioner as the Ruler of Vadia with effect from May 16,1950, and he became entitled to the rights of the Ruler which the Government of India had agreed to recognise. These were the rights reserved to the Ruler under the covenant constituting the United State of kathiawad, namely, the right to a privy purse, to the private properties and to the personal privileges, dignities and titles. 524 On July 2, 1951, the Government of the State of Saurashtra issued a notification declaring that as the petitioner had succeeded his father as Ruler, the village Pithadia should, pending final orders be treated as Khalsa or Khas village of the State of Saurashtra. The petitioner was then a minor and his mother submitted a representation to the Government protesting against the notification. No reply was received to this protest. On May 23, 1952, the Government of Saurashtra issued a further notification which stated: " Whereas the village Pithadia in Vadia Taluka of the Madhya Saurashtra District was granted, by Lekh No. 194 dated 5th July, 1943, as Kapal Giras by the late Ruler Darbar Saheb Suragwala of the former Vadia State to his second son Shri K. section Viravala in the latter 's capacity as a cadet, in appanage grant; and Whereas, the late Ruler and his eldest son Shri K. section Krishna Kumarsinghji predeceased this second son Shri K. S.Viravala, the latter has been recognised as the Ruler of the former State of Vadia with effect from 16th May, 1950, by the Government of Saurashtra and the President of India as per Notification No. PD/MS/20 dated 12th February, 1951, of the Government of Saurashtra Revenue Department (Political) published in the Gazette of Saurashtra and Whereas, pending the recognition the Government of Saurashtra had ordered, by Notification No. PD/148/20, dated 2nd July, 1951, of the Revenue Department (Political) that village should be treated as Khalsa village of the State of Saurashtra and whereas Shri K. section Viravala 's status as a Cadet has ceased and the object of the grant in appanage has terminated in consequence of his being recognised as the Ruler. Now, therefore, the grant is deemed to have lapsed and reverted to the former Vadia State now integrated with the State of Saurashtra at present known as the State of Saurashtra with effect from the date of Shri K. section Viravala having been recognised as the Ruler of the former Vadia State in succession to the late Ruler Darbar Shri Suragwala of Vadia State, viz., 16th of May, 1950 ". 525 The petitioner again lodged a protest against this latter notification but this time also received no reply. On March 9, 1956, he filed the present petition under article 32 of the Constitution asking for the issue of a writ directing the respondent, the State of Bombay, in which State State of Saurashtra had earlier merged, to withdraw or cancel the notification and to restore the village Pithadia with all collections and realisations made by it to the petitioner and restraining the respondent from giving effect to the notification. The petitioner 's contention is that the village had been granted to him absolutely and unconditionally for permanent enjoyment from generation to generation and the State could not resume it so long as any of the descendants of the petitioner was alive. He contends that President 's recognition of him as Ruler of Vadia did not affect his rights to the village. The respondent 's contention is that the grant was not absolute or unconditional but it was to remain in force so long as the petitioner continued to be a cadet of the family and that as on his being recognised as the Ruler he ceased to be a cadet, the grant lapsed and the village reverted to the State. It is said that the Union of India being entitled to all the assets of the State of Vadia, the village has become its property since the date of the petitioner 's recognition as the Ruler. The question therefore is whether the grant lapsed on the grantee becoming the Ruler. That is a question depending on the terms of the grant. Webb in his compilation called " Political Practice in Kathiawad " has defined a ' Bhayat ' as a cadet or the descendant of a younger branch of a Talukdar 's family where the estate follows the rule of primogeniture. The grant was made by a document called a Lekh or a writing to which was attached a Hakpatrak which is a Statement of rights created by the Darbar to a Bhayat. Both these documents were registered before the Agency. The main portions of the. Lekh were in these terms: " Passed by Shree Vadia Darbar Shree Suragvala Bavavala, to long lived Kumar Shree Viravala. To wit: the Rule of primogeniture (i.e., the system 69 526 of Heir apparent and cadets) having been applied to this State, and you being our Kumar (SOD) younger than our eldest Kumar, long lived Yuvaraj Shree Krishna Kumar Saheb, you are, by this Lekh, given, as Bhayat, for permanent enjoyment as Kapal Giras, from generation to generation, the village " Mota Pithadia ", a village of exclusive jurisdiction of this State, which is of our possession, enjoyment and ownership, with its village, Tal (village site), and Sim with all their boundaries, fields, Vadis, Kharo, Kharabo, etc., i.e., with all the boundaries of ' the said village, as Giras. You may enjoy the revenues thereof from the beginning of the Year Samvat 2000. as Bhayat, a Hakpatrak (statement of rights) thereof, according to procedure has been given. The same has been attached herewith. You and your heirs and successors may enjoy the same. Map and Field Book of this village have been made, true copies whereof have been got prepared and given to you ". The lekh conferred various other dignities, privileges, amenities and rights on the petitioner. Thus it is stated that the petitioner 's marriage will be celebrated at the State expense and the State will arrange for his education, that no duties or taxes will be levied on the petitioner on account of his residence in Vadia proper, that the petitioner 's complaint regarding Giras, i.e., the village granted, or any other civil matter would be heard without charging any court fee and he would be exempt from personal attendance in court in civil matters and that no process will be issued against him in criminal cases without the permission of the Ruler himself. All these dignities, rights and privileges are appropriate to a cadet of the Ruler 's family, but have no meaning when applied to a Ruler. In the Hak Patrak it is stated: " In future even if your descendants are joint or may have divided, any one Bhayat surviving from amongst your descendants shall enjoy the Sudharo Giras and it Shall not 527 revert to the State till any one Bhayat from amongst your descendants is living ". It also states that the grantee will not sell or mortgage the Giras without the permission of the State. The grant and the Hak Patrak read together lead to the inescapable conclusion that in its true natures the grant is a grant to a cadet of the family and the grant enures for his benefit as long as he remains a cadet. The expression " given as Bhayat " is not merely descriptive of the grantee, but indicates the true nature of the grant. Nor do we agree that the expression " given as Bhayat " merely indicates the purpose for which the grant is made but describes the nature of the tenure. The grant states in express terms that it is given as Bhayat for permanent enjoyment as Kapal Giras, which means that the grant is to a cadet as an appanage and continues from generation to generation as long as any of the descendants of the grantee is alive. But if the grantee ceases to be the younger branch and becomes heir apparent by reason of the rule of primogeniture or ceases to be a cadet or Bhayat for any reason whatsoever, then the grant must come to an end. This is what the rights and liabilities mentioned in the grant itself and also in the Hak Patrak show; for example, with regard to the right of succession, the Hak Patrak states that even if one Bhayat from amongst the descendants survives he shall enjoy the Giras and there will be no reversion to the State. This, in our opinion, shows that the grant enures as long as there is a Bhayat. If there is no Bhayat the grant lapses. If on a true construction the grant is of the nature indicated above, then no question of reading an implied term in the grant arises; nor is there any necessity of determining whether the petitioner has become a ruler in the sense in which his father was a ruler of the Vadia State. Whatever be the reason for which the petitioner has ceased to be a Bhayat, either by reason of the death of his elder brother or by reason of his becoming a ruler in the limited sense of the Constitution, he has ceased to be a Bhayat and the grant being given as Bhayat for 528 permanent enjoyment as Kapal Giras, it has come to an end. In that view of the matter the petitioner must be held to have failed to make out any infringement of his fundamental : 'right by reason of the notification dated May 23, 1952. The infringement which the petitioner complains of is deprivation of his property by State action and he bases his right on the terms of the grant. If the grant is not an absolute grant in the sense in which the petitioner contends, but is a grant which by its very nature contains a defeasance clause, then the petitioner cannot found his claim on any violation of his fundamental right. The petition is therefore dismissed with costs. Petition dismissed. [/INST] In the, Indian State of Vadia succession was governed by primogeniture. The Ruler in 1943 granted to his younger son, the petitioner, a village in the State in perpetuity and in heredity for enjoyment as 'Kapal Giras ' as ' Bhayat '. In 1947 the State of Vadia acceded to the Dominion of India and by subsequent constitutional developments it became merged in the State of Saurashtra. After the coming into force of the Constitution the elder son of the Ruler and then the Ruler died, and the petitioner was recognised as the Ruler. Thereupon the State of Saurashtra issued a notification resuming the grant as it was deemed to have lapsed and reverted to the former Vadia State. The petitioner contended that the grant was absolute and unconditional for 522 permanent enjoyment from generation to generation and the State could not resume it: Held, that the grant lapsed on the petitioner becoming the Ruler and the State could resume it. The grant was to the petitioner as a " Bhayat ", which word meant a cadet or the descendant of a younger branch of a Talukdar 's family where the estate followed the rule of primogeniture; as such if enured for his benefit as long as he remained a cadet. But when the grantee became the Ruler and ceased to be a " Bhayat ", the grant came to an end. </s>

<s>[INST] Summarize the following judgement: l Appeals Nos. 599 602 of 1962. Appeals from the judgment and order dated April 7, 8, 1960 of the Bombay High Court in Income Tax Reference Nos. 70 and 71 of 1956. R.J. Kolah, Ravinder Narain, J. B. Dadachanji and O. C. Mathur for the appellants (In all the Appeals). N.D. Karkhanis and R. N. Sachthey, for the respondent (In all the Appeals). The Judgment of the Court was delivered by DAS GUPTA J. The assessee is the appellant in each of these four appeals arising out of four references under section 66(1) of the Indian Income tax Act to the High Court of Bombay. In two of these appeals (C.A. Nos. 599 & 600 of 1962) the assessee who has filed the appeals is the Mahalaxmi Mills Ltd., in the other two (C.A. Nos. 601 and 602 of 1962) the Master Silk Mills Ltd., is the appellant assessee. Appeals Nos. 599 and 601 are in respect of the assessment year 1949 50; the other two are in respect of assessment year 1951 52. The controversy in all these cases is as regards the computation of written down value in calculating depreciation allowance. Both the assessees bad from before 1949 50 been carrying on business in Bhavnagar which was formerly an Indian State. In 1948 Bhavnagar along with other Indian States of Kathiawar formed themselves into a union by the name of United States 219 of Kathiawar. Later the name Kathiawar was changed to Saurashtra. On March 16, 1949, the Raj Pramukh of this newly formed State instituted the Saurashtra Income tax Ordinance, 1949. This Ordinance was in force for one year only the assessment year 1949 50. In assessing the profits of business by the two appellant companies for the year 1949 50 the Income tax Officer had therefore to proceed in accordance with the provisions of this Ordinance. For the purpose of calculating the depreciation allowance to which the assessee was entitled in computing the profits or gains of the business the written down value of the building, machinery and plants or furniture had first to be ascertained in accordance with section 13(5) of the Ordinance which ran thus: "Written down value" means: (a)in the case of assets acquired in the previous year, the actual cost to the assessees; (b)in the case of assets acquired before the previous year the actual cost to the assessee less all depreciation actually allowed to him under ' this Ordinance or allowed under any Act repealed hereby or which would have been allo wed to him if the Indian Income tax Act, 1922, was in force in the past." As the assets of both the assessees had been acquired before the previous year section 13(5) (b)applied. Reading the words in the last part of section 13(5) (b) as equivalentto which would have been allowable to him if theIndian Income tax Act, 1922, was in force" the income tax Officer, in ascertaining the written down value, deducted depreciation which would have been allowable under the Indian Income tax Act, 1922, if it had been in force and a claim had been made supported by prescribed particulars. This amount in the case of the Mahalaxmi Mills Ltd., the appellant in C.A. No. 599/62, was computed as Rs. 17,21,041 and in the case of the Master Silk Mills Ltd., the appellant in C.A. No. 601/62, was calculated as Rs. 2,02,500. The obvious result of deducting 220 this amount was that the written down value became considerably lower than what it would have been otherwise and so the depreciation allowance became less. The assessee 's contention that no deduction should have been made on the strength of the words which would have been allowed to him if the Indian Income tax Act, 1922, was in fact in force in the past" as in fact no claim was made or could be made for such allowance, was rejected by the Income tax Officer. The Appellate Assistant Commissioner as also the Income tax Tribunal, however, took a different view and held that this expression "or which would have been allowed to him if the Indian Income tax Act, 1922, was in force in the past" did not permit the Income tax Officer to make any deduction under this bead. The question of law which was referred to the High Court under section 66(1) of the Indian Income tax Act on the application of the Commissioner of Income tax has therefore been framed thus: "Whether on the above facts and circumstances of the case and upon a proper construction of the expression "or which would have been allowed to him if the Indian Income tax Act, 1922, was in force in the past" in Section 13(5)(b) of the Saurashtra Income tax Ordinance, 1949 the written down value has to be computed by deduction from the actual cost of depreciation allowance which was allowable under the Indian Income tax Act, 1922, even though not claimed?" In each of the case, the High court answered the question in the affirmative, but gave a certificate that it was a fit case for appeal to the Supreme Court under section 66(A) 2 of the Indian Income tax Act. The present appeals have been filed on the basis of these certificates. On behalf of the appellants Mr. Kolah has argued that the Ordinance has not used. the words "would have been allowable to him" nor the words" would have been allowed to him if a claim supported by prescribed particulars had been made", and there is no justification for reading these words into the 221 Ordinance. He has stressed the fact that in many cases where the Indian Income tax Act is in force the assessee might find it to his interest not to make a claim for the depreciation allowance and so no depreciation allowance would then be allowed to him. He concedes that it may be that the intention of the Rai Pramukh in using these words in the Ordinance was that the depreciation which could have been and would have been allowed if a proper claim had been made and substantiated, assuming the Indian Income tax Act, 1922, was in force in the past, should be deducted in ascertaining the written down value. file contends however that the words actually used are not sufficient to express and give effect to this intention. According to him, it was necessary in order to give effect to such an intention that the words "if a. claim had been made supported by proper Particulars" or at least the words "if a claim had been made" had been used in this clause. In our opinion, the words which according to Mr. Kolah were necessary to give effect to the above intention are implicit in the very language that has been used though they have not been expressly used. The authority which made the Ordinance should be credited with having appreciated the position that no depreciation would have been allowed even if the Indian Income tax Act, 1922, had been in force, if no claim supported by proper particulars had been made. When therefore the words "which would have been allowed to him" were used they were used to mean "which should have been allowed if proper claim had been made. For, it would be meaningless to speak of a depreciation allowance being allowed. without a claim. The words used, in our opinion, are apt and sufficient to express the intention that if the Income tax Act, 1922, which was not in force in the State before, had been in force, the depreciation that would have been allowed if proper claim had been made should be deducted in ascertaining the written down value. Mr. Kolah complains that on this construction the position of the assessee becomes worse than 222 if the Indian Income tax Act, 1922, had actually been in force in Saurashtra. If that had. been the case only the depreciation actually allowed in the earlier years would have been deductible and so, if no claim had been made and therefore no depreciation had been actually allowed, nothing would 'be deductible under this head. It does not stand to reason, argues Mr. Kolah, that the position of the assessee should be made worse by this fiction in section 13(5) (b) of the Ordinance than it would have been if the Act had in fact been in force. It is not unreasonable to think however that when making this Ordinance the Raj Pramukh thought that if the Indian Income tax Act, 1922, had been in force a proper claim would ordinarily have been made and whatever was allowable under that law would have been allowed as depreciation. The words used not only leave no doubt as regards the intention of the authority, but as we have already stated, are apt and sufficient to give effect to that intention. Mr. Kolah urged that it would cause undue hardship to the assessee, that without having actually availed of any depreciation he would be treated as if he bad done so. The words used do not however leave any doubt about the meaning and whether or not. any hardship has been caused is beside the point. Neither of the two cases cited by Mr. Kolah in support of his argument is of any assistance. In Commissioner of Income tax vs Kamala Mills Ltd.(1)the Calcutta High Court decided that the words "actually allowed" in section 10(5) (b) of the Indian Income tax Act as amended by the Income tax (Amendment) Act (XXIII of 1941) are unambiguous and connote the idea that the allowance was in fact given effect to. The Court rejected a contention of the Income tax authorities that the expression "actually allowed" means "allowable" under the law in force. In that case the Court had not to deal with any expression similar to "depreciation which would have been allowed if the Indian Income tax Act, 1922, was in (1) 223 force". In Rajaratna Naranbhai Mills Ltd., vs Commissioner of Income Tax(1) the Bombay High Court had to construe the words "the amount of depreciation applicable" and held that as the words were not "depreciation allowed" but "depreciation applicable" it was immaterial whether the assessee got any benefit of depreciation in any previous year. Here also, the Court was not called upon to consider the effect of the words under our present consideration, viz., the depreciation which would have been allowed if the Indian Income tax Act, 1922 had been in force. Thus, neither of these decisions has any application to the present appeals. For the reasons we have already given, we are of opinion that the High Court was right in answering the question referred in these cases out of which Civil Appeals Nos. 599 and 601 have arisen, in the affirmative. For the assessment years 1951 52 the controversy arises in a different way. In 1950, Saurashtra became a Part B State of the Union of India; by section 3 of the Indian Finance Act, 1950, the Indian Income tax Act was extended to it. In 1951 52 therefore the Indian Income tax Act, 1922, was in force in Saurashtra in which Bhavnagar was included. So, in calculating the written down value of assets acquired before the previous year the Income tax Officer had to apply the provisions of section 10(5) (b) of the Indian Income tax Act, 1922, which runs thus: "In the case of assets acquired before the previous year the actual cost to the assessee less all depreciation actually allowed to him under this Act, or any Act repealed thereby, or under executive orders issued when the Indian Income tax Act, 1886 (11 of 1886) was in force. " What the Income tax Officer did was to deduct not only the depreciation allowed in the assessment year 1950 51 under the Indian Income tax Act but also the depreciation allowed in the assessment year (1)[1950] 224 1949 50 under the Saurashtra Income tax Ordinance and the depreciation availed of in the previous years by the assessee under the Bhavnagar War Profits Act. There is or can be no dispute that the depreciation allowed in the assessment year 1950 51 was rightly deducted. There might have been a dispute ,about the depreciation allowed in 1949 50 under the Saurashtra Income tax Ordinance, but, as before the High Court the assessee conceded that this amount was also rightly deducted, and no controversy on this was raised either before the High Court or before us. The only dispute that remains is whether the depreciation availed of under the Bhavnagar War Profits. Act Rs. 5,93,285 in C.A. No. 600/62 by the Mahalaxmi Mills Ltd., and Rs. 1,26,707 in C.A. No. 602/62 by the Master Silk Mills Ltd. was deductible in law. The Appellate Assistant Commissioner agreed with the Income tax Officer that this was allowable. The Appellate Tribunal, however, took a different view, but on the prayer of the Commissioner of Income tax referred the following two questions to the High Court under section 66(1) of the Indian Income tax Act: "1. Whether on the above facts and circumstances of the case and on a correct interpretation of the relevant provisions of section 10(5) (b) read with the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, paragraph 2 and the Notification No. 19 (S.R.O.477) dated 9th March 1953 under Section 60A the written down value is to be computed after deducting depreciation allowance which could have been claimed tinder the Indian Income tax Act, 1922? 2. Whether the Notification No. 19 (section R.O. 477) dated 9th March 1953 is ultra vires of the powers of the Central Government?" The High Court has answered the second question in the affirmative and the correctness of that is no longer in dispute before us. 225 As regards the first question it appears to us that the matter in controversy between the parties which was actually considered by the High Court is not clearly brought out by the question as framed. Both parties agree that the real question on which the High Court 's view was sought and which has been actually considered by the High Court may be expressed thus: "Whether on the above facts and circumstances of the case and on a correct interpretation of the relevant provisions of Section 10 (5) (b) of the Indian Income tax Act, 1922 read with the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, paragraph 2 and the Notification No. 19 (S.R.O.477) dated the 9th March 1953 under section 60A the depreciation availed of by the assessees under the Bhavnagar War Profits Act was a deductible amount in computing the written down value of the assets. " It will be noticed that the validity of the Notification referred to in the question was the subjectmatter of the second question and the correctness of the High Court 's answer that it was invalid, was not questioned before us. What really remained to be considered by the High Court was the effect of paragraph 2 of the Taxation Laws (Part B States) (Removal at ' Difficulties) Order, 1950 to which we shall later refer as the "Removal of Difficulties Order". The High Court held that the provisions of this paragraph applied to these two cases of assessment for 1951 52 and under them the depreciation already availed of by the assessees under the Bhavnagar War Profits Act had to be deducted in computing the written down value. The correctness of this decision is challenged before us in C.A. Nos. 600 and 602 of 1962. The Removal of Difficulties Order was made by the Central Government on December 2, 1950, in exercise of the powers conferred by section 12 of the Finance Act, 1950, and Section 5 of the Opium and 226 and Revenue Laws (Extension of Application) Act, 1950. We are concerned in the present case only with section 12 of the Finance Act, 1950. That section runs thus: "If any difficulty arises in giving effect to the provisions of any of the Acts, rules or orders extended by section 3 or section II to any State or merged territory, the Central Government may, by order, make such provision or give such direction as appears to it to be necessary for removing the difficulty. " Section 3 of the Act had the effect of extending the Indian Income tax Act, 1922, to Part B States in the Union of India. It was not disputed that it was within the competence of the Central Government to make the Removal of Difficulties Order, 1950, if any difficulty arose in giving effect to the Indian Income tax Act in an area to which it so became extended. In making the order the Central Government has expressly said: "That certain difficulties had arisen in giving effect to the provisions of the Indian Income tax Act, 1922. . . . in Part B States" and so, the order was made. In Commissioner of Income tax Hyderabad vs Dewan Bahadur Ran; Gopal Mills Ltd., (1) this Court held that it was for the Central Government to determine if any difficulty of the nature indicated in section 12 bad arisen and then to make such order or give such direction as appeared to it to be necessary to remove the difficultly. It was in view of this decision that Mr. Kolah conceded that the order was validly made. He contends however that it is only when a difficulty is actually experienced in giving effect to the Indian Income tax Act that the provision of the Order can come into operation in a particular case. in the cases now under consideration, he argues, no such difficulty was actually experienced and so, paragraph 2 would have no application. In our opinion, the High Court rightly rejected this contention. The consequence of the Removal of Difficulties Order being validly made under section 12 (1) ; 227 of the Finance Act, 1950, is that paragraph 2 of the Order (as also the other paragraphs) have to be applied and no exception can be made. Paragraph 2 runs thus: "In making any assessment under the Indian, Income tax Act, 1922, all depreciation actually allowed under any laws or rules of a Part B State ' relating to income tax and super tax or any law relating to tax on profits of business shall be taken into account in computing the aggregate depreciation allowance referred to in sub clause (c) of the proviso to clause (iv) of sub section 2, and the written down value under clause (b) of sub section 5, of section 10, of the said Act. " These words require "all depreciation actually allowed under any laws or rules of a Part B State relating to income tax and super tax or any law relating to tax on profits of business" to be taken into account in computing the written down value under section 10 (5) (b) of the Indian Income tax Act, irrespective of whether any difficulty has or has not arisen in a particular case in giving effect to the provisions of the Indian Income tax Act. What is necessary in law is that before an order can be made by the Central Government under section 12, the Central Government must be satisfied that in certain cases difficulties have actually arisen in giving effect to the provisions of the Indian Income tax Act. Once on such satisfaction an order is made it is not again necessary for the application of the order in a particular case that difficulty must be found to have arisen. A separate Order under section 12 has not got to be made each for particular case. The order once made on the satisfaction of the Central Government that in some cases difficulties have arisen in giving effect to the provisions of the Indian Income tax Act the order operates under its own terms and so in giving effect to the order it is not necessary for the Income tax Officer to see first whether any difficulty has arisen. We are of opinion that whether any difficulty did actually arise in the cases now under considera 228 tion in applying the Indian Income tax Act, 1922, in this Part B State or not, paragraph 2 of the Removal of Difficulties Order must be applied according to its terms. It is therefore not necessary to examine whether any such difficulty did arise in these cases. This brings us to Mr. Kolab 's main contention that the Bhavnagar War Profits Act is not one of the laws depreciation allowed under which has to be deducted under paragraph 2 of this Order. He points out that the Bhavnagar War Profits Act bad ceased to be in force long before the Part B State the United States of Saurasbtra came into existence. It was therefore never a law of a Part B State and so depreciation which the assessee availed of under it will not come within the words "all depreciation actually allowed under any laws or rules of a Part B State relating to income tax and super tax. " This appears to be correct; but the question still remains whether the Bhavnagar War Profits Act is covered by the words "any law relating to tax on profits of business" in the paragraph. If it does, the depreciation which the assessee availed of under the Act has to be deducted in computing the written down value. Analysing the clause: "all depreciation actually allowed under any laws or rules of a Part B State relating to Income tax and super tax" or any law relating to tax on profits on business," we notice that the words "of a Part B State" were used to qualify the phrase "any laws or rules" in the first portion of the clause. Similar words were not used to qualify the words "any law" in the second part. According to Mr. Kolah these words "of a Part B State" were intended to be read also after the words "any law" in the latter portion and were omitted by way of ellipsis so that the sentence might not appear cumbersome. Ellipsis is a well known figure of speech by which words needed to complete the construction or sense are omitted to produce better rhythm or balance in the structure of the sentence. After careful consideration we have however come to the conclusion that the omission of the words 229 " of a Part B State" in this paragraph is not by way of ellipsis but a deliberate omission with the intention of including laws which could not be stated to be laws of a part B State but bad been laws in the same area at a time before they formed part of a Part B State. If the omission had been by way of ellipsis, as argued by Mr. Kolah, it would be reasonable to think that the words "any law relating to tax" would also have been omitted and this part of the paragraph would have read as "all depreciation actually allowed under any laws or rules of a Part B State relating to Income tax and super tax or tax on profits of business. " It also appears to us that if the intention had not been to include the depreciation allowed under a law which had been law in a component part of the Part B State before it became included in the Part B State, it was unnecessary to add the words " or any law relating to tax on profits of business. " For, "a law relating to tax on profits of business" is also a law relating to Income tax and, so, depreciation actually allowed under a law relating to tax on profits of business which was law of a Part B State would come within the first portion of the clause. It is worth noticing in this connection that in 1949 when by an Ordinance certain taxation laws were extended to Merged States the Central Government made under section 8 of that Ordinance 'The Taxation Laws (Merged States) (Removal of Difficulties) Order, 1949". Paragraph 2 of that Order merely said "all depreciation actually allowed under any laws or rules of a merged State relating to Income tax and super tax shall be taken into account. " Nothing was said in that Order as regards " any law relating to tax on profits of business." The Removal of Difficulties Order add the words "any law relating to tax on profits of business". This appears to have been done with the deliberate intention of including depreciation allowed under such laws, even though they were not laws "of a Part B State" but of a component State. We have come to the conclusion that the Bhavnagar War Profits Act is within the words "any law 230 relating to tax on profits of business" in paragraph 2 of the Removal of Difficulties Order. We hold that the High Court has rightly decided that the depreciation availed of by the assessee under the Bhavnagar War profits act was a deductible amount in computing the written down value of the assets. All the appeals are therefore dismissed with costs. There will be one set of hearing fee in all the appeals. Appeal dismissed. [/INST] The assessees were carrying on business in Bhavnagar which was formerly an Indian State. In 1948 Bhavnagar became part of the United State of Saurashtra and on March 16, 1949 the Saurashtra Income tax Ordinance was promulgated. For the purpose of calculating the depreciation allowance to which the assessees were entitled in computing the profits or gains of the business, the written down value of the building, machinery etc., had to be ascertained in accordance with the provisions of the Ordinance. Section 13(5) (b) of the Ordinance provided that "the written down value meant, in the case of assets acquired before the previous year, the actual cost to the assessee less all depreciation actually allowed to him under this Ordinance or. . which would have been allowed to him if the Indian Income tax (1) A.I.R , was in force in the past". For the assessment year 1949 50, as the assets of the assessees had been acquired before the previous year, the Income tax Officer, in ascertaining the written down value, deducted the depreciation which would have been allowable under the Indian Income tax Act, 1922, if it had been in force and a claim had been made supported by the prescribed particulars. The assessees claimed that on the wording of it section 13(5) (b) of the Ordinance did not enable the Income tax Officer to make the deduction, as, in fact, no claim was made or could be made for such allowance. For the assessment year 1951 52, as by that time Saurashtra had become a Part B State of the Union of India and the Indian Income tax Act, 1922 had been extended to it, the Income tax Officer, applied the provisions of section 10(5) (b) of the Indian Income tax Act read with para 2 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, while computing the written down value and deducted not only the depreciation allowed in the assessment year 1950 51 under the Indian Income tax Act and the depreciation allowed in the assessment year 1949 50 under the Saurashtra Income tax Ordinance but also the deprecia tion availed of in the previous years by the assessees under the Bhavnagar War Profits Act. Paragraph 2 of the Removal of Difficulties Order of 1950 provided: "In making any assessment under the Indian Income tax Act, 1922, all depreciation actually allowed under any laws or rules of a Part B State relating to income tax and super tax or any law relating to tax on profits of business shall be taken into account in computing the written down value under section 10(5) (b) of the Act". The assessees contended that it was only when a difficulty was actually experienced in giving effect to the Act that the provision of the Order could come into operation in a particular case and as no such difficulty was actually experienced the said provision had no application, and that, in any case, as the Bhavnagar War Profits Act was not a law of the Part B State, para 2 of the Order was not applicable. Held:(i) On the true construction of section 13(5)(b) of the Saurashtra Income tax Ordinance, the words "which would have been allowed to him" in that sub section meant "which should have been allowed if proper claim had been made", and that in ascertaining the written down value the depreciation that would have been allowed if proper claim had been made if the Indian Income tax Act, 1922, which was not in force in the State before, had been in force, should be deducted. Commissioner of Income tax vs Kamala Mills Ltd., and Rajaratna Naranbhai Mills Ltd. vs Commissioner of Income tax , distinguished. (ii)It was for the Central Government to determine if any difficulty had arisen in giving effect to the provisions of the Indian 218 income tax Act, 1922, and then to make such order as appeared to it necessary to remove the difficulty, that once the order was made it operated under its own terms, and that in giving effect to the order it was not necessary for the Income tax Officer to examine first in any particular case whether any difficulty had arisen. Accordingly, para 2 of that Taxation Laws (Part B States) (Removal of Difficulties Order, 1950, was applicable. Commissioner of Income tax vs Dewan Bahadur Ram Gopal Mills Ltd., [19611 2 S.C.R. 318, followed. (iii)The Bhavnagar War Profits Act was a law within the words " any law relating to tax on profits of business" in para 2 of the Removal of Difficulties Order of 1950. </s>

<s>[INST] Summarize the following judgement: Civil Appeal No. 158 of 1951. Appeal from the judgment and decree dated 24th March, 1948, of the High Court of Punjab at Simla (Teja Singh and Khosla JJ.) in Regular First Appeal No. 133 of 1945 arising out of judgment and decree dated 25th November, 1944, of the Court of the Senior Subordinate Judge, Kangra, at Dharmsala in Suit No. 86 of 1,943. Daryadatta Chawla for the appellant. Gurbachan Singh (Jindra Lat, with him) for the respond ent. 1952. May 16. The Judgment of the Court was delivered by FAZL ALl J. This is an appeal against the judgment and decree of the High Court of Punjab at Simla reversing the judgment and decree of the Senior Subordinate Judge of Kangra in a suit instituted by the appellant for a declara tion that he was the sole lawful heir of one Musammat Ram Piari, whom he alleged to be his wife, and as such was entitled to the properties left by her, and for possession of those properties. The suit was instituted against 2 persons, namely, Parvin Kumari, who was alleged to be the daughter of the plaintiff by Ram Piari, and Shrimati Raj Kumari, who were respectively impleaded as defendants Nos. 1 and 2. The case of the plaintiff as set out in the plaint was that he was married to Ram Piari, the daughter of an employ ee of Raj Kumari (defendant No. 2) about 22 years before the institution of the suit, that after marriage she lived with him at Hoshiarpur and gave birth to a daughter, Parvin Kumari (defendant No. 1), on the 4th March, 1929, and that Ram Piari died in 828 April, 1941, leaving both movable and immovable properties which she had acquired in her own name with the aid of his money and which had been taken possession of by Raj Kumari. He further alleged that he was a Rajput by caste belonging to tehsil Garhshankar in the district of Hoshiarpur, and was governed by custom in matters of succession, and, according to that custom, he, as the husband of the deceased Ram Piari, was entitled to the movable and immovable properties left by her to the exclusion of Parvin Kumari, her daughter. The suit was contested by both Parvin Kumari and Raj Kumari, and both of them denied that the appellant had been married to Ram Piari. Their case was that the proper ties in suit were acquired by Raj Kumari with her own money for Ram Piari, that the latter had made a will bequeathing them to her daughter, Parvin Kumari, that the appellant was not governed by custom, and that in any event the alleged custom could not apply to the personal and self . acquired property of Ram Piari, As regards 2 cars which were also included in the list of properties claimed in the plaint, the case of Raj Kumari was that they belonged to her and that the deceased was only a benamidar. The trial court decreed the plaintiff 's suit with re spect to all the properties excepting the 2 cars which were held to belong to Raj Kumari. The court held that Ram Piari was the legally married Wife of the appellant, that he was governed by customary law applicable to Rajputs of Hoshiar pur district in matters of succession, and that according to that customary law he was the preferential heir to the estate of Ram Piari. The court further held that the will of Ram Piari was invalid as she had no power under the customary law to make a will. Both the defendants appealed to the High Court against the judgment of the trial court, and the appeal was ulti mately allowed and the plaintiffs suit was dismissed. The High Court held that though there 829 was evidence of long cohabitation of the plaintiff and Ram Piari giving rise to a presumption of marriage, yet that presumption had been completely rebutted and the proper conclusion to be arrived at on the evidence on record was that the plaintiff had not been able to prove that Ram Piari was his lawfully wedded wife. As to custom, the findings of the High Court were as follows : (1) that the appellant belonged to an agricultural tribe of Hoshiarpur district and was therefore governed by the custom prevailing among the Rajputs of that district; (2) that there was no local or general custom allowing the plaintiff to succeed in preference to the daughter to the property left by Ram Piari which had been given to her by a stranger, namely, Raj Kumari, and (3) that the parties were governed by Hindu law under which Parvin Kumari being the daughter of Ram Piari was entitled to succeed to the properties left by the latter in preference to the plaintiff. Against the decision of the High Court, the plaintiff has now preferred this appeal, after obtaining a certificate from the High Court under sections 109 and 110 of the Code of Civil Procedure. The first question which arises in this appeal is wheth er the plaintiff has succeeded in proving that Ram Piari was his legally wedded wife. The plaintiff was admittedly em ployed as a copyist in the District Judge 's court at Hoshi arpur and was living in that town. His case was that he gained the acquaintance of Raj Kumari (defendant No. 2), a wealthy lady of Kangra district who owned a tea estate in tehsil Palampur and occasionally visited Hoshiarpur, and through her good offices was married to Ram Piari, who was the daughter of one Chandar Bit, an employee of Raj Kumari working in her tea estate. After marriage, Ram Piari lived with the plaintiff at Hoshiarpur as his lawfully wedded wife, and a daughter, Parvin Kumari, (also called Usha Rani) was born to 830 them on the 4th March, 1929. Raj Kumari had great attachment to wards Ram Piari and often used to pay visits to Hoshiar pur to meet her. In the year 1934 35 (no date is mentioned in the plaint; but this year is mentioned in the plain tiff 's evidence), Raj Kumari took Ram Piari from the plain tiff 's house with belongings of every description on the pretext of taking her out for recreation. Ram Piari did not like going round with Raj Kumari and though she wanted to come back to the plaintiff she had not the courage to diso bey Raj Kumari, and in fact Ram Piari and ' Raj Kumari in wardly hated one another during the last years of the for mer 's life. In the year 1941, Ram Piari died at Mayo Hospi tal at Lahore, leaving the properties in dispute which had been acquired by her by good management with the plaintiff 's own money. As against this version of the. plaintiff, the case of Raj Kumari was that Ram Piari had been enticed away by a motor driver sometime in 1921, that she returned to Holta estate after about 11 years with Parvin Kumari who was then about 3 years old, and after her return both she and her daughter remained with her (Raj Kumari) till Ram Piari died in 1941. Raj Kumari, being a widow, felt very lonely and so brought up Ram Piari as a companion and all the properties in dispute had been acquired by her with her own money for the benefit of Ram Piari Parvin Kumari had been educated and brought up at her expense, and it was entirely false that she and Ram Piari inwardly hated each other, the truth being that they liked and were attached to each other. The evidence adduced by the plaintiff to prove that Ram Piari was his lawfully wedded wife consists partly of the evidence of a number of witnesses and partly of circumstan tial evidence. The direct evidence of marriage is furnished by Babu Ram, P. W. 7, Anant Ram, P.W. 11, Babu, P.W. 12, and Asa Ram, P.W. 13. Babu Ram claims to be the family priest and alleges to have officiated as priest at the time of the plaintiff 's marriage, Anant Ram and Asa Ram are 831 jaswal Rajputs residing in village Bham, which is near the plaintiff 's village, Ajnoha, and Babu is a barber. These four persons have said that they accompanied the marriage party and that the marriage of the plaintiff with Ram Piari was celebrated in their presence. The evidence of the other witnesses and the circumstantial evidence upon which reli ance has been placed by the plaintiff have been summarized by the learned Subordinate Judge in his judgment in these words : "P. W. 5 Mukhi Ram is a Municipal Commissioner at Hoshi arpur. P.W. 4 Doctor Shadi Lal is a leading Medical Practi tioner of Hoshiarpur. P.W. 9 Lala Sham Lal and P.W. 10 Lala Har Narain have been co employees with the plaintiff in the same office; though these persons (except P.W. 9) have no social relations with the plaintiff and his family, yet they have been seeing Ram Piari living with plaintiff as his wife. She was proclaimed as such by the plaintiff and both of them were treated as husband and wife by the people of the Mohalla and by the brotherhood in the village of plain tiff. Exhibits P 18 and P 19 show that defendant No. 2 has been addressing Ram Piari, care of plaintiff in 1932 and has been receiving correspondence, care of the plaintiff which shows that she approved of the plaintiff 's alliance with Ram Piari . Paras Ram, a younger brother of Ram Piari, lived in the house of Gokal Chand and it is in evidence that he used to address the plaintiff as jija a common name for sister 's husband. From 1930 to 1934 Paras Ram read in the D.A.V. High School at Hoshiarpur and Exhibits P.W. 6/1 to 6 are copies of entries in the registers of the school regard ing applications which were given by Gokal Chand, plaintiff, for admission of his ward Paras Ram, son of Chandar Bit who was described as his sala (wife 's brother). P.W. 6 Lala Bishan Das, teacher, has filed these copies. His sister 's house was adjacent to the house of the plaintiff and he had occasions to see Ram Piari living and being treated as wife by the plaintiff during those years. " 108 832 Upon the evidence to which reference has been made, the trial court came.to the conclusion that Ram Piari was the legally married wife of the appellant. The learned judges of the High Court however found the evidence of the 4 witnesses who claimed to have been present at the marriage of the plaintiff to be quite uncon vincing, and they pointed out that the case of the plaintiff being that his marriage had been performed with great pomp and show, it was surprising that the evidence relating to it should be confined to 4 persons one of whom appeared to be a hired witness ' and the other 3 were interested persons. As to the evidence of the 4 persons who claim to have been present at the plaintiff 's marriage, we find ourselves in agreement with the view taken by the High Court. The evidence of the other witnesses undoubtedly establishes the fact that for some years the plaintiff and Ram Piari lived together as husband and wife and were treated as such, that Paras Ram, brother of Ram Piari, addressed the plaintiff as jija (a common name for sister 's husband), and that the plaintiff acted as Paras Ram 's guardian when the latter was admitted to D.A.V. School and was described as his brother in law in some of the entries in the school register. The learned Judges of the High Court considered that the evi dence of certain witnesses who deposed to some of the facts on which the lower court relied, did not strictly comply with the requirements of section 50 of the Indian Evidence Act,firstly because the witnesses had no special means of knowledge on the subject of relationship between the plain tiff and Ram Piari, and secondly because what section 50 made relevant was not mere opinion but opinion "expressed by conduct" of persons who as members of the family or other wise, had special means of knowledge. It seems to us that the question as to how far the evidence of those particular witnesses is relevant under section 50 is academic, because it is well settled that continuous cohabitation for a number of years may raise the presumption of marriage. In the present case, it seems clear that the plaintiff and Ram Piari 833 lived and were treated as husband and wife for a number of years, and, in the absence of any material pointing to the contrary conclusion a presumption might have been drawn that they were lawfully married. But the presumption which may be drawn from long cohabitation is rebuttable, and if there are circumstances which weaken or destroy that presumption, the court cannot ignore them. We agree with the learned Judges of the High Court that in the present case, such circumstances are not wanting, and their cumulative effect warrants the conclusion that the plaintiff has failed to prove the factum of his marriage with Ram Piari. In the first place, the plaintiff has not examined any of his near relations such as his brother, or collaterals living in Ajnoha, or any co villagers, whose presence at the marriage would have been far more probable than the presence of the witnesses examined by him. He has also not examined any of the witnesses residing in or round about Holta estate in spite of the fact that his own case is that the marriage was celebrated with great pomp and show. was suggested in the courts below that since defendant No. 2 is an influen tial person, no local witnesses would be available to sup port the plaintiff 's case, but the High Court has very fully dealt with this aspect and pointed out firstly that Raj Kumari had litigation with a number of persons belonging to Palampur and such persons would not be under her influence, and secondly that no gold reason has been shown why Raj Kumari, who is alleged to have brought about the marriage between the plaintiff and Ram Hari, should take a completely hostile attitude towards him. Then again, neither the parents nor any of the relations of Ram Piari have been examined to support the plaintiff. On the other hand, Ram Hari 's own mother, Ganga, has deposed that the former was never married to the plaintiff, and the statement made by Ram Piari in her will, which is a very valuable piece of evidence, is to the same effect. It is also in credible that in spite of the love which Ram Piari is said to have had for the plaintiff, she left him 834 and went away to live with Raj Kumari, and that during the long period when Ram Piari was away, the plaintiff should never have visited her or made enquiries about her and his alleged daughter, Parvin Kumari. This is all the more strange, since it is stated by the plaintiff that Ram Piari continued to love him and that she and Raj Kumari inwardly hated each other. Parvin Kumari says in her deposition that she had never seen her father and that when she reached the age of discretion she found herself living at Palampur. The conduct of the plaintiff in showing such complete indiffer ence to his wife and daughter as is disclosed in his evi dence is most unnatural, and no less unnatural is his con duct in instituting a suit to deprive her of properties which had come into her hands not by reason of anything done by him but as a result of the generosity shown towards her by a stranger. The plaintiff 's case that the properties in dispute were acquired by Ram Piari with the aid of his money is wholly untrue, and it has been rightly found by both the courts that they were acquired for her by Raj Kumari. The plaintiff 's witnesses have tried to exaggerate his means to support his case, but the truth appears to be that he had hardly any means of his own beyond the somewhat meagre salary which he used to draw as a court typist. Several of the witnesses including an Advocate and Ram Piari 's own mother have deposed that Ram Piari had eloped with a driver and had remained away from Holta estate for a number of years. Even the Subordinate Judge has not reject ed the story of elopement, and though there is no reliable evidence as to when and how she met the plaintiff, the possibility of her having lived with him for some years even though they were not legally married, cannot be ruled out. The plaintiff claims to be a Rajput of high caste, and it appears to us rather unusual that he should not marry in his own tribe but should take in marriage a Gurkha girl who was born of very poor parents and belonged to a place far away from where he himself lived. 835 The fact that Paras Ram lived with the plaintiff for some time and addressed the latter as jija, and that the plaintiff described himself as guardian and brother in law of Paras Ram, is as consistent with the defence version as with the plaintiff 'section If Paras Ram 's parents had been in affluent circumstances so as to be able to maintain and educate him, the case would have been different, but there is evidence to show that Chandar Bir was very poor and both his wife and daughter had to work as servants of Raj Kumari to earn their living. In our opinion, the conclusion arrived at by the High Court has not been shown by the plaintiff to be incorrect, and whatever the true facts may be, we are compelled to hold that in the present state of evidence the plaintiff has not succeeded in establishing that Ram Piari was his legally wedded wife. In the view we have taken, it is not necessary to deal with the question whether succession to the properties in dispute will be governed by customary law or by Hindu law, but since it was argued before us at very great length, we think that we might state the contentions of the parties and the difficulties which in our opinion arise in dealing with those contentions on the material before us. Before doing so, however, we wish to set out briefly certain gener al principles which we think should be kept in view in dealing with questions of customary law. They may be summa rized as follows : (1) It should be recognized that many of the agricul tural tribes in the Punjab are governed by a variety of customs, which depart from the ordinary rules of Hindu and Muhammadan law, in regard to inheritance and other matters mentioned in section 5 of ' the . (2) In spite of the above fact, there is no presumption that a particular person or class of persons is governed by custom, and a party who is alleged to be governed by custom ary law must prove that he is so governed and must also prove the existence of the 836 custom set up by him. See Daya Ram vs Sohel Singh and Others (1), Abdul Hussein Khan vs Bibi Song Dero C). (3) A custom, in order to be binding, must derive its force from the fact that by long usage it has obtained the force of law, but the English rule that "a custom, in order that it may be legal and binding, must have been used so long that the memory of man runneth not to the contrary" should not be strictly applied to Indian conditions. All that is necessary to prove is that the usage has been acted upon in practice for such a long period and with such invar iability as to show that it has, by common consent, been submitted to as the established governing rule of a particu lar locality. See Mr. Subhani vs Nawab(3). (4) A custom may be proved by general evidence as to its existence by members of the tribe or family who would natu rally be cognizant of its existence and its exercise without controversy, and such evidence may be safely acted on when it is supported by a public record of custom such as the Riwaj i am or Manual of Customary Law. See Abroad Khan vs Mt. Channi Bibi(4). (5) No statutory presumption attaches to the contents of a Riwaj i am or similar compilation, but being a public record prepared by a public officer in the discharge of his duties under Government rules, the statements to be found therein in support of custom are admissible to prove facts recited therein and will generally be regarded as a strong piece of evidence of the custom. The entries in the Riwaj i am may however be proved to be incorrect, and the quantum of evidence required for the purpose of rebutting them will vary with the circumstances of each case. The presumption of correctness attaching to a Riwaj i am may be rebutted, if it is shown that it affects adversely the rights of females or any other class of persons who had no opportunity of appearing before the revenue authorities. See Beg vs Allah Ditta (5), Saleh (1) 110 P.R. (1906) 390 at 410 (4) A.I.R. 1925 P.C. 267 at 271. (2) LR. 45 I.A. 10. (5) A.I.R. 1916 P.C. 129 at 131. (3) A.I.R. 1941 P.C. 21 at 32. 837 Mohammad vs Zawar Hussain(1);Mt. Subhani vs Nawab(2). (6) When the question of custom applicable to an agri culturist is raised, it is open *to a party who denies the application of custom to show that the person who claims to be governed by it has completely and permanently drifted away from agriculture and agricultural associations and settled for good in urban life and adopted trade, service, etc., as his principal occupation and means and source of livelihood, and does not follow other customs applicable to agriculturists. See Muhammad Hayat Khan vs Sandhe Khan and Others(3), Muzaffar Muhammad vs Imam Din(4). (7) The opinions expressed by the compiler of a Riwaj i am or Settlement Officer as a result of his intimate knowledge and investigation of the subject, are entitled to weight which will vary with the circumstances of each case. The only safe rule to be laid down with regard to the weight to be attached to the compiler 's remarks is that if they represent his personal opinion or bias and detract from the record of long standing custom, they will not be sufficient to displace the custom, but if they are the result of his inquiry and investigation as to the scope of the applicabil ity of the custom and any special sense in which the expo nents of the custom expressed themselves in regard to it, such remarks should be given due weight. See Narain Singh vs Mt. Basant Kaur(5), Mt. Chinto vs Thelur (6); Khedam Hussain vs Mohammad Hussain(7). Bearing these principles in mind, the difficulty which appears to us to beset the case of the plaintiff may be briefly stated as follows : The basis of the plaintiff 's case is that the custom by which he claims to be governed is a "zamindara custom" and he is governed by it by reason of his belonging to a family of agriculturists. From the evidence, however, it appears that he Had sold most, if not (1)A.I.R.1944 P.C.18. (5) A.I.R. 1935 Lab. 419 at 421, 422. (2) A.I.R. 1941 P.C. 21 at 25. (6) A.I.R. 1985 Lah. (5)55 P.R. (1906) 270 at 274. (7) A.I.R. 1941 Lah. 73 at 79 (4) I.L.R. , 125. 838 all, of his property in the village to which he belonged, that his ancestors were bankers or sahukars, that his father was a clerk of a lawyer practising in Hoshiarpur district and that he himself was a clerk in the District Judge 's court at Hoshiarpur and lived there, and there is hardly any evidence to show that any of his relations was dependent on agriculture or that he maintained connection with them. In our opinion. the witnesses of the plaintiff have tried to grossly exaggerate his pecuniary means and have not given a correct picture on which the answer to the question as to whether he would still be governed by the old custom would depend. Again, though according to the answer to question 11 in the Riwaj i am of Hoshiarpur district, the general custom governing the Rajputs of that district would seem to be that a marriage within the tribe only is lawful, the plaintiff did not marry a Rajput of his district but is said to have married a Gurkha woman, about whose caste and char acter the evidence is conflicting, and whose family was admittedly not governed by the "Riwaj iam" upon which the plaintiff relies. If both the husband and the wife are shown to belong to the same tribe and to be governed by the same custom, then the difficulty in deciding what would be the rule of succession on the death of the wife in regard to the wife 's self acquired property may not be very great. But even if it be assumed that Ram Piari was lawfully married to the plaintiff, the serious question to be decided would be whether succession to the property which Ram Piari received as gift from a stranger and which she owned in her own right, would be governed by the custom governing her hus band 's family and not her own. Such marriage as is said to have been contracted by the plaintiff being evidently an event of rare occurrence, the rule of succession set up by him cannot be said to derive its force from long usage. As we have pointed out, a custom in order to be binding must derive its force from the fact that by long usage it has obtained the force of law; and if an Occasion never arose to apply the rule of succession 839 invoked by the plaintiff, to the property held by a wife in her own right, the foundation on which custom grows would be wanting. When the matter is further probed, it appears that the plaintiff relies not only on custom but partly on custom 'and partly on the rule of Hindu law, namely, that the law which governs the husband will govern the wife also. Whether the latter rule can be extended to a case like the present is a question of some difficulty, on which, as at present advised, we would reserve our opinion. In the cir cumstances. we prefer to leave the issue of custom undecid ed. and base our decision on the sole ground, which by itself is sufficient to conclude the appeal, that the plain tiff 's marriage with Ram Piari has not been clearly estab lished. The appeal therefore fails and it is dismissed. but in the circumstances of the case and particularly since the appellant has appealed in forma pauperis, we direct that the parties will bear their own costs in all the courts. Appeal dismissed. [/INST] The plaintiff, a Rajput belonging to Tehsil Garhshankar in the District of Hoshiarpur (Punjab), instituted a suit against the defendant for the recovery of the properties which belonged to a deceased Gurkha woman R and which she had acquired by way of gift from a stranger, alleging that he was the lawfully wedded husband of Rand that accord ing to custom which applied to the parties with regard to succession he was entitled to succeed to the moveable and immoveable properties of R in preference to the defendant who was his daughter by R. Held, that even if it be assumed that R was lawfully married to the plaintiff, the question to be decided would be whether succession to property which R had received as a gilt from a stranger and which she owned in her own right would be governed by the custom governing her husband 's family and not her own. Such marriage as was alleged to have been contracted by the plaintiff being evidently an act of rare occurrence, the rule of succession set up by the plaintiff cannot be said to derive its force from long usage and the plaintiff was not, in any event, entitled to succeed. Their Lordships laid down the general principles which should be kept in view in dealing with questions of custom ary law as follows: (1) It should be recognised that many of the agricultur al tribes in the Punjab are governed by a variety of cus toms, which depart from the ordinary rules of Hindu and Muhammadan law, in regard to inheritance and other matters mentioned in section 5 of the . (2) In spite of the above fact, there is no presumption that a particular person or class of persons is governed by custom, and a party who is alleged to be governed by custom ary law must prove that he is so governed and must also prove the existence of the custom set up by him. (See Daya Ram vs Sohel Singh and Others, 110 P R. (1906) 390 at 410; Abdul Hussein Khan vs Bibi Song Dero, L.R. 45 I.A. 10). (3) A custom, in order to be binding, must derive its force from the fact that by long usage it has obtained the force of law, but the English rule that "a CUstOm, in order that it may be legal and binding, must have been used so long that the memory of man runneth not to the contrary" should not be strictly 826 applied to Indian conditions. All that is necessary to prove is that the usage has been acted upon in practice for such a long period and with such invariability as to show that it has, by common consent, been submitted to as the established governing rule of a particular locality. (See Mt. Subhani vs Nawab, A.I.R. 1941 P.C. 21 at 32). (4) A custom may be proved by general evidence as to its existence by members of the tube or family who would natur ally be cognizant of its existence and its exercise without controversy, and such evidence may be safely acted on when it is supported by a public record of custom such as the Riwaj i am or Manual of Customary Law. (See Abroad Khan vs Mt. Channi Bibi, A.I.R. 1925P.C. 267 at 271). (5) No statutory presumption attaches to the contents of a Riwaj i am or similar compilation, but being a public record prepared by a public officer in the discharge of his duties under Government rules, the statements to be found therein in support of custom are admissible to prove facts recited therein and will generally be regarded as a strong piece of evidence of the custom. The entries in the Riwaj i am may however be proved to be incorrect, and the quantum of evidence required for the purpose of rebutting them will vary with the circumstances each case. The presumption of correctness attaching to a Riwaj i am may be rebutted, if it is shown that it affects adversely the rights of females or any other class of persons who had no opportunity of appearing before the revenue authorities. (See Beg vs Allah Ditta, A.I.R. 1916 P.C. 129 at 131 ;Saleh Mohammad vs Zawar Hussain A.I.R. 1944 P.C. 18; Mt. Subhani vs Nawab, A.I.R. 1941 P.C. 21 at 25). (6)When the question of custom applicable to an agricultur ist is raised, it is open to a party who denies the applica tion custom to show that the person who claims to be gov erned by it has completely and permanently drifted away from agriculture and agricultural associations and settled for good in urban life and adopted trade, service, etc., as his principal occupation and means and source of livelihood, and does not follow other customs applicable to agriculturists. (See Muhammad Hayat Khan vs Sandhe Khan and Others, 55 P.R. (1906) 270 at 274; Muzaffar Muhammad vs Imam Din, I.L.R. (1928) 9 Lab. 120, 125). (7) The opinions expressed by the compiler of a Riwaj i am or Settlement Officer as a result of his intimate knowledge and investigation of the subject, are entitled to weight which will vary with the circumstances of each case. The only safe rule to be laid down with regard to the weight to be attached to the compiler 's remarks is that if they repre sent his personal opinion or bias and detract from the record of long standing custom, they will not be sufficient to displace the custom, but if they are the result of his inquiry and investigation as to the scope of the 827 applicability of the custom and any special sense in which the exponents of the custom expressed themselves in regard to it, such remarks should be given due weight. (See Narain Singh vs Mr. Basant Kaur A.I.R. 1935 Lah. 419 at 421,422; Mr. Chinto vs Thelur, A.I.R. 1935 Lah. 98S; Khedam Hussain vs Mohammad Hussain, A.I.R. 1941 Lah. 73 at 79). </s>

<s>[INST] Summarize the following judgement: Civil Appeal No. 389 of 1959. Appeal from the judgment and order dated October 25, 1957, of the Bombay High Court at Nagpur in Misc. Petition No. 476 of 1956. A. section Bobde and Ganpat Rai, for the appellant. H. J. Umrigar K. L. Hathi and R. H. Dhebar, for respondent No. 2. 1960. April 7. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. This appeal arises from a writ petition filed by the appellant, Madhya Pradesh Mineral Industry Association, in which the appellant challenged the validity of the notification issued by the Madhya Pradesh State Government on March 30, 1952, under section 5(2) of the (11 of 1948) (hereinafter called the Act). The High Court of Bombay at Nagpur dismissed the appellant 's petition but has granted the appellant 61 478 a certificate of fitness under article 133(1)(c) of the Constitution. It is with the said certificate that the present appeal has been brought to this Court. The appellant is a non profit making company limited by guarantee and registered under section 26 of the Indian Companies Act, 1913. It has been formed with the object of protecting and promoting the interest of its members shareholders who are engaged in the mining industry by all legitimate and constitutional means. It appears that under article 258 of the Constitution the President of India by Notification No. S.R.O. 2052 published on December 11, 1951, entrusted Governments of . certain States including Madhya Pradesh with their consent the functions of the Central Government under the Act in so far as such functions relate to the fixation of minimum rates of wages in respect of employees employed in stone breaking or in stone crushing operations carried on in mines situated within their respective States. Pursuant to the said delegation the Madhya Pradesh Government issued the impugned notification purporting to act under section 5(2) of the Act. This notification has prescribed the minimum rates of wages for employment in stone breaking or in stone crushing operations carried on in mines. The rates thus prescribed were inclusive of dearness allowance or compensatory cost of living allowance. The Regional Labour Commissioner (Central), Nagpur, Respondent 1, wrote to the appellant for the first time on June 20, 1956, stating that the State of Madhya Pradesh, Respondent 2, had considered the question whether the Act was applicable to the manganese mining industry and had come to the conclusion that it was so applicable; that is why the appellant 's members were asked by respondent 1 to implement the Act within a fortnight from the receipt of his letter. The appellant made several representations to respondent 1 urging that the Act was inapplicable to the manganese mining industry; nevertheless respondent 1 threatened large scale prosecution of the appellant 's members on the basis that the Act applied to them, and its provisions bad been contravened by them. The appellant was thus driven to file the 479 present petition because it alleged that it had no alter native remedy, at any rate equally speedy and efficacious, and so it was urged on its behalf that the High Court should issue a writ quashing the impugned notification as ultra vires. In its petition the appellant had also alleged that the notification issued by the President of India under article 258 cannot fasten upon the manganese mining industry the character of employment in stone breaking or stone crushing and if that was the object of the said notification it was invalid. The respondents disputed the correctness of the appellant 's contention that the impugned notification is invalid. It was urged on their behalf that any industry wherein the workers are employed in operations involving stone breaking or stone crushing is governed by the Act. In their written statement they described the details about the mining operations and contended that the mining of manganese ore mainly consists of development work or the removal of over burden, breaking of big mineral stones like boulder ore or bed ore to manageable sizes, dressing of ores to remove impurities, etc. According to the respondents, having regard to the nature of the manganese mining industry the Act applied to the stone breaking or stone crushing operations connected with it. The High Court has accepted the respondent 's plea and has rejected the appellant 's prayer that a writ should be issued in its favour prohibiting the respondents from enforcing the provisions of the Act against its members. Unfortunately, on two important points the High Court has misdirected itself. It appears to have assumed that the impugned notification has added an entry in the Schedule to the Act, and has observed that as a result of the said addition the provisions of the Act came to be applied to the employment in stone breaking or in stone crushing operations carried on in the mines. The High Court has made this observation in setting out the appellant 's case and it is on the basis of this observation that the High Court has proceeded to examine the validity of the appellant 's contention. It is, however, clear that the impugned notification does not purport to add any 480 item in Schedule I and that was also not the case of the appellant. Thus the assumption made by the High Court on, both the points is, with respect, erroneous. In its judgment the High Court has also observed that the vires of the impugned notification, though challenged in the petition, was not challenged before the High Court and so the only question that remained for its decision was one of interpretation of the relevant provisions of the entry introduced by the notification. This statement again does not appear to be entirely correct. The principal, if not the sole, ground on which the appellant sought for a writ from the High Court was that the impugned notification was ultra vires section 5(2) of the Act. If the validity of the said notification had been conceded by the appellant its writ petition would have immediately become ineffective because if the notification is valid then the question of construction of the material entry can present no difficulty whatever. In terms the stonebreaking and stone crushing operations carried on in mines are specified and the appellant could not possibly urge that the relevant activities carried on by its members did not attract the said description. In view of the fact that the High Court has made a clear statement to the effect that the vires of the impugned notification had not been challenged before it we were at first not inclined to allow Mr. Bobde, for the appellant, to argue that point before us; however, after hearing him and after considering the rest of the record we are satisfied that the statement made in the judgment is not accurate. In the petition filed by the appellant the validity of two notifications was challenged; the first was the notification issued by the President of India under article 258 of the Constitution, and the second is the impugned notification under which proceedings are threatened against the appellant 's members. It is clear from the record that the appellant did not and could not have pressed its case against the validity of the first notification, but it did press its objection against the validity of the second notification ; and that would be clear from the certificate of fitness granted by the High Court itself. The 481 certificate says that the questions raised by the appellant relate to the applicability of the provisions of the Act to persons employed in stone breaking or stone crushing operations carried on at various manganese mines. Now it is clear that this question can arise only if the appellant seeks to challenge the validity of the notification, not otherwise. It is because the employees in question are, according to the appellant, not employed under any of the items prescribed in the Schedule to the Act that the impugned notification is invalid; in that context the questions posed in the certificate would arise. If the notification itself is valid then the solution to the question posed can hardly be regarded as fit for a certificate under article 133(1)(c) of the Constitution. Besides, the appellant 's contention against the validity of the impugned notification has been set out in its application for certificate before the High Court and the same has been expressly repeated in the statement of case filed by the appellant before us. We must, therefore, hold that the High Court was in error in assuming that the vires of the impugned notification had been conceded by the appellant before it. This is another serious infirmity in the judgment of the High Court. As a consequence of the two infirmities in the judgment the approach which the High Court adopted in dealing with the matter has been considerably influenced. It has no doubt considered the meaning of the word " employment and " stone " in connection with the expression stone breaking " and " stone crushing". Even this part of the discussion ' in the judgment seems to assume that the impugned notification has really added one item to the list in the Schedule. It has apparently not been realised that if the present notification purported to make an addition to the items in the Schedule there would have been no controversy between the parties. According to the High Court employment should be given its wider sense and should be held to mean " the action of employing or the state of being employed ". The High Court has also held that the word " stone " should be taken to mean " a piece of rock or hard mineral sub. stance (other than metal) of a small and moderate 482 size". The interpretation of the two words adopted by the High Court has been taken by it from the Shorter Oxford Dictionary, and having assigned to the two words the two respective meanings just stated the High Court has held that stone breaking and stone crushing operations carried on in mines would attract the provisions of the Act. Before dealing with the vires of the impugned notification it would be material to examine the relevant provisions of the Act. The Act has been passed to provide for minimum rates of wages in certain employments. Section 2(b) defines the appropriate government as meaning, inter alia, (1) in relation to any scheduled employment carried on by or under the authority of the Central Government or in relation to a mine the Central Government, and (2) in relation to any other scheduled employment the State Government. It would thus appear that the Legislature intended that the provisions of the Act may in due course be extended to mines and so it has prescribed that in respect thereof the Central Government would be the appropriate Government. Section 2(e) defines an employer as meaning, inter alia, any person who employs whether directly or through another person or whether on behalf of himself or any other person one or more employees in any scheduled employment in respect of which minimum rates of wages have been fixed under this Act. Section 2(g) defines scheduled employment as meaning an employment specified in the Schedule or any process or branch of work forming part of such employment. Section 3 authorises the appropriate government to fix minimum rates of wages in regard to the employments specified in Parts I and II of the Schedule respectively and prescribes the procedure in that behalf. Section 5 lays down the procedure for the fixing and revising of minimum wages. Section 5(2) provides that after following the procedure prescribed by the said section the appropriate government shall by notification in the official gazette fix, or as the case may be, revise the minimum rates of wages in respect of each scheduled employment, and unless such notification otherwise provides, it shall come into force on the expiry 483 of three months from the date of its issue. There is only one more section which needs to be mentioned; that is section 27 which empowers the appropriate government to add to either part of the Schedule any employment in respect of which it is of opinion that minimum rates of wages should be fixed under this Act after following the procedure prescribed by it, and the section adds that after the notification is thus issued the Schedule shall, in its application to the State, be deemed to be amended accordingly. It is thus clear that the whole scheme of the Act is intended to work in regard to the employments specified in Part I and Part II of the Schedule and the Legislature has wisely left it to the appropriate government to decide to what employments the Act should be extended and in what areas. Section 5(2) empowers the appropriate government to fix or revise minimum wages in regard to any of the employments in the Schedule to which the Act applies. This power can be exercised only if the employment in question is specified in the Schedule and the Act is therefore applicable to it. Section 27 confers a wider power on the appropriate government, and in exercise of the said power the appropriate government may add an employment to the Schedule. The nature and extent of the said two powers are thus quite separate and distinct and there can be no doubt that what can be done by the appropriate government in exercise of its power under section 27 cannot be done by it in exercise of its power under section 5(2). It is significant that the impugned notification has been issued by the Madhya Pradesh Government by virtue of the powers under section 5(2) of the Act which have been delegated to it by the President in exercise of his authority under article 258 of the Con stitution. The main argument urged by Mr. Bobde is that the impugned notification is ultra vires section 5(2) because stone breaking and stone crushing operations in manganese mines do not full under any of the items in Part I of the Schedule. The dispute thus raised really lies within a very narrow compass: Does employment in stone breaking or in stone crushing operations carried on in mines specified in the impugned notification amount to employment in stone breaking 484 Schedule to the Act? It is common ground that the employment in question does not fall under any other item in Part I. It is true that the provisions of the are intended to achieve the object of doing social justice to workmen employed in the scheduled employments by prescribing minimum rates of wages for them, and so in construing the said provisions the court should adopt what is sometimes described as a beneficent rule of construction. If the relevant words are capable of two constructions preference may be given to that construction which helps to sustain the validity of the impugned notification; but it is obvious that an occasion for showing preference for one construction rather than the other can legitimately arise only when two constructions are reasonably possible, not otherwise. Now, does employment in stone breaking or stone crushing as specified in of the Schedule on a reasonable construction include stone breaking or stone crushing operations in a mining industry ? In answering this question it would be necessary to bear in mind that the scheduled em ployment under section 2(g) covers the employment specified in the Schedule or any process or branch of work forming part of such employment. It is conceded before us by both the parties that the provisions of the Act apply to the scheduled employments in all branches of their work which may be incidental to the main scheduled employments. The impugned notification, on the other hand, applies only to the stone breaking or stone crushing operations carried on in mines and it does not cover other operations connected with the manganese mining works. This position is inconsistent with the scheme of the Schedule and that is a point which prima facie is in favour of the appellant 's contention. It is, however, urged by Mr. Umrigar, for the respondents, that the word " employment " as well as the word " stone " used in item 8 should receive their widest denotation, and that, according to him, would include stone breaking or stone crushing operations 485 carried on in mines. It is conceded that stone breaking or stone crushing operations have to be carried on in regard to the work in manganese mines. Stones are beaten to small pieces by means of a hammer and they are washed and passed through sieves of different meshes before manganese is obtained. When the Schedule refers to the employment of stone breaking or stone crushing does it refer to the incidental stone breaking or stone crushing in connection with manganese mine operations ? In a chemical or a geological sense stones may include manganese and that is one of the meanings given to the word in the Shorter Oxford Dictionary. On the other hand, the word " stone " as popularly understood in ordinary parlance particularly when it is coupled with the word " breaking " or " crushing " would exclude manganese. When we speak of stone breaking or stone crushing normally we refer to stone in the sense of "piece of rock" and that would exclude manganese. Employment in stone breaking or stone crushing in this sense would refer to quarry operations. Thus whether or not the word " stone " should be understood in the wider sense or in a limited sense must depend upon the context in which the word is used. The intention which is reasonably deducible from the context would decide whether it is the expanded meaning or the limited meaning of the word that can be accepted. The same consideration could apply to the denotation of the word " employment We have carefully considered all the items in the Schedule and have taken into account the general beneficent policy of the Act but we are unable to hold that when item 8 refers to stone breaking or stone crushing it is intended to cover the breaking or the crushing of stones incidental to the manganese mining operations. The context seems to exclude the application of the wider meaning of the word " stone " used in item 8. Therefore, our conclusion is that the stone breaking or stone crushing operations which are carried on in mines are not included in item 8 in the Schedule; and if that be the true position the impugned notification issued by the State Government under section 5(2) is ultra vires, 62 486 The High Court has referred to the fact that in describing some items in Part I the word " any " has been used whereas the said word has not been used in item 8. For instance, item I refers to employment in any woollen carpet making or shawl weaving establishment, whereas item 8 merely refers to employment in stone breaking and stone crushing. The absence of the word " any " according to the High Court indicates that the word "stone" as well as the word " employment" had been used in their wide denotation. We are not satisfied that this conclusion is right,. In fact it appears to us that if the word " any" had been used in item 8 it might have helped to make its scope wider; that is to say, if item 8 bad read as " employment in any ,stone breaking or any stone crushing operations " it might have tended to make its scope wider. As it stands the entry is, in our opinion, confined to Stone breaking and stone crushing employment in quarries and not in mines. As we have already pointed out a notification under section 5(2) can be issued only in respect of employments which fall under the Schedule. We would, however, like to add that this conclusion merely helps to emphasise the fact that the appropriate government may, and can, act under section 27 of the Act if it is desired that the employment in mines or in connection with any operations incidental to mining should be governed by the provisions of the Act. Section 27 empowers the appropriate government to add items to the Schedule and it would be open to the appropriate government to adopt such a course if it is intended to achieve the object with which the impugned notification has been issued. One more point still remains to be considered. Mr. Umrigar attempted to argue that the appellant cannot challenge the vires of the impugned notification without challenging the vires of the delegation of authority effected by the notification issued by the President of India under article 258 of the Constitution. The argument is that if the notification of the President is valid then the State Government has merely exercised its authority as a delegate and its validity cannot be challenged in isolation from the principal 487 or parent notification which conferred the authority on the State Government. This contention has obviously not been raised before the High Court. Besides, if the State Government purports to take action on the strength of the impugned notification which is invalid it would be open to the appellant to resist the threatened action on the ground that the notification is invalid and no action can be validly taken against the appellant for the contravention of the provisions of the Act. As this Court has observed in A. Thangal Kunju Musaliar vs M. Venkitachalam Potti (1), " there can be no agency in the matter of a commission of a wrong. The wrong doer would certainly be liable to be dealt with as a party directly responsible for his wrongful action", and it was added that " on the analogy of a civil wrong the tortfeasor could certainly not protect himself against the liability on the ground of having committed the tort under the directions of his principal, and so the agent could in no event exculpate himself from the liability for the wrongful act done by him and if he is amenable to the jurisdiction of the High Court the High Court could certainly issue an appropriate writ against him under article 226". By parity of reasoning it would follow that if the impugned notification issued by the State Government is ultra vires it cannot fall back upon the President 's notification in support of the plea that the action which it proposes to take against the appellant would nevertheless be justified. We must accordingly hold that it is open to the appellant to claim a writ against the respondents oven without challenging the vires of the Presidential notification. In the result we hold that the impugned notification issued by respondent 2 is invalid and cannot be enforced. The appeal is accordingly allowed, the order passed by the High Court set aside and the application for a writ made by the appellant allowed with costs throughout. Appeal allowed. (1) ; ,1211. [/INST] The Madhya Pradesh Government issued a notification under section 5 (2) of the (II of 1948), prescribing 477 the minimum rates of wages for employment in stone breaking and stone crushing operations carried on in mines in exercise of the authority delegated to it by the President by a notification under article 258 of the Constitution. The appellant company, engaged in manganese mining industry, challenged the validity of the said notification by a writ petition filed in the High Court and its case was that the said notification was ultra vires section 5(2) of the Act. The High Court found against the appellant and rejected the petition. The question for determination in the appeal, therefore, was whether item 8 in Part 1 of the Schedule to the Act, properly construed, included stone breaking and stone crushing operations in a mining industry: Held, that item 8 in Part 1 of the Schedule to the , was not intended to cover the breaking or crushing of stones incidental to mining operations and must be limited to stone breaking and stone crushing employment in quarries. The impugned notification was, therefore, ultra vires section 5(2) of the Act and could not be enforced. It would, however, be open to the Government, if it so desired, to achieve the object it had in view in issuing the impugned notification by adding appropriate items to the Schedule in exercise of its power under section 27 of the Act : Held, further, that it was not necessary for the appellant to challenge the vires of the Presidential notification in the first instance in order that he might impugn the notification in question. A. Thangal Kunju Musaliar vs M. Venkitachalam Potti, ; , referred to, </s>

<s>[INST] Summarize the following judgement: : Civil Appeals Nos. 249 & 250 of 1958. Appeals by special leave from the judgment and order dated March 7, 1956, of the Bombay High Court in I.T.R. Nos. 52 and 53 of 1955. K. N. Rajagopal Sastri and D. Gupta, for the appellant (in both the appeals). N. A. Palkhivala, section N. Andley and J. B. Dadachanji, for the respondent (in both the appeals). April 14. The Judgment of the Court was delivered by section K. DAS, J. These two appeals with special leave have been heard together. They arise out of similar facts and the question of law arising therefrom is the same. The short facts are these. One Balkrishna Purushottam Purani died on November 11, 1947. He left behind him three widows and two daughters. The three widows were named Indira, Ramluxmi and Prabhuluxmi. These widows as legal heirs inherited the estate of the deceased, which consisted of immovable properties situate in Ahmedabad, shares in Joint Stock Companies, money lying in deposit, and share in a registered firm. For the two assessment years 1950 51 and 1951 52 (the corresponding account years being the Sambat years 2005 and 2006) the Incometax Officer issued notices to the legal heirs of Balkrishna Purushottam Purani. Pursuant to those notices, returns were filed under the heading, " Legal heirs of Balkrishhna Purushottam Purani ", in one case 515 and in the name of the 'estate of Balkrishna in the other; the status was shown as " individual " in one case and " association of persons " in the other. They were signed by Indira, one of the three widows. For the assessment year 1950 51 the total income was shown as under Rs. Property. 11,011 Share from registered firm. 4,071 Dividends. 51,796 Interest. 22,343 Ground rent. 125 Total. . 69,346 For the assessment year 1951 52, the total income was shown as Rs. Property . 10,879 Share from registered firm. 460 Dividends. 80,426 Interest on deposits. . 536 Ground rent. 125 Total. . 92,426 For both years the Income tax Officer took the status of the assessee as an " association of persons " and on that footing made two assessment orders. There was an appear to the Appellate Assistant Commissioner, and two of the points taken before him were(a) that the three widows ought to have been assessed separately and not as an " association of persons ", and (b) that in any event, the income from property ought to have been assessed separately in the hands of the three widows by reason of the provisions in section 9(3) of the Income tax Act, 1922. The Appellate Assistant Commissioner rejected point (a) but accepted point (b). Then, there was a further appeal to the 516 Income tax Appellate Tribunal, Bombay. The Tribunal held that the entire estate of deceased Balkrishna Purushottam Purani was inherited and possessed by the three widows as joint tenants and its income was liable to be assessed in their hands in the status of an association of persons. The Tribunal further held that the Appellate Assistant Commissioner was wrong in holding that the shares of the three widows were definite and determinable and section 9(3) was applicable. The assessee then moved the Tribunal to refer certain questions of law which arose out of its orders to the High Court of Bombay. The Tribunal referred four such questions, but we are now concerned with only one of them, viz., question No. 3 which was in the following terms: " (3) Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the assessment made on the three widows of Balkrishna Purushottam Purani in the status of an association of persons is legal and valid in law ? " Two references were made to the High Court in respect of the orders passed for two assessment years and they gave rise to Income tax References Nos. 52 and 53 of 1955. The leading judgment was given in T. T. It. 52 of 1955. The High Court held that the Tribunal was in error in coming to the conclusion that the three widows could be assessed in the status of an association of persons with regard to the income which they earned as heirs of their deceased husband. Therefore, it answered question No. 3 in the negative. The department represented by the Commissioner of Income tax, Bombay, then applied to this Court and obtained special leave to appeal from the judgment and orders of the High Court of Bombay in the two References. These two appeals have been filed in pursuance of the special leave granted by this Court. The appellant is the Commissioner of Income tax, Bombay, and the assessee is the respondent. The argument on behalf of the appellant is that the High Court was in error when it said that " what is required before an association of persons can be liable to tax is not that they should receive income but that 517 they should earn or help to earn income by reason of their association, and if the case of the Department stops short at mere receipt of income, then the Department must fail in bringing home the liability to tax of individuals as an association of persons. " It is submitted that the High Court did not, in the statement quoted above, lay down the correct test for determining what is an " association of persons " for the purposes of the Income tax Act. Before we go on to discuss the argument presented on behalf of the appellant, it is necessary to clear the ground by stating what is the position of co widows in Mitakshara succession and what are the findings arrived at by the Tribunal. The position of co widows is well settled. They succeed as co heirs to the estate of their deceased husband and take as joint tenants with rights of survivorship and equal beneficial enjoyment ; they are entitled as between themselves to an equal share of the income. Though they take as joint tenants, no one of them has a right to enforce an absolute partition of the estate against the others so as to destroy their right of survivorship. But they are entitled to obtain a partition of separate portions of the property so that each may enjoy her equal share of the income accruing therefrom. The Tribunal found that the widows in this case did not exercise their right to separate possession and enjoyment and " they chose to manage the property jointly, each acting for herself and the others and receiving the income of the property which they were entitled to enjoy in equal shares. " Learned counsel for the appellant has emphasised before us the aforesaid finding of the Tribunal and has contended that on the finding of joint management, the widows fulfilled even the test laid down by the High Court and constituted an an "association of persons" for taxing purposes. The High Court, however, rightly pointed out that the only property which the widows could have managed jointly was the immovable property which fetched an income of about Rs. 11,000, and as to that property, the Appellate Assistant Commissioner had held that section 9 (3) applied. There was no appeal by the Department against that finding and it was not 68 518 open to the Tribunal to go behind it. Even on merits the Tribunal was wrong in thinking that the respective shares of the widows were not definite and ascertainable. They had an equal share in the income, viz., one third each, and the provisions of section 9 (3) clearly applied in respect of the immovable property. With regard to the shares, dividends and interest on deposits there was no finding of any act of joint management. Indeed, the main item consists of the dividends and it is difficult to understand what act of management the widows performed in respect thereof which produced or helped to produce income. On the contrary, the statement of the case shows that the assessee filed lists of shares, copies whereof are marked annexure C and form part of the case, which showed that the shares stood separately in the name of each one of the three widows and this was not denied by the Department. We now come to the main question in this appeal. What constitutes an " association of persons " within the meaning of the Income tax Act ? It has been repeatedly pointed out that the Act does not define what constitutes an association of persons, which under section 3 of the Act is an entity or unit of assessment. Previous to the year 1924, the words of section 3 were " individual, company, firm and Hindu undivided family." By the Indian Income tax Amendment Act of 1924 (Act XI of 1924) the words " individual, Hindu undivided family, company, firm and other association of individuals " were substituted for the former words. By the Income tax Amendment Act of 1939 (Act VII of 1939) the section was again amended and it then said: " Where any Act of the Central Legislature enacts that income tax shall be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year of every individual, Hindu undivided family, company and local authority, and of every firm and other association of persons or the partners of the firm or members of the association individually. " 519 By the same Amending Act (Act VII of 1939) sub section (3) of section 9 was also added. Now, section 3 imposes a tax " in respect of the total income. . . . of every individual, Hindu un divided family, company and local authority, and of every firm and other association of persons or the partners of the firm or members of the association individually. " In the absence of any definition as to what constitutes an association of persons, we must construe the words in their plain ordinary meaning and we must also bear in mind that the words occur in a section which imposes a tax on the total income of each one of the units of assessment mentioned therein including an association of persons. The meaning to be assigned to the words must take colour from the context in which they occur. A number of decisions have been cited at the bar bearing on the question, and our attention has been drawn to the controversy as to whether the words " association of individuals " which occurred previously in the section should be read ejusdem generis with the word immediately preceding, viz., firm or with all the other groups of persons mentioned in the section. Into that controversy it is unnecessary to enter in the present case. Nor do we pause to consider the widely differing characteristics of the three other associations mentioned in the section, viz., Hindu undivided family, a company and a firm, and whether in view of the amendments made in 1939 the words in question can be read ejusdem generis with Hindu undivided family or company. It is enough for our purpose to refer to three decisions: In re: B. N. Elias and Others (1); Commissioner of Income tax, Bombay vs Laxmidas Devidas and Another("); and In re: Dwarakanath Harishchandra Pitale and Another(3); In In re: B. N. Elias and Others (1) Derbyshire, C. J., rightly pointed out that the word " associate " means, according to the Oxford dictionary, " to join in common purpose, or to join in an action." Therefore, an association of persons must be OD e in which two or more persons join in a common purpose or common action, and as the words occur in (1) (2) (3) 520 a section which imposes a tax on income, the association must be one the object of which is to produce income, profits or gains. This was the view expressed by Beaumont, C. J., in Commissioner of Income tax, Bombay vs Laxmidas Devidas and Another (1) at page 589 and also in Re: Dwarakanath Harishchandra Pitale and Another (2). In re: B. N. Elias (3 ) Costello, J., put the test in more force full language. He said "It may well be that the intention of the legislature was to hit combinations of individuals who were engaged together in some joint enterprise but did not in law constitute partnership When we find that there is a combination of persons formed for the promotion of a joint enterprise then I think no difficulty arises in the way of saying that these persons did constitute an association We think that the aforesaid decisions correctly lay down the crucial test for determining what is an association of persons within the meaning of section 3 of the Income tax Act, and they have been accepted and followed in a number of later decisions of different High Courts to all of which it is unnecessary to call attention. It is, however, necessary to add some words of caution here. There is no formula of universal application as to what facts, how many of them and of what nature, are necessary to come to a conclusion that there is an association of persons within the meaning of section 3; it must depend on the particular facts and circumstances of each case as to whether the conclusion can be drawn or not. Learned counsel for the appellant has suggested that having regard to sections 3 and 4 of the Indian Income tax Act, the real test is the existence of a common source of income in which two or more persons are interested as owner or otherwise and it is immaterial whether their shares are specific and definite or whether there is any scheme of management or not. He has submitted that if the persons so interested come to an arrangement, express or tacit, by which they divide the income at a point of time before it emanates from the source, then the association ceases; otherwise it continues to be an association. (1) (2) (3) 521 We have indicated above what is the crucial test in determining an association of persons within the meaning of section 3, and we are of the view that the test suggested by learned counsel for the appellant are neither conclusive nor determinative of the question before us. Coming back to the facts found by the Tribunal, there is no finding that the three widows have combined in a joint enterprise to produce income. The only finding is that they have not exercised their right to separate enjoyment, and except for receiving the dividends and interest jointly, it has been found that they have done no act which has helped to produce income in respect of the shares and deposits. On these findings it cannot be held that the three widows had the status of an association of persons within the meaning of section 3 of the Indian Income Tax Act. The High Court correctly answered question No. 3 in the negative. Accordingly, the appeals fail and are dismissed with costs. There will be one set of hearing fee in the two appeals. Appeals dismissed. [/INST] A Hindu governed by the Mitakshara School of Hindu Law died leaving three widows as his legal heirs. The widows took the estate as joint tenants and did not exercise their right to separate possession and enjoyment. The main income was from dividends and from immovable property. The latter was held under section 9(3) of the Income tax Act not to be assessable as income 514 of an association of persons. The question was whether the three widows could be assessed as an association of persons in respect of the rest of the income: Held, that the three widows did not have the status of an association of persons within the meaning of section 3 of the Income tax Act. An association of persons is one in which two or more persons join in a common purpose or common action and, for purposes of the income tax law, one of its objects must be to produce income, profits or gains. It must be a combination of persons formed for the promotion of a joint enterprise for producing income. In the present case except for receiving the dividends and interest jointly the widows had done no act which helped to produce the income. In Ye : B. N. Elias, , Commissioner of Income tax, Bombay vs Laxmidas Devidas, and Re. Dwayakanath Harishchandra, , approved. </s>

<s>[INST] Summarize the following judgement: ION: Criminal Appeal No. 55 of 1955. Appeal by special leave from the judgment and order dated August 26, 1957, of the Bombay High Court in Criminal Appeal No. 1208 of 1955, arising out of the judgment and order dated March 31, 1955, of the Sessions Judge, Baroda, in Criminal Appeal No. 13 of 1955. M. K Ramamurthi and J. B. Dadachanji, for the appellant. R.Ganapathy Iyer and R. H. Dhebar, for the respondent. April 19. The Judgment of the Court was delivered by SARKAR, J. The appellant and two others were convicted by a Magistrate under section 420 read with sections 511 and 34 of the Indian Penal Code and each was sentenced to rigorous imprisonment for 12 months and a fine of Rs. 500 and in default of payment, a further period of imprisonment for four months. On appeal the accused persons were acquitted by a Sessions Judge. The State then appealed to the High Court at Bombay and the High Court set aside the order of acquittal and restored the order passed by the learned Magistrate. Accused No. 1 alone has appealed against the order of the High Court to this Court. The three accused persons approached one Ramanlal and the third accused told Ramanlal that accused 555 Nos. 1 and 2 were proficient in duplicating currency notes and they were prepared to do it for Ranlanal who should take advantage of the offer. The third accused then asked Ranianlal to think over the matter and promised to come again. Ramanlal later mentioned this matter to his friend Champaklal, the complainant, and the two decided to trap the accused persons disbelieving their (professed) power to du plicate notes. The third accused again came as promised and met Rtamanlal and Champaklal. Champaklal promised to find currency notes for Rs. 20,000 for duplicating and a date was fixed when it was to be done. Thereafter Ramanlal and Champaklal informed the police. The police hid themselves in the house of Ramanlal where it had been fixed with the accused that the duplicating would be done. The three accused arrived duly. The second accused spread bottles, blank papers, etc., on a carpet and the first accused, the appellant, asked Champaklal to produce the currency notes. Champaklal who was carrying a bag supposed to contain the promised currency notes worth Rs. 20,000, took out two currency notes of Rs. 100 each from the bag and gave them to the appellant. As soon as the appellant bad taken the money, Champaklal gave the pre arranged signal and the police came into the room and arrested all the accused persons. They were thereafter prosecuted for the offence of an attempt to cheat upon a complaint lodged by Champaklal with the result already mentioned. Three points were argued by the learned advocate for the appellant. First it was said that the charge was for an attempt to cheat Champaklal but there was no evidence to ,how that any representation bad been made by anyone to Champaklal. The Courts below however found that such a representation had been made and we think that the finding is clearly supported by the evidence on record. The next point taken was that there had been no attempt to commit the offence of cheating but only a preparation to commit that offence which was not punishable. It seems to us clear that an attempt to commit the offence bad actually been made. A fals representation had been made and a sum of Rs. 200 556 had been obtained from Champaklal. These clearly are acts done towards the commission of the offence within the meaning of section 511 of the Indian Penal Code. In fact the making of the false representation is one of the ingredients for an offence of cheating under section 420 of the Indian Penal Code. So also the delivery of property is another of such ingredients. Both these ingredients took place in this case and the accused brought them about. Therefore it cannot be said that the accused had only made a preparation and not an attempt to commit the offence. The last point argued was that there was no attempt to cheat because the complainant had not been deceived. It is true that the complainant bad not been taken in. He had never believed that the accused could actually duplicate currency notes. He feigned belief only in order to trap the accused. That however clearly makes no difference so far as an attempt to cheat is concerned. The accused had attempted to cheat the complainant. That they had failed in their attempt is irrelevant in considering whether they had committed the offence of attempting to cheat. This view of the matter has been accepted in the High Courts uniformally. In The Government of Bengal vs Umesh Chunder Mitter (1) it was observed that " A man may attempt to cheat, although the person he attempts to cheat is forewarned, and is therefore not cheated. " This is clearly the right view. This appeal is entirely without merit and it is dismissed. Appeal dismissed. I.L.R. ,116. [/INST] The offence of attempting to cheat may be committed even though the person attempted to be cheated does not believe in the representations made to him and is not misled by them but only feigned belief in order to trap the offender. Where misrepresentations had been made and money obtained from the persons sought to be cheated by the misrepresenta tions, there is an attempt to cheat and not merely a preparation for committing that offence. </s>

<s>[INST] Summarize the following judgement: : Civil Appeal No. 257/59. Appeal by special leave from the judgment and order dated April 18, 1958, of the Calcutta High Court in Civil Rule No. 1487 of 1955, arising out of the judgment and order dated February 12, 1955, of the Munsif Second Court, Alipore, in Misc. Case No. 342/ 1949. Nalini Banjan Bhattacharjee and R. R. Biswa,3, for the appellants. D.N. Mukherjee, for the respondents. 592 1960. April 20. The Judgment of the 'Court was delivered by DAS GUPTA, J. This appeal is by the landlords who having obtained a decree for ejectment against the tenants, Deorajin Debi and her minor son, on February 10, 1949, have not yet been able to get possession in execution thereof Soon after the decree was made the Calcutta Thika Tenancy Act, 1949, came on the statute book. On March 3, 1949, the tenants made an application under Or. 9, r. 13 of the Code of Civil Procedure for having the decree set aside. That application was dismissed on July 16, 1949. On September 9, 1949, an application was made by the tenants under section 28 of the Calcutta Thika Tenancy Act alleging that they were Thika tenants and praying that the decree made against them on February 2, 1949, may be rescinded. This Application was resisted by the landlords, the decree holders, and on Novem er 12, 19519 the Munsif holding that the applicants were not Thika Tenants within the meaning of the Thika Tenancy Act and accordingly the decree was not liable to be rescinded dismissed the application. Against this order the tenants moved the High Court of Calcutta under section 115 of the Code of Civil Procedure. By the time the Revision Application was taken up for hearing the Calcutta Thika Tenancy Ordinance had come into force on October 21, 1952, and the Calcutta Thika Tenancy (Amendment) Act, 1953, had come into force on March 14, 1953. The 1953 Amendment Act inter alia omitted section 28 of the original Act. In order to decide therefore whether the application under section 28 was still alive the High Court had to consider the effect of section 1 (2) of the Calcutta Thika Tenancy Amendment Act which provided that the provisions of the Calcutta Thika Tenancy Act. 1949 as amended by the 1953 Act shall apply and be deemed to have always applied to proceedings pending on the date of the commencement of the Calcutta Thika Tenancy Ordinance of 1952. The learned judges of the High Court held that section 1(2) of the Thika Tenancy Amendment Act did not affect the operation of section 28 of the original Act to these proceedings and disposed of these applications on the 593 basis that section 28 was applicable. The High Court also held that in view of the amended definition of the term " Thika tenant " and the evidence which had been recorded by the Munsif the petitioners must be found to be Thika tenants. Accordingly they allowed the application for revision, set aside the order of the Munsif by which he had dismissed the application under section 28 and remanded the case to the Munsif 's Court for disposal in accordance with law. After remand the Munsif rescinded the decree. The landlords ' application under section 115 of the Code of Civil Procedure against the Munsif 's order was rejected by the High Court. The attempt of the landlords to raise before the High Court again the question of the applicability of section 28 was unsuccessful, the learned judge who heard the matter in the High Court being of opinion that this question as between these parties was res judicata. Against this order of the High Court the present appeal has been preferred by the landlords on the strength of special leave granted by this Court on November 16,1956. On behalf of the appellant it is urged that on a proper interpretation of section 1 (2) of the Calcutta Thika Tenancy Amendment Act, 1953, it should be held that section 28 of the original Act cannot, after the amending Act came into force, be applied to any proceedings pending oil the date of the commencement of the Calcutta Thika Tenancy Ordinance, 1952. This question has been considered by us in Mahadeolal Kano dia vs The Administrator General of West Bengal (1) in which judgment has been delivered to day, wherein we have decided that section 28 of the original Act is not applicable to such proceedings. If therefore this argument is available to the appellant the appeal will succeed as in that view of the law no relief under section 28 of the original Act is available to the tenants and the order made by the Munsif on December 12, 1955, rescinding the decree for ejectment must be set aside. The respondent contends however that the appellant is barred by the principle of res judicata from raising before this Court the question whether on the (1) [196O] 3 S.C.R. 578. 594 enactment of the Thika Tenancy Amendment Act, 1953, section 28 of the original Act survives or not in respect of proceedings pending on the date of the commencement of the Thika Tenancy Ordinance, 1952. He has relied in support of this contention on the decision of the Privy Council in Ram Kripal Shukul vs Muss Umat Rup Kuari (1). The principle of res judicata is based on the need of giving a finality to judicial decisions. What it says is that once a res is judicata, it shall not be adjudged again. Primarily it applies as between past litigation and future litigation. When a matter whether on a question of fact or on a question of law has been decided between two parties in one suit or proceeding and the decision is final, either because no appeal was taken to a higher court or because the appeal was dismissed, or no appeal lies, neither party will be allowed in a future suit or proceeding between the same parties to canvass the matter again. This principle of res judicata is embodied in relation to suits in section 11 of the Code of Civil Procedure; but even where section 11 does not apply, the principle of res judicata has been applied by courts for the purpose of achieving finality in litigation. The result of this is that the original court as well as any higher court must in any future litigation proceed on the basis that the previous decision was correct. The principle of res judicata applies also as between two stages in the same litigation to this extent that a court, whether the trial court or a higher court having at an earlier stage decided a matter in one way will not allow the parties to re agitate the matter again at a subsequent stage of the same proceedings. Does this however mean that because at an earlier stage of the litigation a court has decided an interlocutory matter in one way and no appeal has been taken therefrom or no appeal did lie, a higher court cannot at a later stage of the same litigation consider the matter again ? Dealing with this question almost a century ago the Privy Council in Maharaja Moheshur Singh vs The Bengal Government (5) held that it is open to the appellate court which had not earlier considered the matter to investigate in an appeal from the final decision (1) I.A 37. (2) [1859]7 M.I.A. 283. 595 grievances of a party in respect of an interlocutory order. That case referred to the question of assessment of revenue on lands. On December 6, 1841, judgment was pronounced by the Special Commissioner to the effect that 3,513 beeghas of land alone were assessable, and that the collections made by the Government on the other lands should be restored to the possessors. This judgment was affirmed by another Special Commissioner on March 8, 1842. On September 21, 1847, a petition for review on behalf of the Government of Bengal was presented to another Special Commissioner. That petition for review was granted. After due hearing the judgment of March 8, 1842, was reversed. The question arose before the Privy Council whether the review had been granted in conformity with the Regulations existing at that time with respect to the granting a review. It was urged however on behalf of the Government of Bengal that it was then too late to impugn the regularity of the proceeding to grant the review and that if the appellant deemed himself aggrieved by it, he ought to have appealed at the time, and that it was too late to do so after a decision had been pronounced against him. Dealing with this objection the Privy Council observed : " We are of opinion that this objection cannot be sustained. We are not aware of any law or regulation prevailing in India which renders it imperative upon the suitor to appeal from every interlocutory order by which be may conceive himself aggrieved, under the penalty, if he does not so do, of forfeiting for ever the benefit of the consideration of the appellate court. No authority or precedent has been cited in support of such a proposition, and we cannot conceive that anything would be more detrimental to the expeditious administration of justice than the establishment of a rule which would impose upon the suitor the necessity of so appealing; whereby on the one hand he might be harassed with endless expense and delay, and on the other inflict upon his opponent similar calamities, We believe there have been 596 very many cases before this Tribunal in which their Lordships have deemed it to be their duty to correct erroneous interlocutory orders, though not brought under their consideration until the whole cause had been decided, and brought hither by appeal for adjudication. " This view was re affirmed by the Privy Council in Forbes vs Ameeroonissa Begum (1). A decree for possession with mesne profits having been made against the defendant by the Civil Judge, Purneeha, on December 18, 1834, the defendant appealed to the Sadar Diwani Adalat. That Court by its order dated January 22, 1857, held that the Civil Judge had been wrong in decreeing the mesne profits and further that the plaintiff was bound before he was entitled to have his conditional sale made absolute to render certain accounts. Accordingly the Sadar Diwani Adalat remanded the case in order that the judge might call upon the plaintiff for his accounts and then decide the case in the light of the remarks made by the Adalat. After the case went back the plaintiff produced accounts but the judge held that they were insufficient and dismissed the suit. An appeal was taken against that decree of dismissal to the Sadar Diwani Adalat but the appeal was unsuccessful; a later prayer for review was also rejected. On behalf of the appellant it was contended before the Privy Council that the Sadar Diwani Adalat was wrong in requiring the appellant to produce his accounts. In order however that this question could be raised, it was necessary to decide, whether if the Sadar Diwani Adalat was wrong in remanding the case for re trial, the appellant was bound by that decree he not having appealed therefrom. Their Lordships of the Privy Council pointed out that the order of remand was an interlocutory order and that it did not purport to dispose of the case and consequently upon the principle laid down by the Privy Council in Maharaja Moheshur Singh vs The Gavernment of Bengal (supra), the appellant was not precluded from insisting that the remand for the production of the accounts was erroneous or that the cause should have been decided in (1) [1865] 10 M.I.A. 340. 597 his favour, notwithstanding the non production of the accounts. Their Lordships also mentioned the fact that the learned judges of the Sadar Court also treated the latter point as still open to the appellant, when considering his appeal against the decree of dismissal passed after remand. The principle laid down in Moheshur Singh 's Case (supra) was also acted upon by the Privy Council in Sheonath vs Ramnath(1). That litigation was commenced Ramnath by a suit in the Court of the Civil Judge, Lucknow, seeking a general account and partition. The plaint mentioned the execution of some releases described as (Farighkuttees) but alleged that there had been no partition as between the parties as stated in them, that the partition was intended to take effect after the settlement of accounts when the Farigh kuttees were to have been registered and that in the meantime they bad remained with the appellant as incomplete instruments. The Trial Judge held however that the Farighkuttees had been executed on the footing of actual partition and division of the joint property, that these had been executed without taint of fraud and dismissed the suit. An appeal was taken to the Judicial Commissioner he affirmed the Civil Judge 's decision on all points adding however that " there was one account between the parties still unadjusted, viz., the division of the outstandings which was left open at the time of the division of the assets. " In this view he remanded the case to the Judge to decide what sum should be awarded to the plaintiff in satisfaction of all claims on this account and directed that if possible a decision should be obtained from the arbitrators previously appointed by the parties. After remand the Civil Judge referred the question involved to certain arbitrators but the defendant did not acquiesce inthis order and petitioned the Judicial Commissioner against it, stating that he objected to the arbitrators to whom the Civil Judge had referred the case, and requesting that other arbitrators might be appointed. This objection was overruled by the Judicial Commissioner, and the request was rejected. Ultimately two separate decrees (1) [1865] 10 M.I.A. 413. 78 598 were made by the Civil Judge, one on the 4th September as regards part of the claim and the other on 22nd December as regards another part. On appeal both these decrees were affirmed by the Judicial Commissioner. It was against this decision of the Judicial Commissioner that the defendant appealed to the Privy Council. Two points were raised before the Privy Council. The first was that it was not competent to the Judicial Commissioner except with the consent of both parties, to vary, as he did vary, by his order of May 15, 1862, the rights of the parties under the Farighkuttees and to impose on the defendant an obligation of purchasing the plaintiff 's interests in the outstandings on a rough estimate of its value; the other point raised was that the nomination of the particular arbitrator by the Judge without the consent and against the repeated protests of the appellant was altogether irregular, and that the award was therefore not binding upon him. It has to be noticed that the defendant had not appealed against the Judicial Commissioner 's order of May 15, 1862, nor had he appealed against the Judicial Commissioner 's later order rejecting the defendant 's petition that he objected to the arbitrators to whom the Civil Judge bad referred the case and that other arbitrators might be selected by the parties. In spite of these facts the Privy Council held that both these points were open to the appellant observing: " That both points are open to the appellant, although he has in terms appealed only against the final decision of the Civil Judge and the confirmation of it by the Judicial Commissioner, is, we think, established by the case of Moheshur Singh vs The Government of Bengal. The appeal is, in effect, to set aside an Award which the appellant contends is not binding upon him. And in order to do this he was not bound to appeal against every interlocutory order which was a step in the procedure that led up to the Award. " There can be little doubt about the salutary effect of the rule as laid down in the above cases on the administration of justice. The very fact that in future litigation it will not be open to either of the 599 parties to challenge the correctness of the decision on a matter finally decided in a past litigation makes it, important that in the earlier litigation the decision must be final in the strict sense of the term. When a court has decided the matter it is certainly final as regards that court. Should it always be treated as final in later stages of the proceeding in a higher court which had not considered it at all merely on the ground that no appeal lay or no appeal was preferred? As was pointed out by the Privy Council in Moheshur Singh 's Case (supra) the effect of the rule that at every stage of the litigation a decision not appealed from must be held to be finally decided even in respect of the superior courts, will put on every litigant against whom an interlocutory order is decided, the burden of running to the higher courts for redress of the grievances, even though it may very well be that though the interlocutory order is against him, the final order will be in his favour and so it may not be necessary for him to go to the appeal court at all. Apart from the inevitable delay in the progress of the litigation that such a rule would cause, the interests of the other party to the litigation would also generally suffer by such repeated recourse to the higher courts in respect of every interlocutory order alleged to have been wrongly made. It is in recognition of the importance of preventing this mischief that the Legislature included in the Code of Civil Procedure from the very beginning a provision that in an appeal from a decree it will be open to a party to challenge the correctness of any interlocutory order which had not been appealed from but which has affected the decision of the case. In the Code of 1859 section 363 after laying down that no appeal shall lie from any order passed in the course of a suit and relating thereto prior to a decree provided " but if the decree be appealed against, any error, defect or irregularity in any such order affecting the merits of the case or the jurisdiction of the court may be set forth as a ground of objection in the memorandum of appeal. " When the Code of 1877 made provisions in Chapter 43 for appeal against certain orders, section 591 thereof 600 provided " Except as provided in this chapter, no appeal shall lie from any order passed by any court on the exercise of its original or appellate jurisdiction " and went on to say " but if any decree be appealed against any error, defect or irregularity in any such order affecting the decision of the case, may be set forth as a ground of objection in the memorandum of appeal. " The position remained the same in the Code of 1882. The present Code in its 105th section uses practically the same phraseology except that the word ,,any such order" has been substituted by ,any order" and an additional provision has been made in the second sub section in respect of orders of remand. The expression " such order " in section 591 gave rise to a contention in some cases before the Privy Council that section 591 applied to non appealable orders only. This contention was overruled by the Privy Council and that view was adopted by the Legislature by changing the words " any such order " to " any order ". As regards the orders of remand it had been held that under section 591 of the Code a party aggrieved by an order of remand could object to its validity in an appeal against the final decree, though he might have appealed against the order under section 588 and had not done so. The second sub section of section 105 precludes an appellant from taking, on an appeal from the final decree, any objection that might have been urged by way of appeal from an order of remand. It is clear therefore that an interlocutory order which had not been appealed from either because no appeal lay or even though an appeal lay an appeal was not taken could be challenged in an appeal from the final decree or order. A special provision was made as regards orders of remand and that was to the effect that if an appeal lay and still the appeal was not taken the correctness of the order of remand could not later be challenged in an appeal from the final decision. If however an appeal did not lie from the order of remand the correctness thereof could be challenged by an appeal from the final decision as in the cases of other interlocutory orders. The second sub section did not apply to the Privy Council and can have no application to appeals to the Supreme Court, one reason 601 the supreme Court against an order of remand. There appears to be no reason therefore why the appellant should be precluded from raising before this Court the question about the applicability of section 28 merely because he had not appealed from the High Court 's order of remand, taking the view against him that the section was applicable. We are unable to agree with the learned Advocate that the decision of the Privy Council in Ram Kirpal Shukul 's Case (1) affects this matter at all. That was a case as regards execution proceedings. The decree in question bad been made in 1862. In execution proceedings the question arose whether or not, the decree awarded mesne profits. The District Judge, Mr. Probyn,decided this question in the affirmative. In 1879 the decree had not yet been executed and execution proceedings were pending. The question was raised again before the Executing Court whether the decree allowed mesne profits. That court held that he was bound by the decision of Mr. Probyn that the decree did allow mesne profits and ordered the execution to proceed on that basis. His order was affirmed on appeal. The judgment debtor then appealed to the High Court. Before that court it was urged on behalf of the judgment debtor that the law of res judicata did not apply to proceeding in execution of a decree. The Full Bench of the High Court to which the Division Bench referred this question answered the question in the negative and then the Division Bench ordered, being of opinion that Mr. Probyn 's view was wrong, that the appeal be decreed and execution of decree in respect of mesne profits be disallowed. The Privy Council after stating that Mr. Probyn 's order was an interlocutory judgment stressed the fact it had never been reversed or set aside, and said that the fact that second appeal did not lie to the High Court was of no consequence, for if no such appeal did lie the judgment was final and if an appeal did lie and none was preferred the judgment was equally binding upon the parties. In the opinion of the Judicial Committee the learned Subordinate Judge and the Judge were bound by the order of Mr. Probyn in proceedings (1) [1884] L.R. 11 I.A. 37. 602 between the same parties on the same judgment, the High Court was bound by it and so were their Lordships in adjudicating between the same parties. Ram Kirpal Shukul 's Case (supra) was followed by the Council in Bani Ram vs Nanhu Mal(1) which also related Privy to an order made in execution proceedings. It was followed again by the Privy Council itself in Hook vs Administrator General of Bengal (2). The facts in Hook 's Case were that in an administration suit the High Court had held that certain conditions of a will had not been fulfilled and there was not an intestacy as to the surplus income, rejecting a contention on behalf of the next of kin that the gift over was invalid, as creating a perpetuity; the decree provided that the determination of the destination of the income or corpus of the fund upon the death of the annuitant should be deferred until after that event. In further proceedings in the suit after the annuitant 's death the next of kin contended that under the reservation in the decree they were entitled again to raise the contention that the gift over was invalid. The Privy Council held that the validity of the gift over was res judicata. It will be noticed that in all these three cases, viz., Ram Kirpal Shukul 's Case, Bani Ram 's Case and Hook 's Case, the previous decision which was found to be res judicata was part of a decree. Therefore though in form the later proceeding in which the question was sought to be raised again was a continuation of the previous proceeding, it was in substance, an independent subsequent proceeding. The decision of a dispute as regards execution it is hardly necessary to mention was a decree under the Code of Civil Procedure and so in Ram Kirpal 's Case and Bani Ram 's Case, such a decision being a decree really terminated the previous proceedings. The fact therefore that the Privy Council in Ram Kirpal Shukul 's Case described Mr. Probyn 's order as an " interlocutory judgment " does not justify the learned counsel 's contention that all kinds of interlocutory judgments not appealed from become res judicata. Interlocutory judgments which have the force of a decree must be distinguished from other interlocutory judgments which are a step (1) (1884) L.R. 11 I.A. 181. (2) (1921) L.R. 48 I.A. 187. 603 towards the decision of the dispute between parties by way of a decree or a final order. Moheshur Singh ',s Case, Forbes ' Case and Sheonath 's Case dealt with interlocutory judgments which did not terminate the proceedings and led up to a decree or final order. Ram Kirpal Shukul 's Case, Bani Ram 's Case and Hook 's Case deal with judgments which though called interlocutory, had, in effect, terminated the previous proceedings. These cases are therefore of no assistance to the learned counsel for the respondent in his argument that the order of remand made by the High Court not having been appealed from to this Court the correctness of that order cannot be challenged now. In our opinion the order of remand was an interlocutory judgment which did not terminate the proceedings and so the correctness thereof can be challenged in an appeal from the final order. We hold therefore that the appellant is not precluded from raising before us the question that section 28 of the original Thika Tenancy Act was not available to the tenants after the Thika Tenancy Amendment Act came into force. On this question we have already decided, as already indicated above, in Mahadeolal Kanodia 's Case(1) that section 28 after its omission by the Amending Act is not available in respect of proceedings pending on the date of the commencement of the Thika Tenancy Ordinance of 1952. We hold therefore that the view taken by the High Court in this matter was wrong and that the Munsif acted without jurisdiction in rescinding the ejectment decree. We accordingly allow the appeal, set aside the order of the High Court appealed from and also the order of the Munsif dated February 12, 1955, by which he rescinded the ejectment decree. In consideration of the fact that the state of the law as regards the applicability of section 28 was uncertain we order that the parties will bear their own costs in this Court. Appeal allowed. [/INST] The Calcutta Thika Tenancy Act, 1949, came into force before the appellant landlords could obtain possession in execution of their decree for ejectment against the respondent tenants. Failing to get the decree set aside under 0. 9, r. 13 of the Code of Civil Procedure the tenants made an application under section 28 of the said Act praying that the decree against them be set aside on the ground that they were Thika tenants, but the Munsif holding that they were not Thika tenants dismissed their application. While an application by the tenants under section 115 of the Code of Civil Procedure against the Munsif 's order was pending in the High Court the Calcutta Thika Tenancy Ordinance, 1952, and the Calcutta Thika Tenancy (Amendment) Act, 1953, came into force. The 1053 Amendment Act omitted section 28 of the Original Act. The High Court after considering the effect of section 1(2) of the Amendment Act held that it did not affect the operation of section 28 of the Original Act which was applicable to these proceedings. The High Court also found that the tenants were Thika Tenants 591 and remanded the case to the Munsif for disposal according to law whereupon the Munsif rescinded the decree. On an application by the landlord under section 115 of the Code of Civil Procedure against the order of the Munsif rescinding the decree the High Court held that the question of applicability of section 28 was res judicata between the parties and could not be raised again before the High Court and dismissed the landlord 's application. On appeal by the landlord by special leave the respondent contended that the appellant was barred by the principle of res judicata from raising before this Court the question whether on the enact ment of the Thika Tenancy Amendment Act, 1953, section 28 of the Original Act survives or not in respect of proceedings pending on the date of the commencement of the Thika Tenancy Ordinance, 1952 : Held, that the appellants were not precluded from raising before this Court the question that section 28 of the Original Thika Tenancy Act was not available to the tenants after the Thika Tenancy Amendment Act came into force merely because they had not appealed from the High Court 's order of remand. An interlocutory order which did not terminate the proceedings and which had not been appealed from either because no appeal lay or even though an appeal lay an appeal was not taken, could be challenged in an appeal from the final decree or order. Maharaja Mohesur Singh vs The Bengal Government, (1859) 7 M.I.A. 283; Forbes vs Amecroonissa Begum, (1865) 10 M.I.A. 340 and Sheonath vs Ramnath, (1865) 10 M.I.A. 413, followed. Ramkripal Shukul vs Mst. Rup Kuari, (1883) L.R. 11 I.A. 37, Bani Ram and Any. vs Nanhu Mal, (1884) L.R. 11 I.A. 181 and Hook vs Administrator General of Bengal and Oys., (1921) L.R. 48 I.A. 187, distinguished. Section 28 of the Calcutta Thika Tenancy Act, 1949, after its omission by the amending Act was not available in respect of proceedings pending on the date of the commencement of the Thika Tenancy Ordinance of 1952. Mahadeolal Kanodia vs The Administrator General of West Bengal, [196O] 3 S.C.R. 578 followed. </s>

<s>[INST] Summarize the following judgement: ivil Appeal No. 85 of 1959. Appeal by special leave from the judgment and order dated August 12, 1958, of the Punjab High Court in First Appeal Order No. 183 of 1957, arising out of the judgment and order dated November 8, 1957, of Shri Harbaksh Singh, Member, Election Tribunal, Karnal, in Election Petition No. 249 of 1957. Purshottam Tricumdas, J. B. Dadachanji, section N. Andley and P. L. Vohra, for the appellant. Ganpat Rai, for respondent No. 1. Naunit Lal, for respondent No. 2. 1959. April 1. The Judgment of the Court was delivered by SARKAR, J. ID the 1957 General Elections the appellant was declared elected to the Punjab Legislative Assembly. The respondent, Gian Chand, filed an election petition for a declaration that the appellant 's election was void. The other respondent in this appeal, presumably another unsuccessful candidate at the election, had been made a party to the petition but he never appeared at any stage. For brevity we will refer to the respondent Gian Chand, as the respondent, 518 The Election Tribunal before whom the petition came up for trial framed a number of issues and recorded evidence. When the case was ready for argument, the appellant made an application to the Tribunal for an order dismissing the petition under section 90(3) of the Representation of the People Act, 1951, which is later set out, on the ground that section 117 of that Act had not been complied with. Section 117 requires that every election petition shall be accompanied by a Government Treasury receipt showing that a deposit of Rs. 1,000 had been made by the petitioner infavour of the Secretary to the Election Commission as security for the costs of the petition. The appellant 's contention was that the receipt enclosed with the petition was not, for reasons which will be mentioned later, in terms of the section. The respondent objected to the application being entertained because of the delay in filing it and also on the ground that it could not be decided without taking evidence. The Tribunal overruled the respondent 's objections and held on a scrutiny of the receipt alone that it was not in terms of section 117, and thereupon dismissed the election petition under the powers conferred by section 90 (3) without deciding the other issues framed. The respondent went up in appeal to the High Court of Punjab. It was there contended on behalf of the appellant that no appeal lay from an order dismissing an election petition for the reasons mentioned in section 96 (3) and that the order of the Tribunal was in any event right. The High Court held that an appeal lay to it and that the order dismissing the petition was wrong because the terms of section 117 had been complied with. The present appeal is against this order of the High Court. The first point that arises is whether an appeal lay to the High Court. The Act provides by section 116A that an appear shall lie from every order made by an Election Tribunal under section 98 or section 99 to the High Court of the State in which the Tribunal is situated. The appellant 's contention is that the order of the Tribunal dismissing the petition had not been made under either of these sections. It is quite clear that the 519 Tribunal 's order had not been made under section 99. The point that arises is whether the order had been made under section 98. If it had not been made under section 98, an appeal would clearly not lie. The appellant contends that it was not so made but had been made under section 90 (3). These two sections are set out below: " Section 98. Decision of the Tribunal. At the conclusion of the trial of an election petition the Tribunal shall make an order (a) dismissing the election petition; or (b) declaring the election of all or any of the returned candidates to be void ; or (c) declaring the election of all or any of the returned candidates to be void and the petitioner or any other candidate to have been duly elected;". " Section 90 Procedure before the Tribunal. (3) The Tribunal shall dismiss an election petition which does not comply with the provisions of section 81, section 82 or section 117 notwithstanding that it has not been dismissed by the Election Commission under section 85. " Section 85 provides : " Section 85. If the provisions of section 81 or section 82 or section 117 have not been complied with, the Election Commission shall dismiss the petition. " It is first contended on behalf of the appellant that the revisions of section 85 and section 90 (3) are substantially the same and the fact that no appeal has been provided against the order made by the Election Commission under section 85 should be taken as indicating that no appeal law against an order under section 90 (3). We are unable to agree with this view. It seems to us that whether an appeal lies against an order of the Tribunal has to be decided by reference to section 116A and not by reference to the fact that a similar order by the Election Commission has not been made appealable. It is next said that an order under section 8 is by the terms of the section, an order made at the conclusion of the trial of an election petition while an order dismissing a petition for any of the reasons mentioned in 520 section 90 (3) is an order made prior to the commencement of such trial or at least prior to its conclusion. It is said that the word " trial " in section 98 means that stage of the trial where evidence is tendered and arguments are addressed. Therefore, it is contended, an order dismissing a petition under the powers contained in s.90(3) is not an order under section 98 and it is consequently not appealable. We see no justification for this view. An order made under the powers contained in section 90(3) brings to an end the proceedings arising out of a petition ; after it is made, nothing more remains for the Election Tribunal to try or do in respect of that petition. Therefore, it would appear that it is made at the conclusion of the proceedings before the Tribunal. It follows that such an order is made at the conclusion of the trial by the Tribunal for, as will be presently seen, the sole duty of the Tribunal is to try the petition; the proceeding before it is the trial before it. For the same reason it would be impossible to say that the order was made before the commencement of the trial of the petition by the Tribunal. That would be entirely against the whole scheme of the Act which we now proceed to consider. Chapter III of Part VI is beaded " Trial of Election Petitions ". It consists of sections 86 to 107 and covers the entire ground from the moment an election petition comes to an Election Tribunal till the final order of the Tribunal terminating the proceeding arising out of the petition before it. The first section, section 86, provides that if the Election Commission does not think fit to dismiss under section 85 the petition which has to be filed with it in the first instance, it shall refer the petition " for trial " to an Election Tribunal constituted by it for the purpose. Therefore it would seem that the sole duty of an Election Tribunal is to try an election petition referred to it. It is an ad hoc body created under section 86 for this purpose only. When it passes an order which closes the proceedings before it arising out of an election petition, it must be deemed to have tried the petition and passed the order at the conclu sion of such trial. It would no less be so when it 521 decides a matter before it and there by brings the proceedings to a close on one of the several issues raised and does not decide the other issues. In such a case it has made the order after trial of that issue for clearly it cannot make an order on any issue without trying it. It has therefore made the order at the conclusion of the trial held by it. And for this purpose, it makes no difference that the issue tried is of the nature usually called as preliminary issue or that the Tribunal does or does not consider it necessary to try the remaining issues. The same conclusion also follows from the other provisions of the said Chapter III of the Act, some of which are hereinafter mentioned. Section 86(4) gives the Election Commission the power to fill a vacancy occurring in the office of a member of an Election Tribunal and upon the vacancy being so filled up " the trial " of the petition shall be continued by the Tribunal as if the person appointed in the vacancy had been on the Tribunal from the beginning. Since it is conceivable that a vacancy may occur in the office of a member of a Tribunal long before the final hearing, that is to say the taking of the evidence and the commencement of the arguments, this section by providing that upon the vacancy being filled " the trial" of the petition shall be continued must be taken as contemplating the proceeding prior to the final hearing also as trial. Under section 88 an Election Tribunal may in its discretion sit " for any part of the trial at any place in the State in which the election had taken place. Here again the entire proceeding before the Tribunal from the reference to it by the Election Commission till the conclusion is being considered as the trial. Again under section 89 the Election Commission may at any stage withdraw a petition pending before a Tribunal and transfer it " for trial to another Tribunal " and " that Tribunal shall proceed with the trial from the stage at which it was withdrawn " from the first Tribunal. So here too the entire proceeding from the first reference to an Election Tribunal is being spoken of as the trial. Hence the contention of the 66 522 learned counsel for the appellant that the trial mentioned in section 98 is the stage in the proceedings in which evidence is taken and arguments are heard, is unfounded. That word in the other sections in this part of the Act clearly means the entire proceeding before a Tribunal from the reference to it by the Election Commission to the conclusion. We find no reason to give it a restricted meaning in section 98. Again, suppose in a case no evidence was necessary but the petition was dismissed after hearing arguments only. That would clearly be an order under section 98. It would have been passed at the conclusion of the trial. How is that case different from one in which on arguments having been heard, the petition is dismissed under the powers contained in section 90(3) ? Obviously here also the order was made at the conclusion of the trial. An order passed by the Tribunal under the powers contained in section 90(3) bringing the proceeding to a close is, therefore, in our view an order made under section 98. The learned counsel for the appellant referred us to Harish Chandra Bajpai vs Triloki Singh (1) in support of his contention that the order of the Tribunal with which we are concerned in this case was not made at the conclusion of the trial. We are unable to find anything. in that case to help him. There this Court was dealing with section 90(2) of the Act in which the word trial ' occurred. This Court observed that the word trial ' standing by itself may be susceptible of two meanings, that is, as referring to the final hearing of the petition consisting of examination of witnesses, filing documents and addressing arguments, and also as referring to the entire proceedings before the Tribunal from the time that the petition is transferred to it under section 86 of the Act until the pronouncement of the award. It held that the word I trial ' in the section meant the entire proceeding before the Tribunal. This case therefore does not show that the word I trial ' in section 98 meant only the final hearing. On the contrary it shows that in section 90(2) which is one of the sections in the Chapter of the Act with which we are concerned, (I) ; , 523 the word 'trial ' has been understood by this Court as referring to the entire Proceeding. That, as we have said earlier, is really a good reason for thinking that in section 98 the word 'trial has the same wider meaning and not the narrow meaning of which, the word standing by itself may be capable. It also seems to us that section 90(3) which purports to deal with the " procedure before the Tribunal " only states the power of the Tribunal and section 98 provides for the orders to be made by it in exercise of that power. This view receives support from sections 103, 106 and section 107 of the Act. Under section 103, the Tribunal after it has made an order under section 98 has to send a copy of it to the Election Commission and the records of the case to the District Judge of the place where it had been sitting. Under section 106, after receipt of the order of the Tribunal the Election Commission shall forward copies of the order to the appropriate authority and to the Speaker or Chairman of the House the election to which was being questioned by the petition. Section 107 provides that every order made under section 98 or section 99 shall take effect as soon as it is pronounced by the Tribunal. Now if the contention of the appellant is right and an order dismissing a petition under the powers contained under section 90(3) of the Act is not an order under section 98, such an order need not be sent either to the Election Commission or to the Speaker or the Chairman of the House concerned, neither would there be any provision in the Act stating when the order is to have effect, nor again any provision enabling the Election Tribunal, which is an ad hoc body, to dispose of the records of the case before it. There is no reason why the Act should provide that a dismissal of an election petition on the merits as it has been called, shall be dealt with by the Act in one way while a dismissal on a preliminary point shall be dealt with differently when the practical result of both kinds of dismissal is the same. We are unable to think that the Act could have intended such a curious result. Therefore again, it seems to us that an order in exercise of the powers given by section 90(3) is made under section 98. We were also referred to K. Kamaraja Nadar vs Kunju 524 Thevar (1) and the connected cases. There an objection under section 90(3) to an election petition similar to that which the appellant took in this case, was described as a preliminary objection and it was said that if it was not decided first the result would be a full fledged trial of the election petition involving examination of witnesses. It was therefore directed that the preliminary point should be decided first as that might save costs and harassment to the parties by making it possible to avoid the trial of the other issues. We are unable to hold that this judgment supports the view that an order made under the powers given by section 90(3) is not an order made at the conclusion of the trial; the direction to decide what has been called the preliminary objection, first does not lead to that conclusion. The Court was not concerned with any question as to when an order under the powers given by section 90(3) could be made. It was indicating a procedure best suited to the interests of the parties on the facts of that case and not laying down any rule of law. The last argument advanced was based on section 99. That section says that at the time of making an order under section 98 the Tribunal shall also, where the petition contains a charge of a corrupt practice having been committed, make an order recording a finding whether or not such corrupt practice had been committed. It is said that if all orders of the Tribunal dismissing an election petition were held to be orders under section 989 then,, where a petition contained a charge of a corrupt practice and it was dismissed under the powers contained in section 90(3) the Tribunal had further to make a finding as to whether the commission of a corrupt practice had or had not been proved. It is contended that such a position would be senseless for it would prevent the Tribunal from ever disposing of an election petition summarily on a preliminary ground. Therefore it is said that all orders dismissing an election petition are not orders under section 98 and that supports the view that an order under section 90(3) is not an order under section 98. We are not impressed by this argument. If the proper construction of section 99 is that an election petition cannot be dismissed on a preliminary (1) 525 point raised under section 90(3) where it contains charges of corrupt practices having been committed, as the learned counsel for the appellant contends, that construction must have effect however senseless it may appear. Suppose an election is sought to be avoided on the grounds, that the returned candidate was not qualified or that one of the nomination papers had been improperly rejected and also on the ground of corrupt practices having been committed by the returned candidate, all of which are good grounds for setting aside an election under section 100 of the Act. In such a case too, if the construction put upon section 99 by the learned counsel for the appellant is right, the Tribunal cannot allow the petition on any one of the first two grounds, which it could have done after a very summary trial, but must proceed to decide the charges of corrupt practice alleged. This can be said to be equally senseless as where having dismissed a petition for non compliance with section 117 the Tribunal is made to record a finding on the corrupt practices alleged. On the other hand, if it is not senseless in the one case it is not senseless in the other. We do not therefore find much force in the argument based on an interpretation of section 99 supposed to produce senseless results. All this cannot, in any event, supply a reason for holding that an order which terminates the proceedings arising before an Election Tribunal is not an order passed at the conclusion of the trial when it was made for the reasons mentioned in section 90(3). We have earlier stated that the only duty of the Tribunal is to try and decide an election petition and the order on the preliminary point may dispose of that petition. We may also point out that under section 99 (1) (b), the Tribunal at the time of making an order under section 98 has also to make an order awarding costs and fixing the amount thereof. If an order authorised by section 90(3) is not an order under section 98 then, when dismissing a petition under section 90(3) the Tribunal would appear to have no jurisdiction to make an order for costs. That can hardly have been intended. We therefore think that an order dismissing a petition for the reasons mentioned in section 90(3) is an order 526 under section 98 and is appealable under section 116A. In our opinion, the case of Harihar Singh vs Singh Ganga Prasad (1) which took the contrary view, was wrongly decided. As to the merits of the appeal, we find no difficulty. Under section 117 of the Act the Treasury receipt has to show a deposit of Rs. 1,000 in favour of the Secretary to the Election Commission. There is no dispute that the respondent deposited the required amount and enclosed a deposit receipt with his petition. The deposit receipt filed by the respondent contained the following statements on which the appellant 's contention is based; 1. By whom tendered Gian Chand 2. Name of the person onSecretary to whose behalf money the Election is paid Commission. The contention is that the receipt in this form showed that the money had been paid by the respondent acting for the Secretary to the Election Commission and not by him in favour of the latter. We are wholly unable to read the deposit receipt in that way. The second of the two entries reproduced above is intended to indicate the person in whose favour the money has been paid; 'on whose behalf ' here clearly indicates in whose favour or for whose benefit. The form of the receipt contains no other heading for indicating the person in whose favour the money was paid and of course it was paid in favour of somebody. That makes it perfectly clear that the words 'on whose behalf ' mean in whose favour. It would be absurd to think that the respondent had paid the money into Treasury as security for the costs of the election petition acting as the agent of the Secretary, Election Commission, which would be the position if we were to accept the appellants contention. We feel Do doubt that the receipt was in full compliance with section 117 of the Act. In the result we dismiss this appeal with costs. Appeal dismissed. (1) A.I.R. 1958 Pat. [/INST] Section 117 of the Representation of the People Act, 1951 provided: " The petitioner shall enclose with the petition a Government Treasury receipt showing that a deposit of one thousand rupees has been made by him. in favour of the Secretary to the Election Commission as security for the costs of the petition." The respondent, who filed an election petition challenging the validity of the appellant 's election, deposited the amount as required under section 117 of the Act. In the deposit receipt, the words " Secretary to the Election Commission " were put in as against the name of the person on whose behalf money was paid. The appellant contended that the receipt in this form showed that the money had been paid by the respondent acting for the 517 Secretary to the Election Commission and not by him in favour of the latter, and that as the receipt was, therefore, not in terms Of section 117, the election petition should be dismissed. The Tribunal accepted the appellant 's contentions and dismissed the election petition under the provisions of section 90(3) of the Act. Held, that the words " on whose behalf " in the deposit receipt, in the context, must mean " in whose favour " and that the receipt was in full compliance with section 117 of the Act. Held, further, that the order passed by the Tribunal under the powers contained in section 90(3) Of the Act dismissing the election petition is an order under section 98 and is appealable under section 116A. The word " trial " in section 98 of the Act means the entire pro ceeding before the Tribunal from the reference to it by the Election Commission to the conclusion. Harihar Singh vs Singh Ganga Prasad, A.I.R. 1958 Pat. 287, disapproved. Harish Chandra Bajpai vs Triloki Singh, ; , relied on. </s>

<s>[INST] Summarize the following judgement: Civil Appeal No. 303 of 1956. Appeal from the judgment and decree dated February 7, 1955, of the Calcutta High Court in Appeal from Appellate Order No. 102 of 1953, arising out of the judgment and decree dated August 6, 1953, of the Subordinate Judge, Second Court of Zillah, Howrah, in Misc. Appeal No. 231 of 1953. G., section Pathak, P. K. Chakravarty and B. C. Misra,for the appellant. B. Sen, section N. Mukherjee and P. K. Bose, for the respondent. April 20. The Judgment of the Court was delivered by DAS GUPTA, J. In Calcutta and its suburb Howrah there have existed for many years precarious tenancies popularly known as Thika tenancies, the characteristic feature of which is that the tenant 580 takes lease of the land only and erects structures thereon at his own expense; where there is already a structure on the land the tenant acquires these structures by purchase or gift but takes the land on which the structure stood in tenancy. With the influx of population into these areas that followed the partition of India the position of these Thika tenants became even more insecure than before. With the sharply rising demand for accommodation the landlords found it possible and profitable to put pressure on these Thika tenants to increase their rents or to evict them so that other tenants who would give more rents and high premiums might be brought in. With a view to give some protection to these Thika tenants against eviction and in certain other matters, the West Bengal Legislature enacted in 1949 an Act called the Calcutta Thika Tenancy Act (hereinafter referred to as " the Act "). Some features of the protection afforded by this legislation which deserve mention are that ejectment could be had only on one or more of the six grounds specified in section 3 of the Act; special provisions as regards notice for ejectment were made in section 4; in the same section provision was also made about payment of compensation as a necessary pre requisite for ejectment in certain cases. Section 6 provides that no orders for ejectment on the grounds of arrears of rent shall be executed if the amount of arrears together with costs of proceedings and damages that may be allowed were deposited within 30 days from the date of the order. Not content with giving such protection only in suits and proceedings for eviction that might be instituted by the landlord in future the Legislature in the 29th section of this Act provided that even in suits and proceedings which had already been instituted and were pending for disposal on the, date when the new law came into force, this now law will be applicable, except the provisions as regards notice in section 4. In the 28th section of the Act the Legislature went further and provided that even where the decree or order for recovery of possession had been obtained by the landlord against a Thika tenant but possession had not been actually recovered, courts will have the power to re open the matter and 581 if the decree or order is not in conformity with the beneficent provisions of the Act either to rescind the decree or order altogether or to vary it to bring it into such conformity. Section 28 with which we are specially concerned in this appeal is in these words: " Where any decree or order for the recovery of possession of any holding from a Thika tenant has been made before the date of commencement of this Act but the possession of such holding has not been recovered from the Thika tenant by the execution of such decree or order, the court by which the decree or order was made may, if it is of opinion that the decree or order is not in conformity with any provision of this Act other than sub section (1) of section 5 or section 27, rescind or vary the decree or order in such manner as the Court may think fit for the purpose of giving effect to such provision and a decree or order so varied by any Court shall be transferred to such Court to the Controller for execution under this Act as if it were an order made under and in accordance with the provisions of this Act. " The new law however failed to achieve its object for some years as the Courts interpreted the definition of Thika tenant in the Act in such a manner that speaking generally no tenant was able to establish its requirement. To remedy this the Governor of West Bengal enacted on October 21, 1952, an Ordinance by which the definition of Thika tenant was revised and a few other amendments of the Act were made. The special protection given under sections 28 and 29 of the Act to tenants against whom decrees or orders had been obtained or against whom cases were pending was however kept intact. The Ordinance by its section 5 extended such special protection also to tenants whose cases were pending before a court on the date of the commencement of the Ordinance and those against whom decrees or orders had been made after the date of the Act and before the date of the Ordinance but possession had not been obtained. In 1953 the West Bengal Legislature enacted the Calcutta Thika Tenancy Amendment Act, 1953, revising permanently the definition of Thika tenant and making some, other 76 582 and 29 of the Original Act were omitted. The principal question before us in this appeal is whether the provisions of section 28 could be applied by a Court in a case where an application had been made by a tenant for relief under that section and such application was pending for disposal on the date the omission became effective, by reason of the Amend ment Act coming into force. The decree for possession with which we are concerned in this case was made as far back as August 8, 1941, by a Munsif in Howrah. The tenant 's appeal was dismissed on April 9, 1943. On February 28, 1949, on which date the Calcutta Thika Tenancy Act of 1949 came into force, proceedings for the execution of the decree of ejectment were pending in the Munsif 's Court. On March 19, 1952, when these proceedings were still pending the tenant made an application to the Court which had passed the decree praying that the decree may be rescinded or varied in accordance with the provisions of section 28 of the Act. This application came up for hearing before the Munsif on July 7, 1953. In the meantime the Amendment Act of 1953 had come into force and the omission of section 28 of the Act had become effective. The learned Munsif held that section 28 of the Act being no longer in force he had no power to give the tenant any relief in accordance with the provisions thereof. In that view he dismissed the application. The tenant 's appeal to the District Judge, Howrah, having been rejected, he preferred a second appeal to the High Court. The learned judges of the High Court who heard the appeal agreed with the courts below on a construction of section 1(2) of the Amendment Act that section 28 was not applicable to the proceedings commenced by the tenant by his application for relief and dismissed the Against that decision the tenant has filed the present appeal before us on a certificate of fitness granted by the High Court. The decision of the question raised in this appeal, viz., whether this tenant who had applied for relief 583 under section 28 when that section was in force is entitled to have his application disposed of in accordance with the provisions of that section though it remained undisposed of on the date the Amendment Act came into force, depends on the interpretation of section 1, sub section (2) of the Amendment Act. This section is in these words: "It shall come into force immediately on the Calcutta Thika Tenancy (Amendment) Ordinance, 1952, ceasing to operate: Provided that the provisions of the Calcutta Thika Tenancy Act, 1949, as amended by this Act, shall, subject to the provisions of section 9, also apply and be deemed to have always applied to all suits, appeals and proceedings pending (a) before any Court, or (b) before the Controller or (c) before a person deciding an appeal under section 27 of the said Act, on the date of the commencement of the Calcutta Thika Tenancy (Amendment) Ordinance, 1952. " It is obvious and indeed undisputed that but for any difficulty that may be placed in the tenant 's way by these provisions the tenant would in view of the provisions of section 8 of the Bengal General Clauses Act be entitled to have his application for relief under section 28 of the original Act disposed of as if section 28 still continued. If however a contrary intention has been expressed by the Legislature in its amending Act the contrary intention would prevail. What we have to decide is whether in section 1, sub section (2), the Legislature has clearly expressed an intention that no relief under section 28 of the original Act shall be given in cases like these. The principles that have to be applied for interpretation of statutory provisions of this nature are well established. The first of these is that statutory pro. visions creating substantive rights or taking away substantive rights are ordinarily prospective; they are retrospective only if by express words or by necessary implication the Legislature has made them retrospective; and the retrospective operation will be limited 584 only to the extent to which it has been so made by express words, or by necessary implication. The second rule is that the intention of the Legislature has always to be gathered from the words used by it, giving to ,the words their plain, normal, grammatical meaning. The third rule is that if in any legislation, the general object of which is to benefit a particular class of persons, any provision is ambiguous so that it is capable of two meanings, one which would preserve the benefit and another which would take it away, the meaning which preserves it should be adopted. The fourth rule is that if the strict grammatical interpretation gives rise to an absurdity or inconsistency such interpretation should be discarded and an interpretation which will give effect to the purpose the Legislature may reasonably be considered to have had will be put on the words, if necessary, even by modification of the language used. In applying these principles to the interpretation of section 1(2), it is necessary first to consider a contention that has been raised by Mr. Pathak on behalf of the appellant that the phrase " as amended by this Act " qualifies the word " provisions ". If this be correct, the meaning of the proviso will be that only those provisions of the Act which have been amended by the Act shall apply and be deemed to have applied always to pending proceedings. This will become meaningless, the argument continues, if the word " amended " is interpreted to include omissions. For it makes no sense to say that a provision which has been omitted shall apply. So, it is argued, the word " amended " should be interpreted to mean only amendment by additions or alterations and not an amendment by omissions. The result of the proviso, the appellant 's counsel contends, is to make applicable to pendinn proceedings the altered provisions in place of old provisions but to say nothing as regards such provisions which have been omitted. We are unable to see how it is possible, unless rules of grammar are totally disregarded to read the words as amended by this Act " as to qualify the word provisions. " If ordinary grammatical rules are applied there is no escape from the conclusion that 585 the adjectival phrase " as amended by this Act " qualifies the proximate substantive, viz., the Calcutta, Thika Tenancy Act, 1949. There is no escape from the conclusion therefore that what the Legislature was saying by this was nothing more or less than that the provisions of the amended Thika Tenancy Act shall apply. Mr. Pathak argued that if that was what the Legislature wanted to say, it was reasonable to expect it to use the words " The Thika Tenancy Act, 1949, as amended by this Act," in the proviso; and there was no reason for the use of the words " the provisions of the Thika Tenancy Act ". We are not impressed by this argument. The Legislature might certainly have used the language as suggested by the learned counsel, and as be says, that would have meant an economy of words. But where there are two ways of saying the same thing it is useless to speculate why one way was adopted in preference to the other. It is not unusual to find draftsmen using the words " provisions of the Act " in many statutes where the words " the Act " would have been adequate; and it would be unreason. able to try to read too much in the use of the words " the provisions of the Thika Tenancy Act " instead of " The Thika Tenancy Act " in the proviso. Even so the learned counsel contends, there is no reason to read " amendments " ' so as to include omissions. The word " amendment ", he has submitted is sometimes used in the restricted sense of "addition" or " a alteration" as distinct from omission; and he asks us to read the word " amended " in the proviso, to mean only alterations or additions in the statute, and as not including omissions. It is unnecessary for us in the present case to express any opinion on the general question whether in certain context the word " amended " should be interpreted so as to exclude omissions. What is clear however is that the present is not one of such cases. The amendment Act itself was being called the Calcutta Thika Tenancy (Amendment) Act, 1953. The preamble says " whereas it is expedient to amend the Calcutta Thika Tenancy Act, 1949 ". Section 2 of this amendment Act substitutes a new clause for the old el. (5) of section 2; section 3 adds some words to el. (1) and section 3(b) omits some words in cl. (4) and 586 again adds some words to cl. (5) of section 3 of the Act. Section 4 omits certain words of sub section (1) of section 5. Section 5 substitutes some new words in place of certain words in the original sub sections (1) and (2) of section 10 of the Act. Section 6 omits one section of the original Act, viz., section 1 1 ; section 7 inserts some words in the original section 27 ; section 8 omits two sections, viz., sections 28 and 29 ; the last section, section 9 provides for the continuance of proceedings under section 5, sub section (2) of the Amendment Ordinance if sub sections (2), (3) and (4) thereof were in force. Reading the Amendment Act as a whole there can be no doubt that the Legislature in. using the word " amended " in the proviso to sub section (2) of section 1 sought to make no distinction between amendment by additions, alterations or omissions. It is clear when certain words or sections have been added, altered or omitted by the Amendment Act, the Calcutta Thika Tenancy Act, 1949, took on a new shape with some added features, some altered features and minus those features which have been omitted. What the proviso says is that the Calcutta Thika Tenancy Act in its new shape shall apply and shall be always deemed to have applied to proceedings pending before a Court, a Controller or an appellate authority under section 27 on the date of the commencement of the Thika Tenancy Amendment Ordinance, 1952. As the application which the appellant had made for relief under section 28 of the Tenancy Act was pending for disposal before the Munsif 's court on October 21, 1952, the date of the commencement of the Calcutta Thika Tenancy (Amendment) Ordinance, 1952, the position which cannot be escaped is that the Thika Tenancy Act of 1949 without the provisions as regards relief to tenants against whom decrees had been obtained on the date of the commencement of the original Act but possession had not been actually recovered would be applied to pending applications. In other words, though the application originally was for relief under section 28 no such relief could be granted, the section having ceased to exist retrospectively. It is helpful to remember in this connection the fact that while section 28 of the original Act was giving certain tenants a right to relief which they would have had if 587 the beneficent provisions of the new Act were available to them during the disposal of the suits the manner in which the right is given is by conferring on courts a power to rescind or vary decrees or orders to bring them into conformity with the provisions of the, Act. As soon as section 28 was omitted the courts ceased to have any such power. The effect of the proviso in its strict grammatical meaning is that the courts shall be deemed never to have had this power in respect of applications which were still pending. The inevitable result is that the Court having been deprived of the power to give relief even in respect of applications made at a time when the power could have been exercised, was bound to dismiss the applications. There can be no doubt that this is an unfortunate result. It may very well be true that if as a result of the Amendment Act, many tenants are deprived of the benefit of section 28, this will be mainly because of the Court 's inability to dispose of the applications before the Amendment Act came into force and not for any default on their part. Mr. Pathak has repeatedly stressed this and has asked us to construe section 1 (2) in a way that would retain the benefits of section 28 to tenants whose applications remained to be disposed of on the crucial date. He has in this connection emphasized the fact that the Amendment Act itself is a piece of beneficent legislation and that the amendments made by sections 2,3, 5 and 9 all extend to tenants benefits to which they would not have been entitled under the original Act. This extension of further benefits to tenants, he says, is a guiding principle of the amending legislation. He points out also that except as regards such pending applications under section 28 the effect of section 1(2) of the amending Act will be to give the extended benefits to tenants in pending, proceedings. It will be incongruous, he argued, that while all tenants stand to benefit by the amending legislation only those whose applications under section 28 have, for no fault of theirs, remained pending would be deprived of the benefit they would have had but for the omission in the amending Act, of section 28. It is difficult not to feel sympathy for these tenants. As we have already mentioned it is a sound 588 rule of interpretation of beneficent legislation that in cases of ambiguity the construction which advances the beneficent purpose should be accepted in preference to the one which defeats that purpose. In their anxiety to advance the beneficent purpose of legislation courts must not however yield to the temptation of seeking ambiguity when there is none. On a careful consideration of the language used by the Legislature in section 1(2) we are unable to see that there is any such ambiguity. The language used here has one meaning only and that is that the Act in its new shape with the added benevolent provisions, and minus the former benevolent provisions in section 28 has to be applied to all pending proceedings, including execution proceedings and the proceedings pending under section 28 of the original Act on October 21, 1952. There is therefore no scope for applying in this case the principles of interpretation which are applicable in cases of ambiguity. Nor is it possible to agree with Mr. Pathak 's last contention that the strict grammatical interpretation would result in an absurdity or inconsistency. It is urged that it is unthinkable that the Legislature when undertaking a legislation to help tenants would do anything to deprive them of the existing benefits under section 28. It is in our opinion useless to speculate as to why the Legislature thought it right to take away the benefit. One reason that suggests itself is that the Legislature might have thought that where landlords had already been deprived of the fruits of the decrees they had obtained for a long period from the date when the original Act came into force up to the time when the Amendment Act came into force, it would not be right to continue that deprivation. But whatever the reasons may be the fact remains that the Legislature has used words which in their normal grammatical meaning show that they intentionally deprived this class of tenants, viz., those whose applications under section 28 of the Act were undisposed of on the date the Ordinance came into force, and remained undisposed of, even when the Amendment Act came into force. We have therefore come to the conclusion that the view taken by the High Court in this case that the 589 effect of section 1(2) of the Calcutta Thika Tenancy (Amendment) Act, 1953, is that all pending applications under section 28 of the original Act must be dismissed is correct. The contrary view taken by the same High Court in Deorajan Debi vs Satyadhan Ghosal (1) and other cases is not correct. Before we part with this appeal, however, it is our duty to refer to one incidental matter. We have noticed with some regret that when the earlier decision of two judges of the same High Court in Deorajan 's Case was cited before the learned judges who heard the present appeal they took on themselves to say that the previous decision was wrong, instead of following the usual procedure in case of difference of opinion with an earlier decision, of referring the question to a larger Bench. Judicial decorum no less than legal propriety forms the basis of judicial procedure. If one thing is more necessary in law than any other thing, it is the quality of certainty. That quality would totally disappear if judges of co ordinate jurisdiction in a High Court start overruling one another 's decisions. If one Division Bench of a High Court is unable to distinguish a previous decision of another Division Bench, and holding the view that the earlier decision is wrong, itself gives effect to that view the result would be utter confusion. The position would be equally bad where a Judge sitting singly in the High Court is of opinion that the previous decision of another single Judge on a question of law is wrong and gives effect to that view instead of referring the matter to a larger Bench. In such a case lawyers would not know how to advise their clients and all courts subordinate to the High Court would find themselves in an embarrassing position of having to choose between dissentient judgments of their own High Court. As far as we are aware it is the uniform practice in all the High Courts in India that if one Division Bench differs from an earlier view on a question of law of another Division Bench, a reference is made to a larger Bench. In the Calcutta High Court a rule to this effect has been in existence since 1867. It is unfortunate (1) 77 590 that the attention of the learned judges was not drawn in the present case to that rule. But quite apart from any rule, considerations of judicial propriety and decorum ought never to be ignored by courts in such matters. On the merits, as we have found that the view of law taken by the High Court in this case is correct, the appeal is dismissed. In view however of the uncertainty that was in the law as regards the applicability of section 28 to proceedings pending on the commencement of the Thika Tenancy Ordinance, 1952, we order that the parties will bear their own costs. Appeal dismissed. [/INST] With a view to give protection to Thika tenants against eviction and in certain other matters, the West Bengal Legislature enacted the Calcutta Thika Tenancy Act, 1949. That Act was amended by the Calcutta Thika Tenancy Amendment Act, 1953, which omitted section 28 of the Act. The question for decision in the appeal was whether the appellant against whom proceedings for execution of a decree for ejectment was pending, who had applied for relief under section 28 when that section was in force, was entitled to have his application disposed of in accordance with the provisions of section 28, which had ceased to exist retrospectively though it remained undisposed of on the date the Amendment Act came into force: Held, that section 1, sub section (2) of the Calcutta Thika Tenancy Act 1953, clearly intended that no relief under section 28 of the original 579 Act should be given in cases pending for disposal on the date the amendment became effective and section 28 ceased to exist retrospectively. The principles applicable to interpretation of statutes are four fold in nature, (1)such statutory provisions as create or take away substantive rights are ordinarily prospective ; they can be retrospective if made so expressly or by necessary implication and the retrospective operation must be limited only to the extent to which it has been so made either expressly or by necessary implication, (2)the intention of the legislature has to be gathered from the words used by it, giving them their plain, normal, grammatical meaning, (3)if any provision of a legislation the purpose of which is to benefit a particular class of persons is ambiguous so that it is capable of two meanings the meaning which preserves the benefit should be adopted. , (4)If the strict grammatical interpretation gives rise to an absurdity or inconsistency, such interpretation should be discarded and an interpretation which will give effect to the purpose will be put on the words, if necessary, even by modification of the language used: Held, also, that judicial decorum ought never to be ignored. Where one Division Bench or a judge of a High Court is unable to distinguish a previous decision of another Division Bench or another Single judge and holds the view that the earlier decision was wrong, the matter should be referred to a larger Bench to avoid utter confusion. Deorajan Devi vs Satyadhan Ghosal, , overruled. </s>

<s>[INST] Summarize the following judgement: : Civil Appeal No. 788 of 1957. Appeal by special leave from the judgment and order dated February 16, 1955, of the Bombay High Court in Income tax Reference No. 38/x of 1954. C. K. Daphtary, Solicitor General of India, R. Ganapathy Iyer and D. Gupta, for the appellant. R.J. Kolah, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the respondent. April 21. The Judgment of section K. Das and Kapur, JJ., was delivered by section K. Das, J. Hidayatullah, J., delivered a separate Judgment. S.K. DAS, J. This is an appeal by special leave from the judgment and orders of the High Court of Bombay dated February 16, 1955, in a reference under section 66(1) of the Indian Income tax Act, 1922, hereinafter called the Act. The reference was made in the following circumstances : The Hindu undivided family of one Gandalal carried on business in cloth in Wadhwan in Kathiawar, which at the relevant time was outside British India. The family consisted of Gandalal and his four sons, (1) Girdharlal, (2) Hansraj, (3) Nandlal and (4) Ramniklal. In 1944 Nandlal came to Bombay and started a cloth business in partnership with other persons, the partnership being known as Amulakh Amichand & Co. 623 Nandlal 's share in the partnership was ten annas and that of his three partners, who belonged to the family of Amulakh Amichand, six annas. It was stated that the family of Amulakh Amichand which was a well known business family of Bombay, did not supply any capital to the partnership and Nandlal alone was the financing partner. On April 13, 1944, Nandlal received a sum of Rs. 50,000 from the Hindu undivided family of which he was a member, and a further sum of Rs. 50,000 on April 27, 1944. Two other sums aggregating to Rs. 50,000 were also received from the Hindu undivided family on June 8, 1944, and June 29, 1944. The case of the assessee was that a sum of Rs. 1,00,000 was given to each son by the father and the sums of money received on June 8, 1944, and June 29, 1944, were a loan by the Hindu undivided family to Nandlal. Therefore, the case of the assessee was that Nandlal became the partner of the firm of Amulakh Amichand in his individual capacity. The case of the Department, however, was that the total sum of Rs. 1,50,000 sent to Nandlal by the Hindu undivided family was utilised as capital in the cloth business of the partnership known as Amulakh Amichand & Co. Subsequently, Girdharlal, another brother of Nandlal, came to Bombay and joined the firm. Out of the share of ten annas of Nandlal, Girdharlal was given a share of five annas. The partnership firm of Ainulakh Amichand & Co. then started a cloth business at Banaras, and the partners of the firm at Banaras were the partners of the Bombay firm of Amulakh Amichand & Co. and an outsider from Banaras. A third brother of Nandlal also joined the Banaras firm, but he did not bring any capital. For the assessment year 1945 46 the Income tax Officer held that the Hindu undivided family of Gandalal was resident in the taxable territories (namely, British India), and hence he included the sum of Rs. 1,50,000 in the income of the family under section 4(1) (b)(iii) of the Act as having been brought into or received in British India in the relevant year and made an assessment on that basis. The assessee appealed to the Appellate Assistant Commissioner, Bombay, but without success. Then, there " as an, 624 appeal to the Income tax Appellate Tribunal, Bombay. Two questions were raised before the Tribunal: " (1) Whether Nandlal represented the Hindu undivided family of Gandalal of Wadhwan now in Saurashtra, in the firm Amulakh Amichand & Co., Bombay, and later on in the firms Amulakh Amichand & Co., Bombay and Banaras. (2)Whether the Hindu undivided family of Gandalal was resident in the taxable territories in the relevant years of account. " The Tribunal held on the first question that Nandlal and later Girdharlal joined the Bombay firm and also the Banaras firm of Amulakh Amichand & Co. as representing the Hindu undivided family of Gandalal and the money for starting the Bombay business came from the Hindu undivided family. Accordingly, the Tribunal held that Nandlal was properly assessed in the status of a Hindu undivided family. On the second question the Tribunal held in favour of the assessee and came to the following conclusion: " The business at Bombay and later on the business at Banaras cannot, in our opinion, be considered to be the affairs of the Hindu undivided family of Gandalal. These two businesses belonged to two separate entities, namely, the Bombay firm of Amulakh Amichand & Co., and the Banaras firm of Amulakh Amichand & Co. True, the Hindu undivided family would in due course of time receive a share of profit from these two firms, but all the same we do not think that it could be said that the firms of Bombay and Banaras constituted the affairs of the Hindu undivided family. The businesses in Bombay and Banaras, according to the Partnership Act, belonged to Nandlal and others. We are, therefore, of opinion that for assessment years 1945 46 . the Hindu undivided family was not resident in the taxable territories." The actual relief which the Tribunal gave to the assessee was expressed in the following words: " For the assessment year 1945 46, the assessee 's status would be Hindu undivided family but non resident. In so far as the assessed income is concerned the sum of Rs. 1,50,000 which was included under section 4(1)(b)(iii) has to be deleted. The rest of the 625 income accrued to the Hindu undivided family in the taxable territories. " At the instance of the Commissioner of Income tax, Bombay, who is the appellant before us, the Tribunal stated a case and referred the following question of law to the High Court of Bombay for its decision under section 66(1) of the Act. The question was in these terms : "Whether the Hindu undivided family of Gandalal represented by Nandlal in the firm of Amulakh Amichand & Co. of Bombay was resident in the taxable territories in the year of account relevant for the assessment year 1945 46. " The answer to the question depended on the true scope and effect of section 4A(b) of the Act. The High Court held that the expression " the affairs of the Hindu undivided family " in section 4A(b) did not have reference to the private or domestic affairs of the family, but referred to affairs concerned with income and taxation thereon. It said: " We might put the matter in this way that when a coparcener carries on business in partnership on behalf of the Hindu undivided family, the affair is of the coparcener and not of the family, but when the business is carried on by the family itself then it is the affair of the family and not of the coparceners." "The result is that we must agree with the view taken by the Tribunal and we must answer the question submitted to us in the negative." After the decision of the High Court the appellant obtained special leave and has come to us in pursuance of special leave granted by this Court. We must make it clear at the very outset that the first question raised before the Tribunal and decided by it against the assessee does not now fall for consideration. Whatever income Nandlal and Girdharlal received from the two businesses at Bombay and Banaras was income in their hands of the Hindu undivided family. With that income we are not now concerned. We are concerned with the second question, namely, whether the Hindu undivided family of Gandalal was resident in the taxable territories in the 626 relevant year so as to make the sum of Rs. 1,50,000 taxable under section 4 (1) (b) (iii) of the Act on the basis of such residence. Clearly enough, if the Hindu undivided family of Gandalal was not resident in the taxable territories in the relevant year, the sum of Rs. 1,50,000 would not be taxable under section 4 (1) (b) (iii) of the Act. We must, therefore, keep in mind the narrow scope of the question before us, which is whether the Hindu undivided family of Gandalal could be said to be resident in the taxable territories (i. e., British India) in the relevant year under the provisions of section 4A(b) of the Act, even though the family carried on its own cloth business wholly outside the taxable territories. It is necessary as well as convenient to read section 4A(b) at this stage : "4A. For the purposes of this Act (b)a Hindu undivided family, firm or other association of persons is resident in the taxable territories unless the control and management of its affairs is situated wholly without the taxable territories." In V. V. R. N. M. Subbayya Chettiar vs Commissioner of Income tax, Madras(1) this Court held that the test for deciding the residence of a Hindu undivided family laid down in section 4A (b) of the Act was based very largely on the rule which had been applied in England to cases of corporations, and though normally a Hindu undivided family would be taken to be resident in British India, such presumption would not apply if the case could be brought under the second part of the provision. It was also observed therein that the word " affairs " must mean affairs which are relevant for the purpose of the Income tax Act and which have some relation to income ; it was stated that in order to bring the case under the exception, the court has to ask whether the seat of the direction and control of the affairs of the family is inside or outside British India, and the word " wholly " suggests that a Hindu undivided family may have more than one "residence" in the same way as a corporation may have. The position in Hindu law with regard to a coparcener, even when he is the Karta, entering into partnership (1) ; 627 with others in carrying on a business is equally well settled. The partnership that is created is a contractual partnership and will be governed by the pro . visions of the . The partnership is not between the family and the other partners; it is a partnership between the coparcener individually and his other partners (see Kshetra Mohan Sannyasi Charan Sadhukhan vs Commissioner of Excess Profits Tax, West Bengal) (1). The coparcener is undoubtedly accountable to the family for the income received, but the partnership is exclusively one between the contracting members, including the individual coparceners and the strangers to the family. On the death of the coparcener the surviving members of the family cannot claim to continue as partners with strangers nor can they institute a suit for dissolution of partnership ; nor can the stranger partners sue the surviving members as partners for the coparcener 's share of the loss. Therefore, so far as the partnership is concerned, both under Partnership law and under Hindu law, the control and management is in the hands of the individual coparcener who is the partner and not in the family. Now, it is undisputed that but for the partnership business at Bombay or Banaras the Hindu undivided family of Gandalal was not resident in the taxable territories in the relevant year. The point for decision, therefore, is does the existence of the said partnership establish the residence of the family ? This raises two questions before us: firstly, whether the firm of Amulakh Amichand & Co. is one of the affairs of the Hindu undivided family of Gandalal because that is the only affair which has relation to the income sought to be taxed and on which the appellant relies for determining the residence of the family; secondly, where the control and management of the said affair, looked at from the point of view of the Hindu undivided family, is situate. We think that in the context of the facts found in the case, these two questions are interlinked. The expression " control and management " under section 4A(b) signifies controlling and directive power, "the head and brain" 628 as it is sometimes called. Furthermore, it is settled, we think, that the expression control and management " means de facto control and management and not merely the right or power to control and manage (see B. R. Naik vs Commissioner of Income tax (1)). It is also quite clear, we think, that if a coparcener becomes a partner (on behalf of the joint family) with strangers in a firm which carries on business in the taxable territories, that by itself will not determine the residence of the family unless the control and management of the firm is at least, in part, in the Hindu undivided family. On the facts of this case, the Hindu undivided family or for that matter, the Karta of that family, that is Gandalal, could exercise no power of controlling management over the partnership firm, either under Partnership law or under Hindu law. It seems to us that the word " affairs " in section 4A(b) must mean affairs of a Hindu undivided family which are capable of being controlled and managed by the said Hindu undivided family as such. Where a coparcener enters into partnership with strangers, the Hindu undivided family exercises no controlling power of management over the partnership firm. In that view of the matter the partnership firm cannot be an " affair " of the Hindu undivided family capable of being controlled and managed by the Hindu undivided family as such. It may be here observed that the decision in V. V. R. N. M. Subbayya Chettiar vs Commissioner of Income tax, Madras (2) proceeded on the basis of onus only and as was specifically stated therein, it was confined to the year of assessment to which the case related and it was left open to the appellant of that case to show in future years by proper evidence that the seat of control and management of the affairs of the family was wholly outside British India. In the case before us the Tribunal no doubt found on the first question raised before it that Nandlal and Girdharlal joined the Bombay and Banaras firms as coparceners of the Hindu undivided family and the money for starting the business came from the Hindu undivided family. That finding by itself however does not determine the residence of the (1) [1946]4 1.T.R. 324. (2) ; 629 Hindu undivided family of Gandalal. Both under Hindu law and Partnership law the Hindu undivided family as such could exercise no control and management over the two businesses at Bombay and Banaras. These businesses belonged to the partners and on the facts found in this case, it cannot be said that the businesses were the affairs of the Hindu undivided family of Gandalal within the meaning of section 4A(b) of the Act. We agree with the High Court that the position would be different if the Hindu undivided family itself carried on the business as its own business. In that case the business would be an affair of the family, because the family would be in control and management of the business. At first sight it may appear paradoxical that the income from the two businesses at Bombay and Banaras in the hands of Nandlal and Girdharlal should be treated as income of the Hindu undivided family and at the same time it should be hold that the two businesses were not the affairs of the Hindu undivided family within the meaning of section 4A(b) of the Act. There is really no paradox because the place of accrual of income of such family and the place of its residence need not necessarily be the same under the Act. Residence under section 4A(b) of a Hindu undivided family is determined by the seat of control and management of its affairs, and in the matter of partnership business in British India the Hindu undivided family as such had no connexion whatsoever with its control and management. If the seat of control is divided, the family may have more than one place of residence; and unless it is wholly outside the taxable territories, the family will be taken to be resident in such territories for the purposes of the Act. But whereas in this case in respect of the partnership business, the family as such has nothing to do with its control and management, we fail to see how the existence of such a partnership will determine residence of the family within the meaning of section 4A(b), Therefore, we are of the opinion that the High Court correctly answered the question, The appeal fails and is dismissed with costs, 82 630 HlDAYATULLAH, J. The Commissioner of Incometax, Bombay City, has filed this appeal, after obtaining special leave from this Court, against the judgment and order of the High Court of Bombay dated February 16, 1955, in a Reference under section 66(1) of the Indian Income tax Act. By the judgment under appeal, the High Court (in agreement with the decision of the Income tax Appellate Tribunal, Bombay, given earlier) answered in the negative the following question: " Whether the Hindu undivided family of Gandalal represented by Nandlal in the firm of Amulakh Amichand & Co. of Bombay was resident in the taxable territories in the year of account relevant for the assessment year 1945 46. " The facts briefly stated are as follows: There was in Wadhwan State in Kathiawar a Hindu undivided family consisting of Gandalal and his four sons, Girdharlal, Hangraj, Nandlal and Ramniklal. This family was doing business in cloth. In 1944 Nandlal went to Bombay and started on April 25, 1944, a cloth business in partnership with three strangers, known as Amulakh Amichand & Co. Nandlal 's s`are was ten annas, and that of his three partners, six annas. All the capital of the new firm was supplied by Nand lal, and for this purpose he received two remittances of Rs. 50,000 each on April 13 and 27 in the year 1944 and two other remittances aggregating to Rs. 50,000 on June 8 and 29 in the same year. Thus, a total sum of Rs. 1,50,000 was sent from Wadhwan to Bombay. Subsequently, Girdharlal also went to Bombay and joined Amulakh Amichand & Co. and he was given five annas ' share out of Nandlal 's share of ten annas. In 1946 Amulakh Amichand & Co. started another firm at Banaras under the same name. The partners of the Banaras firm were the partners of the firm at Bombay, an outsider from Banaras and a third brother of Nandlal. He did not bring any capital, and presumably received a share along with his other two brothers. For the assessment year 1945 46 the Income tax Officer treated the Hindu undivided family as resident in British India under section 4A(b) of the Indian Incometax Act, and assessed the family after adding the sum of Rs. 1,50,000 to the income from the firm of 631 Amulakh Amichand & Co., Bombay. The appeal to the Appellate Assistant Commissioner failed. On further appeal, the Appellate Tribunal, Bombay, held that Nandlal was still a coparcener and not a separated member, because the partition which was set up by him was not meant to be acted upon. The Tribunal, however, held that the decision of the Income tax Officer and the Appellate Assistant Commissioner that the Hindu undivided family was resident in British India in the relevant account year was not sound. The Appellate Tribunal therefore, ordered that the sum of Rs. 1,50,000 included under section 4(1)(b) (iii) of the Income tax Act could not be included and must be deleted. According to the Tribunal, the business at Bombay and later the business at Banaras could not be considered to be I the affairs of the Hindu undivided family of Gandalal ', so as to bring the matter within section 4A(b) of the Act. The Appellate Tribunal held that these two businesses belonged to 'different entities ', namely, the Bombay and Banaras firms, and that these firms could not be said to be " the affairs of the Hindu undivided family " but the affairs of Nandlal and his brothers under the law of Partnership. At the instance of the assessee, the Tribunal referred the above question for the opinion of the High Court. The Bombay High Court referred to the decision of this Court in V. V. N. M. Subbayya Chettiar vs Commissioner of Income tax, Madras (1), and pointed out that by the expression " the affairs of the Hindu undivided family " was meant not the private or domestic affairs of the family but some affairs, which had some reference to the Income tax Act. The word " affairs " must, it was held, be construed in relation to taxation. The learned Judges then referred to the position of a coparcener entering into partnership with strangers, and observed that when a coparcener carried on such business in partnership on behalf of the Hindu family, " the affair " was of the coparcener and not of the family, but when the business was carried on by the family itself, then it was " the affair " of the family and not of the coparcener or coparceners. They pointed out that in the cited case Fazl Ali, J., seemed to have held that even though a partnership (1) ; 632 business might be an 'activity ' of the Hindu family, it would not be " the affair " of the Hindu family in the sense in which the expression was used in the Indian Income tax Act. They, however, held that it did not follow that every activity of a coparcener or of a Karta, even if the activity resulted in profit, became " the affair " of the Hindu undivided family. Thus, treating the business of Amulakh Amichand & Co. as " the affair " of the coparceners concerned and not of the Hindu undivided family, the High Court in agreement with the opinion of the Appellate Tribunal, answered the question in the negative. Before dealing with the arguments addressed in the case and the interpretation of the relevant provision, it will be useful to summarise the findings. It is found that the Hindu undivided family did riot disrupt and partition the assets. Nandlal and Girdharlal continued to be coparceners, and the sum of Rs. 1,50,000 represented the funds of the Hindu undivided family. There is no finding that besides the entering into partnership by some of the coparceners with outsiders, there was, in the taxable territories, any other business. There is also no finding by the Tribunal that no part of the control and management was exercised in British India, though the High Court did find this to be so. We are concerned in this case with the application of section 4A(b), which deals with 'residence ' in the taxable territories, of Hindu undivided family, firm or other association of persons. Before the present amendment, the section read as follows: 4A. For the purposes of this Act . . . . . (b)a Hindu undivided family , firm or other association of persons is resident in British India unless the control and management of its affairs is situated wholly without British India. The words " British India " have now been replaced by the words " taxable territories " ; but the reasoning applicable to them is the same. The section was plain in so far as its intent and purpose was concerned. It made a Hindu undivided family resident in British India, unless the control and management of its affairs 633 was situated wholly without British India. If the control and management was wholly or partly situated in British India, then the family was treated as a resident. The words " wholly without British India " showed that even if a part of the control and management, be it ever so small a part, was exercised in British India, the provision was satisfied. So far, there is no dispute, and it is further clear that the St affairs " of the Hindu undivided family refer to something connected with the law of Income tax. The section does not refer to the domestic or private affairs of the Hindu undivided family. It refers to an activity resulting in the making of income. Parties are agreed and I think rightly that this aspect of the law is clear and unambiguous. It is also settled after the decision of this Court in Subbayya Chettiar 's case (1). Parties are, however, at variance, when one comes to the interpretation of the words " its affairs " in the section, and tries to find the situs of the control and management. In cases where the Hindu undivided family itself or through its Karta controls and manages business in the taxable territories, no difficulty arises; but where, as here, the Hindu undivided family is represented by one of its coparceners as a partner in a firm, one faces some difficulties. Two questions then arise, which are: (a)Is there any " affair" of the Hindu undivided family in the taxable territories in such circumstances;. and (b)Is the fact that the coparcener controls and manages the partnership, wholly or partly, sufficient to enable one to say that the control and management of the family is located in the taxable territories ? Now, it is settled law that a Hindu undivided family cannot be a partner under the law of Partnership. Such of the coparceners who join the partnership are regarded quoad the other partners, as individuals in their own names and rights. Yet, the benefits that arise to them from the partnership belong to the family, and their rights are the asset of the family. We have recently held in Charandas Haridas V. com missioner of Income tax, Bombay (2) that in such a situation the matter has to be looked at in the light of three (1) ; (2) [196O] 3 S.C.R. 296. 634 separate and independent branches of law. They are the law of Partnership, the Hindu law and the law relating to Income tax. The implications of a coparcener joining as partner with strangers are different when one views the matter from the angle of the law of Partnership or from the angle of the Hindu law or the law of Income tax. In so far as the law of Partnership is concerned, the coparcenary has no place in the partnership, and the coparcener partner is everything. But, viewed from the angle of Hindu law, the position is entirely different. In this connection, we have to bear in mind two principles of the law relating to a coparcenary, which are well settled. The first is contained in a well known passage in the judgment of Lord Westbury in Appovier vs Rama Subba Aiyan which reads: " According to the true notion of an undivided family in Hindu law, no individual member of that family, whilst it remains undivided, can predicate of the joint and undivided property, that he, that particular member, has a certain definite share. The proceeds of undivided property must be brought, according to the theory of an undivided family, to the common chest or purse, and then dealt with according to the modes of enjoyment by the members of an undivided family. " The second is equally well known, and is found stated in the judgment of Turner, L. J., in Katama Natchiar vs Rajah of Shivaganga (2) in the following words: " There is community of interest and unity of possession between all the members of the family, and upon the death of any one of them the others may well take by survivorship that in which they had during the deceased 's life time a common interest and a common possession. " No doubt, there are other principles also which qualify those quoted, as, for example, the right of a coparcener to claim a partition, or, where such usage obtains, to alienate his interest, which give rise to the expression that the coparcener has a share. In point of Hindu law, however, a coparcener cannot claim (1) [1866] 11 M.I.A. 75, 89. (2) , 61 1. 635 any item of property or even a share of it as his own, and his dealings with the assets are, in so far as he is concerned, for the benefit of the family. The law of Income tax makes the sole test for purpose of residence of a Hindu undivided family, the existence of an a affair ' and its control and management even partly in the taxable territories. For this purpose, one may look at the actual facts, and an inference from facts in the light of Hindu law is equally open. It is thus plain that whilst in the eye of the law of Partnership the coparcener who is a co partner is everything, in the eye of Hindu law he is no more than a member of a body of owners. In attempting to find out if there is any 'affair ' of the Hindu undivided family, we can consider the matter from the point of view of Hindu law. If this is the true position of a coparcener in Hindu law, it is difficult to accept the view of the High Court and of the Tribunal that there was no 'affair ' of the family in British India. The High Court, with respect, posed the wrong question when it asked itself, " was Amulakh Amichand & Co., an affair of the family ?". That question is self evident, and the answer is 'no ' from the point of view of the law of Partnership. The proper question to ask was, as I have framed it, viz., " was there an affair of the Hindu undivided family in British India?". To search and find this 'affair ', it is not necessary to look for it within the partnership any more than to look for it in the affairs of a bank where the family keeps its money with which it does business. That this was not a mere 'activity ' but an activity involving expenditure of family funds in British India and resulting in the earning of money is admitted on all hands. The income received from the partnership belonged to the family, as is wellsettled. See Mangalchand Mohanlal, In re (1), Murugappa Chetty & Sons vs Commissioner of Income tax (2) and Kaniram Hazarimull vs Commissioner of Incometax (3 ) and the numerous cases cited there. The affair, if any, which we have to find, is not to be found within the four corners of the partnership but outside (1) (2) (3) 636 it. The partnership was only the result of the business activity of the family and evidence of it. The affair we have to find must be regulated by Hindu law and not by the law of Partnership, because a partnership is regulated by the two laws considered the other way round. The section we have to interpret speaks of the affairs of the Hindu undivided family whatever shape it may take, and the enquiry is thus limited to what is the dictate of Hindu law. It is an error to think that one can ignore a palpable conclusion of that law, and go to find the answer from the law of Partnership. Nor do I think that the decision of this Court in Subbayya Chettiar 's case (1) laid down any contrary proposition. There, the karta who visited India for a short period dealt with some matters including the starting of certain businesses. The Hindu undivided family was all the time in Ceylon, and it was held that his actions could be described as ' activities '. Indeed, the matter was not decided as to whether the " affair ', if there was one, was of the family or of the coparceners, and the case went against the assessee on the burden of proof which he had failed to discharge, to bring his case within the exception. If the karta had lived in India or some other coparcener or coparceners had stayed on permanently to manage the ' affairs ', then the question would have been considered, perhaps, differently. In this case, we are not concerned with the 'affairs ', of the firm of Amulakh Amichand & Co., but with the ' affairs ' of the Hindu undivided family. The coparceners who became partners could not say that they were not concerned with the Hindu undivided family to which they belonged and an undivided asset of which they owned in common with others. Their investing moneys, becoming partners and running the partnership, starting other partnerships were, from the view point of the coparcenary according to Hindu law, as much the affair of the rest of the family as their own. In view of what I have said, the first of the two questions posed earlier must be answered in the affirmative, that is to say, that there was an (1) ; 637 'affair ' of the Hindu undivided family in the taxable territories (then British India) in the circumstances of this case. The question then is: where was the control and management of the Hindu undivided family located ? If it was wholly located without the taxable territories (then British India), then the family would be nonresident. The burden was on the assessee to establish this, and we were not shown any evidence in this behalf. The question can be decided here also on the burden of proof alone, as was done in Subbayya Chettiar 's case (1). It need not, however, be decided on that narrow issue for reasons ' which will presently appear. Section 4A deals with residence of an individual at one end and of a corporation like the company at the other. It also deals with the residence of three entities, viz., Hindu undivided family, firm and association of persons in the remaining part. The tests for these three categories are different. Special tests have been provided for individuals, based on residence for a certain number of days. Two alternative tests have been provided for companies, the first being that the control and management of their affairs must be situated wholly within the taxable territories. Where the control is without, a company can still be taxed if its income within the taxable territories in the year of account (omitting, capital gains) is greater than its income without the taxable territories, with the same omission. The first provision is necessary, because a company can have more than one residence, its residence being where it ' keeps house and does business '. The test is reversed for a Hindu undivided family, which is non resident only if the whole of its control and management is situate without the taxable territories. The residence of the members of the coparcenary is not a relevant factor, but if control and management is exercised by them within the taxable territory, the family as a whole is treated as resident. In Subbayya Chettiar 's case (1), this Court observed that ' situated ' implies functioning somewhat permanently, though the management and control may be exercised (1) ; 83 638 in more than one place. To prove that management and control is within the taxable territories, something more than a casual 'activity ' is needed. The same tests also apply to a firm and an association of persons. The words 'control and management ' have been figuratively described as ' the head and brain '. In the case of an individual, the test is not necessary, because his residence for a certain period is enough, it being clear that within the taxable territories be would necessarily bring his ' head and brain ' with him. The ' head and brain ' of a company is the Board of Directors, and if the Board of Directors exercised complete local control, then the company is also deemed to be resident. In the case of firms, association of persons and Hindu undivided family, the control and management can be exercised by one or more of the group. So long as this control and management (even partly) is found, and it must be so when some coparceners reside in British India and manage the affair, the family must be treated as resident. The necessity for the test is thus obvious. The Income tax law anticipated that control and management of the affairs of Hindu undivided families (firms and association of persons), might easily be in two or more places, one or more coparceners being within the taxable territories and the other or others, without. To prevent the escape of tax and to get at the income of such families having multiple places of control and management, it was provided that the whole of the control and management must be without the taxable territories to avoid the implication of residence. Otherwise, different coparceners can manage different businesses in the taxable territories and the family cannot be regarded as resident if the karta lived outside, an anomaly which does not really arise. In the present case, can one say that the control and management was wholly without the taxable territories (then, British India,) ? If one goes by the case set up by the assessee, one finds that the clam was that there was a partition in the family and that Nandlal came to 639 Bombay as a separated member. This claim involves the admission that the affairs, such as they were, were not controlled from Wadhwan. Since, however, the case of partition pleaded by the assessee was not accepted, it might be held that the family at Wadhwan was, perhaps, also in control. But it is equally clear that a part of the control of the affairs of the family was done in British India by those coparceners, who became partners in the business and through whom and not directly from Wadhwan the partnership business at Bombay was run to the benefit of the family. Those partners who were also coparceners of the family arranged to start this business at Bombay and stayed on and managed it; they started a fresh business at Banaras, admitted a stranger as partner at the new place and presumably supplied capital from the Bombay firm or from the family ' coffers. There is no claim at all that they supplied their own separate funds. All these actions were acts of control and management. They were not casual but permanent in character. Thus,the control and management of family affairs vis a vis the partnership was being done by them. The coparceners who Januslike face two ways, cannot shelter behind the law of Partnership, and claim that their action had no reference to the 'affairs ' of the family, which was at their back. I am not equating the affairs of the partnership with the affairs of the family. But the entire business involved a family undertaking, and those affairs were being managed in British India. This control and management of the businesses was, in fact, and for purposes of the law of Income tax, control and management of the ' affairs ' of the Hindu undivided family within British India, and the family must, therefore, be regarded as resident in the accounting year within British India. In my judgment, the decision of the Bombay High Court, with respect, was erroneous. The answer to the question ought to have been in the affirmative. I would, therefore, dissolve the answer given by the Bombay High Court, and instead, would answer the question in the affirmative. I would also order that 640 the respondent bear his own costs and pay those of the appellant here and throughout. ORDER OF COURT. In accordance with the majority judgment of the Court, the appeal is dismissed with costs. Appeal dismissed. [/INST] N, a coparcener of the Hindu undivided family of G, carrying on business in Kathiwar, then outside British India, entered into a partnership with strangers in Bombay in 1944. A total sum of Rs. 1,,50,000 was remitted to N from the undivided family 621 funds and utilised as capital in the partnership business. N 's brother joined the partnership in Bombay. The partnership started another firm in Banaras and a third brother of N joined the firm. For the year of assessment 1945 46 the Income tax Officer held that the Hindu undivided family of G was resident in the taxable territories and included the said sum in the income of the family under section 4(1)(b)(iii) of the Indian Income tax Act, 1922, as having been brought into or received in British India in the relevant year and made the assessment on that basis. On appeal by the assessee the Appellate Assistant Commissioner affirmed the assessment but the Income tax Appellate Tribunal holding that in the year of assessment the family was not resident in the taxable territories deleted the said sum from the assessed income. The decision of the Appellate Tribunal was upheld by the High Court in a reference under section 66(1) of the Act made at the instance of the appellant: Held (per section K. Das and J. L. Kapur, jj.), that the expres sion 'control and management ' occurring in section 4A(b) of the Indian Income tax Act means de facto control and management and the word " affairs " means the affairs of the Hindu un divided family capable of being controlled and managed by the said family as such. It is well settled that a Hindu undivided family cannot exercise any controlling power of management of a partnership entered into by a coparcener with strangers either under the , or under the Hindu law. The partnerships in the instant case could not, therefore, constitute affairs of the Hindu undivided family within the meaning of section 4A(b) of the Act, although the incomes from the said partnerships might belong to the said family, and could not determine its residence. The place of accrual of income of a Hindu undivided family and the place of its residence need not necessarily be the same under the Indian Income tax Act, 1922. V.V. R. N. M. Subbayya Chettiar vs Commissioner of Incometax, Madras, ; , Kshetra Mohan Sannyasi Charan Sadhukhan vs Commissioner of Excess Profits Tax, West Bengal, and B. R. Naik vs Commissioner of Income. tax, , referred to. Per Hidayatullah, J. Under section 4A(b) of the Indian Incometax Act, what are really affairs of the Hindu undivided family must be decided in the light of the Hindu law, and not the law of Partnership. It is well settled that a coparcener of a Hindu undivided family cannot claim any item of property or share of his own and, consequently, where certain coparceners enter into partnerships with strangers by investing capital from out of the undivided family funds, as in the instant case, the income from the business must belong to the undivided family. Where the Hindu undivided family enters into a business activity in the taxable territories through its coparceners, invests money and earns income, even though the partnership which results may not be an 81 622 " affair " of the family, there is still a business activity resulting in the partnership and the partnership is the evidence of that business activity. This activity of a permanent character is sufficient for purposes of income tax law to constitute an ,,affair" of the family within the meaning of section 4A(b) of the Indian Income tax Act. Approvier vs Rama Subba Aiyan, [1866] 11 M.I.A. 75, Katama Natchiar vs Rajah of Shivaganga, , Mangalchand Mohanlal, Inre, , Murugappa Chetty & Sons vs Commissioner of Income tax, and Kaniram Hazarimull vs Commissioner of Income tax, , referred to. V.V. R. N. M. Subbayya Chettiar vs Commissioner of Income tax, Madras, ; , considered. Control and management, in the case of a Hindu undivided family, can be exercised by one or more of its coparceners, even though partly, and if such coparceners reside in the taxable territories and manage its affairs, the family must be treated as resident in such territory. </s>

<s>[INST] Summarize the following judgement: : Civil Appeal No. 38 of 1960. Appeal by special leave from the judgment and order dated October 6, 1958, of the Punjab High Court in Letters Patent Appeal No. 52 of 1954, arising out of the judgment and order dated June 15, 1954, of the said High Court in First Appeal from Order No. 149 of 1953. Y. Kumar, for the appellant. Bakshi Man Singh and Sardar Singh, for the respondents. April 20. The Judgment of the Court was delivered by WANCHOO, J. This is an appeal by special leave against the judgment of the Punjab High Court. The brief facts necessary for present purposes are these. The appellant had executed two usufructuary mortgages with respect to two properties situate in Ferozepore city in favour of the respondents in 1946. She also took both properties on lease on the same date. An application was filed by the respondents under section 13 of the Displaced Persons (Debts Adjustment) Act, No. LXX of 1951 (hereinafter called the Act), for recovery of the principal sum due as well as the rent which was said to be in arrears. The application was resisted by the appellant on various grounds, one of which was that no such application lay as the liability was not a debt under the Act. The tribunal negatived the contention of the appellant and passed a preliminary decree for sale. Six months ' time was allowed to the appellant to pay the decretal amount, failing which the respondents were at liberty to get a final decree prepared and bring the properties to sale. The appellant went in appeal to the High Court but the appeal was dismissed. Then there was a Letters Patent Appeal, which was also dismissed. The appel lant then applied for and was granted special leave by this Court, and that is how the matter has come up before us. The only point for our consideration is whether the liability created under a mortgage is a debt within 572 the meaning of section 2(6) of the Act. The relevant part of that provision runs as follows: " 'Debt ' means any pecuniary liability, whether payable presently or in future, or under a decree or order of civil or revenue court or otherwise, or whether ascertained or to be ascertained, which (a) in the case of a displaced person who has left or been displaced from his place of residence in any area now forming part of West Pakistan, was incurred before he came to reside in any area, now forming part of India; (b)in the case of a displaced person who, before and after the 15th day of August, 1947, has been residing in any area now forming part of India, was incurred before the said date on the security of any immovable property situate in the territories now forming part of West Pakistan : Provided that where any such liability was incurred on the security of immovable properties situate both in India and in West Pakistan, the liability shall be so apportioned between the said properties that the liability in relation to each of the said properties bears the same proportion to the total amount of the debts as the value of each of the properties as at the date of the transaction bears to the total value of the properties furnished as security, and the liability, for the purposes of this clause, shall be the liability which is relatable to the property in West Pakistan; (c)is due to a displaced person from any other person (whether a displaced person or not) ordinarily residing in the territories to which this Act extends; x x x x The contention on behalf of the appellant is that the liability under a mortgage is not a pecuniary liability and therefore section 2(6) will not apply to a mortgage debt. It is further urged that the scheme of the Act shows that mortgages in relation to properties situate in what is now India are not covered by the Act at all. 573 Debt is defined in section 2(6) as meaning any pecuniary liability and has been restricted by the three subclauses in the sub section with reference to the person who might be owing the debt or to whom the debt might be owed. Sub cls. (a) and (b) refer to the debts owed by a displaced person as defined in the Act while sub cl. (c) refers to a debt due to a displaced person. Sub cl. (c) has therefore to be taken independently of sub cls. (a) and (b), for it refers to a creditor who is a displaced person while the other two sub clauses refer to a debtor who is a displaced person. Under subcl. (c) a displaced person who is a creditor can recover the debt due to him from any other person, whether a displaced person or not, who is residing in the territories to which the Act extends. The main contention of the appellant in this connection is that a mortgage debt is not a pecuniary liability and therefore does not fall within the definition of debt at all. We are of opinion that there is no force in this contention. The words " pecuniary liability " will cover any liability which is of a monetary nature. Now the definition of a mortgage in section 58 of the Transfer of Property Act, No. 4 of 1882, shows that though it is the transfer of an interest in specific immovable property, the purpose of the transfer is to secure the payment of money advanced or to be advanced by way of loan or to secure an existing or future debt or the performance of an engagement which may give rise to a pecuniary liability. The money advanced by way of loan, for example, which is secured by a mortgage, obviously creates a pecuniary liability. It is true that a mortgage in addition to creating the pecuniary liability also transfers interest in the specific immovable property to secure that liability ; none the less the loan or debt to secure which the mortgage is created will remain a pecuniary liability of the person creating the mortgage. Therefore a mortgage debt would create a pecuniary liability upon the mortgagor and would be covered by the definition of the word "debt" in section 2(6). We may in this connection refer to the Displaced Persons (Institution of Suits) Act, No. XLVII of 1948, which has been practically repealed by the 75 574 Act. In that law, suits relating to immovable property were specially excepted under section 4, but there is no such provision in the Act. Again section 6 of the Displaced Persons (Legal Proceedings) Act, No. XXV of 1949, which has also been repealed by the Act mentions decrees or orders for payment of money while in section 15 of the Act which deals with the same matter those words are omitted and the words " proceedings in respect of any debt " are used instead. There can be no doubt in consequence that the Act is a comprehensive law dealing with all kinds of pecuniary liability. We are therefore of opinion that section 2(6) clearly includes a mortgage debt and under sub el. (c) thereof a displaced person to whom such a debt is due from any other person, whether a displaced person or not, ordinarily residing in the territories to which the Act extends can take the benefit of this Act. Let us now see whether there is anything in the scheme of the Act which in any way militates against the plain words of section 2(6). Learned counsel for the appellant in the first place refers to sub el. (b) of section 2 (6) in this connection and points out that that subclause specifically deals with mortgage debts secured on any immovable property situate in the territories forming part of West Pakistan. It is urged that there was a specific provision with respect to mortgage debts in relation to immovable properties in West Pakistan and that if it were intended that mortgage of immovable properties situate in what is now India would also be dealt with under the Act there would have been a similar specific provision in the Act. Further it is pointed out that the proviso to subel. (b) to section 2(6) provides for apportioning the mortgage debt in cases where the property on which the debt is secured is both in West Pakistan and in India and restricts the application of sub cl. (b) only to that part of the debt which was secured on the property in West Pakistan and thus excludes from the operation of sub el. (b) that part of the debt which is secured on property in India. That is undoubtedly so. The reason however for this special provision is to be found in the later provision contained in section 16 by which a charge was created on compensation to be given to a 575 displaced person with respect to the mortgage debt secured on immovable property in Pakistan or in the alternative a charge was created on property given in exchange for the property in Pakistan on which the debt was charged. The special provision there ,. fore in sub cl. (b) of section 2(6) would not in these circumstances cut down the plain meaning of the words used in sub cl. (c) or restrict the wide words " pecuniary liability " to liability other than that secured by a mortgage. Incidentally we may mention that subcl. (b) itself shows that pecuniary liability includes a mortgage debt, for it shows that any liability which was incurred on the security of any immovable property situate in West Pakistan would be a debt within the meaning of section 2 (6) and therefore a pecuniary liability. It is next urged that when the legislature excepted the property in India which was encumbered from being dealt with under sub el. (b) so far as displaced debtors were concerned, there is no reason why it should allow the displaced creditors to proceed under the Act with respect to mortgage debts. This argument, however, overlooks the provision in sub cl. (a) under which a displaced debtor can take the benefit of the Act, once it is held that the words " pecuniary liability " also include mortgage debt. As we have said before sub cl. (b) was dealing with a special situation which was worked out in section 16 of the Act and the general right of a displaced debtor to take advantage of the Act is to be found in sub cl. (a) and that subclause will cover a mortgage debt as it is a pecuniary liability. Reliance was then placed on section 16 (5), which gives a right to the creditor to elect to be treated as an unsecured creditor in relation to the debt, in which case the provisions of the Act would apply accordingly. It was urged that this sub section requires that a creditor must make an election before he can take the benefit of this Act. We are of opinion that this argument has no force, for sub section (5) of section 16 only deals with a situation which arises where the mortgage, charge or lien was on immovable property situate in West Pakistan. It does not deal at all with cases 576 where the mortgage, charge or lien is on immovable property situate outside West Pakistan. Reference was then made to section 17 of the Act. It deals with debts secured on movable properties. That section is again concerned with displaced debtors and provides how equities will be worked out between a displaced debtor and his creditor with respect to debts secured on movable property. We see nothing in this section which can cut down the amplitude of the words used in section 2 (6)(c). Reference was then made to section 21 which provides for scaling down debts. That is however a general provision dealing with debts of all kinds and there is nothing in that section which shows that the word " debt " as defined in section 2(6) refers only to claims for money and does not include a mortgage debt. Thus we see nothing in any provision of the Act or in its scheme which would cut down the meaning we have given to the words " pecuniary liability " as used in section 2 (6) read with sub cl. (c) thereof. It was also urged that if mortgage debts on property situate in India were covered by the Act, there is no machinery (like section 16) for enforcement of the creditors ' rights in respect thereof. This is not correct. Section 10 provides for the claim of a displaced creditor against a displaced debtor and section 13 provides for the claim of a displaced creditor against any other person who is not a displaced debtor. Section 11 then provides how an application under section 10 A ill be dealt with and under sub section (2) thereof a decree can be passed under certain circumstances against the displaced debtor. Similarly under section 14 (2) a tribunal can pass such decree in relation to an application under section 13 as it thinks fit. These decrees are executable under section 28 of the Act. Therefore even when the debt is a mortgage debt there is provision in the Act for enforcement of that debt, though of course this provision is different from the provision contained in section 16, which was dealing with the special situation of properties under ,mortgage situate in West Pakistan. We may also refer to section 3 of the Act which lays down that the provisions of the Act and of the Rules 577 and Orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. The effect of this overriding provision is to make a suit like the present maintainable in spite of the provisions applying to such suits in other laws. The last contention on behalf of the appellant is that if section 2 (6) (c) empowers a displaced creditor to make an application under section 13 even with respect to a mortgage debt, there will be hardship to prior mortgagees or subsequent mortgagees inasmuch as these persons cannot be dealt with under the Act. Section 13 empowers a displaced person claiming a debt from any other person who is not a displaced person to apply within one year of the coming into force of the Act in any local area to the tribunal having jurisdiction in the matter. The provision is obviously enacted to give relief for a short period only. Section 25 of the Act provides for the regulation of all proceedings under the Act by the provisions contained in the Code of Civil Procedure save as expressly provided in the Act or in any rules made thereunder. But assuming that in spite of this provision, 0. XXXIV, r. 1 of the Code of Civil Procedure will not apply to proceedings under the Act and all those having an interest in the mortgage security cannot be joined as parties as required by 0. XXXIV, r. 1, the interest of prior or puisne mortgagees cannot in any case be affected by the decree passed under the Act. The Explanation to 0. XXXIV, r. 1, shows that a prior mortgagee need not be made a party to a suit for sale by a puisne mortgagee. So far therefore as a prior mortgagee is con cerned, his rights will not be affected by the decree passed under section 13 of the Act, just as his rights are not affected by the decree passed under 0. XXXIV. So far as mortgagees subsequent to the displaced creditor who applies under section 13 are concerned, their interests will also not be jeopardized by the decree which may be passed under section 13. Even under 0. XXXIV, which requires puisne or subsequent mortgagees to be joined as parties in a suit for sale, a decree obtained in a suit to which the subsequent mortgagee was not joined as a party does not affect his rights and the 578 proceedings in such a suit are not binding on him so as to affect his rights under the second mortgage. He can thus follow the property by suing his mortgagor, even though it may have been sold under the decree of an earlier mortgagee in a suit to which he was not a party. Therefore, the interest of the prior mortgagee or the subsequent mortgagee, if any, would not be affected by a decree passed on an application under section 13 and there is no reason therefore to cut down the plain meaning of the words used in section 2 (6) (c) on the ground that the proceedings under the Act would prejudicially affect the rights of prior or puisne mortgagees. There is therefore no force in this appeal and it is hereby dismissed with costs. Appeal dismissed. [/INST] The appellant executed two usufructuary mortgages in favour of the respondents in 1946 with respect to two properties situated in Ferozepur city and herself took the properties on lease on the same date. The respondents filed an application under section 13 of the Displaced Persons (Debts Adjustment) Act, LXX of 1951, for recovery of the principal sum due and also the arrears of rent. The appellant contested the application on the ground, inter alia, that the liability was not a debt under the Act as it was not a pecuniary liability and that mortgages in relation to properties situated now in India were not covered by it. The Tribunal allowed the application and passed a preliminary decree for sale. The appellant 's appeal to the, High Court and another under the Letters Patent were both dismissed. On appeal by special leave: Held, that a mortgage debt would create a pecuniary liabi lity upon the mortgagor and would be covered by the definition of the word " debt " in section 2 (6) of the Act. There is nothing in any provision of the Act which would cut down the plain meaning of the words "pecuniary liability" as used in section 2(6) read with sub cl. (c) thereof or restrict those wide words to liability other than that secured by a mortgage. Under sub cl. (c) of section 2(6) a displaced person to whom a mortgage debt is due from any other person, whether a displaced person or not, ordinarily residing in the territories to which the Act extends can take the benefit of this Act. 571 The interest of the prior mortgagee or the subsequent mort gagee if any would not be affected by a decree passed on an application under section 13 of the Act. </s>

<s>[INST] Summarize the following judgement: Civil Appeal No. 305 of 1955. Appeal by special leave from the judgment and order dated March 31, 1952, and March 2,1953, of the Bombay High Court, in Income tax Reference No. 48 of 1951. R.J. Kolah, Sohrab N. Vakil and section N. Andley, for the appellant. C.K. Daphtary, Solicitor General of India, R. Ganapathy Iyer and D. Gupta, for the respondent. April 19. The Judgment of the Court was delivered by S.K. DAS, J. This is an appeal with special leave from the judgment and orders dated March 31, 1952, and March 2, 1953, of the High Court of Bombay in an Income tax Reference No. 48 of 1951 made by the Income tax Appellate Tribunal, Bombay, under section 66(1) of the Indian Income tax Act, 1922, and section 21 of the Excess Profits Tax Act, 1940. We may shortly state the relevant facts first. The assessee, Messrs. Shoorji Vallabhdas and Company, Bombay, appellant herein, is a firm registered under the Indian Income tax Act. It held the managing agency of three companies, namely (1) the Malabar Steamship Company Ltd., (2) the New Dholera Steamships Ltd., and (3) the New Dholera Shipping and Trading Company Ltd., for the periods material in this case. The appellant as also the aforesaid three managed companies were resident in the taxable territories within the meaning of the Indian Income tax Act. The business of the Malabar Steamship Company Ltd. and of the New Dholera Steamships Ltd. was to carry cargo in cargo boats which touched ports in British India, Cochin State, Travancore State and ,Saurashtra, as they were then known. The appellant became the managing agent of the Malabar Steamship Company Ltd. with effect from April 1, 1943, and the firm consisted of Shoorji Vallabhdas and his two sons. Formerly, Shoorji Vallabhdas alone was the managing agent of the Malabar Steamship Company Ltd. and a managing agency agreement dated September 16, 559 1938, was executed between the managing agent and the managed company, and that agreement as varied by two subsequent deeds dated June 26, 1942, and December 7, 1943, constituted the contract of managing agency between the appellant and the managed company. Under the managing agency contract the remuneration payable to the appellant after September 1, 1943, was expressed in the following terms: " That the remuneration of the Managing Agents as and from 1st September one thousand nine hundred and forty three shall be ten per cent. (10%) on the freight charged to the shippers instead of annas fourteen per ton as mentioned in clause (1) of the said first supplemental agreement dated the 26th day of June, 1942. " The managing agency agreement dated June 8, 1946, between the appellant and the second managed company, New Dholera Steamships, Ltd., provided inter alia as follows: " That the Managing Agents shall as and by way of remuneration for their services in relation to the shipping business of the Company receive a commission of ten per cent. (10%) of the gross freight charged to the shippers and/or passage money charged to the passengers. Such remuneration shall be payable to the Managing Agents at the place where the same is earned by the Company unless otherwise requested by the Managing Agents. The remuneration of the Managing Agents in relation to the business of the Company other than the shipping business shall be (10%) ten per cent. on the gross profits that may be earned in such business. " It may be stated here, however, that no question arose as to the remuneration of the Managing Agent in relation to business other than shipping business, because no business other than shipping business was carried on by the managed company during the relevant period. The third managed Company, viz., the New Dholera Shipping and Trading Company Ltd., confined its business during the relevant accounting period to stevedoring and trading only. The managing agency agreement also dated June 8, 1946, with the, third 560 managed company provided inter alia for the payment of remuneration in the following terms: " That the Managing Agents shall as and by way of remuneration for their services receive a commission at the rate of 25 per cent. of the net profits of the company. Such remuneration shall be payable to the Managing Agents at the place where the same is earned by the Managing Agents unless otherwise requested by the Managing Agents. " The appellant was assessed to income tax for three assessment years, namely, 1945 1946, 1946 1947 and 1947 1948, the previous years being the financial years 1944 1945, 1945 1946 and 1946 1947 respectively. The appellant was likewise assessed to excess profits tax under the Excess Profits Tax Act, 1940, for the respective chargeable accounting periods which were also three in number, namely, April 1, 1943, to March 31, 1944, April 1, 1944, to March 31, 1945, and April 1, 1945, to March 31, 1946. The Income tax Officer and the Excess Profits Tax Officer assessed the appellant to tax in respect of the whole of the managing agency commission received from the three managed companies on the footing that the entire managing agency commission accrued or arose in British India. The appellant went up in appeal to the Appellate Assistant Commissioner from the assessment orders on the ground inter alia that a part of the managing agency commission received from the three managed companies accrued in the Cochin and Travancore States and not in British India and was therefore exempt from tax under the relevant provisions (as they stood at the material time) of the Indian Income tax Act, 1922, and the Excess Profits Tax Act, 1940. Thus, the dispute was about the place of accrual of the in. come in question. As to the managed companies, the Income tax authorities accepted the position that the profits of the three managed companies partly accrued in British India and partly in the Indian States; but they did not accept the claim of the appellant that part of its managing agency commission from the three managed companies accrued or arose in the Cochin and Travancore States. The Appellate Assistant Commissioner by different orders all dated 561 May 4,1950, dismissed all the appeals. The Appellant went in appeal to the Income tax Appellate Tribunal. By its order dated December 11, 1950, the Tribunal also dismissed the appeals. The appellant then made an application to the Tribunal to refer certain questions of law which arose out of its order, to the High Court of Bombay. The Tribunal referred two such questions: " (1) Did a part of the managing agency commission earned by the assessee accrue or arise in the Cochin State inasmuch as the managing agency commission is computed on the basis of the freight earned by the managed company in the Cochin State or otherwise? (2)Did the whole or part of the dividend income accrue or arise in the Cochin State ? " The expression Cochin State in the questions obviously referred to both Cochin and Travancore States. On March 31, 1952, the reference came up for consideration before the High Court, and after hearing Counsel, the High Court reformulated the first question as follows: " Where the actual business of managing agency was done which yielded the commission which is sought to be taxed? " The High Court directed the Tribunal to submit a supplemental statement of the case on the first question as reformulated. The second question was not pressed by learned counsel for the appellant and does not now survive. The Tribunal submitted a supplemental statement of the case on August 29, 1952. The reference was finally heard on March 2, 1953, and the High Court answered the question by saying that the actual business of the managing agency which yielded the commission was done at Bombay and not at Cochin. In arriving at the conclusion the High Court proceeded on the footing that the finding of the Tribunal in effect was that barring freight and collecting it at Cochin, all other important and responsible work of managing the managed companies was done from the head office at Bombay. It has been argued on behalf of the appellant that the High Court erroneously reformulated the question, 562 and that the real question of law is whether on the facts and circumstances of the case, any part of the managing agency commission accrued outside British India so that the appellant would be entitled to an apportionment of the managing agency commission and to claim exemption from tax in respect of the commission which accrued outside British India under section 14(2)(c) of the Indian Income tax Act, 1922 (as it then stood) and the third proviso to section 5 of the Excess Profits Tax Act, 1940. It has been further contended, that in view of the findings of the Tribunal that (a,) the commission earned was a percentage of the freight and passage money received by two of the managed companies in Cochin and Travancore States, (b) a part of the commission was payable there and (c) a part of the services was also rendered by the appellant as managing agent in those States, the High Court was in error in coming to its conclusion that the whole of the managing agency commission accrued or arose in Bombay. While we agree with learned counsel for the appellant that the real question in this case is whether any part of the managing agency commission accrued outside British India, we do not agree with him that the High Court was wrong in reformulating the question. The Tribunal formulated the, question as though the computation of the appellants remuneration on the basis of freight determined the place of accrual; in this the Tribunal was in error, and the High Court rightly pointed out that the test to be applied was not how the remuneration was to be computed or quantified, but where the services were performed by the appellant, which yielded the profits sought to be taxed. The High Court rightly reformulated the question on that basis, and asked the Tribunal to submit a supplemental statement of the case on the materials available and placed before it by the appellant bearing on the question as reformulated by the High Court. What did the Tribunal find in this case as to the place where the actual business was done, i.e., the services were performed by the appellant as managing agent, which yielded the commission ? After referring to the agreements relating to the computation of remuneration, the Tribunal said in its order dated 563 December 11, 1950, that (a) from time to time one of the partners of the appellant firm went to Cochin to, attend to the business, (b) the managed companies had an officer in Cochin, and (c) the payments said to have been made to certain employees at Cochin were fictitious. In the supplementary statement, the Tribunal pointed out that it was not known whether the ' partner who went to Cochin went in his capacity as partner of the appellant firm or as a director of one of the managed companies; the appellant firm had rented a flat at Cochin on Rs. 20 per month and maintained some employees at Cochin for securing freight; and the local office of the appellant firm at Cochin rented at Rs. 10 per month maintained only one book containing cash, journal and ledger. The Tribunal concluded its supplementary statement thus: "As for the staff maintained at Cochin, it was alleged that K. P. Joshi and subsequently G. H. Narechania were paid Rs. 18,000 each year. The so called payment was disallowed by the Appellate Tribunal. It observed that debit entries in regard to the salaries paid by the asessee firm were collusive and fictitious. As for the presence of the partners of the assessee firm at Cochin, it appears from the Appellate Assistant Commissioner 's order that it was admitted before him that none of the partners of the firm ever attended to the company 's business at Cochin or Alleppey. "There is no clear evidence on the record as to what the assessee firm did as the managing agents of the three managed companies; in other words, how the assessee firm was carrying on the managing agency business. The partners of the assessee firm (not necessarily all) were on the Board of Directors of the managed companies. They held a large number of shares in the managed companies. The Malabar Steamship Co. Ltd. had an office of its own "to secure freight ". The Cochin office of the assessee firm, as far as one could make out, did practically nothing, except receive 10% of the gross freight at Cochin and retain the net, income therefrom ", 564 fact reached by the Tribunal where did the commission payable to the managing agent accrue ? It is well to remember that the problem in this case is not so much when the commission accrued as where it accrued, though the question as to where and when may be interlinked. We think that normally, the commission payable to the managing agents of a company accrues at the place where the services are performed by the managing agents. It was so held by this Court in K. R. M. T. T. Thiagaraja Chetty and Company vs Commissioner of Income tax, Madras, No. 2(1). The assessee in that case, Thiagaraja Chettiar, claimed that a portion of the commission or edited to it in the company 's accounts accrued to it in the Indian States where the company had opened branches for selling yarn and as the commission was not remitted to British India, it was not assessable to tax. This Court observed: "The short answer to this argument is that the business of the company was carried on in British India, that the commission earned by the firm on the profits made by the company in the States arose out of one indivisible agreement to charge the reduced commission of 5 per cent. on the profits of the company and that the managing agents had been doing the business of the agency in British India and not in the States. It is not suggested that the managing agents performed any functions in the States. " The same question of the place of accrual arose in a somewhat different context in Commissioner of Income tax, Bombay Presidency and Aden vs Chunilal B. Mehta (2) where a person resident in British India and carrying on business there controlled transactions abroad, and the question was it he was liable to pay tax upon profits derived by him from contracts made for the purchase and sale of commodities in various markets Liverpool, London, New York, etc. The assessee disputed his liability in respect of such profits on the ground that they were not profits " accruing or arising in British India ". It was held that the mere fact that the profits made depended on the exercise in (1) (2) 565 British India of knowledge, skill and judgment on the part of the assessee did not mean that the profits arose or accrued in British India, and there was no necessity &rising out of the general conception of a business as an Organisation that the profits of the business must arise only at one place, namely, the place of central control of the business. Delivering the judgment of the Privy Council in that case, Sir George Rankin observed: " The words "accruing or arising the British India" may be taken, provisionally and in the first place, as an ordinary English phrase which derives no special meaning from the Act. The alternative " accruing or arising in" and the antithesis between these words and the words " received in " or " brought into " afford no safe inference of any special meaning. " Profit accruing or arising in British India " are words which in their ordinary meaning seem to require a place to be assigned as that at 'which the result of trading operation comes, whether gradually or suddenly, into existence". . . . . . . . " Their Lordships are not laying down any rule of general application to all classes of foreign transactions, or even with respect to the sale of goods. To do so would be nearly impossible and wholly unwise. They are not saying that the place of formation of the contract prevails against everything else. In some circumstances it may be so, but other matters acts done under the contract, for example cannot be ruled out a priori. In the case before the Board the contracts were neither framed nor carried out in British India; the High Court 's conclusion that the profits accrued or arose outside British India is well founded. " A similar view was expressed in two earlier decisions: (1) In Re: The Aurangabad, Mills Ltd.(") where a reference was made to Commissioner of Taxation vs Kirk, (1900) Appeal Cases, page 588 and it was pointed out that the circumstance that the affairs of the company were directed from Bombay was not the determining test was the test was where the processes (1) Bom. 1286, 74 566 which yielded the income were carried out and that was outside British India; (2) The Commissioner of Income tax, Bombay Presidency vs Messrs. Sarupchand Hukamchand of Bombay, a firm (1) where the assessees acted as the secretaries, treasurers and agents of a mill company registered at Indore, outside British India, and under the terms of agreement, the assessees were entitled to charge and receive as selling agents commission on the gross sale proceeds of all cloth produced by the mill and the company opened a shop in Bombay for the sale of cloth produced by the mill which was managed by the assessees. The sale proceeds were sent to Indore and the assessees were paid the commission at Indore. The question arose whether the com mission was liable to be assessed to income tax in Bombay, and it was held that the income accrued in British India. In Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai and Co, Bombay (2) this Court dealt with a case where a firm resident in British India carried on the business of manufacturing and selling groundnut oil; it owned some oil mills within British India and a mill in Raichur in the Hyderabad State where oil was manufactured. One of the questions for decision was whether the profits of that part of the business, viz., the manufacture of oil at the mill in Raichur accrued or arose in Raichur within the meaning of the third proviso to section 5 of the Excess Profits Tax Act, 1940. A majority of Judges held that the profits arose in Raichur, and in a composite business, the profits need not arise at one place only but may arise at more than one place and an apportionment may be necessary. This was not, however, a case of managing agency. We now come to the decision in Salt and Industries Agencies Ltd., Bombay vs Commissioner of Income tax, Bombay City(3) a decision of the same learned Chief Justice, in respect of which learned counsel for the appellant has made some very serious comments. The facts of that case were these : the assessees, a company incorporated in Bombay were the managing agents of another company incorporated in Bombay and having its salt works at Aden and at Kandla in the Kutch (1) Bom. 231 (2) ; (3) [1950) 567 where the board of directors met, the books of account were maintained and various types of work connected with the company were done. Under the managing agency agreement the assessees were entitled to a commission at the rate of 12 1/2 per cent. per annum on the annual net profits of the company and in any event a minimum of Rs. 30,000 per annum. The agreement also provided that such portion of the commission as was attributable to the net profits of the company arising or accruing in the Indian State was to be paid to the managing agents in such State and that with regard to the minimum commission half of it was to be. paid in the State. In pursuance of the assessees ' articles of association the board of directors passed a resolution delegating a particular director to guide the company 's operation in the State of Kutch and during the year of account that director supervised the salt works at Kandla. The question was whether the sum of Rs. 88,O65 representing assessee 's commission attributable to the salt works at Kandla accrued or arose at Kandla or in British India. First, the learned Chief Justice referred to the test to be applied in order to determine where the profits of the assessee company accrued or arose, and he said that the test was to find out where the actual business of the company was done which yielded the profits sought to be taxed. In that connexion he said: " The work of the managing agents must be looked upon as a unit and not as divided up into so many different categories, to each one of which a certain portion of the commission earned by the managing agents can be attributed or allocated.". He then went on to consider when the right to managing agency commission arose in that case and came to the conclusion, which was decisive in his opinion, that it arose when all the accounts of the working of the company were submitted to the head office in Bombay and the profits were determined therefore, the sum of Rs. 88,065 accrued or arose to the assessees in Bombay and not in the Indian State both for purposes of income tax and excess profits tax. 568 Now, learned counsel for the appellant has no quarrel with the decision in so far as it laid down that (a) the test is to find out where the business is actually done, i. e., where the services are performed, and (b) the right to managing agency commission arose in that case when all the accounts of the working of the company were submitted to the head office in Bombay and the profits were determined. Learned counsel has contended that in the case under our consideration the services were performed partly in British India and partly in Cochin and the right to managing agency commission arose as soon as the freight was paid at least in respect of two of the managed companies. He has submitted, however, that the learned Chief Justice was in error if he intended to lay down a rule of universal application that the work of the managing agents must always be looked upon as a unit and can never to be divided into categories. It is contended that the services of a managing agent can be performed at more than one place, and legally it is possible to apportion the commission and attribute a part of it to services rendered outside the taxable territories. We consider it unnecessary in the present case to decide the question of performance of services and resultant apportionment, if any, on a theoretical or hypothetical basis, because the case can be disposed of 'on the short ground that on the findings of the Tribunal, the remuneration of the managing agents accrued at Bombay. We had referred earlier to the findings reached by the Tribunal. These findings show that except for an attempt at make believe, no services were really performed by the appellant at Cochin. No doubt, some freight was secured and paid for at Cochin. But the managed company also had an office at Cochin to secure freight. It has been argued that under the terms of the managing agency agreements, the managing agents employed the staff, etc., and for two of the companies which carried on the cargo business, securing freight was the principal part of the managing agency business. The High Court, however, rightly. pointed out: 569 " In our opinion, it is not possible to read the managing agency agreement in that light. All that clause 2 of the agreement does is to lay down the standard by which the commission is to be computed and determined, and it lays down two different standards, one with regard to the shipping business and the other with regard to the other businesses, but as far as the business of the managing agency is concerned their responsibilities and their duties are integrated duties and responsibilities which are set out in the different clauses of the agreement. It is impossible to contend that they had not to supervise, control and manage the shipping business and, as we have already said the business of a shipping company is vastly more detailed and responsible than the mere task of finding people to go by ship or send their goods by ship and for that purpose paying freight. Freight is merely the resultant profit which accrues to a shipping company. In order that that profit should result the company has got to have ships, it has got to have seaworthy ships, it has got to have sailors and officers, it has got to look to the repairs of the ships, the renovation of the ships and the replacements of the ships. All this is part of the shipping company 's business and all this business had to be attended to by the managing agents and the question is, where did they attend to this business. The finding on this question is clear. The finding, in effect, is that barring booking freight, and collecting freight at Cochin, all other important and responsible work of managing the managed companies was done from the head office at Bombay and not from Cochin. " On the findings reached, the position in law is quite clear. The decisions to which we have referred clearly establish that normally, the commission payable to the managing agents accrues at the place where the business is actually done, that is, where the services of the managing agents are performed. In this case the appellant practically performed all the services at Bombay, and therefore the commission which it earned though computed on the percentage of freight and/or passage money in respect of two of the managed companies, accrued or arose in British 570 India. As to the third managed company whose business was stevedoring and trading and the remuneration was payable at 25 per cent. of the net profits, there can be no doubt that the remuneration accrued at Bombay. Therefore, the High Court of Bombay correctly answered the question against the appellant. The appeal accordingly fails and is dismissed With costs. Appeal dismissed. [/INST] The appellant was the managing agent of a company which was, at the relevant time, carrying on the business of transporting cargo in boats which touched ports in British India and in the Indian State of Cochin and other States. Under the managing agency contract the remuneration payable to the appellant was expressed in the following terms: " That the managing agent shall as and by way of remuneration for its services receive a commission of ten per cent. of the gross freight charged to the shippers. Such remuneration shall be payable to the managing agents at the place where the same is earned by the company unless other wise requested by the managing agent. " The Income tax Officer and the Excess Profits Tax Officer assessed the appellant to tax in respect of the whole of the managing commission received by it on the footing that the entire commission accrued or arose in British India. The appellant claimed that a part of the managing agency commission accrued in the Indian States and not in British India and that it would be entitled to an apportionment of the managing agency commission and to claim exemption from tax in respect of the commission which accrued outside British India under section 14(2)(c) of the Indian Income tax Act, 1922, and the third proviso to section 5 of the Excess Profits Tax Act, 1940. The Appellate Tribunal found that except booking and collecting some freight at Cochin, all other important and responsible work of managing the company was done from the head office at Bombay and not from Cochin: Held, that normally the commission payable to the managing agent of a company accrues at the place where the business is actually done, that is, where the services of the managing agent are performed, and as on the finding in the present case the appellant practically performed all the services at Bombay, the commission which it earned though computed on the percentage of freight, accrued or arose in British India. Commissioner of Income tax, Madras vs K. R. M. T. T. Thia garaja Chetty and Co., , followed. Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai and Co., Bombay, ; and Commissioner of Income tax, Bombay Presidency and Aden vs Chunilal B. Mehta, , distinguished, 73 558 Sall and industries Agencies Ltd., Bombay vs Commissioner of Income tax, Bombay City, , considered. </s>

<s>[INST] Summarize the following judgement: Appeal No. 167 of 1955. section N. Kherdekar, N. K. Kherdekar and A. G. Ratna. parkhi, for the appellant. N. C. Chatterjee, section A. Sohni and Ganpat Rai, for respondent No. 1. 1960. August 23. The Judgment of the Court was delivered by KAPUR J. This is an appeal by special leave against the judgment and decree of the High Court at Nagpur passed in second appeal No. 1720 of 1945 confirming the decree of the District Judge. In the suit out of which this appeal has arisen the appellant was defendant No. 1 and the respondents were the plaintiff and defendant Nos. 2 and 3 and the dispute relates to pre emption on the ground of co occupancy which falls under Ch.XIV of the Berar Land Revenue Code, 1928, hereinafter called the Code. On April 10, 1943, D. B. Ghaisas and his mother Ramabai entered into two contracts of sale with the appellant, one in regard to Survey Nos. 5, 14 and 16 for a sum of Rs. 10,000 out of which Rs. 2,000 was paid as earnest money and the other in regard to Survey No. 15/1 for Rs. 8,500 out of which Rs. 500 was paid as earnest money. On April 16, 1943, the vendors executed a registered sale deed in regard to Survey No,%.5, 14 and 16 and the balance of the price 32 250 was paid before the Registrar. On April 22, 1943, the vendors executed a lease of Survey No. 15/1 for 14 years in favour of Kisanlal and Sitaram who were defendant Nos. 2 and 3 in the suit and are respondents Nos. 2 and 3 in this appeal. On April 24, 1943, the vendors executed a fresh agreement of sale in respect of the same field which according to the agreement was to be diverted to non agricultural purposes and thereafter a sale deed was to be executed when it was so diverted. The appellant was to pay the costs of the diversion as well as the premium. In pursuance of this agreement the vendors applied to the Deputy Commissioner, Akola, on August 12, 1943, for diver sion under section 58 of the Code and sanction was accorded on January 22, 1944, subject to payment of premium of Rs. 9,222 and other conditions. The appellant 's case is that as agreed the vendors were paid this money for deposit and it was deposited in the Treasury under Challan No. 68 but there is no finding in favour of the appellant although the trial court and the District Judge seem to have proceeded on the premises that this amount was deposited but in the cir cumstances of this case it is not necessary to go into this matter. On September 11, 1943, i.e., before the sale deed was executed the respondent, Sridhar, brought a suit for pre emption against the appellant on the allegation that he had a co occupancy in the Survey number in dispute being the owner of Survey No. 15/2. In the plaint it was alleged that the transaction of contract under the documents of April 10, 1943, and April 24, 1943, constituted a sale and therefore it was subject to respondent Sridhar 's prior right of pre emption. It was also alleged that the price was not fixed in good faith. These allegations were denied. Both the trial court and the District Judge held that respondent Sridhar was entitled to preempt and determined the fair consideration to be Rs. 3,306. The suit was therefore decreed by the trial court and on appeal by the District Judge. The appellant took an appeal to the 251 High Court which also confirmed the decree of the subordinate courts. The decree of the subordinate courts was Confirmed and against that judgment the appellant has come to this court in appeal by special leave. The first question for decision is whether a right of pre emption had accrued to respondent Sridbar under the provisions of the Code. Previous to the cession of Berar by the Nizam of Hyderabad to the British Government in 1853, the Mohammedan rule of preemption was, according to one view, in force in the province of Berar and it continued to be so till the Berar Land Revenue Code of 1896 came into operation as from January 1, 1897. On the other hand, according to the view of two writers on the Berar Land Revenue Code of 1896, the Mohammedan law origin of the right of pre emption does not seem to be well founded. In the annotation of the Berar Land Revenue Code of 1896 Mr. E. section Reynolds wrote in 1896 that although the right of pre emption in regard to agricultural land on occupancy tenures bad been recognised in Berar the right was not based on Mohammedan law nor did it appear to be ancient and immemorial custom. According to Hirurkar (Land Revenue Code, pp.126 127) also the right of pre emption was not based on the Mohammedan law and did not originally exist in Berar. It 252 seems to have been brought from the land laws of the Punjab or the North West Provinces. In the Berar Settlement Rules and Berar Sub tenancy Rules of 1866 the right of pre emption attached to relinquishment of shares in the case of ryots of joint holdings and applied to co sharers and this is different from the rule of Mohammedan law. By section 205 of the Berar Land Revenue Code of 1896 the right of pre emption arose when a co occupant in any Survey number was transferred by sale, foreclosure of mortgage or relinquishment in favour of a specified person for valuable consideration and it vested in every other co occupant of the Survey number. It will thus be seen that the right of pre emption, which under Mohammedan law attaches to sales only, was also applicable to foreclosure of mortgages and relinquishment for valuable consideration. In the year 1907 the Transfer of Property Act (IV of 1882) was extended to the province of Berar. In 1928, the Code was re enacted and it further extended the provisions in regard to pre emption in Ch. Under section 174 pre emptive rights arise in respect of transfers of unalienated land held for agricultural purposes and before an occupant could transfer the whole or any portion of his interest he had to give notice of his intention to all other occupants. Under sections 176 to 178, the right of pre emption arises in the case of transfers by way of sale, usufructuary mortgages, by lease for a period exceeding fifteen years or in the case of final decrees for foreclosure in a case of mortgage by conditional sale. Under a. 183 every occupant in Survey number shall have the right to pre empt the interest transferred by civil suit. Under section 184 the right also arises in the case of an exchange. Thus it will be seen that the right of pre emption has been by statute extended far beyond what was contemplated under Mohammedan law and also beyond what was recognised in the Berar Settlement Rules, Berar Subtenancy Rules and in the Code of 1896. The High Court held that the word sale in section 176 of the Code had a wider connotation than what it had under section 54 of the Transfer of Property. That 253 was based on the judgment of Vivian Bose, J. (as he then was), in Jainarayan Ramgopal Marwadi vs Balwant Maroti Shingore (1) which had been approved in later judgments of that court. It was also of the opinion that the transaction in dispute gave rise to the exercise of the right of pre emption under the rule laid down in Begum vs Mohammad Yakub (2) and as in the instant case there was in reality a sale although a registered sale deed had not been executed the right of pre emption could not be defeated by the device that the vendors and the appellant adopted. According to section 2 of the Transfer of Property Act which at the relevant time was in operation in Berar section 54 is not one of the sections within ch. 2 of that Act and therefore it overrides Mohammedan law and the provisions of that section, being exhaustive as to modes of transfer, govern all sales in that province and no title passes on a sale except as provided in that section. Sale is there defined as transfer of ownership for a price paid or promised or part paid or part promised and in the case of sale of tangible immoveable property of Rs. 100/ or more sale can only be made by a registered instrument. That is clear from the language of the section itself where it is stated : Section 54 Sale how made: " Such transfer, in the case of tangible immoveable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument ". It was held by the Privy Council in Immudipattam Thirugnana section O. Kondema Naik vs Peria Dorasami (3) which was a case of a zamindari estate that it could not be transferred except by a registered instrument. But it was submitted that sale when used in connection with the general law of pre emption is not to be construed in the narrow sense in which it is used in the Transfer of Property Act and that that had been accepted by the Judicial Committee in Sitaram Bhaurao Deshmukh vs Jiaul Hasan Sirajul Khan(4) where (1) A.I.R. 1939 Nag. (3) (1900) 28 I.A. 46. (2) All. 344. (4) (1921) 48 I.A. 475. 254 the observations of Sir John Edge, C. J., in Begum vs Mohammad Yakub (1) had been approved. In Sitaram Deshmukh 's case (2) one of the two Mohammedan co sharers in Bombay by an agreement dated October 14, 1908, agreed to sell his share to a Hindu. The agreement was expressly subject to a right 'in the co sharer to pre empt. The vendor informed his co sharer that he had sold his share and the latter thereupon, after the customary formalities on October 15, 1908, claimed to recover the share from the pur chaser. The sale deed was executed on November 9, 1908, and then a suit was filed by the pre emptor. It was held that the co sharer had the right to pre empt in accordance with the intention expressed by the parties to the sale and that intention was to be looked at to determine what system of law was to apply and what was to be taken to be the date of the sale with reference to which the formalities were performed. The question there really was as to what was to be taken as a sale sufficient to justify the pre emptor in proceeding at once to the ceremonies and it was in that connection that the following observation of Sir John Edge in Begum vs Mohammad Yakub (1) were quoted : " The Chief Justice, Sir John Edge, there observes, in connection with the question whether the Transfer of Property Act, which required registration, bad altered the principle of the Mohammedan Law, which determined what was a sale for the purposes of the date in reference to which the ceremonies should be performed; " I cannot think that it was the intention of the Legislature in passing Act No. IV of 1882 " (the Transfer of Property Act) " to alter directly or indirectly the Mohammedan law of pre emption as it existed and was understood for centuries prior to the passing of Act IV of 1882 ". That at all events is in harmony with the conclusion come to by the High Court at Bombay. The conclusion is, that you are to look at the intention of the parties in determining what system of law was to be taken as applying and what was to be taken to be (1) All. 344.(2) (1921) 48 I.A. 475.255 the date of the sale with reference to which the ceremonies were performed " But it was argued for the respondents that the Privy Council had not only approved the observation of Sir John Edge, C. J., in Begum vs Mohammad Yakub(1) but has also approved the view of the Calcutta High Court in Jadu Lal Sahu vs Janki Koer (2). That was a case from Bihar where the right of pre emption under Mohammedan Law was judicially recognised in regard to Hindus also. The question whether the sale which was to be preempted was the one under section 54 of the Transfer of Property Act or the one under the principles of Mohmmedan Law does not seem to have been the point raised in that case. In the latter case the kabala was on July 28, 1904 and the ceremonies were performed after that date. In the Allahabad case, Begum vs Mohammad Yakub (1), there was a verbal sale of a house which was followed by possession but there was no registered document. No doubt there the learned Chief Justice in the majority judgment did say that to import into the Mohammedan Law of pre emption the definition of the word " sale " with restrictions contained in section 54 of the Transfer of Property Act would materially alter Mohammedan Law of preemption and afford fraudulent persons to avoid the law of pre emption; with this view Bannerji, J., did Dot agree. Mahmood, J., in Janki vs Girjadat (4) though in a minority (four judges took a different view) was of the opinion that a valid and (1) All. 344. (2) Cal. (3) (1921) 48 I.A. 475. (4) All. 256 perfected sale was a condition precedent to the exercise of the right of pre emption and until such sale had been effected the right of pre emption could not arise. Section 17 read with section 49 of the Registration Act shows that a transfer of immoveable property where it is worth Rs. 100 or more requires registration and unless so registered the document does not affect the property and cannot be received in evidence. The following observations of Mahmood, J., from Janki vs Girjadat (1) are very apposite: " If a valid and perfected sale were not a condi tion precedent to the exercise of the pre emptive right, consequences would follow which the law of pre emption does not contemplate or provide for. In this very case, supposing the so called vendor, notwithstanding the application of the 15th August, 1882 (which cannot amount to an estoppel under the circumstances) continues or recenters into possession of the property it is clear that the so called vendee would have no, title under the so called sale, to enable him to recover possession the transaction being, by reason of section 54 of the Transfer of Property Act, ineffectual as transfer of ownership. The right of pre emption being only a right of substitution, the successful pre emptor 's title is necessarily the same as that of the vendee and if the vendee took nothing under the sale the preemptor can take nothing either; and it follows that if the vendee could not oust the vendor, the preemptor could not do so either, because in both cases the question would necessarily arise whether the sale was valid in the sense of transferring ownership. Again, if notwithstanding a pre emptive suit such as this, the so called vendor, who has executed an invalid sale which does not in law divest him of the proprietary right, subsequently executes a valid and registered sale deed in favour of a co sharer other than the preemptor or in favour of a purchaser for value without notice of the so called contract for sale it is difficult to conceive how the preemptor, who has succeeded in a suit like the present, could resist the claim of such purchaser for possession of the property ". (1) All. 257 Under section 54 of the Transfer of Property Act a contract for sale does not of itself create any interest in or charge on immoveable property and consequently the contract in the instant case created no interest in favour of the vendee and the proprietary title did not validly pass from the vendors to the vendee and until that was completed no right to enforce pre emption arose. As we have said earlier wherever the Transfer of Property Act is in force Mohammedan Law or any other personal law is inapplicable to transfers and no title passes except in accordance with that Act. Therefore when the suit was brought there was no transfer by way of sale which could be subject to preemption. It was next contended that the appellant was guilty of fraud in that in order to defeat the right of the preemptors a deed of sale was not executed although as a matter of fact price had been paid, possession had passed and for all intents and purposes the appellant had become the owner of the property and that conduct such as this would defeat the very law of preemption. The right to pre empt the sale is not exercisable till a pre emptible transfer has been effected and the right of pre emption is not one which is looked upon with great favour by the courts presumably for the reason that it is in derogation of the right of the owner to alienate his property. It is neither illegal nor fraudulent for parties to a transfer to avoid and defeat a claim for pre emption by all legitimate means. In the Punjab where the right of pre emption is also statutory the courts have not looked with disfavour at the attempts of the vendor and the vendee to avoid the accrual of right of pre emption by any lawful means and this view has been accepted by this court in Bishan Singh vs Khazan Singh (7) where Subba Rao, J., observed: " The right being a very weak right, it can be defeated by all legitimate methods, such as the vendee allowing the claimant of a superior or equal right being substituted in his place ". In the present case the transaction of sale had not (7) ; ,884. 33 258 been completed until February 1, 1944, when the sale deed was executed. There are no equities in favour of a pre emptor, whose sole object is to disturb a valid transaction by virtue of the rights created in him by statute. To defeat the law of pre emption by any legitimate means is not fraud on the part of either the vendor or the vendee and a person is entitled to steer clear of the law of pre emption by all lawful means. It was then submitted that the sale deed had as a matter of fact, been executed on February 1, 1944; but respondent Sridhar brought the suit not on the cause of action arising on the sale dated February 1, 1944, but on the transaction of April 10, 1943, coupled with that of April 24, 1943, which being mere contracts of sale created no interest in the vendee and there was no right of pre emption in respondent No. I which could be enforced under the Code. Mr. Chatterji urged that it did not matter if the sale took place later and the suit was brought earlier but the suit as laid down was one to pre empt a sale of April 1943 when, as a matter of fact, no sale had taken place. If respondent Sridhar had based his right of pre emption on the basis of the sale of February 1, 1944, the appellant would have taken such defence as the law allowed him. The defence in regard to the conversion of the land from agricultural into non agricultural site which negatives the right of pre emption would then have become a very important issue in the case and the appellant would have adduced proper proof in regard to it. The right of pre emption is a weak right and is not looked upon with favour by courts and therefore the courts could not go out of their way to help the pre emptor. In our opinion the judgment of the High Court was erroneous and we would therefore allow this appeal, set aside the judgment and decree of the High Court and dismiss the suit with costs throughout. [/INST] The vendors executed an agreement for sale in respect of a certain survey number which according to the agreement was to be diverted to non agricultural purposes and thereafter a sale deed was to be executed. In pursuance to the said agreement the vendors applied for diversion which was sanctioned subject to the payment of premium and other conditions. Before the sale deed was executed respondent No. 1 Sridhar brought a suit for pre emption against the appellant on the ground that he had a co occupancy in the survey number in dispute being the owner of the adjoining survey number. The suit was decreed and on appeal the High Court inter alia held that the transaction was a sale which was subject to pre emption and that the failure to execute and register a sale deed was a subterfuge to defeat the right of pre emption. The question for decision was (1) whether a right of pre emption had accrued to respondent Sridhar under the provisions of the Berar Land Revenue Code, 1928, and (2) whether the appellant was guilty of fraud in that in order to defeat the right of pre emption the deed of sale was not executed, but for all intents and purposes the appellant had become the owner of the property. Held, that the right of pre emption in Berar did not arise from Mohamedon Law and did not exist till it was brought from Land laws of the Punjab or North West Provinces. The right of pre emption under the Berar Land Revenue Code extended to transactions of sale, usufructuary mortgages and leases for 15 years or more and right under Mohamedon Law applies only to sales. The word sale has no wider connotation under section 176 of the Berar Land Revenue Code than it has in the Transfer of Property Act. After the application of Transfer of Property Act to Berar a transaction of sale could not be effective except through a registered instrument. The contract of sale in the instant case created no interest in favour of the appellant and the proprietary title did not validly pass from the vendors to the appellant and until that was completed no right to enforce pre emption arose. The transfer of 249 property, where the Transfer of Property Act applied, had to be under the provisions of the Transfer of Property Act only and neither the Mohamedon Law nor any other personal law of transfer of property could override the statute law. There are no equities in favour of a pre emptor, whose sole object is to disturb a valid transaction by virtue of the right created by statute. Held, further that it is neither illegal nor fraudulent for the parties to a transfer, to avoid and defeat a claim for preemption by all legitimate means and a person is entitled to steer clear of the laws of pre emption by all lawful means. </s>

<s>[INST] Summarize the following judgement: No. 37 of 1950. Appeal from a judgment of the Bombay High Court (Chagla C.J. and Dixit J.) in Appeal No. 281 of 1947. K. section Krishnaswami Aiyangar (K. Narasimha Aiyangar, with him) for the appellant. M.C. Setalvad, Attorney General for India, (B. Sen, with him) for the respondent. December 1. The Judgment of the court was deliv ered by CHANDRASEKHARA AIYAR J. This appeal, preferred ch from the decree of the Bombay High Court in Appeal No. 281 of 1947, raises the question whether an execution application seeking to execute a final decree, passed by the let Class Subordinate Judge 's Court at Poona, on 6th December, 1932, for a sum of Rs. 1,24,215 and odd, is barred by limitation. The decree was made in a suit for dissolution of a partner ship and the taking of accounts. 854 The execution application was filed on 4th October, 1946, and the amount stated to be due under the decree on that date was Rs. 2,30,986 and odd. The previous execution application No 946 of 1940 filed in the Court of the 1st Class Sub Judge, Sholapur, to which the decree had been transferred for execution, was made on 24th June, 1940. It was dismissed on 9th September, 1940, for non prosecution. It would thus be seen that the present application was filed after the lapse of 12 years from the date of the final decree and 3 years from the date of the final order on the previous application. To surmount the bar of limitation, the decree holder, who is the appellant before us, raised four contentions:firstly, that the final decree, which provided that the plaintiff should pay the deficit court fees on the decretal amount before the execution of the decree, was a conditional decree, and that time began to run from the date when the condition was fulfilled on 5th Decem ber, 1935, by payment; secondly, that the period occupied by the insolvency proceedings from 10th August, 1937, to 14th December, 1942, initiated by the decree holder to get the first judgment debtor Walchand Ramchand Kothari (with whom alone we are now concerned) adjudged an insolvent, should be excluded under section 14 (2) of the Limitation Act; third ly, that the period occupied by one Tendulkar, who was the creditor of the present decree holder, in seeking to execute this decree, should be deducted; and lastly, that as the judgment debtor prevented execution of the decree against the 'Prabhat ' newspaper by suppressing his ownership of the same, a fresh starting point of limitation springs up in the decree holder 's favour from the date of the discovery of the fraud. The Subordinate Judge held that the execution applica tion was not barred, agreeing with every one of these con tentions. On appeal to the High Court Chagla C.J. and Dixit J. reversed this decision, holding that it was not a condi tional decree, that the steps taken by Tendulkar to execute this decree were of no avail, and that the insolvency pro ceedings were for a 855 different relief altogether, so that section 14 (2) of the Limitation Act could not be invoked. They concurred with the finding of the Subordinate Judge that the judgment debtor prevented the execution of the decree within 12 years by fraudulent concealment of his ownership of the 'Prabhat ' newspaper and that the twelve years ' bar of limi tation did not apply; but they held that the application was barred under article 182 of the Limitation Act, as more than three years had run from 9th September, 1940, the date of the dismissal of the previous execution application, before the present application was filed on 4th October, 1946. Points 1 to 3 above mentioned are of no avail to the appel lant. The decree was not a conditional one in the sense that some extraneous event was to happen on the fulfilment of which alone it could be executed. The payment of court fees on the amount found due was entirely in the power of the decree holder and there was nothing to prevent him from paying it then and there; it was a decree capable of execu tion from the very date it was passed. There could be no exclusion of the time occupied by the insolvency proceedings which clearly was not for the purpose of obtaining the same relief. The relief sought in insolvency is obviously differ ent from the relief sought in the execution application. In the former, an adjudication of the debtor as insolvent is sought as preliminary to the vesting of all his estate and the administration of it by the Official Receiver or the Official Assignee, as the case may be, for the benefit of all the creditors; but in the latter, the money due is sought to be realized for the benefit of the decree holder alone, by processes like attachment of property and arrest of person. It may be that ultimately in the insolvency proceedings the decreeholder may be able to realize his debt wholly or in part, but this is a mere consequence or result. Not only is the relief of a different nature in the two proceedings but the procedure is also widely divergent. The steps taken by the appellant 's creditor Tendulkar to attach this decree and put it in execution do not save limitation. His darkhast for attachment of the 856 present decree was on 3rd April, 1940, and for execution of the present decree was on 1st February, 1944, more than 3 years from 9th September, 1940, which is the date of the dismissal of the appellant 's prior execution petition. The learned Advocate for the appellant therefore devot ed most of his argument to the fourth contention set forth above. That the judgment debtor respondent suppressed his ownership of the 'Prabhat ' newspaper and fraudulently pre vented the execution of the decree against this property has been found by both the Courts below, as stated already. It was strenuously urged that the fraud so found is not merely fraud as broadly interpreted under section 48 (2), Civil Procedure Code, but also strict or concealed fraud within the meaning of section 18 of the Limitation Act. In this connection, it is as well to set out very briefly the nature of the concealment and the steps taken by the judgment debtor to achieve the same. He purchased the 'Prabhat ' newspaper with all its assets and goodwill from its previ ous owner one Purushottam Mahadev in 1938 under the letter marked Exhibit 129. He opened current accounts in several banks, and gave the name of one Abhyankar as the owner of the paper, but he was himself operating on those accounts. One Rajwade, a friend of the judgment debtor, was shown as the printer and publisher of the paper. Even in his supplementary written statement flied in Court in answer to the present execution, marked Exhibit 88 (page 53 of the printed book), the defendant asserted in paragraph 2 that he became the owner of the newspaper only in April,/944, and that previously he had no ownership or right in the same. He did not go into the witness box to refute the allegation that he was the owner ever since the purchase of the paper in 1938 and that he opened accounts in the names of other people on which he was operating for his own benefit. On these facts, the Subordinate Judge found as follows : "I think on the whole that the evidence establish es beyond doubt that the judgment debtor had concealed his proprietary interest in his newspaper called 857 Prabhat ' from June, 1938, to April, 1944. The only purpose for which the property could have been concealed in this way was probably the fear that the decree holder would pounce upon it if he came to know about it. The decree holder came to know of this fraud after April, 1944; for thereafter the judgment debtor made an open declaration that the newspaper belonged to him. I think therefore that this fraud has prevented the decree holder from executing the decree against some property of the judgment debtor. " In this finding, the High Court concurred. After referring to the stratagem adopted by the judgment debtor in Bhagu Jetha vs Malick Bawasaheb(1), the learned Judges observed: "In this case, in our opinion, the stratagem is much more dishonest. The attempt on the part of the judgment debtor was to conceal his property, to deny its ownership and to put forward a mere benamidar as the real owner of that property. In our opinion, therefore, the execution of the decree is not barred under section 48. The 'judgment debtor has, by fraud, prevented the execution of the decree within 12 years before the date of the application for execution by the decree holder and therefore the decree under consideration is capable of being executed. " On the strength of this concurrent finding, Mr. Krish naswami Iyengar for the appellant argued that the fraud fell within the scope of section 18 of the Limitation Act and that if it were so, he was out of the woods, inasmuch as the proper article to apply would be article 181 of the/imita tion Act. The right to apply accrued to him when the fraud became known to him in or about June, 1946. 'Till then he was kept by the fraud from the knowledge of his right to make an application against the property. Law does not require him to make futile successive applications in execu tion, in the face of this fraud. He was not in a position to seek even the arrest of the judgment debtor as he had got himself declared in the insolvency proceedings as agriclu turist." within the meaning of the Deccan (1) I.L.R. 110 858 Agriculturists ' Relief Act. alleging falsely that he was not in receipt of any income by way of salary or remuneration from the newspaper concerned and that he was mainly depend ent on the income of his family lands for his maintenance. There can be no question that the conduct of the re spondent was fraudulent within the meaning of section 48 (2) of the Civil Procedure Code. Though benami transactions are common in this country and there is nothing per se wrong in a judgment debtor purchasing property in another man 's name, we have to take into account all the circumstances attending the purchase and his subsequent conduct for find ing out whether it was part of a fraudulent scheme on his part to prevent the judgment creditor from realizing the fruits of his decree. Fraudulent motive or design is not capable of direct proof in most cases; it can only be in ferred. The facts before us here leave no room for doubt that the true object of the judgmentdebtor was to prevent the execution of the decree against the ' Prabhat ' news paper Which he had purchased. Other persons were shown as the printer and the publisher of the newspaper, while Abhy ankar was mentioned as the proprietor, The judgement debtor, was, however, operating on those accounts for his own benefit. In the Insolvency Court, he set up the plea that he was an agriculturist, by suppressing the truth about his ownership of the paper, and pretending that his income was mainly, if not solely, from the family lands. He kept up this show till April 1944, when probably he felt that he was sale from the reach of the judgment creditor. Even in his answer to the execution application, out of which this appeal has arisen, he had the hardihood to assert that he was not the owner of the paper till April 1944. It should also be remembered that he did not get into the witness box to explain what other necessity there was for all this camouflage, except it be to cheat the appellant of his dues under the decree. Mr. Setalvad, the learned Attorney General, who appeared for the respondent, pointed out that there 859 was no benami purchase and that the holding out of Abhyankar as the proprietor of the ' Prabhat ' did not amount to any false representation or misrepresentation to the judgment creditor, as the accounts on which reliance was placed were accounts opened in the banks and were not ordinarily avail able for inspection by third parties. This line of reasoning is hardly convincing, when we have to consider whether what is attributed to the judgment debtor does not amount to a fraudulent scheme or device for preventing execution of the decree that had been passed against him for a very large sum of money. In the very nature of things, fraud is secret in its origin or inception and in the means adopted for its success. Each circumstance by itself may not mean much, but taking all of them together, they may reveal a fraudulent or dishonest plan. It would be convenient to set out here in extenso sec tion 48, Civil Procedure Code, and section 18 of the Limita tion Act before we proceed to consider the soundness of the arguments advanced by both sides in support of the positions they have taken up. Section 48, Civil Procedure Code (which corresponds to section 230 of the Code of 1882), is in these terms: " 48. (1) Where an application to execute a decree not being a decree granting an injunction has been made, no order for the execution of the same decree shall be made upon any fresh application presented after the expiration of 12 years from (a) the date of the decree sought to be executed, or (b) where the decree or any subsequent order directs, any payment of money or the delivery of any property to be made at a certain date or at recurring periods the date of the default in making the payment of delivery in respect of which the applicant seeks to execute the decree. (2) Nothing in this section shall be deemed (a) to preclude the Court from ordering the executior of a decree upon an application presented after the expiration of the said term of twelve years, where the 860 judgment debtor has by fraud or force prevented the execu tion of the decree at some time within twelve years immedi ately before the date of the application; or (b) to limit or otherwise affect the operation of arti cle 183 of the first Schedule to the Indian Limitation Act, 1908. " Section 18 of the Limitation Act, 1908, runs thus: " 18. Where any person having a right to institute a suit or make an application has, by means of fraud, been kept from the knowledge of such right or of the title on which it is founded, or where any document necessary to establish such right has been fraudulently concealed from him, the time limited for instituting a suit or making an application (a) against the person guilty of the fraud or accessory thereto, or (b) against any person claiming through him other wise than in good faith and for a valuable consideration, shall be computed from the time when the fraud first became known to the person injuriously affected thereby, or, in the case of the concealed document, when he first had the means of producing it or compelling its production." Whether the fraud of the judgment debtor should actually prevent the execution of the decree or whether it is enough if the fraud has been committed without esulting in actual prevention is a question on which there has been some diver gence of opinion in the decided cases. The former view was taken in an early Madras case Kannu Pillay vs Chellathammal and ) Others(1) and receives support from the decision reported in Sri Raja Venkata Lingama Nayanim Bahadur Varu and Another vs Raja Inuganti Rajaopala Venkata Narasimha Rayanim Bahadur Varu and five Others(2)to which our learned brother Mr. Justice Patanjali Sastri was a party. The latter view ( (1) [1898] M.I.J. Mad. 861 is indicated in M.R.M.A.S.P. Ramathan Chefliar vs Mahalingam Chetti(1) by a Bench of which Sir Madhavan Nair J. was a member. It is not necessary to determine which view is correct, as we have here definite findings of both the Courts below that there was fraud preventing the execution of the decree within the meaning of Section 48 of the Civil Procedure Code. The appellant thus escapes the bar of the 12 years ' period and he has a fresh starting point of limitation from the date of the fraud for section 48 of the Civil Procedure Code. In other words, the decree holder has another 12 years within which he can execute his decree. Having thus got over the difficulty in his way under section 48 of the Code of Civil Procedure, he has next to meet the objection under the Limitation Act. On behalf of the appellant, it was urged that section 18 of the Limita tion Act applied to the facts and that the right to apply accrued to the appellant when the fraud by the judgment debtor became known to him in 1946. No reliance was placed on section 18 of the Limitation Act in the courts below and no reference to it is found in the grounds of appeal to this court. It is however mentioned for the first time in the appellant 's statement of the case. If the facts proved and found as established are sufficient to make out a case of fraud within the meaning of section 18, this objection may not be serious, as the question of the applicability of the section will be only a question of law and such a question could be raised at any stage of the case and also in the final court of appeal. The following obser vations of Lord Watson in Connecticut Fire Insurance Co. vs Kavanagh (2) are relevant. He said: "When a ques tion of law is raised for the first time in a court of last resort upon the construction of a document or upon facts either admitted or proved beyond controversy, it is not only competent but expedient in the interests of justice to entertain the plea. The expediency of (1) 1.L.R. (2) 862 adopting that course may be doubted when the plea cannot be disposed of without deciding nice questions of fact in considering which the court of ultimate review is placed in a much less advantageous position than the courts below." Mr. Setalvad, however, urged that the appellant should not be allowed to rely on section 18 now for the first time and that even if fraud within the meaning of that section had been pleaded the respondent might have adduced counter evidence by himself going into the witness box or otherwise. According to him, the approach to the question of fraud under section 18 of the Limitation Act is quite different from the approach under section 48 of the Civil Procedure Code. There may be cases where the fraud alleged and found is fraud in the wider sense of the term within the meaning of section 48 (2) of the Civil Procedure Code, but the same facts do not amount to fraud as strictly construed under section 18 of the Limitation Act. The fact that the decree holder in the lower courts relied on section 48, Civil Procedure Code, only does not prevent him from relying on section 18 of the Limitation Act if the facts necessary to be established for bringing in the assistance of section 18 of the Limitation Act are admitted, or proved. It is not disputed that the fraud contemplated by section 18 of the Limitation Act is of a different type from the fraud contem plated by section 48 (2) of the Civil Procedure Code. The wording of section 18 which requires the fraud "to prevent knowledge of the right to make the application" is neces sarily of a different nature from the fraud which prevents the decree holder from making an application for execution. Conceding to the appellant the right to rely on section 18 of the Limitation Act even at this late stage, let us see if it is really of any help to him on the facts found. The section has been quoted already. It speaks of the right to institute a suit or make an application which by means of fraud has been kept from the knowledge of the person having the right or the title on which it is founded. The right to apply for 863 execution of a decree like the one before us is a single and indivisible right, and not a composite right consisting of different smaller rights and based on the decree holder 's remedies to proceed against the person of the judgment debtor or his properties, moveable and immoveable. Togive such a meaning would be to split up the single right into parcels and to enable the decree holder to contend that while his right to proceed against a particular item of property is barred, it is not barred in respect of other items. We would then be face to face with different periods of limitation as regards one and the same decree. An inter pretation which leads to this result is prima facie un sound. Both sides agreed that this is the true position, but they reached it from slightly varying standpoints. According to the appellant, fraud even with reference to one property gives him a further extension of 12 years under section 48 (2) as regards the whole decree and it is not necessary for him to show that he had proceeded against the other properties of the judgment debtor. According to the respondent, the fraud must consist in the concealment of the knowledge of the decree holder 's right to apply for execution of the decree and it is not enough to prove or establish that the fraud prevented him from ' proceeding against a specific item. The two contentions, lead to the same conclusion about the indivisibility of the decree, but along different lines. In our opinion, the facts necessary to establish fraud under section 18 of the Limitation Act are neither admitted nor proved in the present case. Concealing from a person the knowledge of his right to apply for execution of a decree is undoubtedly different from preventing him from exercising his right, of which he has knowledge. Section 18 of the Limitation Act postulates the former alternative. To read it as referring to an application for execution to proceed against a particular property would be destructive of the oneness of the decree and would lead to multiplicity of periods of limitation. It is true that articles 181 and 182 of the Limitation Act and section 48, 864 Civil Procedure Code, should be read together. The articles expressly refer to the section. But they are independent or parallel provisions, different in their scope and object. As held in Kalyanasundaram Pillai vs Vaithilinga Vanniar (1) section 48 (2) extends the 12 years ' period of closure by a further period of similar duration but the necessity of resort to article 182 is not thereby obviated. The decree holder must have been taking steps to keep the decree alive and the only circumstance that could relieve him of this obligation is the existence of fraud under section 18 of the Limitation Act. The learned Advocate of the appellant asked how it could be possible for him to apply in execution when there was the fraud and whether the law contemplated that, even though the fraud prevented execution of the decree, he was to go on filing useless or futile applications every three years merely for keeping the decree alive. The answer is simple. The fraud pleaded namely suppression of owner ship of the 'Prabhat ' newspaper, did not conceal from him his right to make an application for execution of the de cree. Indeed, the suppression, which began in 1938, did not prevent the decree holder from applying for execution in 19 10; and in his answers in cross examination, he has adimitted that there were other properties to his knowledge against which he could have sought execution, viz., deposits in several banks of the judgment debtor 's monies but stand ing in his wife 's or daughter 's names, life insurance poli cies for which premia were being paid by him, law books written and published by him, movable properties in the house at Poona etc. As a matter of fact, the appellant 's present application seeks execution against several of these properties. Nothing prevented him therefore ,from seeking such execution within 3 years of the dismissal of his prior application in 1940. Even with reference to the 'Prabhat ', all that the decree holder states is that as he had no evidence to prove that the concern belonged to the defendant he did not take any steps, and not that he had no (1) I,L.R. 1939 Mad.611 865 knowledge of the ownership. To quote two sentences from his deposition: "I had suspected that defendant No. 1 was the real owner of the business all the while. But I had no posi tive knowledge or information till 1946" . . "I could not take any step for attaching the defendant 's business till 1946 as I had no evidence to prove the defendant 's fraud till then. " There is no obligation on the judgment debtor to post the decree holder with all details of his properties; it is the decree holder 's business to gather knowledge about the properties so that he can realise the fruits of his decree. In dealing with this evidence, Mr. Krishnaswami lyengar relied on the Privy Council decision, Rahimbhoy vs Turner in 20 I.A. 1 and referred to the following observation of Lord Hobhouse at page "But their Lordships consider, and in this they agree with both the Courts below, that all that the appellant Rahimbhoy has done is to show that some clues and hints reached the assignee in the year 1881, which perhaps, if vigorously and acutely followed up, might have led to a complete knowledge of the fraud, but that there was no disclosure made which informed the mind of the assignee that the insolvent 's estate had been defrauded by Rahimbhoy of these assets in the year 1867. " The passage cited does not apply here because the appellant admits knowledge, which is more than a mere suspicion, but states that he had no evidence to prove the defendant 's ownership. In any event, it has not been established within the meaning of section 18 of the Limitation Act that the fraud alleged and proved kept back from him the knowledge of his right to execute the decree. It is thus clear that the appellant cannot get the benefit of section 18 of the Limitation Act. It was next argued on behalf of the appellant that under section 48(2) of the Civil Procedure Code, because of the fraud of the respondent the appellant got a fresh starting point of limitation for the Limitation Act also 111 866 and therefore the starting point contemplated in the third column of the schedule to the Limitation Act relating to applications for execution should be the date when the fraud was discovered by the appellant. In other words, it was argued that the effect of section 48 was not merely to make the 12 years ' period start from the discovery of fraud for the purpose of section 48(2) of the Civil Procedure Code but also to give a fresh starting point for the schedule to the Limitation Act. This argument cannot be accepted. If a man is prevented from making an application, because of the fraud of the debtor, he is not necessarily prevented from knowing his right to make the application. By the enactment of section 18, the Legislature has distinctly contemplated that for the Limitation Act the starting point is changed on the ground of fraud, only when the knowledge of the right to make the application is prevented by the fraud of the judg mentdebtor. Having the knowledge that he had the right to make the application, if the judgment debtor prevents the decree holder from knowing the existence of certain properties against which the decree could be enforced, the case is clearly not covered by the words of section 18 of the Limitation Act. Therefore the argument advanced on behalf of the appellant is unsound. It was urged that the various starting points mentioned in the third column to article 182 of the Limitation Act cannot apply because none of them specify a fresh starting point for execution acquired on the ground of the fraud of the judgment debtor. This argument, in our opinion, instead of helping the appellant, goes against him. Such a provision in the third column in the article relating to execution of decrees is not necessary because provision for such a con tingency is made in section 18. Affirmatively, by the inclu sion of section 18 in the Limitation Act, and, negatively, by not providing for a separate period of limitation in the case of the fraud of the judgment debtor in the third column in the articles, the Legislature has clearly indicated that unless advantage could be taken by the 867 decree holder under section 18 on the ground of the fraud of the judgment debtor, fraud does not give any other relief under the Limitation Act. This scheme of the Legislature is not inconsistent with section 48 of the Civil Procedure Code. The two provisions in the two Acts have to be read as related to the same subject but dealing with two differents aspects. Without section 48 of the Civil Procedure Code a decree holder, if he made applications as required by arti cle 181 or 182 of the Limitation Act, could keep his decree alive for an indefinite period. The Legislature, as a matter of policy, ruled that a decree of a civil court (but excluding the High Court) shall not be kept alive for more than 12 years, although all necessary steps are taken under the Limitation Act to keep the decree alive and operative. That is one limit to the right of the decree holder to enforce the decree of the court. The second limitation to his right, which is independent of the first, is that he must keep the decree alive under article 182 or 181, as the case may be. In the case of the fraud of the judgment debtor provision is made in section 48(2) for enlarging the 12 years period prescribed under section 48. For defeating the plea of the bar of limitation under the Limitation Act, in the case of fraud of the judgment debtor, provision is found in section 18 of the Limitation Act. If the particu lar case of fraud set up and proved is not covered by those words, there is no protection against the same in the Limi tation Act. Read in that way, the two legislative provi sions are neither conflicting nor overlapping; and they are capable of operating harmoniously, as they deal with different situations and circumstances. The argument ad vanced on behalf of the appellant that because of the fraud he got not merely a fresh starting point for computing the 12 years period prescribed in section 48 ( '2,) of the Civil Procedure Code but is also entitled to an extension of the time under the Limitation Act, must therefore fail. The second contention urged on behalf of the appellant that because in the third column of article 182 868 fraud is not mentioned, the case is covered by article 181 does not also appear to be sound. The third column in article 182 prescribes the starting point of limitation under different specified circumstances. It does not, and indeed need not, mention the ground of fraud because if fraud of the kind against which the Limitation Act contem plates relief, as prescribed in section 18 of the Limitation Act, is established, the time is automatically altered by operation of that section. If the case does not fall under that section, no relief is permitted under the Limitation Act and the starting point for computing the period must be as mentioned in the third column, irrespective of the question of fraud. In our opinion, therefore, the conten tion that because of the fraud established in the present case under section 48(2) of the Civil Procedure Code, the appellant gets a fresh starting point of limitation under article 182 of the Limitation Act is unacceptable. The appellant relied on the general principle of juris prudence that fraud stops or suspends the running of time and that it should be applied in his favour, apart from section 18 of the Limitation Act. Rules of equity have no application. where there are definite statutory provisions specifying the grounds on the basis of which alone the stoppage or suspension of running of time can arise. While the courts necessarily are astute in checkmating or fighting fraud, it should be equally borne in mind that statutes of limitation are statutes of repose. For the reasons given above we concur in the conclusion reached by the High Court and dismiss the appeal with costs. Appeal dismissed. [/INST] An application for execution of a decree was made after the expiry of 12 'years from the date of the decree and 3 years from the date of the final order on the last previous application for execution. The decree holder contended that the judgment debtor had "fraudulently purchased a business in the name of a stranger and had conducted the same in the name of the latter with a view to prevent the assets of the business from being proceeded against in execution by the decree holder and that therefore under section 48 of the Civil Procedure Code he was entitled to make an application even after the expiry of 19, years. The High Court found that, as the decree holder was prevented by the fraud of the judgment debtor from executing the decree, the application was not barred under section 48 of the Code, but as it was made more than 3 years from the date of the order on the last application it was barred under article 182 of the Limitation Act. The decree holder appealed contending for the first time before the Supreme Court as fraud for the purpose of section 48 of Civil Procedure Code was proved, section 18 of the Limita tion Act was applicable to the case and his application was not barred under article 189. as it was made within three years of the date when he became aware of the fraud and the proper article applicable was article 181: Held, (i) that the question whether on the proved facts section 18 was applicable to the case was a pure question of law and the decree holder was entitled to raise the question before the Supreme Court, even though he had not raised it before the lower courts; (ii) though section 48, Civil Procedure Code, and articles 181 and 189. of the Limitation Act dealt with the time limit for making applications for execution of decrees and should be read together, they were different in their scope and object, and the fact that the application was not barred under section 48, Civil Procedure Code, did not obviate the necessity of considering whether it was barred 853 under article 182; (iii) that, as the fraud committed by the judgment debtor did not in any way conceal from the decree holder the knowledge of his right to make an application for execution of , the decree but only prevented him from exer cising that right in respect of a particular property, section 18 had no application to the case, and the application was therefore barred under article 182 of the Limitation Act; (iv) the fact that there was no provision in article 182 for cases where the judgment debtor had committed a fraud as in the present case did not render that article inapplicable and bring the case within the purview of article 181 as article 182 has to be read with the general provisions contained in s.18 relating to eases where there is fraud. Held also, (i) A decree which provides that the plain tiff should pay the deficient court fees before executing the decree is not a conditional decree and time for making an application for execution of such a decree runs from the date of the decree, and not from the date on which the plaintiff pays the deficit court fees. (ii) The period of time during which the decree holder was prosecuting proceedings for adjudging the judgment debtor an insolvent cannot be excluded under 6.14 (2) of Limitation Act, in computing the period of limitation for making an application for executing the decree. Judgment of the Bombay High Court affirmed. </s>

<s>[INST] Summarize the following judgement: Civil Appeal No. 132 of 1951. Appeal by Special Leave from the Judgment and Decree dated 17th May, 1950, of the High Court of Judicature at Calcutta (Harries C.J. and Sinha J.) in Appeal No. 41 of 1950 arising out of the Order of 766 Banerjee J. dated 19th December, 1949, in Suit No. 132 of 1948. M.C. Setalvad, Attorney General for India (B. Sen, with him) for the appellant. Naziruddin Ahmad (Nuruddin Ahmad, with him) or respond ent No. 1. S.N. Mukherjee for respondent No.2 1952. May 21. The Judgment of the Court was delivered by CHANDRASEKHARA AIYAR J. This Court granted special leave to appeal in this case on the Government agreeing to pay the costs of the respondents in respect of the appeal in any event. The decree holder was a lady named Hira Devi. The judg ment debtor was one Ram Grahit Singh, who retired on 31st January, "1 '947, as a Head Clerk in the Dead Letter Office, Calcutta. A money decree was obtained against him on 30th July, 1948. On 1st February, 1949, a receiver was appointed for collecting the moneys standing to the credit of the judgment debtor in a Provident Fund with the Postal authori ties. The Union of India intervened with an application dated 20th September, 1949, for setting aside the order appointing the receiver. Mr. Justice Banerjee dismissed the application of the Union of India, holding that a receiver could be appointed for collecting the Fund. On appeal, Trevor Harries C.J. and Sinha J. upheld his view. From the facts stated in the petition filed by the Union of India before the High Court, it appears that a sum of Rs. 1,394 13 1 represents arrears of pay and allowances .due to the judgment debtor and a sum Of Rs. 1,563, is the compulso ry deposit in his Provident Fund account. Different consid erations will apply to the two sums, though in the lower court the parties seem to have proceeded on the footing that the entire sum was a "compulsory deposit" within the meaning of the provident Funds Act, 1925. The main question to be decided. is whether a receiver can be appointed in execution in respect of provident Fund money due to the judgment debtor. 767 Compulsory deposit and other sums in or derived from any fund to which the Provident Funds Act XIX of 1925 applies are exempt from attachment and sale under section 60 (k), Civil Procedure Code. "Compulsory deposit" is thus defined in section 2 (a) of the Provident Funds Act XIX of 1925: Compulsory deposit means a subscription to, or deposit in a Provident Fund which under the rules of the Fund, is not, until the happening of some specified contingency repayable on demand otherwise than for the purpose of the payment of premia in respect of a policy of life insurance (or the Payment Of subscriptions or premia in respect of a family pension fund), and includes any contribution and any interest or increment which has accrued under the rules of the fund on any such subscription, deposit, contribution, and also any such subscription, deposit, contribution, interest or increment remaining to the credit of the sub scriber or depositor after the happening of any such contin gency. " Such a deposit cannot be assigned or charged and is not liable to any attachment. Section 3 (1)of the said Act provides : 3. (1)" A compulsory deposit in any Government or Rail way Provident Fund shall not in any way be capable of being assigned or charged and shall not be liable to attachment under any decree or order of any Civil, Revenue or Criminal Court in respect of any debt or liability incurred by the subscriber or depositor, and neither the Official Assignee nor any receiver appointed under the shall be entitled to, or have any claim on any such compulsory deposit. " It is obvious that the prohibition against the assign ment or the attachment of such compulsory deposits is based on grounds of public policy. Where the interdiction is absolute, to allow a judgment creditor to get at the fund indirectly by means of the appointment of a receiver would be to circumvent the statute. That such a frustration of the very object of 768 the legislation should not be permitted was laid down by the Court of Appeal as early as 1886 in the case of Lucas vs Harris (1), where the question arose with reference to a pension payable to two officers of Her Majesty 's Indian Army. Section 141 of the Army Act, 1881 provided: "Every assignment of, and every charge on, and every agreement to assign or charge any . . pension pay able to any officer or soldier of Her Majesty 's forces, or any pension payable to any such officer . . or to any person in respect of any military service, shall except so far as the same is made in pursuance of a royal warrant for the benefit of the family of the person entitled thereto, or as may be authorised by any Act lot the time being in force, be void. In that case, the appointment of a receiver to collect the pension was in question. Lindley, L.J., observed: In considering whether a receiver of a retired officer 's pension ought to be appointed, not only the language but the object of section 141 of the Army Act. 1881 must be looked to; and the object of the section would, in my opinion, be defeated, and not advanced, if a receiver were appointed." Lord Justice Lopes reiterated the same thing in these words : "It is beyond dispute that the object of the legislature was to secure for officers who had served their country, a provision which would keep them from want and would enable them to retain a respectable social position. i do not see how this object could be effected unless those pensions were made absolutely inalienable. preventing not only the person himself assigning his interest in the pension. but also preventing the pension being seized or attached under a garnishee order, or by an execution or other process of law. Unless protection is given to this extent the object which the legislature had in view is frustrated, and a strange anomaly would exist. A person with a (1) 18 (Q.B D. 127. 769 pension would not be able to utilise his pension to pay a debt beforehand, but immediately his creditor had obtained judgment might be deprived of his pension by attachment, equitable execution, or some other legal process. It is impossible to suppose that the legislature could have in tended such an anomaly. " Section 51 of the Civil Procedure Code no doubt recognises five modes of execution of a decree and one of them is the appointment of a receiver. Instead of executing the decree by attachment and sale, the Court may appoint a receiver but this can only be in a case where a receiver can be appointed. The Provident Fund money is exempt from at tachment and is inalienable. Normally, no execution can lie against such a sum. The learned Judges in the Court below rested their view on the authority of the decision of the Privy Council in Rajindra Narain Singh vs Sundara Bibi(1). This decision has caused all the difficulty and has created a current of thought that even though the property may not itself be liable to attachment, a receiver can be appointed to take possession of the same and to apply the income or proceeds in a particular manner including the payment of the debts of the judgment debtor. It is necessary. therefore, to examine the facts of the case carefully and find out whether the proposition sought to be deduced from it can be justified as a principle of general application apart from the particular circumstances. The original decision of the Allahabad High Court from which the appeal was taken before the Judicial Committee is reported in Sundar Bibi vs Raj Indranarain Singh(2). In a suit between two brothers, there was a com promise to the effect that the Judgment debtor shall possess and enjoy the immoveable properties mentioned in the list and estimated to yield a net profit of Rs. 8,000 a year without power of transfer during the lifetime of his broth er, Lal Bahadur Singh, he undertaking to pay certain public exactions and other dues (1)1925) 52 I.A. 262. (2) (1921)43 All. 617 770 to his brother, Lal Bahadur Singh, amounting in all to Rs. 7,870 11 6, in four equal instalments per annum, each to be paid a month before the Government revenue falls due. The arrangement was stated to be "in lieu of his mainte nance". When the judgment debtor 's interest in the proper ties was sought to be attached and sold, he raised the objection that they were exempt from attachment and sale by reason of clause (n) of Section 60 of the Code which speaks of "a right to future maintenance". The High Court held that the words employed in sub clause (n) contemplated R bare right of maintenance and nothing more a right enforce able by law and payable in the future and that inasmuch as in the case before them the properties had been assigned to the judgment debtor in lieu of his maintenance, it was not such a right, which alone was exempt from attachment and sate. They thought that it was a fit case for the appoint ment of a receiver and remitted the execution petition to the subordinate judge for the appointment of a receiver after determining the allowance payable to the judgment debtor for his maintenance. With this conclusion of the High Court the Judicial Committee concurred. But they also expressed the view that they did not agree with the High Court on the subject of the actual legal position of the right of maintenance conferred upon the judgment debtor. Taking the prayer of the judgment creditor to be that the right of maintenance be proceeded against, their Lordships observed that the right was in point of law not attachable and not saleable. If it was an assignment of properties for maintenance, the amount of which was not fixed, it was open to the judgment creditor to get a receiver appointed subject to the condition that whatever may remain after making provision for the maintenance of the judgment debtor should be made available for the satisfaction of the decree debt. The right to main tenance could not be attached or sold. In so far as the decree holder sought to attach this right and deprive the judgment debtor of, his maintenance, he was not entitled to do 771 so, but where his application for the appointment of a receiver was more comprehensive and sought to get at any remaining income after satisfying the maintenance claim, the appointment of a receiver for the purpose was justified. The decision of the Privy Council does not appear to lay down anything beyond this. In our opinion, it is not an authority for the general proposition that even though there is a statutory prohibition against attachment and alienation of a particular species of property, it can be reached by another mode of execution, viz., the appointment of a re ceiver. On the other hand, it was pointed out in the case of Nawab Bahadur of Murshidabad vs Karnani Industrial Bank Limited(1) that as the Nawab had a disposing power over the rents and profits assigned to him for the maintenance of his title and dignity without any power of alienation of the properties, no question of public policy arose and that a receiver of the rents and profits was rightly appointed. This line of reasoning indicates clearly that in cases where there is no disposing power and the statute imposes an absolute bar on alienation or attachment on grounds of public policy, execution should not be levied. Understood as mentioned above, Rajindra Narain Singh 's case creates no difficulty. We shall now refer to the decisions that followed or distinguished the same. In The Secretary of State for India in Council vs Bai Somi and Another(2), the maintenance of Rs. 96 per annum was made under a compromise decree a charge on the house which was to belong to the defendant. 'the court fee due to Government was sought to be recovered by attachment of the house. The right to attach was negatived; the house could not be at tached as it belonged to the defendant; and the plaintiff 's right to maintenance could not be attached under section 60, clause (1). In dealing with a prayer made by the Govern ment for the first time in the High Court for an order appointing a receiver of the plaintiff 's maintenance, Beaumont C.J. and (1) (1931) 58 I.A. 215. (2) 100 772 another learned Judge held that even this could not be done. The Chief Justice said , 'If these exempted payments can be reached in execution by the appointment of a receiver by way of equitable execution, the protection afforded by the section is to a great extent lost." They steered clear of Rajindra Narain Singh 's case by stating that there was in the judgment of the Board no clear expression of opinion and there was doubt whether the allowance then in question was maintenance or not. The Madras High Court in The Secre tary of State for India in Council vs Sarvepalli Venkata Lakshmamma(1) has dealt with a question similar to the one in The Secretary of State for India in Council vs Bai Somi and Another(2) but it merely referred to the ruling in Rajindra Narain Singh 's case without dealing with the facts or the reasoning. It throws no light. The case in Janaki nath vs Pramatha Nath (3) was a decision by a single Judge and stands on the same footing as the Madras case. There is nothing else on this subject in the judgment than the short observation, "the Provident Funds Act does not in my opinion prohibit the appointment of a receiver of the sum lying to the credit of the deceased in the Provident Fund. " Possibly the view was taken that on the death of the employee and in the absence of any dependent or nominee becoming entitled to the fund under the rules, it became money payable to the heirs of the deceased and lost its original nature of being a compulsory deposit. The case of Dominion of India, repre senting E. 1. Administration and Another vs Ashutosh Das and Others(4) refers no doubt to Rajindra Narain Singh 's case but does not discuss it in any detail. Roxburgh J. merely states "surely it is an improper use of that equita ble remedy to employ it to avoid a very definite bar created by statute law to achieving the very object for which the receiver is appointed. " The decision in Ramprasad vs Moti ram(5) related to the attachment and sale in execution of a (1) (4) (2) (5) (1946) 25 Pat. 705. (3) 773 money decree of the interest of a khoposhdar in a khorposh grant which was heritable and transferable. It affords us no assistance. The learned counsel for the respondents relied on three decisions of the Privy Council as lending him support. One is Nawab Bahadur of Murshidabad 's case(1) already referred to. Vibhudapriya Thirtha Swamiar vs Lakshmindra Thirtha Swamiar(2) and Niladri Sahu vs Mahant Chaturbhuj Das and Others(3) are the other two eases and they relate to maths and alienations by way of mortgage of endowed properties by the respective mahants for alleged necessity of the institu tions. They bear no analogy to the present ease. The mahants had a beneficial interest in the properties after being provided with maintenance. A receiver could be ap pointed in respect of such beneficial interest so that the decrees obtained may be satisfied. With great respect to the learned Judges of the Court below, we are of the opinion that execution cannot be sought against the Provident Fund money by way of appointment of a receiver. This conclusion does not, however, apply to the arrears of salary and allowance due to the judgment debtor as they stand upon a different legal footing. Salary is not attach able to the extent provided in Section 60, clause (1), Civil Procedure Code, but there is no such exemption as regards arrears of salary. The learned Attorney General conceded that this portion of the amount can be proceeded against in execution. The Provident Fund amount was not paid to the subscriber after the date of his retirement in January 1947. This, however, does not make it any the less a compulsory deposit within the meaning of the Act. Whatever doubt may have existed under the earlier Act of 1897 the decisions cited for the respondent, Miller vs B.B. & C.I. Railway(4) and Raj (1) (1931) 58 I.A. 215. (3) (1926) 53 I.A. 253. (2) (1927) 54 I.A. 228. (4) 774 Kumar Mukharjee vs W.G. Godfrey(1) are under that Act, the meaning has now been made clear by the definition in section 2 of the present Act; any deposit "remaining to the credit of the subscriber or depositor after the happening of any such contingency" is also a compulsory deposit; and the contingency may be retirement from service. In the result, the appeal is allowed and the order of the lower court dated 1st February, 1949, appointing a receiver is set aside as regards the Provident Fund amount of Rs. 1,563 lying to the credit of the judgment debtor. Under the condition granting special leave, the Government will pay the 1st respondent 's costs of this appeal. Appeal allowed. Agent for the respondent No. 1: Naunit Lal. Agent for the respondent No. 2: P.K. Chatterjee. [/INST] A receiver cannot be appointed in execution of a decree in respect of a compulsory deposit in a Provident Fund due to the judgment debtor. Whatever doubts may have existed under the earlier Act of 1897, the definition of "compulsory deposit" in section 2 (a) of the Provident Funds Act (XlX of 1925) clearly includes deposits remaining to the credit of the subscriber or depositor after he has retired from serv ice. Arrears of salary and allowances stand upon a different footing and are not exempt from being proceeded against in execution. </s>

<s>[INST] Summarize the following judgement: Civil Appeal No. 81 of 1956. Appeal from the judgment and decree dated September 24,1952, of the Patna High Court in First Appeal from Original Decree No. 2 of 1947, arising out of the judgment and decree dated August,31, 1946, of the Special Subordinate Judge, Chaibassa, in Money Suit No. 3 of 1941. L.K. Jha, B. K. Saran, section T. Hussain, section K. Jha and K. L. Mehta, for the appellant. H. N. Sanyal, Additional Solicitor General of India, J. C. Das Gupta and R. C. Prasad, for respondent No. 1. 1960. April 21. The Judgment of the Court was delivered by DAS GUPTA, J. Dhalbhum estate which covers an area of more than 1,000 sq. miles and lies partly in the District of Midnapur and partly in the District of Singhbhum is rich in minerals. In 1900 the then Proprietor of this estate Raja Satrughan Deo Dhabal Deo the predecessor in interest of the first respondent Jagdish Deo Dhabal Deo granted permanent lease of the mining rights for certain metals and minerals in this estate to Prince Mohammad Bakhtyar Shah of Tollygunge in the District of 24 Parganas. Raja Satrughan Deo Dhabal Deo died in 1916. Before his death, however, the management of the estate had been taken over by 'the Deputy Commissioner of Singhbhum under the Chotanagpur Encumbered Estates Act. In the course of such management the Manager of the Estate granted on September 1, 1919, to the Official Receiver to the estate of Prince Mohammad Bakhtyar Shah another lease in respect of mining rights in the same area. The present litigation was commenced by the first respondent with a view to recover rents and royalties on the basis of the second lease from the heirs and representatives of the estate of Prince Mohammad Bakhtyar Shah and also from the present appellant as Receiver to that estate. As under the terms of the lease the lessor is entitled to the half share of the receipts on account of 79 606 rents and royalties and other incomes in respect of the minerals demised and the exact income could not be known until accounts were furnished by the lessee, the defendant prayed for a decree for accounts from January 1, 1926, and for a decree for the sum found due on such accounts. As the suit was brought on August 12, 1941, the period prior to August 12,1935, would prima facie be barred by limitation. According to the plaintiff, limitation was saved by the acknowledgments that had been made from time to time by the then Receiver of the estate. Two defences were raised by the Receiver who was the only contesting defendant. The first was that the lessor had dispossessed him from part of the leasehold property and so there ought to be total suspension of rents and royalties. The second defence was as regards the claim for the period prior to August 12, 1935. It was pleaded that the letters which are claimed to have acknowledged the liability did not in law amount to acknowledgment of liability and that in any case the alleged ackowledgments being by the Receiver who was an agent of the court and not an agent of the parties the acknowledgments would be of no avail in saving limitation. Though the written statement itself did not in terms mention the nature of the lessee 's dispossession from the leasehold property the definite case at the trial was that this dispossession was in respect of minerals which had been specifically excluded from the earlier lease of 1900 but according to the defendant included in the later lease. One of the main questions in the appeal is whether the minerals specifically excluded in cl. 16 of the earlier lease were demised to the lessee by the later lease of 1919. of the several issues that have been framed we are therefore con cerned now only with the two issues in respect of these two defences. The first of these is: " Is the defendant entitled to suspension of rents and royalties as claimed " ; the second is: " Is any portion of the plaintiff 's claim barred by limitation? " The Subordinate Judge held on a construction of the lease of 1919 that it did not include minerals specifically excluded by cl. 16 of the earlier lease and as the only 607 case of dispossession from leasehold property was made in respect of these minerals the plea of suspension of rent must fail. He also negatived the plea of limitation, being of opinion that the Official Receiver was competent to make such acknowledgments and that in fact there were acknowledgments of the plaintiff 's liability within the meaning of section 19 of the Limitation Act. With regard to the period from 1935 to 1941. , regarding which no question of limitation arose, the Subordinate Judge gave a decree of rendition of accounts and for payment of such amounts as would be found on accounting by the Commissioner. On the basis of his finding that there was an acknowledgment of liability to the extent of Rs. 67,459 3 3 as due under the terms of the two leases up to the year 1935 but that there was no material on the record to find out as to what was the amount due up to that year on the basis of that second lease,, he made an order in the following terms: " The defendant is hereby directed to assess and state the amount due under the lease in suit out of the said sum of Rs. 67,459 3 3 on the basis, of the accounts of his office. in respect of the plaintiff 's dues within two months from this date, failing which a commissioner will be appointed to take accounts and ascertain the amount due to the plaintiff, and the defendant shall be liable for the costs of the same. " Against this decree the contesting defendant, the Receiver appealed to the High Court of Judicature at Patna. Before the appeal court two points were raised. The first was that on a proper construction of the 1919 lease it should be found that the minerals specifically excluded in clause 16 of the earlier lease were included in the 1919 lease and consequently, the lessor having granted certain leases to other parties in respect of these minerals in the area the lessee was entitled to suspension of rents. The other point raised. was that in law there was no acknowledgment which, could save limitation in respect of the claim prior to, August 12, 1935. 608 Patna High Court who heard the appeal agreed with the conclusions of the Trial Judge. On the first point they held that the minerals excluded by clause 16 of the 1900 lease were not included in the Second lease and so there was no question of any suspension of rents. They also held that quite apart from the question of construction of the document, the lessee was not entitled to suspension of rents as in order to justify witholding of the rents, the act of the landlord must be forcible or, at any rate, tortious and that these conditions had not been established in the present case. On the second question, the learned judges held that the letters on which the plaintiff relied to show acknowledgments by the Receiver did in law amount to acknowledgments and the acknowledgments being by the Receiver who was himself bound to pay the rent due to the superior landlord were good acknowledgments within the meaning of section 19 of the Limitation Act. Accordingly they dismissed the appeal. The present appeal has been brought by the con. testing defendant the Receiver on a certificate given by the High Court under article 133 of the Constitution. Both the defences raised in the court of appeal have been pressed before us. The alleged dispossession on the basis of which the first defence of a right to suspension of rent is urged is only in respect of minerals mentioned specifically in clause 16 of the earlier lease of 1900. It is necessary therefore to decide in the first place whether these minerals mentioned in clause 16 of the earlier lease have been included in the second lease. If as found by the courts below they have not been so included no question of suspension will arise. If they have been included, some other questions of law and fact may have to be considered in deciding whether the defendant 's plea of suspension of rent can succeed. While primarily we have to construe the 1919 lease to find an answer to the question indicated above, it will be necessary for that very purpose to refer to several portions of the earlier lease of 1900. The very first clause in the operative portion of the 1900 lease is in these words: 609 " That you shall prospect, raise, purify, melt and sell gold, silver, copper, lead, zinc, iron, mercury,, mica, sulphur, copper sulphate, coal, chalk, redearth, etc., mati slate stone and all kinds of precious stones such as diamond, ruby, emerald, topaz, crystals, etc., lying on the surface and subsoil of Ghatsila otherwise called pargana Dhalbhum, mentioned in Schedule excluding the 2 mouzas Narsinghgarh and Ghatsila and the Dibkulis mentioned in Schedule below. " It will be noticed that this clause does not mention stones, lime stones, ghuting or ballasts. Clause 6 of the lease however provided that the lessee shall be " competent to take stones, lime stones, ghuting and ballast which may be required for constructing buildings, bungalows and pathways, etc., necessary for the aforesaid mining work free of cost and rent. " Clause 16 of the lease contains some further provisions as regards these and is in these words : " That by virtue of the aforesaid patta, you shall not be competent to offer any obstruction either to me or to my any authorised person to raise stones (used) for utensils or stones, lime stone and ghuting, etc., for buildings which are not covered by this patta and sell the same to me or to tenants, etc., under me to dig bandh, tank, canal and wells, etc., but the terms of the said patta shall hold good in respect of the underground minerals, etc., lying under the said wells, etc." Two things that are abundantly clear from this document are: (1) that the mining rights were specifically granted in respect of gold, silver, copper lead, zinc, iron, mercury, mica sulphur, copper sulphate, coal, chalk, red earth and certain precious stones such as diamond, ruby, emerald, topaz, crystals, etc., and (2) that stones for utensils or stones, limestones, ghuting, etc., and ballast for buildings were specifically excluded from the lease. By the later lease of 1919 the lessor gave and the lessee obtained mining rights in respect of certain minerals not granted by the earlier lease. The question is whether what was granted by the later lease included in addition to things which had not been specifically named in the 610 earlier grant also things which had been specifically excluded there. The important portion of the operative clause of the later lease is in these words: " In consideration of the rent hereby reserved and of the covenants and conditions hereinafter contained the Manager hereby grants demised unto the Receiver all and singular all metals and minerals of whatsoever kind or description other than those specifically comprised in and granted by the principal lease. . . . . . . rights, privileges and powers comprised in and granted to the said Prince Mohammad Bakhtyar Shah by the said principal lease in all respects as though the same were repeated herein so far as they do not contradict any of the provisions herein contained and are still existing and capable of taking effect. " The covenant runs thus: Receiver covenants with the Manager that he will at the time and in the manner provided for in the said principal lease pay the rent or royalty reserved hereby and will carry out and comply with all the provisions and conditions comprised in the said principal lease so far as they are applicable to these presents in the same manner as though they had been inserted herein. " The document contains next an agreement that the Receiver shall be at liberty to grant under leases subject to certain conditions and provisions. One of the conditions mentioned is " That all such underleases shall be subject to such special terms in regard to specific minerals as may be prescribed from time to time by the Government Rules relating to Mining Leases and shall be subject to the provision of clause 16 of the said principal lease. " The lease concluded with the words: "Provided always and it is hereby agreed that nothing herein contained shall be deemed to show that the Pottah of the tenth day of January one thousand and nine hundred made between Raja Satrughan Deo Dhabal Deo, son of Gopinath Deo Dhabal Deo, deceased and the Hon 'ble Prince 611 Mohammad Bakhtyar Shah, son of Prince Mohammad Anwar Shah, deceased is not still valid and subsisting. " In his attempt to establish that by this later lease the lessor granted a lease even of those minerals which had been excluded specifically by clause 16 of the earlier lease, Mr. Jha has arrayed in his aid several well established principles of construction. The first of these is that the intention of the parties to a document of grant must be ascertained first and foremost from the words used in the disposition clause, understanding the words used in their strict, natural grammatical sense and that once the intention can be clearly understood from the words in the disposition clause thus interpreted it is no business of the courts to examine what the parties may have said in other portions of the document. Next it is urged that if it does appear that the later clauses of the document purport to restrict or cut down in any way the effect of the earlier clause disposing of property the earlier clause must prevail. Thirdly it is said that if there be any ambiguity in the disposition clause taken by itself, the benefit of that ambiguity must be given to the grantee, the rule being that all documents of grants must be interpreted strictly as against the grantor. Lastly it was urged that where the operative portion of the document can be interpreted without the aid of the preamble, the preamble ought not and must not be looked into. The correctness of these principles is too well established by authorities to justify any detailed discussion. The task being to ascertain the intention of the parties, the cases have laid down that that intention has to be gathered by the words used by the parties themselves. In doing so the parties must be presumed to have used the words in their strict grammatical sense. If and when the parties have first expressed themselves in one way and then go on saying something, which is irreconcilable with what has gone before, the courts have evolved the principle on the theory that what once had been granted cannot next be taken away, that the clear disposition by an earlier clause will not be allowed to be out down by later 612 clause. Where there is ambiguity it is the duty of the Court to look at all the parts of the document to ascertain what was really intended by the parties. But even here the rule has to be borne in mind that the document being the grantor 's document it has to be interpreted strictly against him and in favour of the grantee. Bearing these principles in mind we shall now examine the 1919 lease to perform this task of ascertaining the intention of the parties as to what was being granted by this lease. The disposition clause as has already been set out is in these words: " The Manager hereby grants demised unto the Receiver all and singular all metals and minerals of whatsoever kind or description other than those specifically comprised in and granted by the principal lease. " On behalf of the appellant it is argued that if the totality of metals and minerals in the area is denoted by the symbol "X" and what was granted by the earlier lease is denoted by the symbol "Y" the intention of the parties in using the words set out above was that this lease should be in respect of "X" minus "Y". We are afraid however that this is an over simplification of the problem which we must resist. While it is true that strict grammatical sense of the words must be given effect to, words and phrases are not used by people always and invariably in the same sense. As has often been emphasised by eminent judges the intention of persons using certain words cannot be discovered by considering the words in the abstract. When in this lease the grantor used certain words, what we cannot ignore is that when words set out above were used in the present lease both the parties had present in their minds the fact of the principal lease. They were not only well aware of the fact of the earlier lease but actually referred to it as the principal lease and repeatedly emphasised the fact that the terms and conditions of the principal lease in so far as not contradicted by the present lease would remain valid and effective. One of the principal facts of that earlier lease is that while some metals and minerals were specifically granted thereby some were specifically excluded, In interpreting the words of 613 the disposition clause we have to take notice of the fact that no reference is being made to that fact of specific exclusion. The question that arises for determination is whether by this omission to make a specific reference to the exclusion clause of the previous lease the parties intended that the exclusion clause will have no effect. The appellant 's argument is that the necessary result of the words " grants demised unto the Receiver all and singular all metals and minerals of whatsoever kind or description other than specifically comprised in and granted by the principal lease" is that the exclusion clause of the earlier lease was itself being excluded. While there is some scope for that interpretation, if we do not look further, we are unable to agree with the learned Advocate that it is clear and unambiguous that by this reference to the granting clause of the earlier lease and the words used in respect thereof, the exclusion clause of the earlier lease was being necessarily excluded. There is in our opinion as much scope for arguing that the exclusion clause not being in terms referred to would remain valid and active as there is for the appellant 's argument that the words used show an intention to exclude the exclusion clause itself. In cases of ambiguity it is necessary and proper that the court whose task is to construe the document should examine the several parts of the document in order to ascertain what was really intended by the parties. In this much assistance can be derived from the fourth condition of the conditions which were imposed by the lease as regards the grant of sub leases. This condition provided inter alia that all such under leases to be granted by the lessee shall be subject to the provisions of clause 16 of the principal lease. In other words, the sub lessees shall not be competent to offer any obstruction to the head lessor or to any other person authorised by him to raise stone for utensils or stones or lime stone and ghuting, etc., for buildings and in selling the same. Nor will he be competent to offer any obstruction to any person authorised by the lessor in digging bandh, tank, canal and wells, etc. In terms this is a provision as regards under leases only. But the question which springs to the mind is: What could be the sense of 80 614 such a term being imposed in respect of under lessees if so long as under leases were not given, the lessee himself would not be bound by the provisions of clause 16 of the principal lease and would be competent to obstruct the head lessor in the several matier is mentioned in clause 16 ? It is in our opinion unthinkable that such a clause as this fourth clause would be included in respect of sub lessees unless it was also the intention of the parties that the lessee himself would be bound by the provisions of cl. 16 of the principal lease. The view that this must have been the intention is strengthened by the concluding words of this lease which provide in substance that notwithstanding anything in the later lease the principal lease would be valid and subsisting. Here also there would be no point in saying that the principal lease would be valid and subsisting as regards merely the minerals which had been specifically 'granted by the principal lease. As regards the principal lease being binding in respect of those minerals, there could be no doubt whatsoever and the concluding clause of the 1919 lease would be unnecessary and meaningless. As regards the metals and minerals which are excluded by cl. 16 there might however be some scope for argument as to what would prevail. But for some appre hension in the mind of the grantor perhaps on account of clause 6 that there might be some scope of difference as regards the metals and minerals mentioned in el. 16 of the earlier clause, the inclusion of this clause in the principal lease itself would perhaps be unnecessary. It was as a safeguard against that uncertainty that the concluding sentence of the later lease uses the words that we find. It appears to us reasonable therefore to hold that of the two meanings of which the words in the disposition clause are capable, the meaning that the parties intended that the minerals excluded by clause 16 of the principal lease were not covered by the present grant but would remain excluded, should be accepted. We have so long not referred to the preamble of the document. The relevant portion of the same which is of some assistance in construing the document before us, occurs where the Manager mentions the 615 consent of the High Court as regards this later lease. The passage runs thus: " Whereas recently certain disputes have arisen between the Manager as representing the Estate of the said Sri Sri Satrughna Deo Dhabal Deb, and the Receiver as representing the estate of the said Prince Mohammad Bakhtyar Shah now deceased with regard to the construction of the principal lease and the minerals comprised therein, and whereas in order to put an end to all such disputes and differences of opinion and for the purpose of preventing litigation and consequent loss of both the said Estates it has been agreed by and between the parties hereto subject to the consent and approval of the said High Court that the Manager shall grant to the Receiver a lease of all minerals other than those specifically mentioned in the said principal lease. " In the judgment of the Trial Court there is a statement that the dispute which bad arisen as regards the construction of the principal lease was whether a mineral known as wolfram was included in the lease of 1900 or not. The correctness of this observation in the Trial Court 's judgment based apparently on statements made at the bar has not been disputed before us. If that was the dispute then the object of the second lease was obviously to include therein, in respect of the purposes of the granting clause of the first lease even those minerals which had not been included. That the dispute must have been of the nature, as the Trial Court believes ' appears probable also from the use of the words " other than those specifically mentioned " in the preamble. The dispute being on the question of what was mentioned and what was not mentioned in the granting clause, the object of granting the second lease was that what had not so long been mentioned in the granting clause would also be included in such grant by a supplementary lease. The question of what had been excluded was not in the contemplation of the parties at all. It is significant to note that there was no evidence that before the date of the second lease, any dispute had arisen as regards the operation of the exclusion clause, viz., Clause 16. A consideration of 616 the preamble therefore further strengthens the conclusion that this later lease did not grant any mineral rights in respect of what had been excluded by the principal lease in its 16th clause. If we interpret the disposition clause in the second lease in this way, as we think we must, there is no repugnancy between this clause and the later clauses and there is no scope therefore for the applicability of the doctrine relied on by Mr. Jha that if there be two clauses or parts of a deed one repugnant to the other the first part shall be accepted and the latter rejected. Nor is there any question in the present case of the words being construed strictly against the grantor. It is only if the meaning is not otherwise clear that the courts would by recourse to that rule give the grantee something which he might not clearly have received. As however on a proper construction of the document as a whole we reach the conclusion that the intention of the parties has been clearly established to be that the minerals excluded by clause 16 of the principal lease will remain excluded from the later lease also, there is no scope of any benefit accruing to the lessee by reason of the rule that all deeds are to be construed strictly against the grantor and in favour of the grantee. We have therefore come to the conclusion that the courts below were right in their conclusion that the minerals mentioned in cl.16 of the principal lease were not granted by the later lease also. The appellant 's plea of suspension of rents based as it is on the allegation that the metals and minerals mentioned in el. 16 of the principal lease were covered by the later lease must therefore fail. We think it unnecessary to consider in this appeal the question whether if the construction which the appellant wanted to place on the document was correct the plea of suspension of rents would have been available to him and we express no opinion on the correctness or otherwise of the views expressed by the High Court as regards the circumstances in which a plea of suspension of rent can succeed. There remains for consideration the question of limitation as regards the period of the claim prior to 617 August 12, 1935. On this point the learned counsel for the appellant has advanced a two fold contention before us. In the first place he has contended that the alleged acknowledgments were conditional, the condition as stated being that the statements of account enclosed with the letters which are said to constitute the acknowledgments must be accepted as correct. In support of his argument Mr. Jha drew our attention to the words used in Exhibit 2(1) dated March 7, 1931, which typifies the nature of acknowledgments in the other letters relied on by the plaintiff. This letter addressed by the Official Receiver to Raja Jagdish Deo Dhabal Deo is in these words: "Sir, I have the honour to send herewith two statements of account showing an aggregate sum of Rs. 4,993 6 1 as royalty due to the Dhalbhum Raj by the above estate from 1st January to 31st December, 1930. On your accepting the statements as correct a cheque for the said sum of Rs. 4,993 6 1 will be sent to you. Besides the above, there is lying to the credit of the Dhalbhum Raj the sum of Rs. 31,944 8 3 being the royalty upto the end of December, 1929. I shall be obliged if you will kindly let me know whether you are prepared to accept the same and on hearing from you I shall be glad to forward to you a cheque in payment thereof." According to Mr. Jha the first statement as regards the sum of Rs. 4,993 6 1 due to the Dhalbhum Raj by the above estate from 1st January to 31st December, 1930, was not a clear and independent statement of the dues but was made subject to the condition that this was accepted as correct. Similarly he argued that the statement in the next paragraph of the letter as regards the sum of Rs. 31,944 8 3 being the royalty up to the end of December, 1929, was also not a clear and independent statement of what is due but is made subject to the acceptance of the same. That in our opinion is not a proper reading of what is stated in the letter. In the very first sentence of the letter the Receiver is saying that a sum of Rs. 4,993 6 1 as shown 618 in the enclosure to the document was according to him due to the Dhalbhum Raj for the year 1930 on account of royalty; to this he was adding a statement in the second sentence that as soon as this statement of dues was accepted as correct a cheque in payment thereof would be sent. To say that however was not to say that the earlier statement of what is due is subject to the acceptance of the accounts. The idea in the second sentence clearly was that in case the statement of what was due was not accepted as correct the matter will have to be decided by further discussion before payment will be made. This second sentence cannot by any stretch of imagination be read as a condition to the statement made in the first sentence. Similarly the first sentence in the second paragraph of the letter as regards the sum of Rs. 31,944 8 3 being royalty up to the end of December, 1929, is, as we read the letter, made independent of what was stated in the following sentence and was not subject thereto. The argument that these acknowledgments were conditional acknowledgments has therefore been rightly rejected by the High Court. The second contention urged by the learned counsel is that in any case an acknowledgment by the Receiver of an estate is not an acknowledgment by an agent of the owners of the estate " duly authorised in this behalf " within the meaning of Explanation II of section 19 of the Limitation Act, and so is not an acknowledgment within the meaning of section 19(1) of the Limitation Act. According to the learned counsel " duly authorised in this behalf " in Explanation II of section 19 means " duly authorised by the debtor " and does not include duly authorised by law or by an order of the Court. For this proposition we can find no support either in authority or principle. Explanation II to section 19 of the Limitation Act in saying " for the purposes of this section 'signed ' means signed either personally or by an agent duly authorised in this behalf " has not limited in any way the manner in which the authority can be given. The view taken in this matter by a Full Bench of the Bombay High Court in Annapagonda vs Sangadiappa (1) that " duly authorised " would include (1) 619 duly authorised either by the action of the party indebted or by force of law or order of the Court has been followed in other High Courts also (Vide: Rashbehary vs Anand Ram (1); Ramcharan Das V. Gaya Prasad (2) ; Lakshumanan vs Sadayappa (3 ) and Thankamma vs Kunhamma (4) and in our opinion represents the correct state of law. Mr. Jha has next argued that, in any case, law does not authorise the Receiver of an Estate to make acknowledgments of debt due from the estate. For this proposition he has relied on a decision of the Bombay High Court in Currimbhai vs Ahmedali (5). In that case it was held that an acknowledgment by an official assignee will not amount to an acknowledgment by an agent of the debtor. Though this case does not deal strictly with the case of a Receiver, Mr. Jha has relied on the reasoning therein as supporting his con tention. Our attention has been drawn by Mr. Sanyal, on behalf of the respondent to the fact that a contrary view has been taken in Lakshmanan Chetty vs Sadayappa Chetty (6). Mr. Sanyal has argued that in respect of a debt due from the estate the Receiver of the estate fully represents the owners of the estate and that once it is held, as it must be, that the Receiver had authority to pay the debt, Mr. Sanyal argues, it must necessarily be held that acknowledgment of a debt as incidental to the Receiver 's duties in respect of the payment of the debts, is also within his authority. So, he argues that in every case an acknowledgment by a Receiver is an acknowledgment by a duly authorised agent of the debtor. The above is a brief indication of the arguments on either side on Mr. Jha 's contention that the Receiver has no authority to acknowledge debts on behalf of the Estate. It is unnecessary for us however to decide for the purpose of the present appeal the question whether a Receiver is an agent of the owners of the estate of which he is the Receiver for the purposes of an acknowledgment of a debt under section 19 of the Limitation Act. (1) (2) 30 All. 422 (3) A.I.R. 1919 Mad. 816. (4) A.I.R. 1919 Mad. 370. (5) 58 Born. (6) 35 M.L.J. 571. 620 In the present case the suit is based on the second lease of 1919 which was executed in favour of the then Receiver. The acknowledgments by which limitation is claimed to have been saved is by a previous Receiver of the Estate through whom the appellant who is the present Receiver has derived his liability to pay the debt. Section 19 is therefore in terms applicable as the acknowledgements have been signed personally by those previous Receivers and no recourse is needed by the plaintiff to the second part of Explanation 11. This position was indeed fairly conceded by Mr. Jha who agreed that in view of this it was not necessary for us to decide whether the Receiver of an Estate is by that fact itself an agent of the owners of the estate duly authorised to make acknowledgments under section 19 of the Limitation Act. There can be no doubt that the acknowledgments on which the plaintiff relies are acknowledgments within the meaning of section 19 of the Limitation Act and save limitation in respect of the period prior to August 12, 1935. The Courts below were therefore right in rejecting the defendant 's plea of limitation. As both the contentions raised before us fail, the appeal is dismissed with costs. Appeal dismissed. [/INST] In 1900 the then proprietor of the Dhalbhum estate who was the predecessor in interest of the first respondent granted a permanent lease of the mining rights for certain metals and minerals in the estate to one Prince Mohammad Bakhtyar Shah. During the lifetime of the said proprietor the management of the estate was taken over by the Deputy Commission of Singhbhum under the Chotanagpur Encumbered Estates Act and after the former 's death the manager of the Estate granted to the Official Receiver to the estate of Prince Mohammad Bakhtyar Shah another lease in respect of mining rights in the same area in 1919. The first respondent commenced the present litigation for the purpose of recovering rents and royalties on the basis of the second lease from the heirs and representatives of the estate of Prince Mohammad Bakhtyar Shah and also from the appellant as the Receiver to that Estate. The decision of the case depended upon the construction of the two leases of 1900 and 1919 and the Trial Court and the High Court decided the case in favour of the plaintiff respondents. On appeal by the contesting defendant appellant on a certificate granted by the High Court : Held, that the intention of the parties to a dispositive document must be gathered from the words used by the parties themselves and they must be presumed to have used the words in their strict grammatical sense. If the statements made in the earlier part of the document were irreconcilable with those made in the later part, the earlier part must prevail. In cases of ambiguity the court should look at all the parts of the document to ascertain the intention of the parties. If ambiguity still remains, the Court should interpret the document strictly against the grantor and in favour of the grantee. Under Exp. 11 of section 19 of the Limitation Act the words duly authorised " would include duly authorised either by the action of the party indebted or by force of law or order of the court. Annapagonda vs Sangadiappa, , Rashbehari vs Anand Ram, , Ramcharan Das vs Gaya Prasad, 30 All. 422, Lakshumanan vs Sadayappa, A.I.R. 1919 Mad. 816 and Thankamma vs Kunhamma, A.I.R. 1919 Mad. 370, approved. 605 Currimbhai vs Ahmedali, and Lakshmanan Chetty vs Sadayappa Chetty, 35 M.L.J. 571, considered. </s>

<s>[INST] Summarize the following judgement: : Civil Appeal No. 151 of 1960. Appeal by special leave from the judgment and order dated November 23, 1959, of the Madhya Pradesh High Court, Jabalpur, in First Appeal No. 78 of 1959, arising out of the judgment and order dated May 12, 1959, of the Election Tribunal, Raigarh, in Election Petition No. 76/1957. G. section Pathak and G. C. Mathur, for the appellants. N.C. Chatterjee, S . K. Kapur, Y. section Dharamadhikaree and A. G. Ratnaparkhi, for respondent No. 1. 1960. April 22. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. Does the failure of a candi date to specify his age as required by the prescribed form of the nomination paper amount to a defect of a 652 substantial character under section 36(4) of the Representation of the People Act, 43 of 1951 (hereinafter called the Act)? That is the point of law which arises for our decision in the present appeal. The said point arises in this way. On February 25, 1957, polling took place at the General Election to the Madhya Pradesh Legislative Assembly from the Mamendragarh Double Member Constituency. Thirteen candidates had offered themselves for election either for the general or the reserved seat at the said election. Mr. Brijendralal Gupta, appellant I and Thakur Raghubir Singh, appellant 2, were the Congress candidates while respondents 1 and 7 had been adopted by the Praja Socialist Party, respondent 4 and one Sadhuram by the Jan Sangh and the remaining candidates had filed their nominations as independent candidates. Udebhan Tiwari, respondent 5, bad omitted to make the declaration regarding his age in his nomination paper. This defect was discovered at the time of the scrutiny of the nomination papers on February 1, 1957, and as a result his nomination paper was rejected by the returning officer. Subsequently respondent 6 withdrew his candidature with the result that eleven candidates took part in the contest. After the polling took place and the votes secured by the contesting candidates were counted appellants 1 and 2 were declared duly elected to the General and the Reserved seat respectively. Thereupon Jwalaprasad, respondent 1, filed an election petition under section 81 of the Act challenging the election of the appellants on several grounds, one of which was that the nomination of respondent 5 had been improperly rejected. He, therefore, played that the election of the appellants should be declared void and he himself should be declared as having been duly elected. This election petition was made over for trial to the Election Tribunal, Raigarh. On the contentions raised by the parties before it the Election Tribunal framed as many as 49 issues; but in the present appeal we are concerned with only three of them which related to the rejection of the nomination of respondent 5. These three issues were (1) whether the nomination paper of respondent 5 was improperly rejected because of the omission to 653 fill in the age in the prescribed column, (2) whether at the time of the scrutiny respondent 5 was personally present and brought to the notice of the returning officer that his age was above 25 and the omission is simply accidental, and (3) if so, whether the rejection of the said nomination paper has rendered the whole election void ab initio under section 100(1)(c) of the Act. The Tribunal held that respondent 5 did not make any attempt to rectify the defect in the nomination paper, that the returning officer could not in law have allowed respondent 5 to remedy the said defect at the stage of the scrutiny of the nomination, and that the error in the nomination was a defect of a substantial character with the result that the rejection of the nomination paper was according to the Tribunal proper. In accordance with these findings the Tribunal dismissed the election petition. Respondent 1 then preferred an appeal against the decision of the Tribunal before the High Court of Madhya Pradesh at Jabalpur under section 116A of the Act. The High Court has allowed the appeal; it has held that respondent 5 had at the time of the scrutiny offered to supply the omission but the returning officer refused to allow him to do so, that the returning officer was bound to make a summary enquiry before rejecting respondent 5 's nomination paper, and that the non mention of the age in the nomination paper was not a defect of a substantial character. In consequence, according to the High Court, the rejection of respondent 5 's nomination paper was improper; that is why the High Court set aside the election of the appellants under section 100(1)(c) of the Act. It is against this decision of the High Court that the appellants have come to this Court by special leave. The learned counsel for the appellants wanted to challenge the correctness of the finding recorded by the High Court that respondent 5 offered to correct the defect in his nomination paper by supplying evidence about his age and that the returning officer had refused to give him an opportunity to do so. It is true that on this question the Tribunal had found in favour of the appellants; but, in our opinion, it was open to the High Court to consider the correctness or the 85 654 propriety of the said finding because the jurisdiction a of the High Court under section 116A of the Act is wide enough and is not confined to questions of law. It has been urged before us that the decision on this Darrow question of fact depends upon the appreciation of oral evidence led by the parties, and it was suggested that the High Court was not justified in interfering with the conclusion of the Tribunal on that point. We are not impressed by this argument. We would, therefore, deal with the present appeal on the basis that respondent 5 attempted to rectify the omission but was not allowed to do so by the returning officer. Therefore, if the defect in the nomination paper of respondent 5 was not of a substantial character the High Court 's decision would be right on the other hand, if the said defect is of a substantial character then the rejection of respondent 5 's nomination paper would be proper and the fact that respondent 5 was not allowed an opportunity to rectify the said omission would make no difference in law. That is how the only point which calls for our decision is whether the omission, in question is a substantial defect under 36(4) of the Act. Before dealing with this question it is relevant to refer to sections 33, 34 and read section 36. Section 33 provides for the presentation of the nomination paper and prescribes the requirements for a valid nomination. Section 33(1) is important for our purpose. It provides that on or before the date appointed under el. (a) of IS. 30 each candidate shall, either in person or by his proposer, between the hours of eleven o 'clock in the forenoon and three o 'clock in the afternoon deliver to the returning officer at the place specified in this behalf in the notice issued under section 31 a nomination paper completed in the prescribed form and signed by the candidate and by an elector of the constituency as proposer. Section 33(2) lays down that a candidate shall not be deemed to be qualified to be chosen to fill a reserved seat unless his nomination paper contains a declaration prescribed by it. Sub section (3) deals with the case of a candidate who, having held any office referred to in el. (f) of section 71, hag been dismissed and a period of five years has not elapsed since the 655 dismissal, and lays down that the nomination paper of such a person shall be accompanied by a certificate as specified. Sub section (4) requires that on the presentation of a nomination paper the returning officer shall satisfy himself that the names and electoral roll numbers of the candidate and his proposer as entered in the nomination paper are the same as those entered in the electoral rolls. The proviso to this subsection requires the returning officer to permit any clerical or technical error in the nomination paper in regard to the said names or numbers to be corrected, and where necessary, it authorises him to direct that any clerical or printing error in the said entry shall be overlooked. We are not concerned with the remaining two sub sections of section 33. Section 34 deals with deposits and provides that a candidate shall not deemed to be duly nominated for election from a constituency unless he deposits or causes to be deposited the amounts as prescribed in cls. (a), (b) and (c). Section 36 deals with the scrutiny of nomination&, authorises the returning officer to hold an enquiry,, ,prescribes the procedure to be followed by him in holding such an enquiry, required him to endorse his decisions on the points raised in the scrutiny, and to prepare a list of validly nominated candidates that is to say, whose nominations have been found valid, and to affix it to his notice board. Section 36(1) provides that on the date fixed for the scrutiny of nominations under section 30, the candidates and the other persons specified in it may attend at such time and place as the returning officer may appoint, and the returning officer shall give them all reasonable facilities for examining the nomination papers of all candidates which have been delivered within the time and in the manner laid down in section 33. Sub section (2) deals with the examination of nomination papers by the returning officer, and it provides that the said officer shall decide all objections which may be made to any nomination, and may, either on such objection or on his own motion after such summary enquiry, if any, as he thinks necessary, reject any nomination on any of the following grounds, (a) that the candidate either is not qualified or is disqualified for being chosen to till 656 the seat under any of the following provisions that may be applicable, viz., articles 84, 102, 173 and 19 1, and Part 11 of this Act, (b) that there has been a failure to comply with any of the provisions of section 33 or section 34, or (c) that the signature of the candidate or the proposer on the nomination paper is not genuine. Sub section (4) lays down that the returning officer shall not reject any nomination paper on the ground of any defect which is not of a substantial character. Sub section (5) prescribes the procedure for the scrutiny, and subs. (6) requires that the returning officer shall endorse on each nomination paper his decision accepting or rejecting the same and in case of rejection he shall record in writing a brief statement of his reasons for such rejection. Sub section (7) provides that for the purpose of this section a certified copy of an entry in the electoral roll for the time being in force of a constituency shall be conclusive evidence of the fact that the person referred to in that entry is an elector for that constituency unless it is proved that he is subject to a disqualification mentioned in section 16 of the Representation of the People Act, 1950 (43 of 1950). Sub 'section (8) requires the returning officer to prepare a list of validly nominated candidates and affix it to his notice board. It is clear that section 33 requires that a nomination paper must be completed in the prescribed form and signed by the candidate and by the elector of the constituency as proposer. The form prescribed in that behalf is Form No. 2B. The relevant portion of the prescribed form reads thus: Form 2B. Nomination Paper (See rule 4) Election to the Legislative Assembly of. . (State) (To be filled in by the proposer) I hereby nominate. . . as a candidate for election from the. . . Assembly Constituency. Full name of proposer. . . 2. Electoral roll number of proposer. . 3. Name of candidate 's ++father/husband. . . 4. Full postal address of candidate. . . 5. Electoral roll number of candidate. . . Date . Signature of proposer. 657 (To be filled by the candidate) 1, the above mentioned candidate, assent to this nomination and hereby declare (a) that I have completed. . . years of age; (b) that the symbols I have chosen are in order of preference (i) . . . . . . (ii) . . . . . . and (iii) . . . . . . Date Signature of candidate. Strike out one of the alternatives as necessary. It is common ground that the first part of the nomination paper which has to be filled in by the proposer was in order and the second part was duly 'signed by the candidate but failed to declare his age as prescribed by (a) above. When the returning officer noticed this omission he made an order rejecting respondent 5 'S nomination. The brief statement of reasons which the returning officer has recorded shows that he held that the failure of respondent 5 to declare his age cannot be treated as clerical or technical error, but is of a substantial nature since declaration as to age was necessary in order to entitle a candidate to be qualified under article 173 of the Constitution. The returning officer has also noted that he took the objection suo moto and rejected the nomination paper of respondent 5. Thus there is no doubt that respondent 5 's omitted to specify his age before he signed his nomination paper and in that sense his nomination paper has not been completed in the prescribed form. The question which arises for our decision is whether respondent 5 's omission to specify his age in his nomination paper amounts to a defect, and if yes,whether it is a defect of a substantial character under section 36(4) of the Act. On behalf of the appellants it has been conceded before us that the omission in question undoubtedly constitutes failure to comply with the provisions of A. 33, and so it attracts the provisions of section 36(2)(b) of the Act, but it is urged that the said omission does not amount to a defect under section 36(4) much less a defect which is of a substantial character. The argument is 658 that section 36(4) can apply only to such cases of non compliance with section 33 which can be said to amount to defects and not others, and since the omission in question is not a defect there is no scope for invoking the provisions of that, sub section. In support of this argument reliance has been placed on two English decisions. In The Queen vs Tugwell (1) Cockburn, C. J., held that the 9 votes whose validity was impeached had to be struck off because they had not complied with section 32 of the Municipal Corporation Act (5 & 6 Wm. 4, c. 76) and so section 142 could not cure their defect. The voting papers in question contained the Christian name and the surname of the candidate and his place of abode and nothing more, whereas section 32 required that they should also contain the description of the candidate. In other words, there was a total omission to supply the description required by section 32. It was, however, urged that the said omission should be treated as inaccurate description, and so the validity of the impugned votes should be sustained under section 142 which provides, inter alia, that no inaccurate description of any person shall hinder the full operation of the Act in respect of such person provided that the description of such person is such as to be commonly understood. Cockburn, C. J., held that in the cases of the 9 votes in question they were not dealing with the inaccurate description but a total omission of description which is one of the things required by section 32, and so section 142 was inapplicable. It appears that Lush,J., and Hannen,J. agreed with the conclusion of the Chief Justice with some hesitation. To the same effect is the decision in Baldwin vs Ellis (2). In that case the omission to state in the nomination paper the name of the parish for which the person nominated was qualified as a local government elector was held to be non compliance with the requirements of rule 4 of the Rural District Councillors Election Order, 1898, and that the said omission could not be cured by section 13 of the Ballot Act of 1872 since that section applied only to cases where there had been a wrongful admission of a nomination paper and not to those where a nomination paper had been rejected. It was also (1) (2) 650 held that the omission in question cannot be treated as inaccurate description of the person nominate within rule 13 of the Order of 1898 but was a clear non compliance with the requirements of rule 4 of that Order and as such it was not cured by rule 33. It would thus be seen that in both the decisions the question as to whether the particular omission amounted to an inaccurate description was decided in the light of the specific provision of the statute, and so they cannot sustain the broad argument that in no case can omission be treated as a defect. We may also incidentally point out that Halsbury has read these decisions in the same way (3). On the other hand the dictionary meaning of the word " defect" is "lack or absence of something essential to completeness", and in that sense omission to specify the age call and would be treated as a defect under section 36(4). Defect also means " a flaw or a fault or an imperfection"; but whether or not it includes an omission must necessarily depend upon the context in which the word is used. In our opinion, having regard to the context it would be unreasonable to hold that the word " defect " under section 36(4) excludes all cases of omission to specify the details prescribed by the statute in the nomination paper. We must accordingly reject the appellants ' argument that the omission in question is not a defect under section 36(4). The next question which we must consider is whether in the case of such an omission it was obligatory on the returning officer to hold an enquiry under section 36(2) of the Act. The High Court has held that the returning officer ought to have held an enquiry under section 36(2)(a) and satisfied himself whether or not respondent 5 was eligible to stand for the election. In our opinion the High Court was in error in coming to this conclusion. If the nomination paper of respondent 5 did not comply with the provisions of section 33 the case fell squarely under section 36(2)(b) and the only question which can arise in such a case is whether or not the defect arising from the failure to comply with the provisions of section 33 is of a substantial character or not. If the defect is not of a substantial (3) Halsbury 's 'Laws of England", Vol. 14, 3rd Ed., paragraphs foot note (a) on p. 95. 660 character the returning officer shall not reject the nomination paper on the ground of the said defect; if, on the other hand, the defect is of a substantial character the returning officer has to reject the nomination paper on the ground of the said defect, That is the effect of the provisions of section 36(2)(b) and (4) read together. An enquiry which is necessary under section 36(2)(a) may and can be held for instance in cases where the nomination paper shows the age of the candidate as above 25, but an objection has been raised that in fact he is below 25 and as such incompetent to stand for election under article 173 of the Constitution; in other words, the impugned nomination has complied with the provisions of section 33 and as such does Dot fall under section 36(2)(b) at all, nevertheless the validity of the nomination can be challenged on the ground that, in fact article 173 is not complied with. Cases falling under this class must be distinguished from cases falling under section 36(2)(b). In the latter class of cases the failure to comply with the provisions of section 33 being established there is no scope for any enquiry under section 36(2) (a). Once the alleged non compliance is proved, the defective nomination falls to be accepted or rejected according as the defect is of an unsubstantial or of a substantial character. Therefore, it is not right to hold that even after the returning officer was satisfied that the omission to specify his age showed that the nomination paper of respondent 5 had not complied with the provisions of section 33, he should still have held an enquiry under section 36(2) (a). Non compliance with the provisions of section 33 itself would justify the rejection of the nomination paper provided of course that the defect arising from the non compliance in question is of a substantial character. That takes us to the question as to whether the failure to specify the age in the nomination paper amounts to a defect of a substantial character under section 36(4) or not. There is little doubt that the age of the candidate is as important as his identity, and in requiring the candidate to specify his age the prescribed form has given a place of importance to the declaration about the candidate 's age. Just as the 661 nomination paper must show the full name of the candidate and his electoral roll number, and just as the nomination paper must be duly signed by the candidate, so must it contain the declaration by the candidate about his age. It is significant that the statement about the age of the candidate is required to be made by the candidate above his signature and is substantially treated as his declaration in that behalf. That being the requirement of the prescribed nomination form it is difficult to hold that the failure to specify the age does not amount to a defect of a substantial character. The prima facie eligibility of the person to stand as a candidate which depends under article 173 of the Constitution, inter alia, on his having completed the age of 25 years is an important matter, and it is in respect of such an important matter that the prescribed form requires the candidate to make the declaration. It would, we think, be unreasonable to hold that the failure to make a declara tion on such an important matter is a defect of an unsubstantial character. In this connection, it is relevant to refer to the fact that the declaration as to the symbols which the prescribed form of the nomination paper requires the candidate to make is by the proviso to rule 5 given a subsidiary place. The proviso to rule 5 shows that any non compliance with the provisions of sub rule (2) of rule 5 shall not be deemed to be a defect of a substantial character within the meaning of section 36, sub section In other words, this proviso seems to suggest that, according to the rule making authority, failure to comply with the require ments as to the declaration of symbols as specified in rule 5, sub rule (2), would have been treated as a defect, of a substantial character; that is why the proviso expressly provides to the contrary. This would incidentally show that the failure to specify the age can. not be treated as a defect of an unsubstantial character. On behalf of the respondents it has, however, been urged before us that the returning officer should not be astute to reject the nomination papers on technical grounds, and that in the present case the returning officer should have looked at the electoral roll and satisfied himself that respondent 5 was duly qualified 86 662 to stand for the election. His age is 48 and it was shown in the electoral roll against his name. It was thus a simple matter of looking at the electoral roll be satisfied that the omission to specify the age in the nomination form was no more than a technical breach of the requirements of section 33. We are not impressed by this argument. As we have already observed, in cases of non compliance with section 33 which attract the provisions of section 36(2)(b), there would be no occasion to hold an enquiry under section 36(2)(a). The only point to consider in such cases would be whether the defects in question are substantial or not; and so the argument that the returning officer could have easily verified the age of respondent 5 is not really material in construing section 36(4). In this connection it is relevant to consider the effect of the presumption which is raised under section 36(7) of the Act and its effect. As we have already noticed, under section 36(7) a certified copy of the entry in the electoral roll shall be conclusive evidence of the fact that the person referred to in that entry is an elector for that constituency ; but it must be remembered that this presumption is raised for the purposes of this section and it is made expressly subject to the last clause of this subsection, that is to say, the presumption can arise unless it is proved that the person in question is subject to any of the disqualifications men tioned in section 16 of the Act of 1950. The use of the adjective " conclusive " which qualifies" evidence " is technically inappropriate because the presumption arising from the production of the certified copy is by no means conclusive. It is also significant that in regard to the conclusive character of the relevant evidence the material provision as it stood originally has been subsequently amended by Act 27 of 1956. Originally the provision was that the relevant entry shall be conclusive evidence of the right of any elector named in that entry to stand for election or to subscribe the nomination paper as the case may be. The Legislature apparently thought that the presumption authorised by these words was unduly wide, and so, by the amendment, the prima facie and rebuttable presumption is now limited 663 to the capacity of the person concerned to be treated as an elector and nothing more, and that too unless it is proved that he suffers from any disqualification ' mentioned in section 16. Section 16 to which reference has thus been made prescribes disqualifications for registration in an electoral roll under three heads, (a) that the person is not a citizen of India, (b) that he is of unsound mind and stands so declared by a competent court, or (c) is for the time being disqualified from voting under the provisions of any law relating to corrupt and illegal practices and other offences in connection with elections. Thus the position is that the certified copy of the relevant entry would prima facie show that the person concerned is not subject to any of the said disqualifications, but this prima facie presumption can be rebutted by evidence to the contrary. There is yet another aspect of this matter to which reference may be made. The rebuttable presumption which arises under section 36(7) merely refers to the status of the person concerned as an elector. Let us consider what this presumption means. An elector under section 2, sub s.1, (e), of the Act in relation to a constituency means " a person whose name is entered in the electoral roll of that constituency for the time being in force and who is not subject to any of the disqualifications mentioned in section 16 of the Act of 1950". That takes us to the conditions prescribed by section 19 of the Act of 1950 for registration in the electoral roll. Section 19 provides that subject to the foregoing provisions of Part III of the said Act every person who, on the qualifying date (a) is not less than 21 years of age, and (b) is ordinarily resident is a constituency, shall be entitled to be registered in the electoral roll for that constituency. Thus when a presumption is raised under section 36(7) it may mean prima facie that the person concerned is not less than 21 years of age and is ordinarily resident in that constituency; but for the validity of the nomination paper it has to be proved that the candidate has completed 25 years of age. article 173 of the Constitution which prescribes the qualification for membership of State Legislature provides 664 that a person shall not be qualified in that behalf unless he (a) is a citizen of India, (b) is, in the case of a seat in the Legislative Assembly, not less than 25 years of age, and (c) possesses such other qualifications as may be prescribed in that behalf by or under any law made by Parliament. Confining ourselves to the requirement about age it is obvious that the presumption raised under section 36(7) would not be enough to justify the plea about validity of the nomination paper because the said presumption only tends to show that the person concerned has completed 21 years of age. It is clear that in regard to persons between 21 to 25 years of age their names would be registered in the electoral and so they would be electors if otherwise qualified and yet they would not be entitled to stand for election to the State Legislature. Thus it would not be correct to assume that a reference to the certified copy of the electoral roll would in every case decisively show that the age of the candidate satisfied the test prescribed by article 173 of the Constitution; in other words, the requirement about the completion of 25 years of age is outside the presumption under section 36(7), and that must be the reason why the prescribed nomination form requires that the candidate in signing the said form must make a declaration about his age. This consideration supports our conclusion that the declaration about the age is a matter of importance and failure to comply with the said requirement cannot be treated as a defect of an unsubstantial character. It now remains to consider some of the decisions which were cited before us by the learned counsel for both the parties. In Rattan Anmol Singh vs Atma Ram(1) this Court has held that the attestation required in the case of proposers and seconders who are not able to write their names is not a technical or unsubstantial matter, and so the failure to comply with the said requirement would amount to a defect of a substantial character. The appellants contend, and with some force, that this decision supports their case that like the attestation required in the case of an illiterate proposer or seconder the declaration as to the (1) ; , 665 age of the candidate is a matter of substantial importance, and failure to comply with the requirement of the prescribed form in that behalf cannot be treated as a defect which is not of a substantial character. In Pranlal Thakorlal Munshi vs Indubhai Bhailabhai Amin (1), the Election Tribunal, Baroda, has held that the omission by the candidate to mention his age in the nomination paper is a defect of a substantial character and that his nomination paper had been properly rejected on that account. The appellants have naturally relied on this decision in support of their case. The appellants have then referred us to certain decisions where the effect of the failure to specify the electoral roll number or other particulars has been considered, and it has been held that the failure in question amounts to a substantial defect under section 36(4) of the Act. (Vide: Rup Lal vs Jugraj Singh (2 ); Brij Sundar Sharma vs Election Tribunal, Jaipur (3 ); Balasubrahmanyan vs Election Tribunal, Vellore (4); and Ramayan Shukla vs Rajendra Prasad Singh (5). By parity of reasoning the appellants contend that the failure to mention the age is undoubtedly a substantial defect. It is unnecessary for us to consider the merits of these decisions. On the other hand the respondents have relied on the decision of this Court in the case of Durga Shankar Mehta vs Thakur Raghuraj Singh (6). Indeed it appears from the judgment of the High Court under appeal that in coming to its decision the High Court was influenced by certain observations made by Mukherjea, J., as he then was, in dealing with the case of Durga Shankar (6). In that case the validity of the election of Vasant Rao, respondent 2, was challenged before the Election Tribunal on the ground that he was not eligible to stand for election since at all material times he was under 25 years of age. It was, how ever, clear that no objection was taken before the returning officer in respect of the nomination paper of respondent 2, and the said nomination paper had been accepted by there turning officer. The question (1) (1958) 15 E.L.R 484. (3) (5) [1955] S.C.R. 267. 666 which was raised before this Court was whether the acceptance of respondent 2 's nomination paper could be said to be improper, and this Court held that the acceptance would have been improper if the want of qualification was apparent on the electoral roll itself or on the face of the nomination paper and the returning officer overlooked that defect or if any objection was raised and enquiry made as to the absence of qualification in the candidate and the returning officer came to the wrong conclusion on the materials placed before him. Since neither of these things had happened in that case, the Court held that the acceptance must be deemed to be a proper acceptance. Even so it was observed that the validity of respondent 2 's election could be challenged under section 100(2)(c) of the Act. With that aspect of the matter we are, however, not concerned in the present appeal. It would thus be clear that in the case of Durga Shankar (1) this Court had no occasion to consider the scope and effect of section 36(2Xb) and (4) of the Act at all, and so the observations made in the judgment on which reliance had been placed by the respondents in support of their plea that an enquiry should have been held in the present case do not really help us. The said observations must, with respect, be read in the context of the dispute which was raised before this Court in that case. The respondents have also relied upon the decision of this Court in Pratap Singh vs Shri Krishna Gupta (2). In that case this Court has no doubt observed that courts should not adopt a technical attitude in dealing with election matters and that " it is the substance that must count and it must take precedence over mere form ; but in appreciating the effect of these observations it is necessary to bear in mind the points which arose for decision in that case. It was the failure of the candidate to mention his occupation as required by rule 9 (1)(i) on which the validity of his nomination was impeached, and in dealing with that point this Court had to consider the effect of section 23 of the C. P. and Berar Municipalities Act, 2 of 1922, which provided that anything done or any proceeding taken under the said Act shall not be questioned on account (1) [1955] 1 S.C.R. 267 (2) A.I.R. 1956 S.C. 140, 141, 667 of any defect or irregularity not affecting the merits of the case. So the short point which the Court had to decide was whether the defect in the nomination form affected the merits of the case, and it held that there was no doubt that the said failure, could riot possibly affect the merits of the case. It was in the context of this legal position that the Court disapproved of the technical attitude adopted by the High Court in dealing with the question of the validity of the impugned nomination. It is significant, however, that even in that case the Court has referred with approval to its earlier decision in the case of Rattan Ammol Singh (1). There is another decision of this Court on which the respondents have relied. That is the case of Karnail Singh vs Election Tribunal, Hissar (2). It appears that in that case the nomination paper of Sher Singh had been rejected on the ground that column 8 in the nomination form was not duly filled up. The defect to which objection was taken was that the name of the sub division had not been stated under the relevant columns, though on evidence it was quite clear that there was no defect in identifying the candidate and that the candidate himself pointed out to the returning officer the entry of his name in the electoral roll, and this Court held that the defect in question was purely technical and that the Tribunal was perfectly right in holding that the nomination paper had been improperly rejected. It is difficult to see how this decision can assist the respondents at all. As we have already pointed out the omission to make a declaration about the age is, in our opinion, an omission to comply with the substantial requirement prescribed by the form and it cannot be compared with the omission with which this Court was concerned in the case of Karnail Singh (2). There is one more decision on which the respondents have relied. In Pt. Charanjit Lal Ram Sarup vs Lahri Singh Ram Narain (3) the Punjab High Court was dealing with a case where the nomination paper of a candidate had been rejected not only on account of the omission to state the age in the nomination paper but also for the reason that no evidence was led by the (1) [1955) 1 S.C.R. 481. (2) (3) A.I.R, 1958 Punj. 433. 668 candidate concerned or by his representatives or agents to show that the candidate had completed his 25 years though the returning officer had directed that such evidence should be led. It appears that the Election Tribunal also found that on the evidence adduced before it could not be determined with any amount of certainty as to whether at the time of filing the nomination paper Mr. Pirthi,the candidate in question, was above or below 25 years of age. That is why it was held that the rejection of the nomination paper could not be said to be improper. One of the points urged before the Punjab High Court was that the omission to state the age was not a defect of a substantial character but the High Court did not feel called upon to give a firm finding on this point, because in the case before it there was not only the impugned omission but there was also no material before the returning officer whereby that omission could be made good. We ought, however, to add that though on the facts proved in that case the election petition should have been dealt with under section 36(2)(b) and (4) it was apparently considered as falling under section 36(2)(a) and that, as we have already pointed out, is not the true legal position. Besides there are certain general observations made in the judgment which would indicate that the High Court was inclined to hold that the defect arising from the failure to declare the age in the nomination form was not of a substantial character. It is unnecessary to add that these observations do not correctly represent the effect of section 36(2)(b) and section 36(4) of the Act. In the result the appeal is allowed, the decision of the High Court is set aside and that of the Tribunal restored with costs throughout. Appeal allowed. [/INST] Thirteen candidates filed their nomination papers for election to the Legislative Assembly of Madhya Pradesh. The nomination of U was rejected on the ground that he failed to give a declaration as to his age as required in the nomination paper. After the poll the appellants were declared duly elected. Thereupon one of the unsuccessful candidates J filed an election petition challenging the election of the appellants, inter alia, on the ground that the nomination of U had been improperly rejected. The Election Tribunal dismissed the petition holding that U made no attempt before the returning officer to remedy the defect in the nomination paper, that the defect could not in law have been remedied at the stage of the scrutiny that the defect was of a substantial character and that the rejection of the nomination was proper. On appeal the High Court held that at the time of the scrutiny U had offered to supply the omission but the returning officer had refused to allow him to do so, that the returning officer was bound to make a summary enquiry before rejecting the nomination, that the non mention of age in the nomination paper was not a defect of a substantial character and that the rejection of the nomination was improper and consequently allowed the appeal and set aside the election of the appellants: 651 Held, that the omission to give the declaration as to age in the nomination paper was a defect of substantial character within the meaning of section 36(4), Representation of the People Act, 1951, and the rejection of the nomination for such an omission was proper. Rattan Anmol Singh vs Atma Ram, ; , Pranlal Thakorlal Munshi vs lndubhai Bhailabhai Amin, , Rup Lal vs jugaraj Singh, , Brij Sundar Sharma vs Election Tribunal, Jaipur, , Balasubyahmanyan vs Election Tribunal, Vellore, and Ramayan Shukla vs Rajendra Prasad Singh , referred to. Durga Shankar Mehta vs Thakur Raghuraj Singh, [1955] S.C. 140 and Karnail Singh vs Election Tribunal Hissar, , distinguished. Charanjit Lal Ram Sarup vs Lohri Singh Ram Narain, A.I.R. 1958 Punj. 433, disapproved. The word " defect" in section 36(4) included an omission to specify the details prescribed in the nomination. The distinction drawn in English cases between an " omission " and " inaccurate description" depended upon the specific provisions of the English statutes and did not obtain under the Indian Law. The Queen vs Tugwell, and Baldwin vs Ellis, , distinguished. Cases failing under section 36(2) (b) must be distinguished from those falling under section 36(2) (a). Where the nomination paper did not comply with the provisions of section 33 of the Act the case fell under section 36(2) (b) and the defective nomination had to be accepted or rejected according as the defect was of an unsubstantial or of a substantial character. In such a case it was not necessary for the returning officer to hold any enquiry. </s>

<s>[INST] Summarize the following judgement: Civil Appeals Nos. 324 and 325 of 1957. Appeals by special leave from the judgment and order dated April 10, 1953, of the former Hyderabad High Court in E.P.T. References Nos. 45215 and 453/5 of 1358 F. A.V. Viswanatha Sastri, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellant. K.N. Rajagopal Sastri and D. Gupta, for the respondent. April 18. The Judgment of the Court was delivered by S.K. DAS, J. These are two appeals with special leave from the Judgment and Order of the High Court of Hyderabad dated April 10, 1953, in two references under section 48(3) of the Hyderabad Excess Profits Tax Act. The question which the High Court answered against the assesses in the said references was 548 " Whether in the circumstances of the case, the officers of the Excess Profits Tax Department were right in treating the income of the assessee or the Industrial Trust Fund as income from business." , The High Court answered the question in the affirmative. The point for decision before us is if the High Court correctly answered the question. The relevant facts which led to the question and answer are these. There were two cotton mills in the State of Hyderabad (as it was then known) called Azamjahi mills and Osmanshahi mills. They were public joint stock companies. By a Firman e Mubarak of 1929 issued by the then Ruler of the State was formed an institution called the Industrial Trust Fund, the purpose of which was to help large and small industries on behalf of the Government of the State. The management of the Trust was entrusted to a Committee which consisted of three members of the Government, who were called Trustees. By two agreements dated April 12, 1934, and July 27, 1934, made between the Trustees of the one part and the two mills of the other, the Trustees were appointed secretaries, treasurers and agents of the said mills. Under these agreements the Trustees were given the general conduct and management of the business and affairs of the mills and they were entitled to appoint employees and were also entitled to delegate to other persons all or any of the powers, authorities, discretions, etc., under the agreements subject to the approval of the Board of Directors of the respective mills. By two other agreements also dated April 12, 1934, and July 27, 1934, the Trustees were appointed selling agents of the mills. By two agreements both dated October 16, 1938, which were supplemental to the selling agency agreements mentioned above, the Trustees were given power to delegate all or any of their powers, authorities, etc., to other persons subject to the approval of the Board of Directors of the respective mills. Till October, 1938, the Trustees exercised their powers and performed their functions under the agreements aforesaid through an Advisory Board, and Quamar Shaffi Tyabji, appellant before us, was appointed chairman of the Advisory Board on a remuneration of Rs. 1,500 549 per month plus a certain commission. Sometime in 1938 the Advisory Board was dissolved, and on December 6, 1938, an agreement was entered into between the Trustees and the appellant. Clause 11 of the preamble of this agreement recited: " The said Trustees are desirous of delegating such of the powers, authorities and discretions as such secretaries, treasurers and agents as also as such selling agents of the said two mills as aforesaid as are hereinafter mentioned to and appointing the said Quamar Shaffi Tyabjee as the managing agent of the business of the said trustees as such secretaries and treasurers and agents as also as such selling agents of the said two mills as aforesaid in and for the matters and purposes hereinafter mentioned." The agreement then recited that the approval of the Board of Directors of the two mills having been obtained, the appellant was appointed managing agent of the business of the Trustees as secretaries, treasurers and agents and also as selling agents of the two mills. Clause 2 of the agreement detailed the powers of the appellant which were the same as those of the Trustees to conduct and manage the business of the two mills, subject however to the general control of the Trustees. In other words, the full powers of management and of the selling agency in relation to both the mills were delegated to the appellant. Clause 3 said inter alia that the appellant would hold the office of managing agent and selling agent for the remaining period of the original managing agency and selling agency agreements. The remuneration of the appellant for the managing agency was fixed at Rs. 2,000 per month and a commission of 21 per cent. out of the commission of 121 per cent. per annum on the annual profits payable to the Trustees, subject to the condition that Osmanshahi mills made an annual profit of Rs. 1,50,000 and the Azamjahi mills made an annual profit of RE;. 2,00,000. For the selling agency a separate commission was payable on the sale of different kinds of goods subject again to the condition that the annual profits of the two mills did not fall below a particular figure. Clause 6 of the agreement related to the appointment and duties of a mill expert, Clause 7 72 550 provided for the termination of the agreement and said that the agreement shall terminate on the Trustees terminating the earlier agreements in their favour, provided however that in the event of the said Trustees deciding to transfer the said respective agreements and the rights thereunder to any one they shall in the first instance offer the same to the said managing agent on the same terms and conditions as may have been offered to them and on the further term that the managing agent shall make arrangement to the satisfaction of the said Trustees for the payment to them in cash or otherwise of the moneys they have spent in purchasing the managing agency rights of the said two mills as also the balance then due of the unsecured loans (i.e., other than first debenture loan) they have and may hereafter advance to the said two mills, so that the said managing agent shall have the first refusal thereof in the manner aforesaid, provided always that the said managing agent shall intimate to the said Trustees his acceptance of the said term within six weeks of the communication to him of the said offer and in the event of his omission to do so he shall be deemed to have not accepted the same. Clause 9 of the agreement is also important. It said : " The managing agent shall not assign the benefit of this agreement, the same being personal to himself." Clauses 10 and II related to the eventuality of winding up of the mills and its effect on the appellant 's right,; under the agreement. Under the terms of the agreement dated December 6, 1938, the appellant conducted the business of the mills, both as to management and selling. He was assessed to excess profits tax for the two chargeable accounting periods 1351F and 1352F, corresponding to October 1, 1941, to September 30, 1942, and October 1, 1942, to September 30, 1943, respectively. The total income assessed for 1351F was Rs. 2,37,451, which included a sum of Rs. 2,11,230 representing the appellant 's managing agency allowance and commission. The total income for 1352F was Rs. 4,90,027 which included Rs. 4,45,775 being the managing agency commission and allowance of the appellant. 551 Before the Excess Profits Tax authorities the appellant contended that he was only an employee of the Industrial Trust Fund and his remuneration under the agreement dated December 6, 1938, was merely salary and not income derived from business and therefore not liable to excess profits tax. The Excess Profits Tax authorities negatived this contention, and as required by the High Court the Commissioner of Income tax, Hyderabad, referred the question of law which we have set out at the beginning of this judg ment to the High Court for decision. On behalf of the appellant it has been submitted that on a true construction of the relevant agreements the Industrial Trust Fund was the managing agent as also the selling agent of the two mills; the Trustees employed the appellant on certain terms and gave him certain powers, and therefore the appellant,, an individual and not a firm, was not carrying on an independent business of his own; be was just carrying out the duties of an employee of the Trustees in spite of his being described as managing agent in the agreement of December 6, 1938. His income, therefore, was not income derived from business. We are unable to accept this line of argument a.,; correct. In Lakshminarayan Ram Gopal and Son Ltd. V. The Government of Hyderabad (1) this Court had occasion to explain the position of an agent, a servant and an independent contractor. It was there pointed out that the difference between the relations of master and servant and of principal and agent lay in this: a principal has the right to direct what work the agent has to do; but a master has the further right to direct how the work is to be done. An agent has to be distinguished on the one hand from a servant and on the other from an independent contractor. A servant acts under the direct control and supervision of his master, and is bound to conform to all reason. able orders given in the course of his work. An agent though bound to exercise his authority in accordance with all lawfull instructions which may be given to him from time to time by his principal, is not subject in its exercise to the direct control or supervision of the principal. Indeed, learned counsel for the appel (1) ; 552 lant accepts as correct the distinction made above and also accepts that the true relation between the Mills and the Trustees was that of principal and agent; but be contends that as between the Trustees and the appellant the relation was one of master and servant. We consider that this contention is wholly unsound. We have examined the original agreement between the Mills and the Trustees dated April 12, 1934. Clause 9 of that agreement said that "the agents may regulate and conduct their proceedings in such manner as they may from time to time determine and may delegate all or any of their powers, authorities and discretions as secretaries, treasurers and agents of the company to such person or persons and on such terms and conditions as they may think fit, subject to the approval of the Board of Directors of the company. " The delegation in favour of the appellant was made under this clause. The position was therefore this: the Trustees as agents had express authority to name another person to act for the principal in the business of the agency, and they named the appellant with the approval of the Board of Directors. Therefore, the appellant, was neither a servant nor a mere sub agent. He was an agent of the principal for such part of the business of the agency as was entrusted to him. The position in law was as laid down in section 194 of the Indian Contract Act. In similar circumstances this Court has held that managing agency is business (see Lakshminarayan Ram Gopal and Son Ltd. vs The Government of Hyderabad (1) and J. K. Trust, Bombay vs The Commissioner of Income tax Excess Profits Tax, Bombay (2 ). A consideration of the terms of the agreement of December 6, 1938, also leaves no manner of doubt, in the matter. Full powers of the Trustees as managing agents were delegated to the appellant under cl. 2 of the agreement, subject only to the general control of the Trustees and the clause stated that the appellant was to conduct and manage the business and affairs of the two mills. Clause 3 relating to the tenure of the managing agency, cl. 4 relating to remuneration, cl. 7 relating to termination of business and the clauses (1) ; (2) [1958] S C.R. 65. 553 relating to the eventuality of winding up of the mills all these were appropriate to a business undertaking only and quite inappropriate to a relation of master and servant. The extent of the delegation of powers was also indicated by cl. 5 which said inter alia that the managing agent (meaning the appellant) must observe and perform ail the terms and conditions of the earlier managing agency and selling agency agreements in favour and on the part of the Trustees; in other words, the entire managing agency business was handed over to the appellant. Learned counsel for the appellant emphasised el. 9 which we had quoted earlier and said that it showed that the appellant could not assign any of the benefits under the agreement, which was personal to himself. We do not think that el. 9 changed the quality of the relation between the Trustees and the appellant. The managing agency agreement must be read as a whole, and so read the conclusion which clearly emerges is that the appellant was undertaking a business of his own in accepting the duties and responsibilities of a managing agent of the two mills under the general control of the Trustees. The appellant was a man with previous business experience and held an agency of the Eastern Federal Union Insurance Co., which brought him a substantial income. Learned counsel for the appellant has relied on the decision in Inderchand Hari Ram vs Commissioner of Income tax, U. P. & C. P. (1), where the distinction between the definitions of managing agent and manager under the Indian Companies Act, 1913, was pointed out. We do not think that that decision gives any help to the appellant. The question really is one of construction of the relevant agreements; what do their terms show a relation of master and servant or an agency business ? We have no doubt in our minds that what clearly emerges from the terms of the agreement of December 6, 1938, is a business of managing agency accepted and undertaken by the appellant. Therefore, the High Court correctly answered the question in the affirmative. The appeals fail and are dismissed with costs. As the appeals have been heard together, there will be one set of costs. Appeals dismissed. [/INST] By an order of the Ruler of the erstwhile State of Hyderabad an institution was formed for the development of industries on behalf of the Government, called the Industrial Trust Fund, to be managed by a committee called Trustees. In 1934 the Trustees entered into agreements with two cotton mills situated in the State by virtue of which they were appointed secretaries, treasurers and agents of the said mills. They were given the general management of the mills including the power to appoint employees and were also appointed selling agents of the mills. By separate agreements the Trustees were given power to delegate to other persons all or any of the powers under the agreements subject to the approval of the Board of Directors of the respective mills. On December 6, 1938, the Trustees entered into an agreement with the appellant whereby they delegated their powers in his favour and appointed him as the managing agent of their business as secretaries, treasurers and agents, as also selling agent of the two mills, subject to their general control. The appellant was to hold the office of managing agent and selling agent for the remaining period of the original managing agency and selling agency agreements. The remuneration of the appellant for the managing agency was fixed at Rs. 2,000 per month and a commission of 2 1/2 per cent. out of the commission of 12 1/2 per cent. per annum on the annual profits payable to the Trustees. For the selling agency a separate commission was payable on the sale of different kinds of goods. Clause 9 of the agreement provided 547 that the managing agent shall not assign the benefit of the agreement, the same being personal to himself. For the accounting years 1941 42 and 1942 43 the appellant was assessed to excess profits tax, but he contended that the Trustees of the Industrial Trust Fund were the managing agents as also the selling agents of the two mills, that the Trustees employed him on certain terms and gave him certain powers, and that he was not carrying on an independent business of his own but was just carrying out the duties of an employee of the Trustees. He claimed that his remuneration under the agreement dated December 6, 1938, was merely salary and not income derived from business and therefore not liable to excess profits tax : Held, (1) that under the agreements of 1934 the Trustees as agents had express authority to name the appellant to act for the principal in the business of agency and that therefore the appellant was neither a servant nor a mere sub agent, but an agent of the principal for such part of the business of agency as was entrusted to him, within the meaning of section 194 of the Indian Con tract Act, 1872. (2)that on the true construction of the agreement dated December 6, 1938, the appellant was undertaking a business of his own in accepting the duties and responsibilities of a managing agent of the two mills under the general control of the Trustees, and that, therefore, the income derived by him as remuneration and commission was liable to excess profits tax. Lakshminarayan Ram Gopal and Son Ltd. vs The Government of Hyderabad, ; and 1. K. Trust, Bombay vs The Commissioner of Income tax excess Profits Tax, Bombay, [1958] S.C.R. 65, relied on. </s>

<s>[INST] Summarize the following judgement: Appeal No. 507 of 1957. Appeal by special leave from the order and judgment dated September 28, 1955, and February 20, 1956, of the Bombay High Court in Income tax Reference No. 28 of 1955. R.J. Kolah and I. N. Shroff, for the appellant. C. K. Daphtary, Solicitor General of India,B. Ganapathy lyer and D. Gupta, for the respondent. March 30. The Judgment of the Court was delivered by HIDAYATULLAH, J. This is an appeal with the special leave of this Court, and is directed against an order dated September 28, 1955, and a judgment dated February 20, 1956, of the High Court of Bombay. By the order, the High Court reframed a question referred to it by the Appellate Tribunal at Bombay, which it answered by its judgment. Mrs. Kusumben D. Mahadevia (hereinafter referred to as the assessee) who has filed this appeal, was, at all material times, residing in Bombay. She was a shareholder, holding 760 shares of Mafatlal Gagalbhai & Co., Ltd., Bombay. For the assessment year 1950 51 (the previous year being the calendar year 1949), she was assessed to income tax on a total income of Rs. 1,50,765 which included a grossed up dividend income of Rs. 1,47,026. In the latter income was included a sum of Rs. 47,120 being the dividends declared by Mafatlal Gagalbhai & Co., Ltd., Bombay. Mafatlal Gagalbhai & Co., Ltd., is a private limited Company with its registered office at Bombay. It was, at all material times, 'resident and ordinarily resident ' in British India. It was also doing business in the former Baroda State, and used to keep its profits derived in that State with Mafatlal Gagalbhai Investment Corporation, Navsari. In the year 1949 Mafatlal Gagalbhai & Co., Ltd., declared dividends out of these accumulated profits by three resolutions, which are reproduced: 25 3 1949. " That a further dividend of Rs. 17 per ordinary share free of income tax for the year 1947 be and is hereby declared absorbing Rs. 4,29,250 419 and the same be payable in Navsari out of the profits of the year 1947 lying at Navsari." 24 9 1949. " That a further dividend of Rs. 24 per ordinary share free of income tax for the year 1948 be and is hereby declared absorbing Rs. 6,06,000 and the same be payable in Navsari out of the profits of the year 1948 lying at Navsari with Messrs. M.G. Investment Corporation Ltd. on or after 30th April, 1949. " 24 9 1949. " Resolved that an Ad interim dividend of Rs. 21 per ordinary share free of income tax absorbing Rs. 5,30,250 be and is hereby declared for the year 1949 out of the income of the Company for the year 1949 remaining unbrought with Messrs. M. G. Investment Corporation Ltd., Navsari, and that the same be payable in Navsari on or after 30th April, 1949. " The assessee did not bring these dividends into British India. She claimed the benefit of para. 4 of the Merged States (Taxation Concessions) Order, 1949 (hereinafter referred to briefly as the Concessions Order); but the Tribunal held that the income did not accrue to her in the Baroda State. The Tribunal pointed out that the dividends were declared by Mafatlal Gagalbhai & Co., Ltd., out of its profits which had accrued partly in, what was then called, British India and partly in the Indian State. The dividend was thus declared out of ' composite profits '. It further pointed out that the assessee had paid for and acquired the shares of a Company in British India and was thus holding an asset in British India, and that the income was from that asset. The Tribunal, however, at the instance of the assessee drew up a statement of the case under section 66(1) of the Indian Income tax Act, and referred the following question to the High Court: " Whether the net dividend income of Rs. 47,120 accrued to the assessee in the former Baroda State, or whether it is income accrued or deemed to have accrued to the assessee in British India ?" When the reference was heard, the High Court was of the opinion that the Tribunal ought to have decided and referred also the question whether the Concessions 420 Order applied to the assessee. The High Court recognised the grievance of the assessee that no such point was raised before the Tribunal. The High Court, however, by its order dated September 28, 1955, decided that there was no need to send the case back for a supplemental statement, since all the facts necessary to decide the two questions were before the High Court. The High Court then reframed the question, as it said, to comprehend the two points of law in the following words: " Whether the assessee is entitled to any concession under the Merged States (Taxation Concessions) Order, 1949, with regard to the net dividend income of Rs. 47,120?" The reference then came up for final disposal on February 20, 1956, and the High Court answered the question in the negative, holding that para. 4 of the Concessions Order did not apply to the assessee. The High Court did not decide where the income had accrued to the assessee. Leave to appeal to this Court was refused by the High Court, but the assessee applied to this Court for special leave against both the order and the judgment and obtained it, and the present appeal has been filed. At the very outset, the assessee has questioned the jurisdiction of the High Court to frame and deal with a question of law not arising out of the order of the Tribunal. The assessee points out that the Tribunal had decided that the income had accrued in British India. The assessee had challenged this part of the decision, and if the Commissioner felt it necessary, he should have obtained the decision of the Tribunal and asked for a reference on the other point also. Since the Tribunal had not gone into the question of the applicability to the assessee of the Concessions Order and had not expressed any opinion thereon, the assessee contends that the High Court could not raise the question on its own, and decide it. The assessee strongly relies upon a decision of this Court in New Jehangir Vakil Mills Ltd. vs Commissioner of Incometax (1). In that case, the Bombay High Court had (1) 421 directed the Tribunal to submit a supplementary statement of the case on points not arising from the order of the Tribunal, and this Court held that the High Court had no jurisdiction to do so. The learned counsel for the Commissioner, on the other hand, contends that the question was the assessability of the assessee, who claimed the benefit of the Concessions Order. The main question was thus the applicability of the Concessions Order, and the question of the accrual of the income, whether in British India or in Baroda, was merely ancillary. The latter question was, according to the respondent, included in the first question, and the High Court was right when it framed a comprehensive question and answered it in the sequence it did. The respondent points out that the High Court having held that the Concessions Order did not apply, was not required to decide the other limb of the question, as it became unnecessary to do so. In our opinion, the objection of the assessee is well founded. The Tribunal did not address itself to the question whether the Concessions Order applied to the assessee. It decided the question of assessability on the short ground that the income had not arisen in Baroda but in British India. That aspect of the matter has not been touched by the Bombay High Court. The latter has, on the other hand, considered whether the Concessions Order applies to the assessee, a matter not touched by the Tribunal. Thus, though the result is the same so far as the assessment is concerned, the grounds of decision are entirely different. The High Court felt that the question framed by it comprehended both the aspects and, perhaps it did. But the two matters were neither co extensive, nor was the one included in the other. The question of accrual of income has to be decided under the Incometax Act, and has but little to do with the Concessions Order. That question can be adequately decided on the facts of this case without advertence to the Concessions Order. It cannot, therefore, be said to be either coextensive with or included in the decision of the question actually considered by the High Court to wit, whether the Concessions Order applied or not. If this 54 422 be so, it is manifest that the Tribunal decided something which stands completely outside the decision of the Bombay High Court. The High Court also decided a matter which was not considered by the Tribunal even as a step in the decision of the point actually decided. The two decisions are thus strangers to each other, though they lead to the same result. Section 66 of the Income tax Act which confers jurisdiction upon the High Court only permits a reference of a question of law arising out of the order of the Tribunal. It does not confer jurisdiction on the High Court to decide a different question of law Dot arising out of such order. It is possible that the same question of law may involve different approaches for its solution, and the High Court may amplify the question to take in all the approaches. But the question must still be one which was before the Tribunal and was decided by it. It must not be an entirely different question which the Tribunal never considered. The respondent attempted to justify the action taken by contending that the decision of the question of the accrual of the income with reference to the place of accrual implied the applicability of the Concessions Order. We do not agree. If this were so, there would be no necessity to frame the question again. Indeed, the High Court itself felt that there were two limbs of the question of assessability, and reframed the question to cover both the limbs. Where the High Court went wrong was in not deciding both the limbs but one of them and that too, the one not decided by the Tribunal. The resulting position can be summed up by saying that the High Court decided something which the Tribunal did not, and the Tribunal decided something which the High Court did not. This is clearly against the provisions of section 66. The respondent referred to Scindia Steam Navigation Co. Ltd. vs Commissioner of Income tax (1), Commissioner of Income tax vs Breach Candy Swimming Bath Trust (2 ) and Ismailia Grain Merchants Association vs Commissioner of Income tax (3). They (1) (2) (3) 423 were all decisions of the same Court, and arose in different circumstances. In two of them, the question was wide enough to take in a line of reasoning not adopted by the Tribunal, and in the third, the question was widened by deleting a reference to a section, when another section was also material. They were not cases where the issues of law as decided by the Tribunal and the High Court were entirely different, which is the case here. The Punjab High Court has taken a contrary view in Mash Trading Co. vs Com missioner of Income tax (1). For the reasons given above, we are of opinion that the High Court exceeded its jurisdiction in going outside the point of law decided by the Tribunal and deciding a different point of law. The order of the High Court will, therefore, be set aside, and the case will be remitted to the High Court to decide the question framed by the Tribunal. In view of the fact that both the assessee and the Commissioner pointed out the anomaly to the : High Court and the question was reframed in spite of this, the costs of this appeal shall be costs in the reference to. be heard by the High Court, and will abide the result. Appeal allowed. Case remitted. [/INST] The appellant was a shareholder of a company known as Mafatlal Gagalbhai and Co., Ltd. The Company with its registered office at Bombay was at all material times resident in British India. It was also doing business in the former Baroda State and used to keep its profits derived in that State with Mafatlal Gagalbhai Investment Corporation, Navsari. In the year 1949 Mafatlal Gagalbhai and Co. Ltd. declared dividends out of profits which had accrued partly in British India and partly in the Indian State. The appellant was assessed to income tax on the dividends earned by her. She did not bring those dividends into British India and claimed the benefit of para. 4 of the Merged States (Taxation Concessions) Order. The Tribunal held that the income did not accrue to the appellant in the Baroda State but it did not decide the question whether she was entitled to the benefits of the Taxation Concessions Order. The High Court on a reference to it held that para. 4 of the Taxation Concessions Order. did not apply to the assessee but it did not decide the other question as to where the income had accrued to the assessee. On appeal by special leave the appellant contended, inter alia, that since the Tribunal had not gone into the question of the applicability to the assessee of the Concessions Order and had not expressed any opinion thereon, the High Court could not raise the question on its own and decide it: Held, that the High Court exceeded its jurisdiction in going outside the point of law decided by the Tribunal and deciding a different point of law. Section 66 of the Income tax Act which confers jurisdiction upon the High Court only permits a reference of a question of law arising out of the order of the Tribunal. It does not confer jurisdiction on the High Court to decide a different question of law not arising out of such order. New Jehangir Vakil Mills Ltd. vs Commissioner of Income tax, , Scindia Steam Navigation Co. Ltd. vs Commissioner of Income tax, , Commissioner of Incometax vs Breach Candy Swimming Bath Trust, and Ismailia Grain Merchants Association vs Commissioner of Incometax, [1957] 31 I.T.R. 433, distinguished. Mash Trading Co. vs Commissioner of Income tax, , considered. </s>

<s>[INST] Summarize the following judgement: Civil Appeal No. 305 of 1959. Appeal by special leave from the Decision dated January 10, 1957, of the Labour Appellate Tribunal of India, Bombay, in Appeal No. 111 346 of 1955. G. section Pathak, section P. Sinha and K. K. Sinha for G. N. Dikshit, for the appellants. Maqbool Ahmad Khan (General Secretary of the Union), for respondent No. 1. J. P. Goyal, for respondent No. 2. 1960. April 7. The Judgment of the Court was delivered by DAS GUPTA, J. This appeal by the employer, the Muir Mills Co., Ltd., Kanpur, is against the decision of the Labour Appellate Tribunal of India, Bombay, modifying an award of the Adjudicator, Kanpur, in a reference made by the Government of: U. P. under the provisions of sections 3, 4 and 8 of the . The matter in dispute referred was originally set out in these terms : " Whether the employers have wrongfully and/or unjustifiably reduced the wages of their workmen of Carding Department, given in the annexure ? If so, to what relief are the workmen entitled and from what date ? " By an order dated April 25, 1955, the Government amended this issue by substituting therefor the following: " Whether the employers have wrongfully and/or unjustifiably reduced the wages of their workmen of Carding Department, given in the annexure. , by discontinuing the payment of production and/or special bonus, if so, to what relief are the workmen entitled and from what date ? 490 It will be noticed that the issue as re framed by the amendment indicated the manner in which the reduction in the wages of these workmen had been alleged to be made, viz., by " discontinuing the payment of production and/or special bonus ". To understand how the question of such a reduction arose and also the considerations which arise in deciding the question whether the reduction, if any, was wrongful and/or unjustifiable a few facts need to be mentioned: The appellant company is a textile mill employing in its Carding Department workmen known as Inter Tenters, Roving Tenters, Draw Frame Tenters and Slubbers. All these workmen are paid wages on piece rate basis. Before 1948 the rates in force per hank were /2/3/ for the Inter Tenters, /2/3/ for the Slubbers and Draw Frame Tenters and /2/5/ for the Roving Tenters. In addition to this these workmen were entitled to receive further emoluments if their production exceeded a certain norm. The rates for these further emoluments then in force were two annas per rupee of basic earnings of Rs. 15 to Rs. 25 per month and three annas per rupee for basic earnings above Rs. 25 per month. Apart from these emoluments payment was also made at 9 pies per hank if the production on any day was 7 hanks or more. Though both these additional emoluments were related to production the Tribunals below have described the first kind as production bonus and the second kind as incentive bonus and it will be convenient to adhere to that description here. These two kinds of additional payments which the workmen would receive only if their production would reach and surpass certain standards had the result of increasing the total emoluments received by some of the workmen much above, what they would be getting under the fixed rate per hank. The right to receive these additional emoluments had become a part of the terms of service of these workmen. With effect from December 1, 1948, however the appellant company stopped the system of paying such additional emoluments but instead raised the fixed rate per hank to /3/9/ for Inter Tenters, /3/6/ for Slubbers and Draw Frame Tenters and /4/9/ for Roving Tenters. This was done immediately after an order had been made 491 by the Government under the provisions of section 3 of the U. P. , laying down the standards of basic wages and dearness allowance for different industries in the Province. Clause 2 of this order fixed the minimum basic wage for cotton and woollen textile industries in Kanpur and certain other areas at Rs. 30 per month. Clause 3 provided for payment of dear food allowance. Clause 5 provided that persons who are already employed on November 30, 1948, in any industrial textile concern shall receive wages at the increased rates mentioned therein. Clause 7 provided that " every employee of an industrial concern or undertaking to which this order applies, shall be paid wages including dear food allowance in accordance with the provisions of cls. (2), (3), (5) and (6). " There is a proviso to the clause which says that where the consolidated wage payable to an employee who was on the pay roll of the concern or undertaking on November 30, 1948, is more than the consolidated wage payable in accordance with the provisions of the said clauses, the difference shall be paid to him as personal wage. Clause 8 defines " basic wages " as " consolidated wages payable to an employee on November 30, 1948, minus Dear Food Allowance calculated according to the rates prevalent in the concern on the said date. The workmen 's case is that by stopping the additional emoluments which they used to get on the basis of better production by extra efforts the employer had in fact reduced the wages to which they were entitled and the fact that higher piece rate were introduced with effect from December 1, 1948, does not affect the question. The employer 's contention is that by the Government order it was required to introduce new piece rates after taking into consideration the amounts actually earned by workers including what had been earned by additional emoluments and so the stoppage of these additional emoluments did not amount to any reduction. The Adjudicator held that these additional emoluments payable as production bonus and incentive bonus had not been taken into consideration by the company while arriving at the revised piece rates. He 492 held further that these could not be taken into con sideration in law as the Government order did not contemplate these bonuses to be taken into consideration in arriving at the appropriate figure for basic wages for the purpose of the order. In that view the Adjudicator held that there had been an Unjustifiable reduction in the wages of the workmen and directed the management to restore with effect from December 1, 1948, " the system of granting production and incentive bonuses to such of the workmen who are entitled to it ". He also gave directions as to how the calculations should be made for the purpose of incentive bonus and production bonus. The Appellate Tribunal thought it unnecessary to consider the question whether these bonuses had been actually taken into consideration while fixing new piece rates, being of opinion that if the Government order did not require or justify the employer 's including these bonuses in the calculation of the new rates the company would be bound in law to restore these bonuses even if they had actually taken them into consideration. It held that the Government order did not require or justify the employer including these bonuses in the calculation of the rates of wages for the purposes of the Government order. In the result the appellate tribunal agreed with the first tribunal 's decision that this system of granting production and incentive bonuses must be restored. In view of the fact however that for a long time after December 1, 1948, the workmen did not raise this question the appellate tribunal was of opinion that the restoration should be only with effect from February 1, 1954. As regards the rates at which these bonuses had to be calculated they also modified the directions given by the Tribunal. The main contention raised before us on behalf of the appellant company is that the appellate tribunal was wrong in thinking that the Government order did not require or justify the company in including the additional emoluments being paid by way of production bonus and the incentive bonus in the calculation of the rates of basic wages for the purpose of the order, 493 Before we proceed to consider this question it is proper to mention a preliminary contention which was sought to be raised by Mr. Pathak, on behalf of the appellant. Referring to a note made by the Adjudicator on August 27, 1955, he wanted to argue that it was not open to the tribunals below to consider at all the question whether under the Government order the appellant could have included the incentive bonus in the calculation of the basic rate. The note is in these words : " The parties are represented. The calculations have been filed by them which were made in the presence of the Adjudicator. There is no difference between the parties that while calculating the rates with effect from 1 12 48 if production and incentive bonus have been considered the question of any relief does not arise, and vice versa. The workers say that in the said wages, these bonuses have not been included while the employers contend that they have been included. The latter have not filed the required information. Proceedings closed. " At first sight, this does seem to give a basis for an argument that the parties agreed before the Tribunal to treat the matter as a question of fact only and that the workmen did not want to raise any question that under the Government order these bonuses could not be included in the calculation of the rates. It is unnecessary however for us to examine the effect of such concession in view of what transpired before the appellate tribunal. From the judgment of that Tribunal we find that on behalf of the workmen it was stated that they had not conceded any such position in the lower tribunal and that their contention was that such bonuses had not and could not be taken into consideration. It is also clear from the judgment that in view of this the parties argued their appeal before the appellate tribunal on both these contentions, viz., whether the Government order in question allowed the employers to include the bonuses in question in the calculation of the new rates of basic wages in the case of the piece rate workers like those concerned in this and if so, whether the employers have in 63 63 494 fact taken these bonuses into account. It is clear that the contention that in view of the concession made on August 27, 1955, it was not open to the appellate tribunal to go into the question whether the Government order required or authorised the employer 's including the bonuses in the calculation of the new rates was abandoned before the tribunal below. When it was pointed out to Mr. Pathak that in view of this, he should not be allowed to raise this contention Mr. Pathak fairly abandoned this contention here also. The real question therefore is whether the Government order required or authorised the company to include the incentive bonus and the production bonus which they had been so long paying in fixing the new piece rate for the purpose of compliance with the directions given in the Government order as regards the basic wages. In finding the correct answer to this question it is necessary to examine the entire scheme of the Government order. The relevant clauses of the Government order have already been set out. The purpose of the scheme, on the face of it, is to make it obligatory on the employers in different industries to keep wages of workmen at a certain level. This purpose is sought to be achieved by laying down on the one hand the basic wages Which must be paid and on ' the other hand the dearness allowance called in the Government order dear food allowance which must be paid. The concept of basic wage is familiar to employers and workmen and all who have to deal with the problems of labour 's remuneration. It may be profitably remembered in this connection that the concept of a " basic " is not peculiar to wages alone. For instance, when any rationing system is introduced for any commodity, whether it is food, or coal, or petrol or some other commodity, it is usual to fix a quantum as the basic ration. The underlying idea is to fix some amount as what every individual coming under the system will get; while additional amounts to be fixed in accordance with further directions will be allowed to some individuals, in view of their special claims as supplementary rations. " Basic " in all such cases is what is normally allowable to all irrespective 495 of special claims. The phrase "I basic wages " is also ordinarily understood to mean that part of the price of labour, which the employer must pay to all work ' men belonging to all categories. The phrase is used ordinarily in marked contra distinction to " dearness allowance ", the quantum of which varies from time to time, in accordance with the rise or fall in the cost of living. Thus understood " basic wage" never includes the additional emoluments which some workmen may earn, on the basis of a system of bonuses related to the production. The quantum of earnings in such bonuses varies from individual to individual according to their efficiency and diligence ; it will vary sometimes from season to season with the variations of working conditions in the factory or other place where the work is done; it will vary also with variations in the rate of supplies of raw material or in the assistance obtainable from machinery. This very element of variation, excludes this part of workmen 's emoluments from the connotation of " basic wages ". But, says the appellant, whatever may be ordinarily under. stood by the word " basic wages " hardly matters when the Government order itself contains a definition of " basic wage ". Clause 8, which has already been referred to is in these words: " Basic Wages " for the purposes of this order will mean consolidated wages payable to an employee on November 30, 1948, minus Dear Food Allowance calculated according to the rates prevalent in the concern on the said date. " On behalf of the appellant Mr. Pathak concentrates on the words " consolidated wage ", and argues that everything which answers to the description of wage must be included in this process of consolidation. Contending next that the emoluments payable by way of production bonus and incentive bonus are " wages even if not ordinarily understood to be basic wages he argues that the result of the definition in cl. 8 is that basic wages for this order is the sum total of all emoluments answering to the description of wages thus including production and incentive bonuses, but excluding by reason of the express words used " dearness allowance, 64 496 In support of his argument that production or incentive bonuses which used to be paid by the company is also a kind of wage the learned advocate has placed strong reliance on some observations made by this Court in Titaghur Paper Mills Co., Ltd. vs Their Workmen (1) that a production bonus is in the nature of an incentive wage. We will presently consider how far the fact that these bonuses are in the nature of an incentive wage assists the appellant 's contention that it has to be included in the " consolidated wage" within the meaning of cl. 8 of the order. But before we do that, it will be proper to see exactly what this Court said in the above case. A question had been raised as regards the jurisdiction of the Industrial Tribunals to go into the question of any production bonus claim at all, that being a matter of agreement between the employer and the employees. In considering this question this Court thought fit to consider first what a production bonus essentially is. In the course of that discussion the Court said: " Before we go into the question of jurisdiction of a tribunal under the (hereinafter called the Act), we should like to consider what production bonus essentially is. The payment of production bonus depends upon production and is in addition to wages. In effect it is an incentive to higher production and is in the nature of an incentive wage. " "There is a base or standard above which extra payment is made for extra production in addition to the basic wage. Such a plan typically guarantees time wage up to the time represented by standard performance and gives workers a share in the savings represented by superior performance." "Therefore generally speaking, payment of production bonus is nothing more or less than a payment of further emoluments depending upon production as an incentive to the workmen to put in more than the standard performance. Production (1) [1959] SUPP. 2 S.C.R. 1012 497 bonus in this case also is of this nature and is nothing more than additional emolument paid as an incentive for higher production. We shall later consider the argument whether in this case the production bonus is anything other than profit bonus. It is enough to say at this stage that the bonus under the scheme in this case also depends essen tially on production and therefore is in the nature of incentive bonus. " It is important to notice that while the learned counsel is undoubtedly right in saying that a bonus related to production was described in this case as in the nature of an incentive wage, the Court was equally emphatic in laying down that such bonuses form no part of wages as ordinarily understood and again that these are in addition to basic wages. Can it be reasonably said that even such "incentive wage" though not forming part of basic wage ' as ordinarily understood was intended to be included in the consolidation of wages which cl. 8 speaks of? The answer must be in the negative. While it is true that the word " consolidated wage " taken away from the context would import the inclusion of every kind of wage, we have to remember that here it is basic wage which is being, defined. It will be unreasonable to think that in defining basic wage the Government would include something which is always understood to be outside the ordinary concept of basic wage. Remembering as we must that it is basic wage which is being defined here it is reasonable to think that only such emolu ments which are receivable by the workmen generally, as a normal feature of their earnings and therefore satisfy the characteristics of " basic wage ", are intended to be covered by the consolidation. It is because dear food allowance does not satisfy this characteristic that this has been expressly excluded. Mr. Pathak 's argument that when in the case of dearness allowance an express exclusion has been made, everything else in the nature of wages has to be included would have been of great force but for the fact that when "basic wage" is being defined the presumption must be that anything which is essentially 498 different and distinct from basic wage was not intended to be included. It is worth mentioning also that the notification does not in terms refer to piece rate system of payment. That itself is a reason for thinking that production bonuses which are an essential feature of piece rate system but not of time rate system, were not in the contemplation of those who drafted the order. Equally pertinent is the consideration that when the Government is evolving a scheme to improve the wage structure of workmen it would not knowingly do anything which would have the effect of removing incentives to production. Such removal would harm labour by preventing workmen from earning more by extra efforts, harm capital by diminishing the return therefrom and harm the country as a whole at a time when higher production is the crying need of every branch of industry. An interpretation which would impute to Government such an unthinkable intention to harm all concerned, cannot be lightly accepted; but that would be the necessary result if " consolidated wages " in the definition of basic wages is interpreted to include even an incentive wage like bonus related to production. On every consideration it is therefore abundantly clear that production bonus and incentive bonus were not within basic wages as defined in the Government order. It was faintly argued by Mr. Pathak that the fact that the workmen did not for a number of years raise any objection to the stoppage of the old system of production bonus and incentive bonus shows that they themselves understood the Government order to mean that these bonuses would be included in fixing the basic wages for the purpose of the order. Whether that was so or not it is unnecessary for us to consider, for when the only reasonable interpretation of the words used in the order is that these are not to be included, it matters little how the 'employer or the workmen understood these words to mean. We have therefore come to the conclusion that the Labour Appellate Tribunal was right in holding that the Government order did not require or justify th 499 employer including the production and incentive bonuses in the calculation of the rates of the basic wage of the workers and consequently that the Government order did not have the effect of absolving the company from the duty of continuing to pay the production and incentive bonuses to workmen as before. No objection has been raised before us as regards the directions given by the appellate tribunal for the calculation of these bonuses. The appeal is accordingly dismissed with costs. Apppeal dismissed. [/INST] The appellant paid wages to its workmen in the Carding Department on piece rate basis and in addition, the workmen were entitled to receive further emoluments if their production exceeded a certain norm. The right to receive these additional emoluments had become a part of the terms of service of these workmen. In 1948 the Government of Uttar Pradesh with a view to make it obligatory on the employers in the different industries to keep the wages of workmen at a certain level, by its order under the provisions of section 3 of the U.P. , laid down the standard of basic wages and dearness allowance for different industries in the province. The appellant in giving effect to the said order of the Government for introducing the new piece rate raised the fixed piece rate but stopped the system of paying additional emoluments, as it thought itself to be justified, in taking into consideration for this purpose the amounts actually earned by the workers including what had been earned as additional emoluments which were being paid to the workmen by way of productive and incentive bonuses. The workmen 's case was that by stopping the additional emoluments which they used to get on the basis of better production by extra efforts the employer had in fact reduced the wages to which they were entitled and the fact that higher piece rates were introduced did not affect the question. The question was whether the Government order required or authorised the company to. include the incentive bonus and the production bonus which they had been so long paying in fixing the new piece rate for the purpose of compliance with the directions given in the Government order as regards the basic wages: Held, that the Government. order did not require or justify the employer including the production and incentive bonuses in the calculation of the rates of the basic wage of the workers and consequently the Government order did not have the effect of absolving the company from the duty of continuing to pay the production and incentive bonuses to workmen as before: Held, further, that the concept of " basic " is not peculiar to wages alone; it is what is normally allowable to all, irrespective of special claims and is also ordinarily understood to mean that part of the price of labour, which the employer must pay to all 489 workmen belonging to all categories. The phrase is used ordinarily in marked contradistinction to " dearness allowance " the quantum of which varies from time to time, in accordance with the rise or fall in the cost of living. Thus understood " basic wage" never includes the additional emoluments which some workmen may earn, on the basis of a system of bonuses related to the production. Titaghur Paper Mills Co. Ltd. vs Their Workmen, [1959] SUPP. (2) S.C.R. 1012, referred to. </s>

<s>[INST] Summarize the following judgement: 2 of 1960. Petition under Article 32 of the Constitution of India for the enforcement of Fundamental Rights. A. V. Viswanatha Sastry and B. B. L. Iyengar, for the petitioner. G. section Pathak, R. Gopalakrishnan and T. M. Sen, for the respondents. C. K. Daphtary, Solicitor General of India and B.R.L. Iyengar, for the Intervener (D. R. Karigowda). April 28. The Judgment of the Court was delivered by SHAH, J. The petitioners pray for a writ quashing a scheme approved under section 68D(2) of the , by the Government of the State of 744 Mysore and for a writ restraining the respondents, i.e., the State of Mysore, the General Manager, the Mysore Government Road Transport Department and the Regional Transport Authority, Bangalore, from taking action pursuant to the scheme. The petitioners are operators of Stage carriages on certain routes in the sector popularly known as " Anekal area " in the Bangalore District. On January 13, 1959, the General Manager, Mysore Government Road Transport Department, who will hereinafter be referred to as the 2nd respondent, pub lished a scheme in exercise of the powers conferred by section 68C of the , for the exclusion of private operators on certain routes and reservation of those routes for the State transport undertaking in the Anekal area. The Chief Minister of the Mysore State gave the operators affected by the scheme an opportunity of making oral representations and on perusing the written objections and considering the oral representations, approved the scheme as framed by the 2nd respondent. On April 23, 1959, the scheme was published in the Mysore State Government gazette ' On June 23, 1959, renewal applications submitted by petitioners 1 to 3 for permits to ply Stage carriages on certain routes covered by the scheme were rejected by the Transport Authority and the 2nd respondent was given permanent permits operative as from June 24, 1959, for plying buses on those routes. In Writ Petition No. 463 of 1959 challenging the validity of the permanent permits granted to the 2nd respondent, the High Court of Mysore held that the issue of permits to the 2nd respondent before the expiry of six weeks from the date Of the application was illegal. To petitioners 1 to 3 and certain other operators renewal permits operative till March 31, 1961, were thereafter issued by the third respondent. The 2nd respondent applied for fresh permits in pursuance of the scheme approved on April 15, 1959, for plying Stage carriages on routes specified in the scheme and notices thereof returnable on January 5, 1960, were served upon the operators likely to be affected thereby. On January 4, 1960, the five petitioners 745 applied to this court under article 32 of the Constitution for quashing the scheme and for incidental reliefs. The petitioners claim that they have a fundamental right to carry on the business of plying stage carriages and the scheme framed by the 2nd respondent and approved by the State of Mysore unlawfully deprives them of their fundamental right to carry on the business of plying stage carriages in the Anekal area. The diverse grounds on which the writ is claimed by the petitioners need not be Bet out, because, at the hearing of the petition, counsel for the petitioners has restricted his argument to the following four heads: (1) that the scheme violates the equal protection clause of the Constitution, because only fourteen out of a total of thirty one routes on which stage carriages were plied for public transport in the Anekal area were covered by the scheme and that even from among the operators on the fourteen routes notified, two operators were left out, thereby making a flagrant discrimination between the operators even on those fourteen routes; (2) that by Chapter IVA of the , Parliament had merely attempted to regulate the procedure for entry by the States into the business of motor transport in the State, and in the absence of legislation expressly undertaken by the State of Mysore in that behalf, that State was incompetent to enter into the arena of motor transport business to the exclusion of private operators; (3)that the Chief Minister who heard the objections to the scheme was biased against the petitioners and that in any event, the objections raised by the operators were not considered judicially; and (4) that the Chief Minister did not give " genuine consideration " to the objections raised by the operators to the scheme in the light of the conditions prescribed by the Legislature. Re. 1: In column 1 of the scheme " part of Bangalore District, viz,, Bangalore North, Bangalore South, Anekal and Hosakote Taluks " is set out as the area in relation to which the scheme is approved; and in 746 column 3, " the routes (with their starting points, termini, intermediate stations and route length) in which the State transport undertaking will introduce its services to the exclusion of private operators " are those set out in statement 1 appended to the scheme. Statement 1 sets out the description of fourteen routes with their intermediate points, route length, number of buses to be operated and the maximum number of trips to be performed on each route. By column 4 " the number of existing stage carriages on each route with the number of trips and the names of their opera tors " are described " as in statement 2 appended ". Statement 2 sets out the names and places of business of fifty six operators together with the routes operated and the numbers of the stage carriages and trips made by those operators. In the Anekal area, there are thirty one routes, which are served by stage carriages operated by private operators, and by the approval of the scheme, only fourteen of those routes are covered by the scheme ' Section 68C, in so far as it is material, provides that a State transport undertaking, if it is of opinion that it is necessary in the public interest that road transport services in relation to any area or route or portion thereof should be run and operated by itself, whether to the exclusion, complete or partial, of other persons or otherwise, it may prepare a scheme giving particulars of the nature of the services proposed to be rendered, the area or route proposed to be covered and other particulars respecting thereto as may be prescribed. Section 68D(1) provides for inviting objections by persons affected by the scheme. Sub section 2 of section 68D authorises the State Government after considering the objections and giving an opportunity to the objectors to approve or modify the scheme; and by sub section 3, the scheme as approved or modified and published by the State Government in the official gazette shall " become final and shall be called the approved scheme and the area or route to which it relates shall be called the notified area or notified route. " Counsel for the petitioners contended that exercising powers under section 68C, the State transport undertaking may prepare a scheme in respect of an 747 area or a number of routes in that area, but not a scheme for an area which is to apply to some only and not to, all routes on which public transport vehicles in the area operate. In this case, it is unnecessary to decide whether it is open to a State transport undertaking under a scheme framed for a notified area to limit its application to some only of the routes, because on a true reading of the scheme, it is amply clear that the scheme was approved in relation to fourteen notified routes and not in relation to a notified area. ,, The approved scheme is in the form prescribed by the rules, and in the form prescribed, by column 1, the area in relation to which the scheme is approved is required to be set out. But a scheme under section 68C must be one in relation to an area or any route or portion thereof wherein the transport service is to be undertaken by the State transport under taking to the exclusion, either complete or partial, of other operators. Column 1 of the approved scheme undoubtedly describes the area in relation to which the scheme is approved, but by the designation of the area, in the scheme, an intention to exclude either wholly or partially the operators of stage carriages from that area is not evinced either expressly or by implication. By column 3, the scheme expressly directs that the State transport undertaking will introduce its service to the exclusion of private operators on the specified routes. The scheme must therefore be regarded as one for the fourteen notified routes and not in relation to the area described in column 1. Counsel for the petitioners submitted that an order passed on October 22, 1959, by the 3rd respondent the Regional Transport Authority rejecting applications for permits for one of the fourteen routes to an applicant, indicated that in the opinion of the third, respondent, the scheme related to a notified area and not to notified routes. The order states that. " an approved scheme for the exclusive operation in the notified area of Bangalore District " by the second respondent " has come into existence after the notification of the route Bangalore to Nallur, and the major, portion of the route applied for lie in the notified area and as such it was not desirable, to grant any permit 748 to operators to pass through notified area in the intraState route. " The third respondent may have in considering the application assumed that the scheme related to a notified area, but the true interpretation of the scheme cannot be adjudged in the light of that assumption. The other document relied upon is a statement of objections filed by the second respondent on October 24, 1959, resisting the application for stage carriage permits to a private operator on the route Siddalaghatta Bangalore via Nallur. In para. 4 of the statement, it was submitted that " the existing notification dated October 15, 1959, came under the notified area of the department" of the second respondent " and that would overlap certain services of the department". But because in making his defence, the second respondent has referred to the scheme as dealing with " the notified area", the scheme will not necessarily be hold to be one in relation to the notified area. The argument that among the operators on the fourteen routes, two have been selected for special treatment and on that account, the scheme is discriminatory, has, in our judgment, no substance. It is averred in para. 13 of the petition that two persons, Chikkaveerappa operating on route Chikkathirupathi to Bangalore via Surjapur, Domsandra and Agara and Krishna Rao operating on route Bangalore to Chik kathirupathi via Agara and Surjapur are not amongst those who are excluded from operating their vehicles on the notified routes. In the affidavit filed by the State and the second respondent, it is submitted that the plea of the petitioners that the two persons operating stage carriages on specified routes were not amongst those to be excluded is incorrect, and that those two persons had been notified by the Secretary of the third respondent that they were " likely to be affected on giving effect to the approved scheme. " Undoubtedly, route item No. 2 in statement 1 to the scheme is " Bangalore to Surjapur or any portion thereof " and the route operates via Agara and Domsandra, but the record does not disclose that the two named persons are, in plying their stage carriages, entitled to operate on the route specified with right to stop at the named places for picking up passengers. 749 It is not clear on the averments made in the petition that the route on which the stage carriages of the two named persons ply are identical; even if the routes on which the stage carriages of these two operators ply overlap the notified route, in the absence of any evidence to show that they had the right to pick up passengers en route, the discrimination alleged cannot be deemed to have been made out. Re. 2: Article 298 of the Constitution as amended by the Constitution (Seventh Amendment) Act, 1956. recognises the executive power of the Union and of each State as extending to the carrying on of any trade or business. That power of the Union is subject in so, far as the trade or business is not one in respect of which Parliament may make laws, to legislation by the State and the power of each State, in so far as the trade or business is not one with respect to which the State Legislature may make laws, is subject to legislation by Parliament. Like ordinary citizens, the Union and the State Governments may carry on any trade or business subject to restrictions which may be imposed by the Legislatures competent to legislate in respect of the particular trade or business. Under Article 19(6) of the Constitution as amended by the First Amendment Act, 1951, nothing in sub cl. (g) of cl. (1) of article 19 is to affect the operation of any existing law in so far as it related to, or prevent the State from making any law relating to the carrying on by the State or by a Corporation owned or controlled by the State of any industry or business, whether to the exclusion, complete or partial, of citizens or otherwise. The State may therefore carry on any trade or business, and legislation relating to the carrying on of trade or business by ,the State, is not liable to be called in question on the ground that it infringes the fundamental freedom of citizens under article 19(1)(g). The Motor Vehicles Act.1939, was enacted by the Central Legislative Assembly in exercise of its power under the Government of India Act, 1935, to legislate in respect of mechanically 'propelled vehicles. Chapter IVA containing sections 68A to 681 was incorporated into that Act by the Parliament by Act 100 of 1956 whereby special provisions 97 750 relating to the conduct of transport undertakings by the States or Corporations owned or controlled by the State were made. Section 68A defines the expression " State transport undertaking " as meaning among others an undertaking for providing transport service carried on by the Central Government or a State Government or any Road Transport Corporation established under Act 44 of 1950. By section 68B, the provisions of that chapter and the rules and orders made thereunder are to override Chapter IV and other laws in force. Section 68C authorises the State transport undertaking to prepare and publish a scheme of road transport services of a State transport undertaking. Section 68D deals with the lodging of objections to the scheme framed under the preceding section, the of those objections and the publication of the final scheme approved or modified by the State Government. Section 68F deals with the issue of permits to State transport undertakings in respect of a notified area or notified route and provides that the Regional Transport Authority shall issue such permits to the State transport undertaking notwithstanding anything contained in Chapter IV. It also enables the Regional Transport Authority, for giving effect to the approved scheme, to refuse to entertain any application for the renewal of any other permit, to cancel any existing permit, to modify the terms of any existing permit so as to render the permit ineffective beyond a specified date, to reduce the number of vehicles authorised to be used under the permit and to curtail the area or route covered by the permit. Section 68G sets out the principles and method of determining compensation to persons whose existing permits are cancelled. By Chapter IVA, the State transport undertaking which is either a department of the State or a corporation owned or controlled by the State on the approval of a scheme, is entitled, consistently with the scheme, to exclusive right to, carry on motor transport business. The Regional Transport Authority is, bound to grant permit for the routes covered by the,, scheme to the State transport undertaking if that authority applies for the same and the Regional Transport Authority is 751 also bound in giving effect to the approved scheme, to modify the terms of existing permits and to refuse to entertain applications for renewal of permits of private operators. Chapter IVA is not merely regulatory of the procedure for carrying on business of road transport by the State; it enables the State transport undertaking, subject to the provisions of the scheme, to exclude private operators and to acquire a monopoly, partial or complete, in carrying on transport business, in a notified area or on notified routes. The authority of the Parliament to enact laws granting monopolies to the State Government to conduct the business of road transport is not open to serious challenge. Entry No. 21 of List III of the Seventh Schedule authorises the Union Parliament and the State Legislatures concurrently to enact laws in respect of commercial and industrial monopolies, combines and trusts. The argument of the petitioners that the authority conferred by entry No. 21 in List III is restricted to legislation to control of monopolies and not to grant or creation of commercial or industrial monopolies has little substance. The expression " commercial and industrial monopolies " is wide enough to include grant or monopolies to the State and Citizens as well as control of monopolies, The expression used in a constitutional enactment conferring legislative powers must be construed not in any narrow or restricted sense but in a sense beneficial to the widest possible amplitude of its powers: Navinchandra Mafatlal vs The Commissioner of Income tax, Bombay City(1), The United Provinces vs Atiqua Begum(2). Entry No. 26 of List II of the Seventh Schedule which invests the States with exclusive authority to legislate in respect of trade and commerce within the State, subject. to the provisions of entry No. 33 of List III, does not derogate from the authority conferred by entry 21 of List III concurrently to the Parliament and the State Legislatures, to grant or create by law commercial or industrial monopolies. The amplitude of the powers under the entry in the concurrent list expressly dealing with commercial and industrial monopolies cannot be presumed to be restricted by the (1) [1955] 1 S.C.R. 829, 836. (2) 752 generality of the expression " trade and commerce in the State List. If the argument of the petitioners and the intervener that legislation relating to monopoly in respect of trade and industry is within the exclusive competence of the State be accepted, the Union Parliament cannot legislate to create monopolies in the Union Government in respect of any commercial or trading venture even though power to carry on any trade or business under a monopoly is reserved to the Union by the combined operation of article 298, and the law which is protected from the attack that it infringes the fundamental freedom to carry on business by article 19(6). We are therefore of the view that Chapter IVA could competently be enacted by the Parliament under entry No. 21 read with entry No. 35 of the Concurrent List. The plea sought to be founded on the phraseology, used in article 19(6) that the State intending to carry on trade or business must itself enact the law authorising it to carry on trade or business is equally devoid of force. The expression " the State " as defined in article 12 is inclusive of the Government and Parliament of India and the Government and the Legislature of each of the States. Under entry No. 21 of the Concurrent List, the Parliament being competent to legislate for creating, commercial or trading monopolies, there is, nothing in the Constitution which deprives it of the power to create a commercial or trading monopoly in the Constituent States. Article 19(6) is a mere saving provision: its function is not to create a power but to, immunise from attack the exercise of legislative power falling within its ambit. The right of the State to carry on trade or business to the exclusion of others does not &rise by virtue of article 19(6). The right of the State to carry on trade or business is recognised by article 298; authority to exclude competitors in the field of such trade or business is conferred on the State by entrusting power to enact laws under entry 21 of List III of the Seventh Schedule,, and the exercise of that power in the context of fundamental rights is secured from attack by article 19(6), In any event, the expression " law " as, defined in article 13(3)(a) includes any ordinance, order, bye law, 753 rule, regulation, notification custom, etc., and the scheme framed under section 68C may properly be regarded as " law " within the meaning of article 19(6) made by the State excluding private operators from notified routes or notified areas, and immune from the attack that it infringes the fundamental right guaranteed by article 19(1)(g). Be.3: The plea that the Chief Minister who approved the scheme under section, 68D was biased has no substance. Section 68D of the undoubtedly imposes a duty on the State Government to act judicially in considering the objections and in approving or modifying the scheme proposed by the transports undertaking. Gullapalli Nageswara Rao vs Andhra Pradesh State Road Transport Corporation and another(1). It is also true that the Government on whom the duty to decide the dispute rests, is substantially a party to the dispute but if the Government or the authority to whom the power is delegated acts judicially in approving or modifying the scheme, the approval or modification is not open to challenge on a presumption of bias. The Minister or the officer of the Government who is invested with the power to hear objections to the scheme is acting in his official capacity and unless there is reliable evidence to show. that he is biased, his decision will not be liable to be called in question, merely because he is, a limb of the Government. The Chief Minister of the State has filed an affidavit in this case stating that the contention of the petitioners that he was " biased in favour of the scheme was baseless he has also stated that he heard such objections and representation& as were made before him and he had given the fullest opportunity to the objectors to submit their objections individually. The Chief Minister has given. detailed reasons for approving the scheme and has dealt with such of the objections as he says were urged before him. In the last para. of the reasones given, it is stated that the Government have heard all the arguments advanced on behalf of the operators and " after: giving full consideration to them, the Government have come to (1959) Supp. 1 S.C.R.319 754 the conclusion that the scheme is necessary in the interest of the public and is accordingly approved subject to the modifications that it shall come into force on May 1, 1959 ". In the absence of any evidence controverting these averments, the plea of bias must fail. 4: The argument that the Chief Minister did not give genuine consideration " to the objections raised by operators to the scheme in the light of the conditions prescribed has no force. The order of the Chief Minister discusses the questions of law as well as questions of fact. There is no specific reference in the order to certain objections which were raised in the reply filed by the objectors, but we are, on that account, unable to hold that the Chief Minister did not consider those objections. The guarantee conferred by section 68D of the upon persons likely to be affected by the intended scheme is & guarantee of an opportunity to put forth their objections. and to make representations to the State Government against the acceptance of the scheme. This opportunity of making representations and of being heard in support thereof may be regarded as real only if in the consideration of the objections, there is a judicial approach. But the Legislature does not contemplate an appeal to this Court against the order passed by the State Government approving or modifying the scheme. Provided the authority invested with the power to consider the objections gives an opportunity to the objectors to be heard in the matter and deals with the objections in the light of the object intended to be secured by the scheme, the ultimate order passed by that authority is not open to challenge either on the ground that another view may possibly have been taken on the objections or that detailed reasons have not been given for upholding or rejecting the contentions raised by the objectors. In the view taken by us, the contentions raised by the petitioners fail and the petition is therefore dismissed with costs. Petition dismissed. [/INST] In exercise of the powers conferred by section 68C of the , the General Manager of the Mysore Government Road Transport Department published a scheme for the exclusion of private operators on certain routes in a specified area and reservation of those routes for the State Transport Undertaking. The scheme was approved by the Government under s, 68D(2) of the Act after the Chief Minister of the State had given an opportunity to the operators affected by the scheme to make representations objecting to it, The petitioners who were 743 private operators challenged the validity of the scheme and the action taken by the Government pursuant to it on the grounds, inter alia, (1) that the petitioners have a fundamental right to carry on the business of plying stage carriages and that the provisions of Ch. IVA of the , which provide for the right of the State to exclusive right to carry on motor transport business are invalid,(2)that by Ch. IVA Parliament had merely attempted to regulate the procedure for entry by the State into the business of motor transport in the State, and that in the absence of legislation expressly undertaken by the State in that behalf, that State was incompetent to enter into the arena of motor transport business to the exclusion of private operators, and (3) that the scheme violated the equal protection clause of the Constitution because only fourteen out of a total of thirty one routes on which stage carriages were plied for public transport in the area specified were covered by the scheme : Held, (1) that the expression " commercial and industrial monopolies " in entry 21 of List III of the Seventh Schedule of the Constitution of India is wide enough to include grant or creation of commercial or industrial monopolies to the State and citizens as well as control of monopolies. (2) that it is competent for the Parliament to enact Ch. IVA of the Act under entry 21 read with entry 35 of List III. (3)that the scheme framed under section 68C of the may be regarded as "law" within the meaning of article 19(6) of the Constitution, made by the State excluding private operators from notified routes or notified areas, and immune from the attack that it infringes the fundamental right guaranteed by article 19(1)(g). (4)that on a true reading, the scheme in question was approved in relation to the fourteen notified routes and not in relation to a notified area and that as a scheme under section 68C of the Act may be one in relation to an area or any route or portion thereof, the scheme could not be challenged as discriminatory. </s>

<s>[INST] Summarize the following judgement: 161 of1958 and 109 of 1959. Petitions under article 32 of the Constitution of India for the enforcement of fundamental rights. Achhru Ram, D. B. Prem and Ganpat Rai, for the petitioners (In Petn. No. 161 of 58 and 16, 17, 35, 58, 69, 102, 109/1959). D.R. Prem, B. Thiagarajan and T. Satyanarayana, for the petitioners (In Petn. No. 36 of 1959). C. K. Daphtary, Solicitor General of India, R. Ganapathy Iyer, R. H. Dhebar and T. M. Sen, for the respondents (in all the petitions). April 28. The Judgment of the Court was delivered by SHAH, J. In the First Schedule to the Constitution, as originally enacted under the heading " Part C States" were set out the names of ten "C" States. The Parliament of India enacted The Government of Part C States Act, 49 of 1951, providing for the constitution of Legislative Assemblies, Councils of Ministers and Councils of Advisers for Part C States. Under section 4 of the Act, the President was authorised to delimit by order the constituencies into which each Part C State was to be divided and the areas of the constituencies, the number of seats allocated to each such constituency and the number of seats reserved for scheduled castes and tribes. In exercise of the powers conferred by section 4 of the Act, the President made an order determining the constituencies into which the State of Himachal Pradesh was to be divided. In 1952, elections were held to the Himachal Pradesh Assembly and 36 members were elected in the different constituencies. In the Legislative Assembly of the State, 757 Bill No. 7 of 1953 was introduced by the Government for the abolition of certain intermediaries in respect of landed estates. Before that Bill was passed into an Act, on May 8, 1954, the Parliament of India enacted the Himachal Pradesh and Bilaspur (New State) Act No. 32 of 1954. This Act which constituted a new State by uniting the States of Himachal Pradesh and Bilaspur received the assent of the President on May 28, 1954, and was brought into force under a notifi cation dated July 1, 1954. Under section 12 of Act 32 of 1954, a Legislative Assembly for the new State of Himachal Pradesh was to be constituted with 41 seats to be filled by direct elections. No fresh elections to the new State Assembly were held, but on July 7, 1954, a notification was issued by the Lieutenant Governor of the new Himachal Pradesh State purporting to exercise the powers conferred by section 9 of the , converting the second session of 1954 of the Himachal Pradesh Legislative Assembly. Pursuant to this notification, the Legislature assembled and Bill No. 7 of 1953 which was introduced in the old Himachal C State Assembly was passed into an Act. This Act called the Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act, 1954 hereinafter called the Abolition Act received the assent of the President on Novem ber 23, 1954, and was brought into force under a notification issued by the State Government on January 26, 1955. This court, in petitions under article 32 of the Constitution challenging the constitutional validity of the Abolition Act, held that the said Act could not be recognised as a piece of legislation validly enacted. It was held that even though section 15(1) of the New State Act provided that each of the 36 sitting members representing a constituency of the old Legislative Assembly of Himachal Pradesh was to be deemed to have been elected by that constituency, and by " the deeming provision ", these members were placed in the same position in which they would have been placed had they gone through the entire process of election and been elected, as no notification had been issued under section 74 of the Representation of the People , the 36 members of the old Himachal Pradesh Assembly could not constitute the Legislative Assembly. It was further held that by the notification issued by the Lieutenant Governor, the second session of the old Legislative Assembly was summoned, and not the new Legislative Assembly; and in the session held pursuant to the command of the Lieutenant Governor, Bill No. 7 of 1953 pending before the Assembly of the old State which had lapsed when that Assembly was dissolved could not be enacted as an Act of the Legislative Assembly of the new State. After this decision was pronounced on October 10, 1958, the President issued Ordinance No. 7 of 1958 validating the constitution and proceedings of the Legislative Assembly of the new State of Himachal Pradesh formed under Act 32 of 1954, and prohibiting the courts from questioning the validity of the proceedings of the new Legislative Assembly on the ground of defect in its constitution. This Ordinance was replaced by Act 56 of 1958. Sections 3 and 4 of the said Act provided as under: Section 3: " Notwithstanding anything contained in any law or in any judgment, decree or order of any court, (a)the body of persons summoned to meet from time to time as the Himachal Pradesh Legislative Assembly (Himachal Pradesh Vidhan Sabha) during the period commencing on the 1st day of July, 1954, and ending with the 31st day of October, 1956, by the Lieutenant Governor of Himachal Pradesh in the exercise or purported exercise of the powers conferred on him by section 9 of the , shall be deemed for all purposes to have been the duly constituted Legislative Assembly of the new State of Himachal Pradesh formed under 'section 3 of the ; (b)the persons who sat or voted or otherwise took part in the proceedings of the new Legislative Assembly shall be deemed to have been entitled so to do as members; (c)the persons who functioned as the Speaker and the Deputy Speaker of the new Legislative Assembly 759 shall be deemed to have been duly chosen as the Speaker and the Deputy Speaker respectively; and accordingly (1)any Bill passed by the new Legislative Assembly (whether the Bill was introduced in the new Legislative Assembly or was introduced in the Legislative Assembly of Himachal Pradesh functioning immediately before the 1st day of July, 1954) and assented to by the President shall be deemed to have been validly enacted and to have the force of law; (2) any grant made, resolution passed or adopted, proceeding taken or any other thing done by or before the new Legislative Assembly shall be deemed to have been made, passed, adopted, taken or done in accordance with law. " Section 4: "No court shall question any Act passed, or any grant, resolution, proceeding or thing made, passed, adopted, taken or done by or before the new Legislative Assembly merely on the ground that the new Legislative Assembly had not been duly constituted or on the ground that a person who was not entitled so to do presided over, sat or voted or otherwise took part in the proceedings of the new Legislative Assembly. " By these nine petitions, the constitutional validity of Ordinance No. 7 of 1958 and Act No. 56 of 1958 is challenged and the petitioners pray for writs of mandamus or other writs or directions restraining the Himachal Pradesh Administration and the Union of India from giving effect to Ordinance No. 7 of 1958 and Act No. 56 of 1958 and to the Abolition Act or "acting in any manner under or on the basis of that Act ". Counsel for the petitioners contends, (1) that the persons summoned by the Lieutenant Governor by his notification dated July 7, 1954, could not constitute a Legislature of the new State as those persons were not elected or nominated in the manner prescribed by article 240 of the Constitution; and the Parliament could Dot by law validate acts and proceedings of that body which had no authority to legislate, (2) the Parliament in enacting the Validating 760 Act had no authority retrospectively to form a Legislative Assembly in violation of the terms of article 240 of the Constitution especially when the new State of Himachal Pradesh which was formed under Act 32 of 1954 had ceased to exist at the date when the Abolition Act was enacted, and (3) even if the Validating Act is not open to challenge, the Abolition Act contravened article 31 of the Constitution and is therefore void as infringing the fundamental rights of the petitioners under article 19 and article 31 of the Constitution. In our view, there is no substance in any of the contentions raised. By article 240(1) of the Constitution, before it was amended by the Constitution (Seventh Amendment) Act, 1956, it was provided: " 240. (1) Parliament may by law create or continue for any State specified in Part C of the First Schedule and administered through a Chief Commissioner or Lieutenant Governor (a)a body, whether nominated, elected or partly nominated or elected, to function as a Legislature for the State; or (b)a Council of Advisers or Ministers, or both with such constitution, powers and functions in each case,, as may be specified in the law. " By the Article as it stood before its amendment, the Parliament was competent by law to create or continue for any State specified in Part C of the First Schedule a body to function as a Legislature. Under that Article, the Legislature was to consist of persons nominated or elected, or partly elected and partly nominated, and there is no dispute that the Legislature consisting of members validly elected from the various constituencies functioned for the old State of Himachal Pradesh. Those 36 members of the old Himachal Pradesh Assembly having been under Act 49 of 1951 duly elected to the Assembly of that State, by virtue of section 15(1) of Act 32 of 1954 each member was to be deemed to have been duly elected by the corresponding constituency of the Legislature of the new State, and the only reason why those members could not function as a Legislature of the new State was that the notification under section 74 of the Representation of 761 the People Act was not published. The legislative acts of that Assembly were undoubtedly unauthorised, but it Was competent to the Parliament by legislation to remove the bar which arose because of the failure to issue the notification and to validate the acts done by the Legislature. Article 240 did not provide that the Legislative Assembly could not function unless the members thereof were expressly elected or were nominated to the Legislature of a Part C State. By article 248, the Parliament has the residuary power to make laws with respect to any matter not enumerated in the Concurrent List or the State List, and legislation seeking to remove the disability of members of a Legislative Assembly of a Part C State arising because of the failure to issue a notification under section 74 of the Representation of the People Act, is not covered by any item falling in the Concurrent List or in the State List. By item No. 97 in List I to the Seventh Schedule, the Union Parliament is competent to make any other law not enumerated in Lists II and III. The legislative competence of the Parliament to enact the Act is therefore not open to challenge. The legislative competence of the Legislative Assembly of the New Himachal State Assembly to enact the Abolition Act in 1954 cannot be and is not denied. There is no absolute bar against the authority of the Parliament to enact legislation which takes away vested rights provided the legislation falls within any of the legislative lists within the competence of the Parliament and it does not infringe any of the fundamental rights of the citizens. Again, no constitutional provision is violated by the enactment of Act 56 of 1958. We are also unable to hold that the authority of Parliament to validate the acts and proceedings of the Assembly summoned by the Lieutenant Governor in 1954 was exhausted when article 240 as it originally stood was amended by the Constitution (Seventh Amendment) Act, 1956, and Part C State of Himachal Pradesh ceased to exist. When the Validating Act was enacted, the Himachal Pradesh Part C State had ceased to exist but on that 'account, the authority of the Parliament to validate 762 the proceedings of the body of persons which purported to function as the Legislative, Assembly under Act 32 of 1954 was not extinguished. Did the Abolition Act infringe the fundamental rights of the petitioners under article 19 or article 31 of the Constitution ? By section 1 1, the tenants were invested with the right to acquire the interests of the land.owners in the lands held by them. It was provided that notwithstanding any law, custom or contract to the contrary, any tenant other than a sub tenant shall, on application made to the compensation officer at any time after the commencement of the Act, be entitled to acquire, on payment of compensation, the right, title and interest of the land owner in the land held by him subject to certain terms and conditions set out therein. Section 14 permitted acquisition by the tenants of the rights of the land owners in a portion of the lands of the tenancy in certain specified circumstances. Section 15 sanctioned the acquisition by the State Government of the rights of the land. owners by notification in the gazette declaring that as from such date and in respect of such area as may be specified in the notification, the right, title and interest of the land owner in the lands of any tenancy held under him by a tenant shall stand transferred to and vest in the State Government free from all encumbrances created in such lands by the land owner. By section 16, the method of computation of the compensation payable for acquisition of the right, title and interest of the land owners under section 15 is prescribed. By section 27, it was provided that notwithstanding anything contained in the provisions of the foregoing sections of that chapter, the land owner who held land, the annual land revenue of which exceeded Rs. 125 per year, the right, title and interest of such owner in such land shall be deemed to have been transferred and vested in the State Government free of all encumbrances. Sub section (3) of section 27 laid down that the land owner whose right was acquired under sub section 1 by the State Government shall be entitled to receive compensation to be determined by the compensation officer having regard to so. 17 and 18 of the Act, in accordance with the provisions of Schedule II; but in 763 the case of such occupancy tenant who was liable to pay rent in terms of land revenue or the multiple of land revenue, the compensation payable to his landowner shall be computed in accordance with Schedule 1. Provision was also made by the Act for State management of lands in certain eventualities. Article 31 of the Constitution as amended by the Constitution (Fourth Amendment) Act, 1955, provides, inter alia, that a law for compulsory acquisition of property for public purposes shall not be called in question in any court on the ground that the compensation provided by that law is not adequate, and by article 31 A which was substituted by the Constitution (Fourth Amendment) Act, 1955, for the original Article with retrospective effect, it is provided that notwithstanding anything contained in article 13, no law providing for (a) the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights. shall be deemed to have become void on the ground that it is inconsistent with or takes away or abridges any of the fundamental rights con ferred by article 14, 19 or 31; provided that where such law is made by the Legislature of a State, the provisions of the Article shall not apply thereto unless the law, having been reserved for the consideration of the President, has received his assent. The Abolition Act passed by the State Assembly was reserved for consideration of the President and it received his assent. The impugned Act contains provisions transferring the interest of the land owners to the tenants in lands and for acquisition by the State of the property of the land owners on payment of compensation under the Schedule provided in that behalf. This court has held in Sri Ram Narain vs State of Bombay (1) that a statute the object of which is to bring about agrarian reform by transferring the interest of the land owners to tenants falls within the class of statutes contemplated by article 31 A(a) and is protected from the attack that it violates the fundamental rights enshrined in articles 14, 19 and 31 of the Constitution. Counsel appearing on behalf of the petitioners conceded, and in our judgment rightly, that the principle of that case governed this (1) [1959] Sapp; 1 S.C.R. 489; 764 case and the validity of section 11 could not in view of article 31 A be challenged. The validity of the provisions for acquisition by the State of the lands of the land owners for compensation determinable in accordance with the provisions of Sch. 11 is also not liable to be challenged under article 31 read with article 31 A. In that view of the case, all these petitions must fail and they are ordered to be dismissed with costs. Petitions dismissed. [/INST] On October 10, 1958, the Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act, 1953, was declared invalid by the Supreme Court on the ground that the Legislative Assembly of the New Himachal Pradesh State which passed it was not duly constituted and was as such incompetent to pass the Act (Vide: Shree Vinod Kumar vs State of Himachal Pradesh, [1959] SUPP. 1 S.C.R. 160). The President by Ordinance NO. 7 of 1958 validated the constitution and proceedings of the said Assembly. That Ordinance was replaced by the Validating Act No. 56 of 1958 passed by the Parliament. Section 3 of the Act validated the constitution and proceedings of the Legislative Assembly of the Himachal Pradesh State and section 4 prohibited the courts from questioning the validity of any Act or proceeding of the Assembly on the ground of defect in its constitution. The Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act was accordingly validated. The petitioners who were land holders challenged the constitutionality of the Ordinance and the validating Act, by petitions under article 32 of the Constitution: Held, that (i) in view of article 24o as it stood before its amendment by the Constitution (Seventh Amendment) Act, 1956, the Parliament was competent to enact the validating Act; (ii) the provisions of the Abolition Act did not infringe articles 19 and 31 Of the Constitution, and (iii)the Abolition Act fell within the protection of article 31A of the Constitution and it was not open to challenge on the ground that it infringed articles 19 and 31 Of the Constitution. Shri Ram Narain vs State of Bombay, [1959] Supp. 1 S.C.R. 489, referred to. The reason which precluded the members of the Old Himachal Pradesh Assembly from functioning as the Legislature of the New Himachal Pradesh State was that a Notification under section 74 of, the Representation of the People Act 1951, Was not 756 issued. The Parliament, by virtue of its residual powers of legislation under article 248 of the Constitution and item No. 97 of List I to the Seventh Schedule, was competent to remove the defect that arose because of the failure to issue the notification, and to validate the actual proceedings of the body which functioned as the Legislature. Under article 240 Of the Constitution, as it stood before it was amended by the Constitution (Seventh Amendment) Act, 1956, the Parliament was not debarred from enacting the validating Act nor did the power of the Parliament to validate the acts and proceedings of the State Legislature come to an end when the State itself ceased to exist. </s>

<s>[INST] Summarize the following judgement: Appeal No. 420 of 1957. Appeal by special leave from the judgment and order dated August 8, 1955, of the former Andhra High Court in Tax Revision Case No. 2 of 1955. WITH Civil Appeal No. 142 of 1958. Appeal from the judgment and order dated July 28, 1955, of the former Andhra High Court in T.R.C. No. 32 of 1954. N.Rajeswara Rao and Sardar Bahadur, for the appellants (in both the appeals). T.V. R. Tatachari and T. M. Sen, for the respondent (in both the appeals). April 29. The Judgment of the Court was delivered by S.K. DAS, J. These two appeals, one with special leave from this Court and the other on a certificate granted by the High Court of Andhra, have been heard together and this judgment will govern them both. The facts are similar and the short question for decision is whether the appellant, Messrs. Chandaji Kubaji and Company, Guntur, was entitled to apply under section 12A(6)(a) of the Madras General Sales Tax Act, 1939 (Madras Act IX of 1939), as applied to Andhra, for a review of an order of the Appellate Tribunal made under suchs. (4) of section 12A of the said Act. The relevant facts are these. The appellant is a dealer in ghee, groundnut oil, chillies, etc., and was carrying on its business at Guntur. In Civil Appeal No. 420 of 1957, the Deputy Commercial Tax Officer, Guntur, assessed the appellant to sales tax for the year 1948 49 on a turnover of Rs. 28,69,151 and odd. The appellant having unsuccessfully appealed to the Commercial Tax Officer, Guntur, made a second appeal to the Sales Tax Appellate Tribunal, hereinafter called 105 806 the Tribunal. Before the Tribunal the appellant contended inter alia that out of the total turnover a sum of Rs. 10,45,156 and odd related to commission purchase of commodities taxable at the stage of sale on behalf of principals resident outside the State of Andhra and was not therefore taxable by the respondent State. In respect of this plea the Tribunal said: " As regards the alleged commission agency business to the tune of Rs. 10,45,156 4 9 the appellants have neither advanced arguments nor placed before us any materials in support of the contention raised in this behalf ". In the result the Tribunal dismissed the appeal on May 30, 1953. In Civil Appeal No. 142 of 1958 the appellant was assessed by the Deputy Commercial Tax Officer, Guntur, on a net turnover of Rs. 28,72,083 and odd for the year 1949 50. The appellant objected to the inclusion of a sum of Rs. 19,89,076 and odd on the ground that the goods relating thereto bad been consigned to self and despatched to places outside the state and in fact were delivered outside the State. "this plea was disallowed by the Sales Tax autho rities, and the Tribunal said " In the grounds of appeal it has been urged with regard to these sale transactions the ownership in the goods continued to vest in the appellant till the sale price was collected and the goods were delivered to the buyers at places outside the State. Beyond advancing a broad argument of this type no material has been placed before us or was placed before the assessing authority or the Commercial Tax Officer to support the appellant 's version that the property in the goods passed to the buyer only at places outside the State". x x x It is not denied that though contracts in writing were not entered into, these transactions were the result of correspondence between the appellant on the one hand as seller and various persons on the other as buyers. It is conceded that such correspondence exists but the appellants have not chosen 807 to make this correspondence available either to us or to the officer below. When documents which would establish the nature of the transaction beyond doubt are available and have been withheld by the appellant, the normal result is that an inference adverse to his contention has to be drawn. We are accordingly of the opinion that in this case, the sales must be deemed to have taken place within this State and that they have been rightly included in the taxable turnover ". The appeal was disposed of on this finding on August 19,1952. In respect of both the aforesaid orders the appellant filed applications for review under section 12A(6)(a) of the Act. That section, in so far as it is relevant for these appeals, reads: " 12A(6)(a) The Appellate Tribunal may, on the application either of the assessee or of the Deputy Commissioner, review any order passed by it under sub section (4) on the basis of facts which were not before it when it passed the order: Provided that no such application shall be preferred more than once in respect of the same order ". The point taken on behalf of the appellant in Civil Appeal No. 420 of 1957 was that the accounts were in Gujrati language and as there was none on behalf of the appellant who could give instructions to the appellant 's advocate either in Telugu or English when the appeal was heard by the Tribunal, the appellant could hot place the materials before the Tribunal. In the other appeal, the point taken in support of the application for review was that the relevant correspondence was mixed up with other records and so it could not be placed before the Tribunal. The Tribunal rejected the applications for review on the ground that a failure to produce the necessary materials in support of a plea taken before it, due either to gross negligence or deliberate withholding, did not come within the reason of section 12A(6)(a) as stated in the expression " on the basis of facts which were not before it when it passed the order ". The appellant then moved the High Court in revision under section 12B of the Act and 808 contended that the view which the Tribunal took of s.12A(6)(a) was not correct. The High Court drew a distinction between what it called basic facts and evidence in support thereof and said: " There is an essential distinction between a fact and the evidence to establish that fact x x x Section 12A(6)(a) in our view is not intended to give two opportunities to every assessee to establish his case before a Tribunal. It is really conceived in the interests of ; the assessee, who was not able to place some facts before the Tribunal at the first instance which would have made a difference in its decision ". In the view which the High Court took of section 12A(6)(a), it held that the applications for review were rightly rejected. In the two appeals before us the argument has been that the Tribunal as also the High Court took an erroneous view of the true scope and effect of section 12A (6)(a) of the Act. Our attention has been drawn to a Subsequent Full Bench decision of the same High Court in The State of Andhra vs Sri Arisetty Sriramulu (1) and it has been submitted that the view expressed therein is the correct view. In that decision, it was held that the word " facts " in section 12A(6)(a) may be taken to have been used in the sense in which it is used in the law of evidence, that is to say, as including the factum probandum or the principal fact to be proved and the factum probans or the evidentiary facts from which the principal fact follows immediately or by inference; facts may be either ,facts in issue " which are the principal matters in dispute or relevant facts which are evidentiary and which directly or by inference, prove or disprove the " facts in issue ". In the view which we have taken of these two appeals, it is not necessary to discuss at great length the divergent views taken in the High Court of Andhra as to the true scope and effect of section 12A(6)(a) of the Act. A Division Bench expressed the view that facts " in the sub section meant basic facts, that is, (1) A.I.R. 1957 Andhra Pradesh 130. 809 facts necessary to sustain a claim, and drew a distinction between such facts and the evidence required to establish them; it further expressed the view that under section 12A(6)(a) the Tribunal may review its order if any of the basic facts were not present before it when it passed the order, but the sub section was not meant to give a second opportunity to a party to produce fresh evidence. The Full Bench took a wider view of the sub section and said that facts referred to in the sub section might be "facts in issue" or " evidentiary facts ". We think that in an appropriate case evidentiary facts may be so interlinked with the facts in issue that they may also fall within the purview of the subsection. The Full Bench, however, went a step further and said that even if relevant evidentiary facts were intentionally or deliberately withheld or suppressed, the party guilty of such suppression or withholding would still be entitled to ask for a review under section 12A(6)(a). We say this with great respect, but this is precisely what the section does not permit. The Full Bench said: " The language of section 12A(6)(a) is so wide and general that it might possibly lead to inconvenient results in that it might enable an assessee to get a further chance of hearing before the Appellate Tribunal on the strength of evidence which he negligently or designedly failed to produce at the first ,hearing. As the language used in section 12A(6)(a) is clear and unequivocal and, in our opinion, capable only of one interpretation, we are bound to give effect to it in spite of the possibility of any incon venience resulting therefrom. The inconvenience, if any, is not to the assessee for whose benefit the provision is intended. In any case, the remedy is with the Legislature". It is, we think, doing great violence to language to say that an intentional or deliberate withholding or suppression of evidence in support of a plea or contention or a basic fact urged before the Tribunal, is comprehended within the expression " facts which were not before it (Tribunal) when it passed the order ". To so construe the section is to put a premium 810 on deliberate negligence and fraud and amounts to allowing a party to profit from its own wrong. We do not think that such a construction follows from the language used, which is more consistent with the view that the provision in section 12A(6)(a) permits a review when through some oversight, mistake or error the necessary facts, basic or evidentiary, were not present before the Court when it passed the order sought to be reviewed. It is entirely wrong to think that the subsection permits a party to play hide and seek with a judicial Tribunal; that is to say to raise a fact in issue or evidentiary fact as a plea in support of a claim and at the same time deliberately withhold the evidence in support thereof. Such a situation cannot be said to be one within the meaning of the expression " facts not present before the Tribunal ". In the appeals before us there was intentional withholding or suppression of evidence. In the case, the materials were not produced on the plea that they were written in Gujrati and nobody was available to instruct counsel in English or Telugu and in the other, on an equally specious plea that the correspondence was mixed up with other records for about two years. These two appeals can be disposed of on this short ground that the appellant was not entitled to ask for review under section 12A(6)(a) by reason of his own deliberate negligence and intentional withholding of evidence. We see no merit in these appeals and dismiss them with costs. Appeals dismissed. [/INST] The appellant company was a dealer in ghee and groundnut oil etc. The Deputy Commercial Tax Officer assessed it to sales tax for the year 1948 49 on a turnover of Rs. 28,69,151 and odd. Similarly for the year 1949 50 the appellant was assessed to sales tax on a turnover of Rs. 28,72,o83 and odd. The appellant challenged these assessments and its appeal before the Commercial Tax Officer having failed the two matters came up in second appeal before the Sales Tax Appellate Tribunal. In the Tribunal the appellant did not place any materials in support of its contentions and the two appeals were disposed of by the Tribunal holding that the appellant was correctly assessed to sales tax. In respect of the aforesaid orders of the Tribunal the appellant filed applications for review under section 12A(6)(a) of the Madras General Sales Tax Act, 1939 (Mad. Act IX Of 1939), taking the plea that in the first case the materials could not be placed before the Tribunal as there was none to instruct the appellant 's advocate in English or Telegu, and in the second case the relevant correspondence was mixed up with other records. The Tribunal rejected the applications for review on the ground that a failure to produce the necessary materials in support of a plea taken before it, due either to gross negligence or deliberate withholding, did not come within the reason of section 12A(6)(a) of the Act. The High Court upheld the decision of the Tribunal. On appeal by special leave in one case and a certificate of the High Court in the other: Held, that the provision in section 12A(6)(a) of the Madras General Sales Tax Act, 1939 (Mad. Act IX Of 1939), permits a review when through some oversight, mistake or error the necessary facts, basic or evidentiary, were not present before the Court when it passed the order sought to be reviewed, but a party was not 805 entitled to ask for a review when it had deliberately or intentionally withheld evidence in support of a claim made by it. State of Andhra vs Sri Arisetty Sriyamulu, A.I.R. 1057 Andhra Pradesh 130, not approved. </s>

<s>[INST] Summarize the following judgement: Appeal No. 107 of 1960. Appeal by special leave from the judgment and order dated September 21, 1959, of the Mysore High Court, Bangalore, in Misc. Appeal No. 68 of 1959. Purshottam Prikamdas, section N. Andley, J. B. DadaChanji, Rameshwar Nath and P. L. Vohra, for the appellant. 715 K. R. Karanth and Naunit Lal, for the respondent. April 27. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. The respondent, Pothan Joseph, who was working as the Editor of the Deccan Herald owned and published by the appellant, The ' Printers (Mysore) Private Ltd., in Bangalore has filed a suit against the appellant on two contracts executed between the parties on April 1, 1948, and February 20, 1953, respectively, and has claimed accounts of the working of the Deccan Herald newspaper from April 1, 1948, to March 31, 1958, as well as payment of the amount that may be found due to him from the appellant tinder the provisions of cls. 2(d) and 1(d) of the said contracts. The services of the respondent were terminated by the appellant by its letter dated September 28, 1957, in which the respondent was told that the termination would take effect from March 31, 1958. However, by a subsequent letter written by the appellant to the respondent on March 17, 1958, the respondent was told that his services had been terminated with immediate effect and he was asked to hand over charge to his successor, Mr. T. section Ramachandra Rao. Thereafter on July 14, 1958, the respondent, filed the present suit against the appellant. The appellant contended that the two contracts on which the respondent 's claim was based were subject to an arbitration agreement, and so it was not open to the respondent to file the present suit against the appellant. The appellant, therefore, requested the Court under section 34 of the Indian , (hereinafter called the Act), to stay the proceedings initiated by the respondent and refer the dispute to arbitration in accordance with the arbitration agreement between the parties. The learned trial judge who heard the appellant 's application, however, exercised his discretion against it and refused to stay the proceedings in the respondent 's suit. Thereupon the appellant preferred an appeal in the Mysore High Court but his appeal failed and the High Court confirmed the order passed by the trial court though for different reasons. The High 716 Court, however, thought that the learned trial judge, in dealing with the appellant 's application " bad gone much further than he should have done, and hence it was desirable that the case should be tried by some other judge ". The respondent did not object, and so the High Court directed that the suit may be transferred to the file of the Additional Civil Judge, Bangalore. The appellant then applied to the High Court for a certificate. His application was, however, rejected on the ground that the decision under appeal could not be considered as a judgment, decree or final order under article 133(1) of the Constitution ; on that view it was thought unnecessary to decide whether on the merits the case was fit to be taken in appeal to this Court. Then the appellant applied for and obtained special leave from this Court. That is how this appeal has come before us; and the substantial point which arises for our decision is whether the courts below were in error in refusing to stay the suit filed by the respondent against the appellant in view of the arbitration agreement between them. Before we deal with the merits of the contentions raised by the parties in this appeal it is necessary to set out briefly the relevant facts leading to the present litigation. The appellant is a printing company and it owns and publishes the Deccan Herald in English and Prajavani in Kannada at Bangalore. By a contract dated April 1, 1948, the appellant engaged the respondent as Editor of the Deccan Herald for a period of five years on terms and conditions specified in the said contract. As provided by el. (5) of the said contract the period of the respondent 's employment was extended by another five years by a subsequent contract entered into between the parties on February 20, 1953. As we have already mentioned the services of the respondent came to be terminated abruptly on March 17, 1958. It appears that by his letter dated October 16, 1957, the respondent made certain claims against the appellant under the provisions of the Working Journalists Act. Besides, he demanded 1/10th of the profits made by the Deccan Herald from 1948 up to the date of the termination of his service under the two respective contracts. This claim was 717 denied by the appellant. Correspondence then ensued between the parties but since no common ground was discovered between them the respondent filed the present suit. His case is that the two contracts entitled him to claim 1/10th of the profits made by the Deccan Herald during the period of his employment,, and so he claims an account of the said profits and his due share in them. The learned trial judge found that the respective contentions raised by the parties before him showed that there was no dispute as such between them which could attract the arbitration agreement. He also held that an attempt was made by the parties to settle their differences amicably through the mediation of Mr. Behram Doctor but the said attempt failed because the appellant was not serious about it and was just trying " to protract, defeat and delay the plaintiff 's moves". According to the learned trial judge a plea of limitation would fall to be considered in the present suit and it was desirable that the said plea should be tried by a competent court rather than by arbitrators. He was, however, not impressed by the respondent 's contention that his character had been impeached by the appellant and so he should be allowed to vindicate his character in a trial before a court rather than before the arbitrators. In dismissing the appellant 's claim for stay of the suit the learned judge observed that if the accounts of the Deccan Herald had not been separately maintained it would be competent for a qualified accountant to allocate expenses and capital expenses among the different activities of the appellant and then very little would be left for arbitrators to decide. He had no doubt that the contract by which the respondent was entitled to claim 1/10th share in the profits of the Deccan Herald necessarily postulated that the accounts of the Deccan Herald would be separately maintained. On these considerations the trial judge refused to stay the suit. When the matter went in appeal the High Court held that the dispute between the parties did not fall within the arbitration agreement. The High Court also considered the other points decided by the trial court; it held that Mr, Behram Doctor had not been 93 718 appointed as an arbitrator between the parties and that the proceedings before him merely showed that the parties were exploring the possibility of having an arbitration. It observed that the appellant company was a big concern and referred to the respondent 's apprehension that it was in a position to dodge the respondent 's claim. However, the High Court was not impressed by these apprehensions, and it was not inclined to find fault with the conduct of the appellant in the trial court. It was also not satisfied that the question of limitation which would arise in the suit as well as the question of interpreting the contracts could not be properly tried by arbitration. It recognised that there had been a complete change of front on the part of the appellant in regard to the pleas raised by the appellant under the arbitration agreement when the matter was discussed before Mr. Behram Doctor, and when it reached the court in the form of the present suit. The High Court then considered other facts which it thought were relevant. It stated that there was great deal of bad blood between the parties and there was no meeting ground between them. The appellant 's plea that recourse to arbitration may help an early disposal of the dispute did not appeal to the High Court as sound, and so, on the whole, the High Court thought that the order passed by the trial court refusing to stay the proceedings in suit should be confirmed. The appellant contends that the reasons given by the High Court in refusing to stay the suit are not convincing and that the discretion vesting in the High Court in that behalf has not been properly or judiciously exercised. Section 34 of the Act confers power on the court to stay legal proceedings where there is an arbitration agreement subject to the conditions specified in the section. The conditions thus specified are satisfied in the present case, but the section clearly contemplates that, even though there is an arbitration agreement and the requisite conditions specified by it are satisfied, the court may nevertheless refuse to grant stay if it is satisfied that there are sufficient reasons why the matter should not be referred in accordance with the arbitration agreement. In other words, the power to 719 stay legal proceedings is discretionary, and so a party to an arbitration agreement against whom legal proceedings have been commenced cannot by relying on the arbitration agreement claim the stay of legal proceedings instituted in a court as a matter of right. It is, however, clear that the discretion vested in the court, must be properly and judicially exercised. Ordinarily where a dispute between the parties has by agreement between them to be referred to the decision of a domestic tribunal the court would direct the parties to go before the tribunal of their choice and stay the legal proceedings instituted before it by one of them. As in other matters of judicial discretion, so in the case of the discretion conferred on the court by section 34 it would be difficult, and it is indeed inexpedient, to lay down any inflexible rules which should govern the exercise of the said discretion. No test can indeed be laid down the automatic application of which will help the solution of the problem of the exercise of judicial discretion. As was observed by Bowen, L. J., in Gardner vs Jay (1) " that discretion, like other judicial discretion, must be exercised according to common sense and according to justice. " In exercising its discretion under section 34 the court should not refuse to stay the legal proceedings merely because one of the parties to the arbitration agreement is unwilling to go before an arbitrator and in effect wants to resile from the said agreement, nor can stay be refused merely on the ground that the relations between the parties to the dispute have been embittered or that the proceedings before the arbitrator may cause unnecessary delay as a result of the said relations. It may not always be reasonable or proper to refuse to stay legal proceedings merely because some questions of law would arise in resolving the dispute between the parties. On the other hand, if fraud or dishonesty is alleged against a party it may be open to the party whose character is impeached to claim that it should be given an opportunity to vindicate its character in an open trial before the court rather than. before the domestic tribunal, and in a proper case the. court may consider that fact as relevant for deciding (1) 58, 720 whether stay should be granted or not. If there has been a long delay in making an application for stay and the said delay may reasonably be attributed to the fact that the parties may have abandoned the arbitration agreement the court may consider the delay as a relevant fact in deciding whether stay should be granted or not. Similarly, if complicated questions of law or constitutional issues arise in the decision of the dispute and the court is satisfied that it would be inexpedient to leave the decision of such complex issues to the arbitrator, it may, in a proper case, refuse to grant stay on that ground; indeed, in such cases the arbitrator can and may state a special case for the opinion of the court under section 13(b) of the Act. Thus, the question as to whether legal proceedings should be stayed under section 34 must always be decided by the court in a judicial manner having regard to the relevant facts and circumstances of each case. Where the discretion vested in the court under section 34 has been exercised by the trial court the appellate court should be slow to interfere with the exercise of the said discretion. In dealing with the matter raised before it at the appellate stage the appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the trial court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court 's exercise of discretion. As is often said, it is ordinarily not open to the appellate court to substitute its own exercise of discretion for that of the trial judge; but if it appears to the appellate court that in exercising its discretion the trial court has acted unreasonably or capriciously or has ignored relevant facts and has adopted an unjudicial approach then it would certainly be open to the appellate court and in many cases it may be its duty to interfere with the trial court 's exercise of discretion. In cases falling under this class the exercise of discretion by the trial 721 court is in law wrongful and improper and that would certainly justify and call for interference from the appellate court. These principles are well established; but, as has been observed by Viscount Simon, L. C., in Charles Osenton & Co. vs Johnston (1) " the law as to the reversal by a court of appeal of an order made by a, judge below in the exercise of his discretion is well established, and any difficulty that arises is due only to the application of well settled principles in an individual case". In the present case there is one more fact which has to be borne in mind in dealing with the merits of the controversy before us. The appellant has come to this Court by special leave under article 136; in other words, the appellant is not entitled to challenge the correctness of the decision of the High Court as a matter of right. It is only in the discretion of this Court that it can be permitted to dispute the correctness or the propriety of the decision of the High Court, and so in deciding whether or not this Court should interfere with the order under appeal it would be relevant for us to take into account the fact that the remedy sought for by the appellant is by an appeal which is a discretionary matter so far as this Court is concerned. It is in the light of these principles that we must consider whether or not the appellant 's complaint against the High Court 's order can be upheld. The first point which calls for a decision relates to the construction of the contracts between the parties. As we have already stated two contracts were executed between them but their terms are substantially the same and so we may deal with the subsequent contract which was executed on February 20, 1953 (P. 2). Under this contract the respondent was engaged as the Editor of the Deccan Herald and his salary was fixed at Rs. 1,500 permensem under paragraph 1 (a). Paragraph 1(b) and (c) deal with the other amenities to which the respondent was entitled. Clause (d) of paragraph 1 provides that when the newspaper shows a profit in the annual accounts the Editor shall be entitled to 1/10th share of it is on this clause that the respondent 's claim in the present proceedings is (1) , 138. 722 based. The terms on which the respondent had to remain in the service of the appellant are specified in paragraph 2(a) and (b). Paragraph 3 provides for the renewal of the contract for a further period of five years if it is found that such renewal is for the mutual advantage of the parties. This paragraph also provides that during the continuance of his employment the respondent shall not directly or indirectly be interested in any other newspaper business than that of the appellant or any other journalistic activities in competition with that of the appellant. It also stipulates that if the contract is determined the respondent shall not for a period of three years thereafter be directly or indirectly interested in any newspaper business of the same kind as is carried on by the appellant within the Mysore State. It would thus be seen that this paragraph shows the liability imposed on the respondent as a consideration for the benefit conferred on him by paragraph 1 in general and cl. (d) of the said paragraph in particular. Paragraph 4 contains an arbitration agreement. It provides that if in the interpretation or application of the contract any difference of opinion arises between the parties the same shall be referred to arbitration. The arbitrator can be named by both the parties but if they failed to choose the same person each side will choose an arbitrator and the two will elect another person to complete the panel. Their award shall be final and binding on both the parties. The High Court has held that the present suit is outside the arbitration agreement because neither party disputes the applicability of the terms of the contract in the decision of the dispute. The High Court thought that in the context the words 'application of the contract ' meant a dispute as to the applicability of the contract, and since the applicability of the contract was not in question and no dispute as to the interpretation of the contract arose, the High Court held that paragraph 4 was inapplicable to the present suit. Mr. Purshottam, for the appellant, con. tends that the construction placed by the High Court on the word " application " is erroneous. According to him, any difference of opinion in regard to the application of the contract must in the context mean 723 the, working out of the contract or giving effect to its terms. In our opinion, this contention is well founded. The words 'interpretation or application of the contract ' are frequently used in arbitration agreements and they generally cover disputes between the parties in regard to the construction of the relevant terms of the contract as well as their effect, and unless the con ' text compels a contrary construction, a dispute in regard to the working of the contract would generally fall within the clause in question. It is not easy to appreciate what kind of dispute according to the High Court would have attracted paragraph 4 when it refers to a difference of opinion in the application of the contract. Since both the parties have signed the contract the question about its applicability in that form can hardly arise. Differences may, however, arise and in fact have arisen as to the manner in which the contract has to be worked out and given effect to, and it is precisely such differences that are covered by the arbitration agreement. We would accordingly hold that the High Court was in error in coming to the conclusion that the present dispute between the parties was outside the scope of paragraph 4 of the contract. If the High Court had refused to stay the present proceedings only on this ground the appellant would no doubt have succeeded; but the High Court has based its decision not only, nor even mainly, on the construction of the contract. The tenor of the judgment suggests that the High Court considered the other relevant facts to which its attention was invited and the material findings recorded by the trial judge, and though it differed from some of the findings of the trial judge, on the whole it felt no difficulty in coming to the conclusion that there was no reason to interfere with the trial court 's exercise of discretion under section 34. That is why, even though the appellant has succeeded before us on the question of the construction of the arbitration agreement, having regard to the limits which we generally impose on the exercise of the jurisdiction under article 136, he must still satisfy us that we would be justified in interfering with the concurrent exercise of discretion by the two courts below, and that would inevitably depend upon the other 724 relevant facts to which both the courts have referred, and on which both of them have relied though in different ways. What then are the broad features of the case on which the trial judge and the High Court have respectively relied ? It is clear that the present dispute is not the result of an ordinary commercial transaction containing an arbitration clause. The contract in question is between a journalist and his employer by which the remuneration of the journalist has been fixed in a somewhat unusual manner by giving him a specified percentage in the profit which the Deccan Herald would make from year to year. According to the respondent he was surprised when the General Manager of the paper informed him that 75% of the overall expenditure incurred in the several activities of the appellant was being charged to the Deccan Herald, and that the capital liabilities were charged in the same proportion; he thought that this system of accounting adopted by the appellant was repugnant to the material provisions in his contract. Indeed his case is that after he came to know about this system he protested to the Director, Mr. Venkataswamy, who has been taking active part in the affairs of the appellant, and Mr. Venkataswamy assured him that as from the beginning of 1955 the accounts were being separately maintained. It would appear that the information received by the respondent from the General Manager disillusioned him and that appears to be the beginning of the present dispute, according to the respondent 's letter of May 24, 1955, (D. 1). On February 18, 1956, the respondent invoked the arbitration agreement and told Mr. Venkataswamy that Mr. Behram Doctor had agreed to work as arbitrator and give his award (D. 2). Mr. Venkataswamy who was addressed by the respondent as the Managing Director told him by his reply of March 5, 1956, that he was not the Managing Director and added that in his ' view it was not open to the respondent to invoke cl. 4 of the contract because he was aware that no monies were payable to the respondent under el. 1(d). It would thus be seen that Mr. Venkataswamy 's immediate response to the res pondent 's request for arbitration was that the respon 725 dent could not invoke the arbitration clause (D. 3). It is true that on April 23, 1956, Mr. Venkataswamy attempted to explain this statement by saying that all that he intended to suggest was that no occasion for invoking the arbitration agreement had arisen. That, however, appears to be an unsatisfactory explanation (D. 10). Even so, Mr. Venkataswamy agreed to meet Mr. Behram Doctor and so on March 9, 1956, the respondent gave to Mr. Venkataswamy the address of Mr. Behram Doctor and asked him to see him (D. 5). He informed Mr. Behram Doctor accordingly (D. 6). It appears that subsequently Mr. Behrain Doctor met both the respondent and Mr. Venkataswamy on May 9, 1956. The proceedings of this meeting which have been kept by Mr. Behram Doctor and copies of which have been supplied by him to both the parties indicate that Mr. Behram Doctor attempted to mediate between the parties and presumably the parties were agreeable to secure the mediation of Mr. Behram Doctor to resolve the dispute. We ought to add that the copy of the said proceedings produced by the appellant contains a statement that Mr. Venkataswamy at the outset told Mr. Behram Doctor that he had; come on an unofficial visit and was speaking without the consent of the other directors. This statement is, however, not to be found in the copy supplied by Mr. Behram Doctor to the respondent. Prima facie it is not easy to understand why Mr. Behram Doctor should have omitted this material statement in the copy supplied by him to the respondent. That, however, is a matter which we do not propose to pursue in the present appeal. It is thus clear that though Mr. Behram Doctor was not appointed an arbitrator and no reference in writing was made to him an attempt was made by the parties to settle the dispute with the assistance of Mr. Behram Doctor, and that attempt failed. Having regard to the facts which have come on the record it may not be unreasonable to infer that the appellant was not too keen to pursue the matter on the lines originally adopted by both the parties before Mr. Behram Doctor. It also appears that for some years the, accounts of the Deccan Herald had not been separately kept as 94 726 they should have been according to the respondent 's case. The respondent alleges that they have not been kept separately throughout the ten years ; but that is a matter which is yet to be investigated. If the accounts are not separately kept the question of allocating expenditure would inevitably arise and that can be decided after adopting some ad hoc principle in that behalf. A plea of limitation has also been indicated by the appellant and it has been suggested that the first contract having merged in the second it is only under the latter contract that the respondent may have a cause of action. "Thus the effect of the two contracts considered together may have to be adjudged in dealing with the question of limitation. It has also been suggested that the respondent knew how the accounts were kept from year to year and in substance he may be deemed to have agreed with the method adopted in keeping the accounts. If this point is raised by the appellant it may involve the decision of the question about the effect of the respondent 's conduct on his present claim. The appel lant has also suggested that the respondent has adopted an attitude of blackmailing the appellant and the respondent treats that as an aspersion on his character. The relations between the parties have been very much embittered and the respondent apprehends that the appellant, being a powerful company, may delay and seek to defeat the respondent 's claim by protracting the proceedings before the arbitrators. It now looks impossible that the parties would agree to appoint one arbitrator, and so if the matter goes before the domestic tribunal the two arbitrators appointed by the two parties respectively may have to nominate a third one to complete the constitution of the domestic tribunal, and that it is said may easily lead to a deadlock. In the trial court attempts were made to settle this unfortunate dispute but they failed and the respondent 's grievance is that the appellant adopted an unhelpful and noncooperative attitude. It appears fairly clear that when the parties entered into the present contract and agreed that differences between them in regard to the interpretation and application of the contract should be referred to 727 arbitration they did not anticipate the complications which have subsequently arisen. That is why an arbitration agreement may have been introduced in the contract in question. All these facts have been considered by both the courts, and though it is true that in their approach and final decisions in respect of these facts the two courts have differed in material particulars, they have in the result agreed with the conclusion that the discretion vested in them should be exercised in not granting stay as claimed by the appellant. Under these circumstances we do not think we would be justified in substituting our discretion for that of the courts below. It may be that if we were trying the appellant 's application under section 34 we might have come to a different conclusion; and also that we may have hesitated to confirm the order of the trial court if we had been dealing with the matter as a court of first appeal; but the matter has now come to us under article 136, and so we can justly interfere with the concurrent exercise of the discretion by the courts below only if we feel that the said exercise of discretion is patently and manifestly unreasonable, capricious or perverse and that it may defeat the ends of justice. Having regard to all the circumstances and facts of this case we are not disposed to hold that a case for our interference has been made out by the appellant. That is why we dismiss this appeal but make no order as to costs throughout. Appeal dismissed. [/INST] The respondent was the Editor of the Deccan Herald, owned and published by the appellant, and the two contracts executed by the parties contained an arbitration clause that if in the interpretation or application of the contract any difference arose between the parties the same shall be referred to arbitration and the award shall be binding between the parties and also provided for, apart from his monthly salary, the payment of 10% of the profits to the respondent. Upon the termination of his services by the appellant, the respondent brought a suit for accounts and payment of the profits found due to him. The appellant by an 714 application pleaded that the suit ought to be stayed under section 34 of the , and the dispute referred to arbitration in accordance with the agreement between the parties. The trial judge refused to exercise his discretion in favour of the appellant and refused to stay the suit. On appeal the High Court confirmed the decision of the trial court. The appellant came up to this Court by special leave under article 136 of the Constitution: Held, that the power conferred on the court by section 34 Of the , is discretionary and even though the conditions specified therein were fulfilled no party could claim there under a stay of legal proceedings instituted in a court as a matter of right. But the discretion vested in the court is a judicial discretion and must be exercised as such in the facts and circumstances of each case. No inflexible rules can, therefore, be laid down f or its exercise and the court has to act according to common sense and justice. Gardner vs Jay, , referred to Where the discretion under the section has been properly and judiciously exercised by the trial court the appellate court would not be justified in interfering with such exercise of discretion merely on the ground that it would have taken a contrary decision if it had considered the matter at the trial stage. But if it appears to the appellate court that the trial court has exercised its discretion unreasonably or capriciously or has ignored relevant facts or has approached the matter unjudiciously, it would be its duty to interfere. Charles Osenton & Co. vs jhanaton, , referred to. The words " interpretation and application of the contract frequently used in arbitration clauses, as they have been in the contracts in question, cover not only disputes relating to the construction of the relevant terms of the contract but also their effect, and unless the context compels a contrary construction, a dispute relating to the working of the contract falls within such a clause. But the Supreme Court would not lightly interfere under article 136 of the Constitution with the concurrent exercise of dis cretion of the courts below under section 34 Of the Act. Before it can justly do so, the appellant must satisfy the Court, on the relevant facts referred to by the courts below, that they exercised their discretion in a manifestly unreasonable or perverse way which was likely to defeat the ends of justice. </s>

<s>[INST] Summarize the following judgement: Appeal No. 190 of 1955. 682 Appeal from the judgment and order dated July 31, 1953, of the Hyderabad High Court in Reference Case No. 302/5 of 1951 52. N. A. Palkhivala and B. Ganapathy Iyer, for the appellants ' H. N. Sanyal, Additional Solicitor General of India, H. J. Umrigar and D. Gupta, for the respondent. April 26. The Judgment of Kapur and Hidayatullah, JJ., was delivered by Hidayatullah, J.S. K. Das, J., delivered a separate Judgment. S.K. DAS, J. This is an appeal by the assessee with leave of the High Court of Hyderabad granted under section 66A(2) of the Indian Income tax Act, 1922. The short facts are these. The appellant is a private limited company carrying on the business, inter alia, of sale of Shahabad stones (flag stones) which had to be extracted from quarries, dressed and then sold. For the purpose of its business, the appellant took on contract the right to excavate stones from certain quarries in six villages in Tandur taluk for a period of twelve years under a Quolnama dated 9th March, 1343F, from the then jagirdar of the taluk, named Nawab Mehdi Jung Bahadur. The contract provided that the jagirdar should be paid annually a sum of Rs. 28,000 as consideration for extracting the stones till the end of the contract period, as per a plan prepared, within the six villages specified therein. The appellant had no right or interest in the land; nor did he have any other interest in the quarries apart from excavating stones therefrom. The contract specifically provided that the appellant, called the contractor, had no right to manufacture cement from the stones; he had only the right to excavate stones from the quarries till the end of the contract period. I may here quote some of the relevant provisions of the Quolnama as to how the annual consideration of Rs. 28,000 was to be paid. It said: " 1. The period of contract for excavating stones from the quarries of the villages noted above is for 12 years from 1st Ardibehisht 1346 Fasli to the end of the Farwardi, 1358 Fasli and the contractor will be given possession from 1st Ardibehisht 1346 Faisli. 683 2. The annual contract amount would be Rs. 28,000. For the surety of the contract the sum of Rs. 96,000 0. section has been received and deposited in the treasury of the Jagir towards the advance and earnest money and the security, a receipt for the same has been issued separately. 4.The remaining annual balance sum of Rs. 20,000 may be deposited in the Jagir Treasury by instalment every month of Rs. 1,667 10 8; if there be any default in paying the instalment regularly, interest at the rate of one rupee per cent. per mensem will be charged to the contractor till the full payment. There was another lease or contract taken from Government for a period of five years for which the appellant was required to pay Rs. 9,000 per year in monthly instalments of Rs. 750. That was also in respect of stone quarries. The terms of the said contract with Government have not been printed in the paper book, presumably because they were similar in nature to those of the Quolnama referred to above. ,The Income tax Appellate Tribunal found, and there is no dispute as to this, that under the aforesaid two contracts the appellant had merely the right to extract Shahabad stones. The Tribunal said: " Flag stones of required thickness are found in layers in those mines or quarries. Before one gets these flag stones of the required thickness, one has also to extract flag stones of greater thickness. The assessee sells these flag stones both of the usual thickness and thickness greater than usual one, after working on them, if necessary. " There was no finding as to how deep the quarrying bad to be done to extract the stones of required thickness. According to the appellant 's books of account, it paid each year of account Rs. 37,000 as lease or contract money to extract the stones under the two contracts and it claimed an allowance in respect thereof under section 12(2)(xv) of the Hyderabad Income tax Act, corresponding to section 10(2)(xv) of the Indian Income tax Act, 1922. The Tribunal stated that the Income tax Officer was under some misapprehension or error while examining the appellant 's books of account, and held for the assessment year 1357F that the expenditure 684 of Rs. 27,054 as lease or contract money was capital expenditure, in respect of which the appellant was not entitled to claim any allowance under the relevant provision of the Hyderabad Income tax Act. For the assessment year 1358F he similarly held that the sum of Rs. 28,158 was capital expenditure and not revenue expenditure. There were two appeals to the Appellate Assistant Commissioner who also held that the expenditure was capital expenditure. Then, there was an appeal to the Income tax Appellate Tribunal, Bombay. The Accountant member of the Tribunal held that the payments in question stood on the same footing as royalties and dead rent which are allowable as working expenses in cases of mines and quarries. The President Of the Tribunal expressed his finding thus: " In the present case, the assessee purchased his stock in trade. Instead of paying so much for so many cubit feet, he pays a lump sum every year. Parties might as well agree that the so called lessee shall pay a sum of money bearing a proportion to the sales or quantum of material extracted or a lump sum for the purpose of convenience. Because these quarry leases are called leases, the assessee does not get an asset of an enduring benefit. In fact, I find that the leases are renewed from time to time. The lease money is, therefore, in my opinion, not capital expenditure but revenue expenditure and should be allowed in computing the assessee 's income from the quarries." In the result, the Tribunal allowed the claim of the appellant that the payment of the two sums of Rs. 27,054 and Rs. 28,158 for the assessment years 1357F and 1358F respectively was in its true nature a revenue expenditure rather than capital expenditure. On being satisfied that a question of law arose out of its order, the Tribunal stated the following question for the decision of the High Court: " Whether the lease money paid by the assessee company to Nawab Mehdi Jung Bahadur and to Government is capital expenditure or revenue expenditure. " The High Court answered the question against the appellant. Hence the present appeal. 685 My learned brethren have come to the conclusion that the expenditure in question was capital expenditure. Reluctantly and much to my regret I have come to a different conclusion, and I proceed now to state the reasons for my conclusion as briefly as I can. It is not disputed that if the expenditure was capital expenditure, then the appellant was not entitled to the benefit of section 12(2)(xv) of the Hyderabad Income tax Act in the relevant years. It is equally undisputed that if the expenditure was revenue expenditure, then the appellant could claim an allowance in respect thereof. Therefore, it is unnecessary to read the provisions of section 12(2)(xv) of the Hyderabad Income tax Act or the corresponding provisions of section 10(2)(xv) of the Indian Income tax Act, 1922. 1 plunge at once in medias res to a consideration of the crucial /question in this case: were the two payments in question of the nature of capital expenditure or revenue expenditure ? This distinction between capital and revenue, either on the receipt or expenditure side, is almost a perennial problem in Income tax law. In general the distinction is well recognised and is based on certain principles which are easy of application in some cases; but from time to time cases arise which make the distinction difficult of application. A large number of decisions were cited before us, but no infallible criterion of universal application emerges therefrom and each case must turn on its own facts, though the decisions are useful as illustrations and as affording indication of the kind of considerations which may relevantly be borne in mind in approaching the problem. I shall refer in this judgment to such decisions only as have a bearing on the real controversy between the parties. In view of the submissions made before us, the real controversy in this case appears to me to be this : in the context of the terms of the contract between the parties, was the expenditure incurred intended to create or bring into existence an asset or advantage of an enduring character or was it intended to get only the stock in trade or the raw materials for the business ? If it was the former, then it was capital 89 686 expenditure; if latter, then revenue expenditure. There is no doubt that receipts and payments in connexion with acquiring or disposing of leaseholds of mines or minerals are usually on capital account (Kamakshya Narain Singh vs Commissioner of Income tax (1)). The reason why the price paid for the purchase of mining rights is a capital expenditure as explained by Channel J., in Alianza Co. vs Bell (2) ,in the, following words: "In the ordinary case, the cost of the material worked up in a manufactory is not a capital expendture; it is a current expenditure and does not become a capital expenditure merely because the material is provided by something like a forward contract, under which a person for the payment of a lump sum down secures a supply of the raw material for a period extending over several years. . . If it is merely a manufacturing business, then the procuring of the raw material would not be a capital expenditure. But if it is like the working of a particular mine or bed of brick earth and converting the stuff worked into a marketable commodity, then the money paid for the prime cost of the stuff so dealt with is as much capital as the money sunk in the machinery or buildings. " Learned counsel for the Department has strongly relied on these observations and has contended that the ,appellant had no manufacturing business in the present case and the price he paid for working the quarries was as much capital expenditure as money sunk in machinery or buildings. But this contention ignores the absence of one very important circumstance in this case. The acquisition of a mine or a mining right is an enduring asset, because it is not a mere purchase of minerals but is ail acquisition of a source from which flows the right to extract minerals; in other words, the acquisition provides the means of obtaining the raw material rather than the raw material itself ; therefore, it relates to fixed capital, and in a business sense the acquiring of a leasehold of a mine is not the purchase of raw materials only. It is something more than that. In the case before us except the stones, nothing else was acquired. Clauses 5 and 7 of the Quolnama said: (1) (2) 687 " 5. The contractor shall have no right to excavate stones from other places of the Jagir Ilaqa except the villages specified within the prescribed period of contract. The Jagir authorities will not allow any other person to excavate these stones within the jurisdiction of villages other than the villages specified above." . . . . . . . . . . . . . . . . . . . 7.The contractor shall have to excavate stones from the quarries as per the plan. In case he requires a further area of land in the village for excavation of stones, this will be done on his application four months in advance. The contractor will have no right to manufacture cement from the stones in the villages noted above." In view of these clauses and the recital in the Quolnama that it was a quarry contract for excavating stones only, it is in my view not reasonable to hold that what the appellant acquired in the present case was the means of obtaining raw material rather than the raw material itself. It is, I think, an accepted position now that the expression " capital expenditure " must normally be construed in a business sense and emphasis should be placed upon the business aspect of the transaction rather than on the purely legal and technical aspect. It is not, therefore, necessary to determine whether the Quolnama in the present case was in law a lease, or a license, or a license coupled with a grant. What we have to consider is the nature of the transaction from the business point of view, and it seems to me that having regard to the terms of the Quolnama, the transaction in its true nature and quality was a sale of raw materials coupled with a license to the appellant to come on the land and remove the materials sold; the purchase price was to be paid partly in a lump sum and partly in monthly instalments. If that is the true nature of the transaction, there is no difficulty in answering the question raised. The only answer then is that the payments in question were revenue expenditure. 688 I now refer to four decisions which in my opinion come closest to the controversy before us. (1) In re: Benarsi Das Jagannath (1); (2) Mohanlal Hargovind of Jubbulpore vs Commissioner of Income tax, C. P. and Berar, Nagpur (2) ; (3) Abdul Kayoom vs Commissioner of Income tax, Madras (3 ) and (4) Stow Bardolph Gravel Co. Ltd. vs Poole (Inspector of Taxes) (4). The first is a decision of the Full Bench of the Lahore High Court, the second, a decision of the Privy Council, the third, a decision of the Full Bench of the Madras High Court and the last a decision of the Court of Appeal in England. The facts in Benarsi Das Jagannath (1) were these. The assessee, who was a manufacturer of bricks, obtained certain lands on leases for the purpose of digging out earth for the manufacture of bricks. Under the deeds he had the right to dig earth up to three to three and a half feet. He had no interest left in the lands as soon as the earth was dug out and removed. The periods of the leases varied from six months to three years. The Income tax authorities and the Appellate Tribunal held that the consideration paid by the assessee to the owners of the lands was a capital expenditure and was therefore not an allowable deduction under section 10(2)(xv) of the Indian Income tax Act. It was held by the Full Bench that the main object of the agreement was the procuring of earth for manufacturing bricks and not the acquisition of an advantage of a permanent nature or of an enduring character, that the payments made were the price of raw material and that the assessee was therefore entitled to claim them as business expenditure under section 10(2)(xv). It was worthy of note that this decision was approved by this Court in Assam Bengal Cement Co. Ltd. vs Commissioner of Income tax, West Bengal (5). Bhagwati, J., delivering the judgment of this Court said: " This synthesis attempted by the Full Bench of the Lahore High Court truly enunciates the principles which emerge from the authorities. In cases where the expenditure is made for the initial outlay or for (1) Lah. (3) I.L.R. (2) [1949] L.R. 76 I.A. 235. (4) (5) 689 extension of a. business or a substantial replacement of the equipment, there is no doubt that it is capital expenditure. A capital asset of the business is either acquired or extended or substantially replaced and that outlay whatever be its source whether it is drawn from the capital or the income of the concern is certainly in the nature of capital expenditure. The question, however, arises for consideration where expenditure is incurred while the business is going on and is not incurred either for extension of the business or for the substantial replacement of its equipment. Such expenditure can be looked at either from the point of view of what is acquired or from the point of view of what is the source from which the expenditure is incurred. If the expenditure is made for acquiring or bringing into existence an asset or advantage for the enduring benefit of the business it is properly attributable to capital and is of the nature of capital expenditure. If on the other hand it is made not for the purpose of bringing into existence of any asset or advantage but for running the business or working it with a view to produce the profits it is a revenue expenditure. If any such asset or advantage for the enduring benefit of the business is thus acquired or brought into existence it would be immaterial whether the source of the payment was the capital or the income of the concern or whether the payment was made once and for all or was made periodically. The aim and object of the expenditure would determine the character of the expenditure whether it is a capital expenditure or a revenue expenditure. The source or the manner of the payment would then be of no consequence. It is only in those cases where this test is of no avail that one may go to the test of fixed or circulating capital and consider whether the expenditure incurred was part of the fixed capital of the business or part of its circulating capital. If it was part of the fixed capital of the business it would be of the nature of capital expenditure and if it was part of its circulating capital it would be of the nature of revenue expenditure. These tests are thus mutually exclusive and have to be applied to the facts of each particular case in the manner above indicated. It has been rightly 690 observed that in the great diversity of human affairs and the complicated nature of business operations it is difficult to lay down a test which would apply to all situations. One has therefore got to apply these criteria one after the other from the business point of view and come to the conclusion whether on a fair appreciation of the whole situation the expenditure incurred in a particular case is of the nature of capital expenditure or revenue expenditure in which latter event only it would be a deductible allowance under section 10(2)(xv) of the Income tax Act. The question has all along been considered to be a question of fact to be determined by the Income tax authorities on an application of the broad principles laid down above and the Courts of law would not ordinarily interfere with such findings of fact if they have been arrived at on a proper application of those principles. " I do not read these observations as merely indicating an approval of certain general principles, but not necessarily an approval of the actual decision in Benarsidas Jagannath (1). In cases of this nature it is the application of the principles to the facts of a case which presents difficulties, and I do not think that this Court would have made the observations it made, unless it was approving the actual decision in Benarsidas Jagannath (1) in so far as it applied the general principles to the facts of that case. I see no significant distinction between that case and the one before us. In both cases, what was acquired was raw material earth in one case and stone in the other and the payments made were the price of the raw material. The only distinction pointed out is the difference in the period of the contracts; that is a relevant factor but not determinative of the problem before us. Even in our case the contract in favour of Government was for five years only. Surely, it cannot be argued that three years in one case and five years in the other will make all the difference. I think that the real test is, in the context of the controversy before us, what was acquired au enduring asset or advantage, or raw materials for running the business ? Judged by that test the present case stands on the same footing as the case of Benarsidas Jagannath (1) (1) Lah. 307, 691 In Mohanlal Hargovind (1) the facts were these. The assessees carried on business at several places as manu factures and vendors of country made cigarettes known as bidis. These cigarettes were composed of tobacco rolled in leaves of a tree known as tendu leaves, which were obtained by the assessees by entering into a number of short term contracts with the Government and other owners of forests. Under the contracts, in consideration of certain sum payable by instalments, the assessees were granted the exclusive right to pick and carry away the tendu leaves from the forest area described. The assessees were allowed to coppice small tendu plants a few months in advance to obtain good leaves and to pollard tendu trees a few months in advance to obtain better and bigger leaves. The picking of the leaves however had to start at once or practically at once and to proceed continuously. The Privy Council distinguished Alianza Co. vs Bell (2) and overruling the decision in Income tax Appellate Tribunal vs Haji Sabumiyan Haji Sirajuddin (3) held that the expenditure was to secure raw material and was allowable as being on revenue account. Lord Greene delivering the judgment of the Board said: " It appears to their Lordships that there has been some misapprehension as to the true nature of these agreements and they wish to state at once what in their opinion is and what is not the effect of them. They are merely examples of many similar contracts entered into by the appellants wholly and exclusively for the purpose of their business, that purpose being to supply themselves with one of the, raw materials of that business. 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." " In the present case the trees were not acquired: nor were the leaves acquired until the appellants had reduced them into their own possession and ownership by picking them. If the tendu leaves had been stored (1) (1949) L.R. 76 I.A. 235. (2) (3) 692 in a merchant 's godown and the appellants had bought the right to go and fetch them and so reduce them into their possession and ownership it could scarcely have been suggested that the purchase price was capital expenditure. Their Lordships see no ground in principle or reason for differentiating the present case from that supposed. " I also see no ground in principle or reason for differentiating the present case from that of Mohanlal Hargovind (1). In K. T. M. T. M. Abdul Kayoom and Hussain Sahib vs Commissioner of Income tax, Madras (2 ) a Full Bench of the Madras High Court dissenting from its earlier decisions held that rent paid by a dealer in chank under an agreement in the form of a ,lease" with the Government under which he had an exclusive right " to fish for, take and carry away all the chank shells in the sea off the coast line " of a certain district, was allowable as revenue expenditure. It was further held there that it made no difference whether what was acquired was raw material for a manufacturing busi ness or stock in trade which was intended to be sold without being subjected to any manufacturing process. This decision is the subject of Civil Appeal No. 64 of 1956 which has been heard along with this appeal. I do not see how the present case can be distinguished from the Madras case without holding that the Madras decision was incorrect. Last, I come to Stow Bardolph Gravel Co. Ltd.(3) That was a case in which it was held that sums paid by a dealer in gravel as consideration for the right to excavate and take away deposits of gravel represented capital expenditure. The decision rested on the fact that the subject matter of the agreement consisted of a deposit of gravel living some feet beneath the surface of the land and requiring to be won from the land by a process of excavation. I find it difficult to reconcile this decision with the decision in Benarsidas Jagannath (4) and Abdul Kayoom (2) in both of which also excavation or exploration was necessary to win the raw material. If, as I hold, the decision in Benarsidas Jagannath (4) was approved by this Court then we (1) (1949) L.R. 76 I.A. 235. (2) I.L.R. (3) (4) Lah. 693 must accept that decision as correct in preference to the decision of the Court of Appeal in England. I may point out here what Evershed, M. R., said in the course of his judgment in that case: " The Commissioners for the General Purpose of the Income Tax were of opinion that these claims to make deductions were not admissible, but Harman, J., was of opinion that the deductions were admissible. I have myself reached a different conclusion from that reached by Harman, J., and I have reached it, I confess, with some slight feeling of regret and misgiving on two grounds: first, I think the result bears a little hardly on the taxpayers for reasons which will, I think, emerge without any necessity for empha sis as I recite the facts; second, I am not for my own part satisfied that if close investigation were made of the method whereby the taxpayers and others in the same line of business carry on their businesses, it might not emerge I say no more than that that the Commissioners would find as a fact, notwithstanding the apparent legal consequences of the agreement to which I have referred, there was here in truth such a taking possession of the deposit of gravel in question that it could sensibly for tax purposes and rightly and fairly be said that once the consideration money had been paid under the agreement the deposit was in truth the stock in trade of the taxpayer. However, I have felt compelled to say that there is no finding of fact to support such a conclusion, nor indeed is there before us any evidence sufficient to warrant it. It is in that respect, "apprehend, that I find myself at variance with Harman, J." . . . . . . . . . . "If the facts were as the judge intimated, the General Commissioners might find, and might justifiably find, that a case such as this is not really distinguishable as a matter of law and common sense from a sale of loose objects lying on the surface of the ground, such as windfalls from apple trees, or even from cases like those I have mentioned, which are concerned with crops or leaves growing on trees. But my difficulty is that I can find no justification for that conclusion in the material before us. " 90 694 In view of these observations I have considerable hesitation, and I say this with great respect, in accepting the decision as a decision on a general question of law. The decision proceeded on the findings of the Commissioners and on the basis that there were no materials for the conclusion reached by Harman, J. If we proceed on the findings of the Tribunal in the present case, there are enough materials to support the finding that the appellant acquired nothing but raw materials by the transactions in question. I find nothing in the decision in Stow Bardolph Gravel Co. Ltd. (1) which need lead me to the conclusion that the decisions in Benarsidas Jagannath (2) and Abdul Kayoom (3) were wrong and require reconsideration. If I may again say so with great respect, the learned Master of the Rolls distinguished the Privy Council decision in Mohanlal Hargovind (4) by saying that decision rested upon the particular circumstances of the case and upon the fact that the Board was able to say that from the moment the contract was entered into and before the leaves had actually been picked, the tendu leaves were part of the raw material of the appellant. He added that he could not say the same of sand and gravel, which were part of the earth itself and which could only become part of the stock in trade of the gravel merchant 's business when it had, in the true sense, been won, been excavated and been taken into their posses sion. I do not, however, think that the decision in Mohanlal Hargovind (4) proceeded on the basis suggested by the learned Master of the Rolls. In clear and express terms Lord Greene said: "nor were the leaves acquired until the appellant reduced them into their possession and ownership by picking them." This shows that the decision of the Privy Council did not proceed on the ground alleged, namely, that even before the leaves had actually, been picked, they were part of the raw material of the appellant of that case. The decision proceeded on the footing that the leaves became part of the raw material when they were reduced into possession and ownership by picking (1) (3) (2) Lah. (4) (1949) L.R. 76 I.A. 235. 695 3 S.C.R. SUPREME COURT REPORTS them. If that is the correct ratio of Mohanlal Hargovind (1), then where is the distinction between that case and the case of the gravel merchant in Stow, Bardolph Gravel Co. Ltd. (2) and the stone merchant in the present case ? In my opinion there is none. In the result and for the reasons given above, I hold that the expenditure in question was on revenue account and the appellant was entitled to the allowance he claimed. The answer given by the High Court was wrong and the appeal should be allowed with costs. HIDAYATULLAH, J. This is an assessee 's appeal on a certificate of the High Court granted under section 66A(2) of the Indian Income tax Act. Pingle Industries Ltd. (hereinafter called the assessee) is a private limited Company which carries on, among other businesses, the business of extracting stones from quarries, which, after dressing, it sells as flag stones. In the year 1343 Fasli, the assessee obtained from Nawab Mehdi Jung Bahadur of Hyderabad the right to extract stones from certain quarries belonging to the Nawab. A quolnama (con. tract) was executed, and it has been produced in the case. Under this quolnama, the assessee was granted the right to extract stones from quarries situated in six named villages for a period of 12 years (1346 Fasli to 1358 Fasli) on annual payment of Rs. 28,000. To safeguard payment Rs. 96,000 representing a part of the annual payments at Rs. 8,000 per year were paid in advance as security, and the balance of Rs. 20,000 was payable each year in monthly instalments of Rs. 1,666 10 8 each. In default of punctual payment of these instalments, interest at Re.1 per cent was to be charged. Some other conditions of the quolnama may also be briefly mentioned here. The assessee undertook not to manufacture cement and also to be ,responsible for the payment of the money in spite of " any celestial or terrestrial or unexpected calamity or unforeseen event ", while the Nawab on his part undertook not to allow any other person to excavate stones in the area of the six villages. It was agreed that in case of default of instalment, the contract (1) (1949) L.R. 76 I.A. 235. (2) 696 would be re auctioned after One month 's notice to the contractor, who would be responsible for any shortfall but would not have the benefit of any extra amount. The assessee was assessed in the Fasli years 1357 and 1358 for the account years 1356 and 1357 Fasli. It claimed deduction respectively of Rs. 27,054 and Rs. 28,159 paid to the Nawab in those years, as expenditure under section 12(2)(xv) of the Hyderabad Income tax Act, which is the same as the corresponding pro. vision under the Indian Income tax Act. The claim for deduction was refused by the Income tax Officer, who held that the amount in each year represented a capital expenditure though the whole sum was being paid in instalments. The assessee appealed against the two orders of assessment to the Appellate Officer of Income tax, and questioned this decision. The appeals involved other matters also, with which we are not now concerned. The appeals were dismissed. The assessee appealed further to the Income tax Appellate Tribunal, Bombay, and raised the same contention. The Appellate Tribunal accepted the appeals. Different reasons were given by the President and the Accountant Member. According to the latter, the payment of these sums was similar to the payment of royalties and dead rent which is allowable as working expense in the case of mines and quarries. The President relied upon Mohantal Hargovind vs Commissioner of Income tax (1), and held that the payments represented the purchase of the stock in trade of the assessee, and that the leases did not create an asset of an enduring character. The Commissioner of Income tax, Hyderabad Division, then asked for a reference of the case to the High Court at Hyderabad, and the Appellate Tribunal referred the following question of law under section 66(1) of the Hyderabad Income tax Act: " Whether the lease money paid by the assessee Company to Nawab Mehdi Jung Bahadur and to Government is capital expenditure or revenue expenditure. " The reference to Government in the question arises in this way. It appears that there was yet another (1) (1949) L.R. 76 I.A. 235. 697 lease which was taken from Government for 5 year. and under which the assessee was required to pay Rs. 9,000 per year in instalments of Rs. 750 per month. It does not appear that the terms of this lease were ascertained and the amount does not figure in the order of assessment, though apparently it was assumed that what applied to the payment to the Nawab held equally good in regard to the payment to Government. In any event, the books of the assessed kept in mercantile system showed both the sums each year as lease money. The High Court of Hyderabad after an examination of several decisions rendered in India and the United Kingdom, held that the payments in each year of account were of a capital nature, and that no deduction could be given under section 12(2) (xv) of the Hyderabad Income tax Act. The assessee then applied, and obtained the certificate as stated, and this appeal has been filed. The arguments in the case involved the interpretation of the quolnama as to the right conveyed there and the nature of the payments with reference to the provision of the law under which the deduction was claimed. That section reads as follows: " 12 (1). The tax shall be payable by an assessee under the head profits and gains of business, profession or vocation in respect of the profits and gains of any business, profession or vocation carried or by him. (2) Such profits or gains shall be computed after making the following allowances, namely: . . . . . . . . . (XV) Any expenditure (not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of such business, profession or vocation. " While the Appellate Tribunal looked to the periodicity of the payments, the High Court held that the amount payable was Rs. 3,36,000 divided into annual and redivided into monthly instalments. The Tribunal also considered the payments as of the nature of rent or royalty or as price for raw materials. The High 698 court, on the other hand, disagreed, and held that here being no manufacturing business, the money expended could not be regarded as price of raw materials or even as rent but as spent to acquire a capital asset of enduring benefit to the assessee. The High court referred to numerous decisions in which the question whether a receipt or expenditure is on capital or revenue account has been considered in India and the United Kingdom. Before us also, many of them were again cited as illustrating, if not laying down, certain general principles. We shall refer to some of the leading cases later, but we may say at once that no conclusive tests have been laid down which can apply to all the cases. The facts of one case differ so much from those of another that the enquiry is often somewhat fruitless. If, however, the distinguishing features are not lost sight of, the decided cases do afford a guide for the solution of the problem in hand. The arguments of Mr. Palkhivala for the assessee may be shortly stated. He contends that the quolnama is a licence and not a lease, because it creates no interest in land and no premium is payable for the right, but what is paid is periodic compensation corresponding to rent. He contends that the payments can only be regarded as periodic compensation or periodic royalty or licence fees and thus revenue in character. He further argues that even if held to be a lump sum payment broken up into instalments, it is still allowable as expenditure because it represents the price for the acquisition of raw materials, viewed from the business angle. According to him, all cases of mines and quarries fall into three classes which are: (i) in which mines and quarries are purchased outright; (ii)in which ownership is not acquired but only an interest in land; and (iii) in which there is not even an interest in land but there is an arrangement in praesent and de futuro to ensure supply of raw materials. He contends that this being evidently not a case within the first category, it matters not which of the other two categories it belongs to, because in his submission, both the remaining categories exclude a case 699 of capital expenditure. He, however, seems inclined to put his case in the third category. The learned Additional Solicitor General on his side enumerates the tests which determine whether an expenditure bears a capital or revenue character. According to him, decided cases show that capital expenditure is ordinarily once and for all and not of a periodic character, but contends that even a single sum chopped up into instalments is not a payment of a periodic character. He submits that capital expenditure is one which brings into existence an enduring advantage, which, he maintains, is the case here, because the money was spent on the initiation of the business and to obtain a permanent source of raw materials and not only the materials. The quolnama shows that the agreement was for 12 years. The assessee paid an initial sum of Rs. 96,000 a,% security for the whole contract. He was required to pay Rs. 28,000 per year. The security which was given was being diminished at the rate of Rs. 8,000 per year. It was a guarantee against. failure to pay the monthly instalments, but there was no condition that the short payments were to be debited to it. It was rather a guarantee for the overall payment and to reimburse the jagir for any loss occasioned by a re auction of the lease after default by the assessee. Further, the payments were to be made even if no stones were extracted or could not be extracted due to force majeure. There was no limit to the quantity to be extracted. There was also a condition that none but the assessee was allowed to work the quarries, which means that the right was exclusive and in the nature of a monopoly. The payment, though divided into instalments of Rs. 1,666 10 8 per month, was really one for the entire lease and of Rs. 3,36,000. Nothing, however, turns upon it. It is pertinent to say that the assessee in its petition for leave to appeal to this Court filed in the High Court, viewed the amount as being Rs. 3,36,000 divided into various parts. This is what it said: " Under the terms of the said lease, the Company was required to pay a sum of H. section Rs. 28,000 per annum to the lessor. The total amount payable for 700 the entire period amounted to IRS. 3,36,000 out of which a sum of Rs. 96,000 was paid at the time of the execution of the lease deed and the balance of Rs. 2,40,000 was agreed to be paid at the rate of Rs. 20,000 per annum in twelve years. It was also agreed that this sum of Rs. 20,000 per annum should be paid in equal instalments of Rs. 1,66 10 8 every month. On the expiry of the period of lease, it was renewed for a further period of five years and seven months at an annual rent of Rs. 35,000. " These being, the terms of the lease, the question is whether the payments in the account years can be regarded as capital or revenue expenditure. The question whether an expenditure is capital or revenue in character is one of common occurrence. Its frequency, however, has not served to elucidate the tests with any degree of certainty and precision. It has now become customary to start with two propositions which appear to have been received without much argument. The first was laid down in Vallambrosa Rubber Co. Ltd. vs Farmer (1), where Lord Dunedin observed that "in a rough way" it was " not a bad criterion of what is capital expenditure as against what is income expenditure to say that capital expenditure is a thing that is going to be spent once and for all and income expenditure is a thing which is going to recur every year ". This proposition was further qualified by Lord Cave in Atherton vs British Insulated and Helsby Cables Ltd. (2) in the following words: " When an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, I think there is very good reason (in the absence of special circumstances leading to the opposite conclusion) for treating such an expenditure as properly attributable, not to revenue, but to capital. " The words " enduring benefit of a trade " have been further explained as meaning not " everlasting ", but in the way capital endures ", see Du Pareq, L. J., in (1) (1910) S.T.C. 529. (2) , 213 701 Henriksen vs Grafton Hotel Ltd. (1) and Rowlatt, J., in Anglo Persian oil Co. vs Dale (2). Another test propounded by Viscount Haldane in John Smith & Son vs Moore (3) is to distinguish, as economists do, between fixed and circulating capital. This appears to have appealed to Lord Hanworth, M. R.,, in Golden Horse Shoe (New) Ltd. vs Thurgood (4); but in Van Den Berghs Limited vs Clark (5), Lord Macmillan observed that he did not find it very helpful. Often enough, where the character of the expenditure shows that what has resulted is something which is to be used in the way of business, the test may be useful; but in cases close to the dividing line, the test seems useless. A third test was laid down by the Judicial Committee in Tata Hydro Electric Agencies Ltd., Bombay vs Commissioner of Income tax (6). There, it was stated that if the expenditure was part of the working expenses in ordinary commercial trading it was not capital but revenue. The Judicial Committee observed: "What is money wholly and exclusively laid out for the purposes of the trade ' is a question which must be determined upon the principles of ordinary commercial trading. It is necessary, accordingly, to attend to the true nature of the expenditure, and to ask oneself the question, is it a part of the company 's working expenses; is it expenditure laid out as part of the process of profit earning ? " In addition to these three tests, the last of which was applied again by the Judicial Committee in Mohanlat Hargovind 's case (7), there are some supplementary tests, which have frequently been alluded to. Lord Sands in Commissioners of Inland Revenue vs Granite City Steamship Co. Ltd. charaeterised as capital an outlay made for the initiation of a business, for extension of a business, or for a substantial replacement of equipment. In that case, there was extensive damage to a ship, and repairs were necessary to resume trading, such expense being held to be capital expend (1) , 462, C A.(2) , 262. (3) , 282.(4) , 298. (5) ; (1937) L.R. 64 I.A. 215. (7) (1949) L.R. 76 I.A. 235.(8) 14. 91 702 iture. The questions which Lord Clyde posed in Robert Addie & Sons Collieries Ltd. vs Commissioners of Inland Revenue(1), namely: " Is it part of the Company 's working expenses, is it expenditure laid out as part of the process of profit earning ? or, on the other hand, is it capital outlay, is it expenditure necessary for the acquisition of property or of rights of a permanent character, the possession of which is a condition of carrying on its trade at all ? " influenced the Privy Council in Tata Hydro Electric Agencies Ltd., Bombay vs Commissioner of Income tax (2) (at p. 209), and the latter part of the question is the test laid down by Lord Sands, to which we have referred. There is then the test whether by the expenditure the taxpayer was ensuring supplies of raw material or purchasing them. This test is adverted to by Channell, J., in Alianza Co. Ltd. vs Bell (3 ) and approved by the House of Lords. Says Channell, J.: " In the ordinary case, the cost of the material worked up in a manufactory is not a capital expenditure, it is a current expenditure and does not become a capital expenditure merely because the material is provided by something like a forward contract, under which a person for the payment of a lump sum secures a supply of the raw material for a period extending over several years. If it is merely a manufacturing business, then the procuring of the raw material would not be a capital expenditure. But if it is like the working of a particular mine, or bed of brick earth and converting the stuff into a marketable commodity, then the money paid for the prime cost of the stuff so dealt with is just as much capital as the money sunk in machinery or buildings. " The application of this proposition finds an example in Mohanlal Hargovind 's case (4), where tendu leaves were the subject of expenditure. The firm in that case had paid for purchasing a right to collect tendu leaves from forest, which right included the right of (1) , 676. (3) (2) (1937) L.R. 64 I.A. 215. (4) (1949) L.R. 76 I.A. 235. 703 entry and coppicing and pollarding. No right in the land or the trees and plants was conveyed, and the Judicial Committee laid emphasis on the nature of the business of the firm, and equated the expenditure to one for acquiring the raw materials for the manufacturing business. The cases to which we have referred and many more of the High Courts in India where the principles were applied with the exception of the one last cited, were all considered by this Court in Assam Bengal Cement Co. Ltd. vs Commissioner of Income tax(6). In that case, Bhagwati, J., referred to a decision of the Punjab High Court in Benarsidas Jagannath, In re (2), where Mahajan, J. (as he then was), summarised the position and the various tests. This Court quoted with approval this summary, and observe at p. 45: " In cases where the expenditure is made for the initial outlay or for extension of a business or a substantial replacement of the equipment, there is no doubt that it is capital expenditure. A capital asset of the business is either acquired or extended or substantially replaced and that outlay whatever be its source whether it is drawn from the capital or the income of the concern is certainly in the nature of capital expenditure. The question however arises for consideration where expenditure is incurred while the business is going on and is not incurred either for extension of the business or for the substantial replacement of its equipment. Such expenditure can be looked at either from the point of view of what is acquired or from the point of view of what is the source from which the expenditure is incurred. If the expenditure is made for acquiring or bringing into existence an asset or advantage for the enduring benefit of the business it is properly attributable to capital and is of the nature of capital expenditure. If on the other hand it is made not for the purpose of bringing into existence any such asset or advantage but for running the business or working it with a view to produce the profits it is a revenue expenditure. If any such asset or advantage for the enduring benefit of the business is (1) [1935] 1.S.C.R. 972. (2) (1046) I.L.R. 704 thus acquired or brought into existence it would be immaterial whether the source of the payment was the capital or the income of the concern or whether the payment was made once and for all or was made periodically. The aim and object of the expenditure would determine the character of the expenditure whether it is a capital expenditure or a revenue expenditure. The source or the manner of the payment would then be of no consequence. It is only in those cases where this test is of no avail that one may go to the test of fixed or circulating capital and consider whether the expenditure incurred was part of the fixed capital of the business or part of its circulating capital. If it was part of the fixed capital of the business it would be of the nature of capital expenditure and if it was part of its circulating capital it would be of the nature of revenue expenditure. These tests are thus mutually exclusive and have to be applied to the facts of each particular case in the manner above indicated. " Learned counsel in the present case rested his case upon the decision of the Punjab High Court in Benarsidas case (1), and stated that after its approval by this Court, the expenditure here could not but be held as on capital account. He relied strongly also upon the decision of the Judicial Committee in Mohanlal Hargovind 's case (2 ). Reference was made to other decisions, which we will briefly notice later. In Benarsidas case (1), the person sought to be assessed was a manufacturer of bricks. He obtained certain lands for digging out earth for his manufacture. Under the deeds which gave him this right, he could dig up to a depth of 3 feet. to 31 feet. He had no interest in the land, and as soon as the earth was removed, his right was at an end. It was held in that case that the main object of the agreements was the procuring of earth as raw materials and by the expenditure the lessee had not acquired any advantage of a permanent or enduring character. It is, however, to be noticed that the duration of the leases was from six months to three years. The Full Bench referred to (1) Lah. (2) (1994) L.R. 76 I.A. 235. 705 some other leases in which the duration was longer,and observed: " There are other agreements which are not before us and it seems that the items mentioned in the question referred relate to those agreements as well. We do not know the nature of the agreements, but the question can be answered by saying that expenses incurred during the year of assessment for purchase of earth on basis of agreements of the nature mentioned in the case of Benarsidas or of the nature like Exhibit T. E. are admissible deductions, while sums spent for obtaining leases for a substantially long period varying from 10 to 20 years cannot be held to be valid deductions if they amount to an acquisition of an asset of an enduring advantage to the lessee. " It appears that the Full Bench was persuaded to this view from two considerations. The first was that what was acquired was earth with no interest in land, and the other was the short term of the leases. The approval given to Benarsidas case (1) by this Court does not extend beyond the summary of the tests settled in it, and the tests have to be applied to the facts of each case in the manner indicated by this Court. But the actual decision was not before this Court, and cannot be said to have been approved. The agreements in the present case are long term contracts. They give the right to extract stones in six villages, without any limit by measurement or quantity. They give the right exclusively to quarry for a number of years. This case is thus very different on facts. Further, the duration of the right which seems to have weighed with the Full Bench in the Punjab High Court has little to do with the character of the expenditure even if it be a relevant factor to consider. In Henriksen 's case(2) the right was only for 3 years, but monopoly value having been paid for it, the result was a capital asset of an enduring character. In Mohanlal Hargovind 's case (3), the person assessed was a bidi manufacturer who had obtained short term (1) Lah. (2) , 462, C.A. (3) (1949) L.R. 76 I.A. 235. 706 contracts with Government and other forest owners to obtain tendu leaves from the forests. These tendu leaves with tobacco are used to roll into cigarettes. The contracts gave a right of entry into forests to collect the leaves and also to coppice the plants and to pollard the tendu trees, but beyond this gave no interest in land. The Judicial Committee held that these contracts were in a business sense for the purpose of securing supplies to the manufacturers of one of the raw materials of his business. They granted no interest in land or the plants or trees. The small right of cultivation and the exclusive nature of the grant were of no significance. Then, the Judicial Committee observed as follows: " Cases relating to the purchase or leasing of mines, quarries, deposits of brick earth, land with standing timber, etc. do not appear to their Lordships to be of assistance. " The Board distinguished Alianza Co. Ltd. vs Bell which was said to be a case analogous to purchase or leasing of a mine and Kauri Timber Company 's case (2), which was a case of acquisition of land or of standing timber which was an interest in land. In either case, it was a capital asset. Their Lordships finally observed: " In the present case the trees were not acquired; nor were the leaves acquired until the appellants had reduced them into their own possession and ownership by picking them. The two cases can, in their Lordships ' opinion, in no sense be regarded as comparable. If the tendu leaves had been stored in a merchant 's godown and the appellants had bought the right to go and fetch them and so reduce. them into their possession and ownership it could scarcely have been suggested that the purchase price was capital expenditure. Their Lordships see no ground in principle or reason for differentiating the present case from that supposed. " It is to be noticed that the Privy Council case was not applied but distinguished by the Court of Appeal in England in Stow Bardolph Gravel Co. Ltd. V. Poole (3). (1) (2) [1913] A.C. 771. (3) 707 In that ease, the Company was doing the business of selling sand and gravel. It purchased two unworked deposits, and it claimed that the payment should be deducted from its profits as being expenditure for acquiring its trading stock. It was held that the Company had acquired a capital asset and not a stock in trade. Harman, J., before whom the appeal came from the decision of the General Commissioners, said that the case was indistinguishable from the Golden Horse Shoe case (1), where the tailings were regarded as the stock in trade of the taxpayer. He observed : " Now, it is said here that the opposite conclusion should be reached, and I think in substance the reason is because this gravel had never been raked off the soil upon which it was lying. There is no question, in any true sense, of extracting gravel; there is no process, as I understand it, gone through here. It is not even suggested that a riddle or sieve is used; you merely dig it up or rake it up where it lies, put it on the lorry and sell it wherever you can. It is said what was bought was a mere right to go on the place and win the gravel, but, in effect, in the Golden Horse Shoe case (1) what was bought was the licence to go on the land and take away the tailings, and 'myself think that it is a distinction without difference to suggest that, because nobody had ever applied a rake to this gravel before, it should be treated as capital, whereas if somebody had raked it into little heaps before the contract was made then its purchase would constitute a different form of adventure. It is the same situation; it is no more and ,.no less attached to the land. " In dealing with this case on appeal, Lord Evershed, M. R. (then Sir Raymond Evershed), felt that the case was a little hard upon the taxpayer, and further that it might, if proper enquiry bad been made, have been possible to hold that after the price was paid, the sand and gravel become, in truth, the stock in trade of the taxpayer. Taking the facts, however, as found, he held that what was purchased was a part of the (1) , 298. 708 land itself, namely, the gravel in situ. He held that there was a distinction between the purchase of a growing crop or leaves and the purchase of gravel. Lord Evershed then analysed the agreement, and observed as follows: " I think that, once it has to be conceded that there was no sale of the gravel in the way the Judge said there was, then it must follow that what was here acquired was the means of getting the gravel by excavating and making it part of the stock in trade. " Reference was then made by him to cases in which what was purchased or taken on lease was land or an interest in land, and Mohanlal Hargovid 's case (1) was distinguished on the ground that in that case it was possible to say of tendu leaves that they were acquired as the raw material for manufacture. The argument of Mr. Magnus in the case described as ail attempt to substitute sand and gravel for tendu leaves was not accepted, Lord Evershed observing: " But I cannot say the same of the sand and gravel, part of the earth itself, which was the subject of the contract here in question and which I think only could sensibly become part of the stock in trade of this gravel merchants ' business when it had in the true sense been won, had been excavated and been taken into their possession. " We are in entire agreement that such a distinction is not only palpable but also sensible. The present case is a fortiori. Here, the stones are not lying on the surface but are part of a quarry from which they have to be extracted methodically and skilfully before they can be dressed and sold. These deposits are extensive, and the work of the assessee carries him deep under the earth. Such a deposit cannot be described as the stock in trade of the assessee, but stones detached and won can only be so described. Before we deal with the other cases, we wish to state the distinguishing features of the cases already mentioned, and which have not often been viewed together. In the Alianza case (2), the sale was not of the caliche as such but of the right to win it from a (1) (1949) L.R. 76 I.A. 235. (2) , 709 deposit thereof, and it was treated as an expenditure of a capital nature. In the Stow Bardolph case(,), the finding was that sand and gravel had to be won, and it was held that they could not be treated as stock in trade till they were actually won. The doubt expressed by Lord Evershed was that if the taking of sand and gravel involved merely taking them up and putting them into trucks, the finding could have been otherwise. Harman, J., made this distinction, but in view of the finding, the Court of Appeal came to a different conclusion. Indeed, Harman, J., himself would have decided differently if there was, in any true sense, a question of extracting gravel. He, therefore, thought that the case resembled the Golden Horse Shoe case (2) where the " tailings " were bargained for and paid for, and became the stock in trade of the tax payer. In Mohanlal Hargovind 's case (3), there being no interest in land or trees or plants and the right of cultivation and the exclusiveness of the right to the leaves being insignificant, the contracts were treated as leading to acquisition of the raw materials. The leaves on trees were treated as equal to leaves in a shop. It was on this ground that case was distinguished from the Kauri Timber Company case (4), in which land and interest in land in the shape of standing timber were involved. The case in Hood Barrs vs Commissioners of Inland Revenue (5) was similar to the last cited. In the present case, the assessee acquired a right to extract stones and his lease included not only the stones on the top but also those buried out of sight under Tons of other stones, which he could only reach after extracting those above. This case is thus within the rule of those cases in which the right acquired is to a source from which the raw materials are to be extracted. The doubt expressed by Lord Evershed does not apply to the facts here, because the reasons given by Harman, J., cannot be made applicable at all. In Kamakshya Narain Singh vs Commissioner of Income tax(6), the case involved payment of certain annual sums by way of salami for mining rights, and (1) (3) (5) (2) (4) [1913] A.C. 771. (6) P.C. 710 these were regarded as capital income. There were also two other payments, namely, royalty on coal raised and a provision for minimum royalty. These were regarded as not capital receipts but as assessable income. In dealing with the nature of the working of a mine, certain observations were made. It was contended that the payments amounted to conversion of a capital asset into cash. The argument was repelled by the Judicial Committee in these words: These are periodical payments, to be made by the lessee under his covenants in consideration of the benefits which he is granted by the lessor. What these benefits may be is shown by the extract from the lease quoted above, which illustrates how inadequate and fallacious it is to envisage the royalties as merely the price of the actual tons of coal. The tonnage royalty is indeed payable when the coal or coke is gotten and despatched; but that is merely the last stage. As preliminary and ancillary to that culminating act, liberties #are granted to enter on the land and search, to dig and sink pits, to erect engines and machinery, coke ovens, furnaces and form railways and roads. All these and the like liberties show how fallacious it is to treat the lease as merely one for the acquisition of a certain number of tons of coal, or the agreed item of royalty as merely the price of each ton of coal. The contract is in truth much more complex. The royalty is 'in substance a rent; it is the compensation which the occupier pays the landlord for that species of occupation which the contract between them allows ' to quote the words of Lord Denman in R. vs Westbrook (1). He was referring to leases of coal mines, clay pits and slate quarries. He added that in all these the occupation was only valuable by the removal of portions of the soil. It is true that he was dealing with occupation from the point of view of rating, but compensation has the same meaning in its application to matters of taxation such as are involved in this case. " Thus, the contention of the learned counsel for the assessee that we should treat this quolnama as merely (1) 711 showing a licence and not a lease creating interest in land is not correct. A lease to take out sand was described in Kanjee and Moolji Bros. vs Shanmugam Pillai (1) as amounting to a transfer of interest in immovable property and also so, in connection with the Registration Act in Secretary of State for India vs Kuchwar Lime and Stone Co. (2). It is thus clear that what the assessee acquired was land, a part of which in the shape of stones he was to appropriate under the covenants. He was not purchasing stones, and the price paid could not in any sense be referable to stones as stock in trade. The stones extracted might have become his stock in trade, but the stones in situ were not so. Nor do we agree that the periodicity of payments has any significance. As was pointed out by Lord Greene, M. R., in Henriksen 's case (3) : "If the sum payable is not in the nature of revenue expenditure, it cannot be made so by permitting it to be paid in annual instalments. These payments by instalments in respect of monopoly value have not the annual quality of the payments for the grant of the annual excise licence, but are of a different character altogether. Here the Appellants were minded to acquire as asset in the shape of a licence for a term of years. " The learned Master of the Rolls added that the annual payments gave " a false appearance of periodicity ". Applying the above test to the present case, it is obvious that the monthly payments of Rs. 1,666 10 8 did not represent the lease amount for a month. This was a case in which the assessee bad acquired an asset of an enduring character for which he had to put his hand in his pocket for a very large sum indeed. He paid Rs. 96,000 down, but for the rest he asked for easy terms. The amount paid every month was not in any sense a payment for acquisition of the right from month to month. It was really the entire sum chopped into small payments for his convenience. Nor can the amount be described as a business expense, because the outgoings every month were not (1) Mad. 169. (2) (1937) L.R. 65 I.A. 45, 5, (3) , C.A, 712 to be taken as spent over purchase of stones but in discharge of the entire liability to the jagir. Some of the cases to which we were referred may now be briefly noted. Hakim Ram Prasad, In re (1) was a case of renting of a cinema projector for 10 years. The amount paid was thus hire for the machine. 'In Commissioner of Income tax vs Globe Theatres Ltd. (2) the assessee advanced Rs. 10,000 to a company for the construction of a cinema house which was never built. Since the amount was not salami or premium but only advance rent, it was held deduct ible. Commissioner of Income tax vs Kolhia Hirdagarh Co. Ltd. (3) was a case of commission on every ton of coal raised, and it was held to be revenue expenditure. These cases are entirely different, and can be of no authority for payments, such as we have. Reliance was also placed upon Parmanand Haveli Ram In re (4), Nand Lal Bhoj Raj, In re (5) and Commissioner of Income tax vs Tika Ram & Sons (6). In the first two, expenditure to acquire lands bearing certain salts in the earth, which could be converted into potassium nitrate, sodium chloride or saltpetre, was regarded as revenue expenditure. They follow the line of reasoning which the same Court adopted in the Full Bench case of Benarsidas (7), which we have considered in detail earlier. They involved shortterm contracts, and in the Full Bench case it was stated that the case of long term leases was on a different footing, though, in our opinion, the decisive factors in such cases will be the nature of the acquisition and the reason for the payment. Cases on the other side of the line where payments were regarded as capital expenditure are Commissioner of Income tax vs Chengalroya Mudaliar (8) and Chengalvaroya Chettiar vs Commissioner of Income tax (9). There the expenditure was for a lease for excavation of lime shells. Since the lease conferred exclusive privilege and a new business regarded not as the right to win shells. (1) (3) (5) (7) (2) (4) (6) (8) Mad. (9) 713 All these cases turned on different facts, and it is not necessary to decide which of them in the special circumstances were correctly decided. This enquiry will hardly help in the solution of the case in hand. We are, however, satisfied that in this case the assessee acquired by his long term lease a right to win stones, and the leases conveyed to him a part of land. The stones in situ were not his stock in trade in a business sense but a capital asset from which after extraction he converted the stones into his stock in trade. The payment, though periodic in fact, was neither rent nor royalty but a lump payment in instalments for acquiring a capital asset of enduring benefit to his trade. In this view of the matter, the High Court was right in treating the outgoings as on capital account. In the result, the appeal fails, and will be dismissed with costs. BY COURT: In accordance with the majority judgment of the Court, the appeal is dismissed with costs. Appeal dismissed. [/INST] Under a quolnama the assessee company was granted exclusive rights in the nature of a monopoly to extract Shahabad Flag Stones without limit to quantity or measurement from quarries situated in six villages for a period of 12 years on annual payment of Rs. 28,000 but not to manufacture cement. The stones had to be extracted methodically and skilfully before they could be dressed and sold. The assessee company paid an initial sum of Rs. 96,000 as security and the balance of Rs. 20,000 was payable each year in monthly instalments of Rs. 1,666 10 8 each. The payments were to be made even if no stones were extracted or could not be extracted. The question was whether the amounts paid were allowable as business expenditure under section 12(2)(xv) of the Hyderabad Income Tax Act: Held (Per Kapur and Hidayatullah, jj. section K. Das, J., dissenting), that under the quolnama the assessee acquired by his long term lease a right to win stones and the lease conveyed to him a part of land. The stones in situ were not his stock intrade in a business sense but a capital asset from which after extraction he converted the stones into his stock in trade. The payment though periodic in fact was neither rent nor royalty but a lump sum payment in instalments for acquiring a capital asset of enduring benefit to his trade. The right acquired is to a source from which the raw material was to be extracted. The expenditure was outgoings on capital account and was not allowable as deductions under section 12(2)(XV) Of the Hyderabad Income Tax Act. Per section K. Das, J. That on its true construction the trans action was the sale of raw materials coupled with a licence to the assessee to come on the land and remove the materials sold, the purchase price being paid partly in a lump sum and partly in monthly instalments, that the object was the procuring of the stones for making flag stones and not the acquisition of an enduring asset or advantage, that the payments made were the price of raw materials and that the assessee was therefore entitled to claim them as business expenditure under section 12(2)(xv) of the Hyderabad Income Tax Act. Assam Bengal Cement Works Ltd. vs Commissioner of Income Tax, West Bengal, , distinguished. </s>

<s>[INST] Summarize the following judgement: 297 of 1951. Petition under article 32 of the Constitution of India for enforcement of fundamental rights by quashing the orders of the Deputy Commissioner and House Rent Controller, Banga lore, allotting the petitioner 's house to the 3rd respondent and for taking forcible possession of the same. S.K. Venkataranga Iyengar for the petitioner. A.R. Somanatha Iyer, Advocate General of Mysore, (R. Ganapathy Iyer, with him) for the respondent No. 1. K. Ramaseshayya Chowdhury for the respondent No. 2. 1952. May 26 The Judgment of the Court was delivered by 746 CHANDRASEKHARA AIYAR J. This is an application under article 32 of the Constitution for quashing the orders of the Deputy Commissioner and House Rent Controller, Banga lore, (2nd respondent) allotting house No. 291, Fifth Main Road, Gandhi Nagar, Bangalore City, for the use of Sri Aswathanarayana Rao (3rd respondent) and taking forcible possession of the same. The State of Mysore has been im pleaded as the first respondent, The facts are these. The petitioner D.K. Nabhirajiah is a merchant and is the owner of the premises aforesaid. After lengthy litigation, the previous tenant of the premises vacated it on 1st September, 1949. On 2nd Septem ber, 1949, the petitioner notified the vacancy to the 2nd respondent as required by law but added that he wanted the premises for his own use to set up one.of his grown up sons in a business in electrical goods. The third respondent Aswathanarayana Rao however wanted the house for a chil dren 's school which he was running under the name of Bala Mandir and so he not only applied to the Rent Controller for allotting to him that house but also moved the Minister for Law and 'Labour for the same purpose. The second respondent made an order on 13th September, 1949, in the following terms: "With reference to your vacancy report in respect the above place you are informed under clause 3 (2) of the Mysore House Rent and Accommodation Control Order, 1948 that the building is required for the occupation of Balamandira Home for the children and for residential use of the Direc tor. You are therefore directed under clause 3 (4) of the Mysore House Rent and Accommodation Control Order, 1948 to hand over possession of the above house to the said Sri Aswathanarayana Rao, Director, Balamandira. " By an order dated 20th September, 1949, made on an appli cation by the petitioner dated 16th September, 1949, the Deputy Commissioner refused to reconsider the allotment and required the petitioner to give effect to the same at once and deliver possession to the allottee, 747 The petitioner preferred an appeal to the Commissioner of Labour who is the House Rent Control Appellate Authority and obtained a stay, but the appeal was eventually dismissed and the said order vacated on 28th December. He filed a Revision Petition No. 97 of 1949 50 before the Government of Mysore but without success and the Government declined to interfere by their order dated 14th March, 1950. He then resorted to the High Court of Mysore by means of a petition under section 45 of the Mysore Specific Relief Act. This again was dismissed on the ground that the party who seeks to obtain an order under the said section cannot do so on the allegation that the statute which enjoins the doing or for bearing of the act is itself illegal or ultra vires. Applications moved under article 226 of the Constitution in the course of the same proceedings also failed. This was on 5th January, 1951. Some intermediate steps may now be set out. The third respondent complained that he had not been given possession. On this complaint, the second respondent passed an order on the 20th March, 1950, to the following effect : "Sri Aswathanarayana Rao, the allottee of the above house, has reported that you have not handed over possession of the house to him. You are required to show cause immedi ately why you should not be prosecuted for failure t0 obey the order. Please note that if the house is not handed over to the allottee, action will be taken under clause 3 (6) to take forcible possession of the house through police. " The petitioner lodged a protest against this order pointing out that the House Rent Accommodation Control Order did not vest the Controller with jurisdiction to allot the house, but on 23rd March, 1950, he received the following reply: "Your letters under reference have been examined care fully. It is not correct to say that allotment of a house to any party (private)is illegal. Clause 3 of 97 748 the Mysore House Rent Control Order, 1948, is amended to include any person also. I do not find any other reason except that you are evading to give possession to the allot tee. You are hereby finally warned that if possession is not given to the allottee action will be taken to prosecute you and take forcible possession of the house. " On 11th April, 1950, the second respondent made the following order: "Whereas premises No. 291, Fifth Main Road, Gandhi Nagar was allotted to Sri Aswathanarayana Rao of Balamandira The owner 's appeal before the Labour Commissioner and Government having been rejected the owner filed a petition before the High Court of Mysore who passed an interim order and which was vacated by the order referred to above. A subsequent appeal before the Labour Commissioner has also been reject ed and stay vacated in Endorsement in H.R.C. 1/1940 50 dated 10th April, 1950. I therefore direct the owner Sri D. K Nabhirajiah to hand over possession of the said house to Sri Aswathanarayana Rao at once, failing which, I authorise the Superintendent of Police, Bangalore City or any other offi cer empowered by him in his behalf to take possession of the house and hand over to the allottee, Sri Aswathanarayana Rao." As this order was not obeyed by the petitioner, forcible possession was taken of the house with police help and the third respondent was given possession. The petitioner seeks to quash the above mentioned orders of the second respondent dated 20th September, 1949, 20th March, 1950, 23rd March, 1950, and 11th April, 1950. The prayer in the petition is thus worded: "for quashing the orders of the second respondent No. 522 Acc. (b) 49 dated 20th September, 1949, confirmed by Appellate Authority in H.R.C. Appeal No. 117 of 1949 1950 dated 28th December, 1949, and by the Government of Mysore in H.R.C. Revision Petition No. 97 of 1949 1950 dated 14th March 749 1950, and also the subsequent orders of the second respondent No. 562 Acc. (b) 50 dated 20th March, 1950, 23rd March, 1950, and 11th April, 1950, respectively allotting and taking over forcible possession of the property No. 291, Fifth Main Road. Gandhi Nagar, Bangalore City, for the use of a private individual, the third re spondent, and for costs. " The contention of the petitioner is a threefold one, namely : (1) The order allotting the premises to the third re spondent contravenes the provisions of article 31, sub clause (2) and article 19 (1} (f) of the Constitution. (2) The order is discriminatory and offends article 14 of the Constitution. (3) Under the Defence of India Rules under which the Accommodation Control Order was made, the allotment can only be of houses available for letting. It will be convenient here to set out the relevant legis lative provisions. The Mysore House Rent and Accommodation Control Order, 1948, (hereinafter referred to for the sake of convenience as the Control Order) was made in exercise of the powers conferred by clause (bb) of sub rule (2) of Rule 81 of the Defence of India Rules as applied to Mysore, and it came into force with effect from 1st July, 1948. Clause 3 of the Control Order provides, subject to two exceptions, for notice being given by the landlord to the Controller within seven days after a house becomes vacant. Subclause (2), as it originally stood, was in the following terms : "(2) If within ten days of the receipt by the Controller of a notice under sub clause (1), the Controller does not intimate the landlord in writing that the house is required for the purposes of the Government of Mysore, or of the Central Government, or of the Government of an Indian Prov ince or State, or of any local authority or public body, or of any educational or other public institution for the occupation of any 750 officer of any such Government authority, body or institu tion, the landlord shall be at liberty to let the house to any tenant, or if the Controller, on application made by the landlord permits the landlord to do so, to occupy the house himself. " By a notification dated 4th May, 1949, the words: "or for the occupation of any individual" were added after the words "body or institution" in the said sub section. The sub clause as amended runs thus: "(2) If within ten days of the receipt by the Controller of a notice under sub clause (1), the Controller does not intimate the landlord in writing that the house is required for the purposes of the Government of Mysore, or of the Central Government, or of the Government of an Indian Prov ince or State, or of any local authority or public body, or of any educational or other public institution, or for the occupation of any officer of any such Government authority. body or institution or for the occupation of any individual, the landlord shall be at liberty to let the house to any tenant, or if the Controller on application made by the landlord, permits the landlord to do so, to occupy the house himself. " Sub clause (8) says : "The landlord shall not let the house to a tenant or occupy it himself, before the expiry of the period of ten days specified in sub clause (2), unless he has received intima tion that the house is not required for the purposes re ferred to in that sub clause or the permission referred to therein, earlier." To this sub clause, a proviso was added by a notification to the following effect: "Provided that the Controller, before requiring the house for any of the purposes stated above, shall take into consideration such representation, if any, as may be made by the owner regarding his bona fide requirements for personal occupation. " Then comes sub clause (4) which reads as follows : "(4) If the house is required for any of the purposes or for the occupation by any of the officers 751 specified in sub clause (2)the landlord shall deliver pos session of the house to the Government authority, body or institution concerned and such Government authority or body or institution shall be deemed to be the tenant of the landlord, with retrospective effect from the date on which the Controller received notice under sub clause (1), the terms of the tenancy being such as may be agreed upon be tween the landlord and, the tenant: Provided that the rent payable shall not exceed the fair rent which may be payable for the house under the provisions of this Order. " The Mysore House Rent and Accommodation Control Order of 1948 was repealed by the Mysore House Rent and Accommodation Control Act XXX of 1951. But what is relevant and material for disposal of this petition is the earlier Control Order as all the proceedings now in question were taken under it. If the allotment had been made under the Control Order prior to the date of its amendment on 4th May, 1949, the petitioner would have had a good case to urge. Sub clause (2) as it then stood spoke of the house being required for certain specified purposes or for any educational or other public institution, or for the occupation of an officer of any Government authority, body or institution;and the house could not have been required for the occupation of a private individual. But the amendment has enlarged the scope of the power of the Controller by providing that the requirement may also be for the occupation of any individu al. The answer to the first contention based on article 31 (2) or article 19(1) (I) of the Constitution is a short one. The Constitution came into force on the 26th January, 1950, after the impugned orders were made and at a time when there was nothing like a chapter of Fundamental Rights. The argu ment that the requisition in the present case was not for any public purpose and the restriction on the respondent to hold property must be in the interests of the general public presupposes that the Constitution governs the case. This 752 assumption, however, is not well founded. The order of allotment was made before the Constitution came into force and at a time when the Control Order provided, validly, that a house could be taken for the occupation of a private individual. During the period of 10 days specified in sub clause (2), the landlord could not let the house or occupy it himself, and on allotment, he was bound to deliver up possession to the allottee. His rights as landlord were thus at an end so far as possession was concerned. Whether retrospective effect could be given to article 13 (1) of the Constitution arose for decision in Keshavan Madhava Menon vs The State of Bombay(1). Dealing with the argument that the said article rendered voidab initio and for all purposes an earlier law which was inconsistent with fundamental rights, it was laid down by this Court in that case "that such laws existed for all past transactions and for enforcing all rights and liabilities accrued before the date of the Constitution." (Per Das J., at page 234). Mr. Justice Mahajan observed at pages 249 and 250: "It is admitted that after the 26th January, 1950, there has been no infringement of the appellant 's right of freedom of speech or expression. In September, 1949, he did not enjoy either complete freedom of speech or full freedom of expression. It is in relation to the freedom guaranteed in article 19 (1) of the Constitution to the citizen that the provisions of article 13 (1) come into play. the article does not declare any law void independ ently of the existence of the freedoms guaranteed by Part III. A citizen must be possessed of a fundamental right before he can ask the court to declare a law which is incon sistent with it void; but if a citizen is not possessed of the right, he cannot claim this relief. " These remarks have application here. The learned Advocate for the petitioner sought to get over this difficulty by pointing out that the (1) ; 753 dispossession took 'place on 11 4 1950. This, however, is no answer. The dispossession was a mere consequence which followed under clause '3, sub clause (6) of the Control Order. The right to possession was lost earlier and the landlord merely held on to the property. Article31 (2)does not apply for another reason. There was no acquisition by the State of the house. The taking of possession can only be from a person who is entitled to possession. The petitioner landlord lost his right to possession by reason of the Controller 's order. As soon as the allotment is made, the allottee becomes a tenant and the owner becomes the landlord by reason of sub clause (4)of the Control Order and the learned Advocate General of the Mysore State contended that a statutory tenancy was thereby created. It is no doubt true that it is provided by sub clause (4) that the terms of the tenancy may be such as may be agreed upon between the landlord and the tenant, and there is no provision, as found in the later Act, as to what is to happen in the event of there being no agreement. If it is correct that a tenancy is brought into existence by the operation of the statute, it is possible that in case the terms are not the subject of any agreement between the landlord and the tenant, the ordinary law of landlord and tenant will apply in the absence of any provision for the fixation of terms by the Controller. But the point does not arise for decision in this case and nothing. further need be said about it. The applicability of sub clause (4) of the Control Order was sought to be avoided in another manner. It was pointed out that sub clause (2) referred in its first part "to the purposes of the Government of Mysore" etc., and in its later part "for the occupation of any officer or any such Govern ment authority, body or corporation, or for the occupation of an individual", but that when we come to sub clause (4), the two categories are kept distinct or separate and in referring to the second category the Control Order 754 speaks only of the requirement of the house for the occupa tion by any of the officers and nothing is said about the occupation of any individual. The amending Act did not introduce the words "or for the occupation of any individu al" into sub clause (4). Therefore, it was urged that the whole basis of the Advocate General 's contention about a statutory tenancy being created fell to the ground. At first sight, there seems to be something in the point. But if sub clause (2) is read as a whole, having in 'view the object sought to be achieved by the legislation, it is fairly clear that there is no such necessary antithesis between the two categories or clauses and that the words "for the purposes" can be so read as to include "occupation" also. 'the omission of the words "for the purposes" in the latter part of sub clause (2) was perhaps to avoid inartis tic phraseology. "For the occupation" certainly reads better than "for the purposes of the occupation". Ground No. 2 regarding discrimination was not pressed. Then, we come to ground No 3. Clause (bb) of sub clause (2) of Rule 81 of the Defence of India Rules is in these terms: "(bb) for regulating the letting and sub letting of any accommodation or class of accommodation, whether residential or non residential, whether furnished or unfurnished and whether with or without board, and in particular, (i) for controlling the rents for such accommodation (either generally or when let to specified persons or classes of persons or in specified circumstances); ((ii) for preventing the eviction of tenants and sub tenants from such 'accommodation in specified circumstances and); (iii) for requiring such accommodation to be let either generally, or to specified persons or classes of persons, or in specified circumstances; . ," 755 It was urged that the power conferred under this sub clause applied only to those cases where the house was available for letting or sub letting and not to eases where a house was not so available, in other words, if the land lord of any premises said that they were required for his own occupation, the Government had no power to requisition the same, Emphasis was laid on the word "regulating". This, however, is an obviously unsound interpretation to be placed upon the words. They mean that the Government might provide for and regulate the letting and sub letting etc., and that such is the scope is clear from the words in sub clause (2) "may by order provide". The argument for the petitioner, if accepted, would render the powers entirely nugatory, as it would then be open to every landlord to say that the prem ises are required for self occupation, or even that he has already let it out to another and that therefore it is not available for being let. There was no requisition of property in this case under section 75 (A) of the Defence of India Rules. The Control Order was promulgated under rule 81 (2) (bb) which provides for the regulation of letting and sub letting houses. It is rather the exercise of a police power of regulation in public interest than anything done in the exercise of a power of eminent domain, in which case alone questions relating to compensation and public purpose will arise. In the course of the arguments, it was suggested that the amendment notification of 4th May, 1949, introducing the words "or for the occupation of any individual" was invalid because the regulation of letting and sub letting under clause (bb) could only be for the Defence of British India or for the efficient prosecution of the war, or for main taining supplies and services essential to the life of the community, and that the taking of property for the occupa tion of a private individual was outside the scope of the power. Apart from the fact that no such ground has been taken in the petition, it has also to be noted that 98 756 the Control Order purports to have been made not only under clause (bb) of sub rule (2) of rule 81 of the Defence of India Rules, but also under the Supplies, Services and Miscellaneous Provisions (Temporary Powers) Act of 1947. We have not got this Act before us and it was not even referred to in the course of the arguments. Hence no decision is called for on this point. The petition fails and is dismissed without any order as to costs. Petition dismissed. Agent for the petitioner: K.R. Krishnaswarny. [/INST] A house belonging to the petitioner in the Bangalore City fell vacant on the 1st September, 1949, and on the 13th September, 1949, an order was passed by the Rent Con troller 745 under the Mysore House Rent and Accommodation Control Order, 1948, allotting the house to another person and directing the petitioner to deliver possession to the lat ter. The petitioner protested and took various steps to get the order vacated but he was unsuccessful and forcible possession was taken from him under an order made on the 11th April, 1950. He applied to the Supreme Court under article 32 of the Constitution for quashing the order allotting the house and the subsequent orders made to enforce that order, on the ground, infer alia, that these orders contravened the provisions of articles 31 (2) and 19 (1) (f) of the Consti tution: Held, (i) that as the order of allotment was made before the Constitution came into force and at a time when the Control Order provided, validly, that a house could be taken for the occupation of a private individual, the order could not be impugned on the ground that it contravened article 31 (2) or 19 (1)(f) of the Constitution: (ii) the fact that possession was actually taken only in pursuance of an order made on the 11th April, 1950, was immaterial as the peti tioner 's right to possession was lost earlier; (iii) article 31 (2) was inapplicable for another reason also, namely, that there was no acquisition of the house by the State, as taking of possession can only be from a person who is enti tled to possession and the landlord lost his right to pos session by reason of the Controller 's order. Held also, that the power conferred by cl. (bb) of sub cl. (2) of Rule 81 of the Defence of India Rules (under which the Control Order was made) was not confined to cases where the house was available for letting or subletting in the sense that the landlord did not require the house for his own use or had not let it to another himself. </s>

<s>[INST] Summarize the following judgement: Appeal No. 88 of 1956. Appeal by special leave from the judgment and decree dated February 11, 1954, of the Madras High Court in Civil Revision Petition No. 921 of 1952, arising out of the judgment and decree dated November 2, 1951, of the Court of Small Causes, Madras, in Suit No. 4076 of 1950 (N. T. A. No. 113 of 1951). With Civil Appeals Nos. 91 and 92 of 1958. Appeals by special leave from the judgment and decree dated March 10, 1955, of the Bombay High Court in Appeals Nos. 66/X and 67/X of 1954, arising out of the judgment and decree dated February 15, 1954, of the said High Court in Suits Nos. 1693 of 1949 and 105 of 1950, respectively. B. Sen, section N. Mukherjee and B. N. Ghosh, for the appellant (in C. A. No. 88 of 1956). C. B. Pattabhiraman and Ganapathy Iyer, for respondent (in C. A. No. 88 of 1956). C. K. Daphtary, Solicitor General of India, section N. Andley, J. B. Dadachanji and Rameshwar Nath, for the appellants (In C. As. Nos. 91 and 92 of 1958). G. Gopalakrishnan, for the respondent (In C. A. No. 91/58). A. V. Viswanatha Sastri and G. Gopalakrishnan, for the respondent (In C. A. No. 92 of 58). May 3. The Judgment of the Court was delivered by 107 822 DAS GUPTA, J. These three appeals Civil Appeal No. 88 of 1956, Civil Appeal No. 91 of 1958 and Civil Appeal No. 92 of 1958, of which one is from a decision of the High Court of Madras and the other two from decisions of the High Court of Bombay raise some common questions of general importance to carriers of goods by sea and of shippers as regards the 3rd clause of paragraph 6 of article III in the Schedule of the Carriage of Goods by Sea Act (hereinafter called " the Act "). This clause provides that " in any event the carrier and the shipper shall be discharged from all liability in respect of loss or damage unless a suit is brought within one year after the delivery of the goods or the date when the goods should have been delivered ". In all the three appeals before us the carriers ' main defence to claims of compensation by the owners of the goods was based on this clause and the courts had to consider whether this defence was available to the carrier. The appeal from the Madras High Court was in respect of a consignment of 90 bundles of brass circles which were consigned to the respondent at Madras from Bombay to Madras per section section Fakira, a Steamer belonging to the East and West Steamship Co. The Ship arrived in Madras on August 1, 1948, and 78 out of the 90 bundles were delivered on August 25, 1948, to the appellant through his clearing agent, the second respondent. Five more bundles were delivered on September 25, 1948. After some correspondence between the Shipping Company and the first respondent regarding the seven bundles not, delivered the appellant company repudiated finally the respondent 's claim on March 24, 1950. The first respondent brought the present suit on June 27, 1950, claiming Rs. 1,023 5 0 as compensation Rs. 974 13 0 for the value of the undelivered goods and Rs. 48 8 0 as the profit of which he had been deprived. The claim for this amount of profit was given up at the Trial. The appellant 's defence was: (1) that the suit having been filed beyond the period prescribed in cl. 6 of article 3 of the Act; (2) that the suit was also barred as no claim had been made within the period of one month from the date of 823 arrival of the vessel as stipulated in the bill of lading and (3) that the goods were insufficiently packed and therefore carrier was not liable for the alleged loss. The learned Judge of the Small Causes Court who tried the suit as also the Judge who heard the matter on a new trial application held that the plaintiff 's right to claim compensation was extinguished before the date of the suit. As regards the second defence based on the stipulation in the bill of lading that notice has to be given within one month the Trial Court held that this term in the bill of lading was void and of no effect. The learned Judges who heard the new trial application disagreed with this and accepted the defence on this point also. In the result they dismissed the new trial application and confirmed the order of dismissal made by the learned Trial Judge. Against this order the High Court of Madras was moved by the plaintiffs under section 115 of the Code of Civil Procedure. The learned Judge held that the term in the bill of lading as regards one month 's notice was repugnant to Rule 8 to article III of the Schedule to the Act and was void. He was also of opinion that the date of the final repudiation of liability by the Shipping Company as regards the short delivery or non delivery is the date " when the goods should have been delivered " within the meaning of the 3rd clause of the 6th paragraph of article III and so whether this clause provided for extinction of a right or only prescribed a rule of limitation, the defence based on this clause of the Act could not succeed. He expressed his own opinion, however, that this clause did not provide for extinction of the right but merely prescribed a rule of limitation. In view of his conclusions he set aside the decision of the lower courts and remanded the suit for further disposal to the trial court. After remand the trial court on May 4, 1954, decreed the suit for a sum of Rs. 974 13 0. Against that decree no steps were taken by the Shipping Company. It was after that date that the Shipping Company applied for and obtained from this Court special leave to appeal on October 11, 1954. It has to be noticed that as the decree made in the suit has become final and unassailable, this appeal is really of 824 academic interest. In view however of the fact that the main question of law raised, viz., as regards the scope and interpretation of the 3rd Clause of para. 6 of article III of the Schedule to the Act is being raised before us in the other two appeals from the Bombay High Court also we have heard the counsel for both sides in this appeal in full. Of the two appeals from Bombay the one Civil Appeal No. 92 of 1958 is in respect of some consignments at Bombay by section section Tweedsmuir Park, section section Finnamore Hill and section section Ismalia all vessels belonging to the first defendant, the British India Steam Navigation Company Ltd. section section Tweedsmuir and section section Finnamore Hill arrived in the port of Bombay on or about September 10, 1948, and steamer Ismalia arrived in Bombay on September 6,1948. The vessels discharged their cargoes alongside on to the docks belonging to the Trustees of the Port of Bombay. The plaintiffs took delivery of the goods packed in bags which bore their distinctive and identifying marks, but were unable to obtain delivery of 164 bags out of the consignment sent by Ismalia, 869 bags out of the consignment sent by Finnamore and 1,657 bags out of the consignment sent by Tweedsmuir Park. The suit was brought on a claim of Rs. 1,10,323 8 0 as compensation for the bags not delivered. The Trustees of the Port of Bombay were also made defendants. We are no longer concerned with them as after the suit was dismissed by the Trial Judge against both the defendants the plaintiffs did not prefer any appeal against the order of dismissal as against the Trustees. The main defence of the first defendant, the Shipping Company, was that the company was discharged from all liability in respect of the loss or damage alleged in the plaint by reason of the provisions of the Act inasmuch as the suit had not been brought within one year of the date " when the goods should have been delivered". Another defence was that the company was not liable as no notice within 3 days after discharge and before goods were removed from the quay or ship 's side or place of discharge had been given and so in view of Clause 20 of the bill of lading the company was free from all liability. The trial judge held that 825 in view of the fact that S.S. Finnamore Hill completed discharging her cargo on 19th September, 1948, S.S. Ismalia completed discharging her cargo on 25th September, 1948, and S.S. Tweedsmuir Park completed discharging her cargo on 27th September, 1948, the suit was clearly not brought " within one year " from the date " when the goods should have been delivered". He held therefore that the defendants were discharged from all liability by reason of the provisions of the Act. Accordingly he dismissed the suit. In appeal from this order of dismissal the plaintiffs contended that article III (6) did not deal with cases of loss or damage arising from non delivery of goods; in the alternative it was contended that the expression " loss or damage " in article III (6) must be limited to the loss or damage to the goods themselves and if the goods have not been lost this clause had no application. The learned judges of the High Court rejected both these contentions. They were of opinion that article III (6) deals with all cases of loss or damage whether the loss or damage is caused by the deterioration of the goods or is caused by the non delivery of the goods and further that " the loss or damage" as used was used by the Legislature to include any loss or damage caused to shipper or consignee in respect of which he claims compensation from the shipping company. The learned judges also held that so far as the shipping company was concerned the delivery of goods is given or ought to be given as soon as the goods are landed and therefore in this case the goods with regard to the three ships having been cleared on September 19, 1948, September 25, 1948, and September 27, 1948, respectively. These were the dates on which the goods " should have been delivered " for the purposes of the application of the 3rd clause of paragraph 6 of article Ill. Accordingly agreeing with the Trial Judge that the liability of the shipping company was discharged and the suit was not maintainable they dismissed the appeal. The other appeal from the Bombay High Court, viz., Civil Appeal No. 91 of 1958 is in respect of a consignment of 6,000 bags of coconut from Cochin and 4,733 bags of copra and coconuts from Badagara 826 consigned to the plaintiffs for carriage to Bombay by the steamer " Bharatjal " belonging to the appellant, the Bharat Lines Ltd. The steamer arrived in Bombay Port some time in the middle of September, 1948. The plaintiffs however failed to obtain delivery of 596 bags from the Badagara consignment and 470 bags from the Cochin consignment. They brought the suit on December 5, 1949, against the shipping company, the Bharat Lines Ltd., and also against the Trustees of the Port of Bombay on a claim of Rs. 1,05,726 1 6 on which Rs. 45,725 7 5 appear to have been claimed as compensation in respect of the bags not delivered and the remainder as compensation for damage to the goods in the bags of which delivery was taken. We are no longer concerned with the second defendant, the Trustees of the Port of Bombay, as after the suit was dismissed by the Trial Court the plaintiffs did not pursue the claim against them. The main defence of the first defendant, the shipping company, was that the suit was barred " by reason of the Indian Carriage of Goods by Sea Act ". It was also urged that the suit was not maintainable as under the terms of the bill of lading the plaintiffs were bound to notify to the defendants their claim in writing about the alleged non delivery within one month from the date of the arrival of the vessel which the plaintiffs had failed to do. It appears to have been conceded before the Trial Judge in the Bombay High Court that the suit had not been filed within one year after the delivery of the goods or the date on which the goods should have been delivered. The plaintiffs ' counsel also appears to have conceded that cl. 6 of article III applied to the case. The learned Judge therefore held that the first defendant had been discharged from all liability in respect of the loss or damage alleged in the plaint and dismissed the suit. It appears however that in the appeal from this order of dismissal the plaintiffs urged that article III (6) of the Act did not apply to the facts of the case and also the date on which the goods should have been delivered should be construed to mean the date " when the loss was finally ascertained " and the shipping company was in a position to finally declare that they were or were not 827 in a position to deliver the goods in question. In dismissing the appeal the learned judges of the High Court who heard the appeal did not give any separate reasons but stated that the appeal was being dismissed on the same ground as given in their judgment in Appeal No. 66 of 1954. This is the judgment from which Civil Appeal No. 92 of 1958 of this Court has been preferred. From what has been said above it is clear as we have already indicated that the main questions in this appeal are as regards the interpretation of the 3rd Clause of paragraph 6 of article III in the Schedule to the Act. The first and the most important of these questions is as regards the meaning of the word " loss " as used in the said clause. Does it mean only such loss as occurs when one says " the goods have been lost" or does it include also such loss as is sustained by the owners of the goods whether the shipper or the consignee when the carrier fails to deliver the whole or part of the cargo shipped ? The second question that arises for consideration is whether this clause only prescribes a rule of limitation or also provides for the extinction of the right to compensation after a certain period of time. The next question is as regards the as certainment of the date on which the goods not delivered " should have been delivered " for the purposes of ' this clause. Apart from these questions as regards the interpretation of the 3rd clause of paragraph 6 of article 111, it will be necessary to consider also whether the requirement in the bill of lading as regards the time within which the notice of claim must be made in order that the carrier may be responsible is void as being against the 8th paragraph of article III. As has been mentioned in the preamable to the Act it was passed to give effect to the recommendation of the International Conference of Maritime Law at Brussels in October, 1922. The circumstances which led to the holding of the conference and were responsible for the recommendations have been stated by Scrutton on Charter Parties, 15th Edition, at p. 439, in these words: 828 In recent years, as the terms of bills of lading became more diverse, the need for standardisation became more and more insistent and an increasing demand was made on the part of importers and exporters for the imposition by legislation, on the lines of the American Harter Act or the Australian Sea Carriage of Goods Act, 1904, or the Canadian Water Carriage of Goods Act, 1910, of certain minimum liabilities on sea carriers who issued bills of lading. " x x x The movement in favour of legislation finally resulted in the decision of the delegates at the Diplomatic Conference on Maritime Law held at Brussels in October, 1922, to recommend to their respective Governments the adoption of the Hague Rules with slight modifications as a basis of legislation. " It is this recommendation which has been referred to in the preamble to the Indian Act. It is important to mention that apart from our own country, U. K., Australia, Canada, Ceylon, Newfoundland, New Zealand as well as Belgium, France and U. section A. have given statutory effect wholly or partially to the Hague Rules. This international character of the provisions of law as incorporated in the articles to the schedule to the Act makes it incumbent upon us to pay more than usual attention to the normal grammatical sense of the words and to guard ourselves against being influenced by similar words in other acts of our Legislature. it is helpful to remember in this connection the caution uttered by Lord Atkin in State Line Ltd. vs Foscold (1) about the importance of giving words in these rules their plain meaning, and not to colour one 's interpretation by considering whether a meaning otherwise plain should be avoided if it alters the previous law. After stating that this caution would be well founded if the Act merely purported to codify the law, he went on to observe: " But if this is the canon of construction in regard to a codifying Act, still more does it apply to an Act like the present which is not intended (1) 829 to codify the English law, but is the result (as expressed in the Act) of an international conference intended to unify certain rules relating to bills of lading. It will be remembered that the Act only applies to contracts of carriage of goods outwards from ports of the United Kingdom; and the rules will often have to be interpreted in the courts of the foreign consignees. For the purpose of uniformity it is therefore important that the courts should apply themselves to the consideration only of the words used without any predilection for the former law. ". The House of Lords was in that case interpreting certain provisions of the English Carriage of Goods by Sea Act, 1924. Our own Act applies to contracts of carriage of goods outwards from the ports of India. Section 2 states that the rules set out in the Schedule shall have effect in relation to and in connection with the carriage of goods by sea in ships carrying goods from any port in India to any other port whether in or outside India. Though in the appeals before us we are concerned with only contracts of carriage of goods from one Indian port to another Indian port, it is necessary to remember that these rules will often have to be interpreted in the courts of the foreign consignees. That is an additional reason why we should be careful not to attach to the words used in the rules set out in the Schedule to the Act anything more or less than their normal meaning consistent with the context in which they appear and consistent with the scheme of the legislation. article III of the Schedule with which we are specially concerned in the present case purports to mention the responsibilities and liabilities of the carriers. The first paragraph lays down the responsibilities and liabilities of the carrier in the matter of making ships seaworthy, properly manning, equipping and supplying the ship and making the holds and the different parts of the ship where goods are carried fit and safe for their reception, carriage and preservation. The second paragraph places on the carrier the duty of properly and carefully loading, handling, stowing, carrying, keeping, caring for and discharging the goods, subject to article IV. The 3rd paragraph provides for the issue of a bill of lading 830 to the shipper of the goods showing among other things the identifying marks, the number of packages or pieces or the quantity or weight as also the apparent order and condition of the goods. Paragraph 4 provides that the bill of lading shall be the prima facie evidence of the receipt by the carrier of the goods as described in accordance with paragraph 3. The fifth paragraph provides that the shipper shall be deemed to have guaranteed to the carrier the accuracy as regards the details of marks, number, 'quantity and weight as furnished by him. It provides further that the shipper shall indemnify the carrier against all loss, damages and expenses arising or resulting from such inaccuracies. Then comes paragraph 6, the whole of which it is proper to set out : Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage, or if the loss or damage be not apparent, within three days, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading. " " The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject of joint survey or inspection. " " In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after the delivery of the goods or the date when the goods should have been delivered. " " In the case of any actual or apprehended loss or damage. the carrier and the receiver shall give all reason able facilities to each other for inspecting and tallying the goods. The seventh paragraph contains provisions as regards issue of a shipped bill of lading. The eighth paragraph is in these words: " Any clause, covenant or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with 831 goods arising from negligence, fault or failure in the duties and obligations provided in this article or lessening such liability otherwise than as provided in these Rules, shall be null and void and of no effect. A benefit of insurance or similar clause shall be deemed to be a clause relieving the, carrier from liability. " It has to be noticed that before providing in the 6th paragraph an immunity to the carrier from " all liability in respect of loss or damage " in certain circumstances the Legislature had in the earlier paragraphs laid on the carrier the duty of making the ships seaworthy, properly manning, equipping and supplying the ship, and making the holds and all other parts of the ship fit and safe for the reception, carriage and preservation of the goods; properly and carefully loading, handling, stowing, carrying, keeping and caring for and discharging the goods carried and provided that ordinarily the bill of lading should show the quantity or weight of the goods or the number of packages or pieces. " Loss or damage " which paragraph 6 speaks of should therefore reasonably be taken to have reference to such loss or damage which may result from the carrier not performing some or all of the duties which had been mentioned earlier. One of those duties is to discharge the goods carried in accordance with the quantity or weight or the number of packages or pieces as mentioned in the bill of lading. The shipper and the consignee of goods are more concerned with the duty of the carrier to discharge the goods in proper order and condition and in full than anything else. Indeed the other duties cast on the carriers so far as the owners of the goods are concerned, are really incidental to this duty of discharging the goods in full and in good order and condition. When in the context of the previous paragraphs of article III the 6th paragraph seeks to provide an immunity to the carrier "from all liability in respect of loss or damage " after a certain time, it is reasonable to think that it is loss or damage to the owner of the goods, be he shipper or the consignee, which is also meant, in addition to the " loss of the goods ". When 832 the goods themselves are lost, e.g., by being jettisoned, or by being destroyed by fire or by theft, there will be failure to discharge the goods in full and loss to the owner of the goods will occur. Even where the goods are not lost the carrier may fail to discharge the goods in full or not in proper order and there also loss will occur to the owner of the goods. In such a case, even though there may not have been " loss of the goods " the goods are lost to the owner. The word " loss " as used in paragraph 6 is in our opinion intended to mean and include every kind of loss to the owner of the goods whether it is the whole of the consignment which is not delivered or part of the consignment which is not delivered and whether such non delivery of the whole or part is due to the goods being totally lost or merely lost to the owner by such fact of nondelivery there is in our opinion "loss" within the meaning of the word as used in paragraph 6. It is worth noting in this connection that while paragraph 5 makes it clear that loss there means loss to the carrier and paragraph 6 speaks of loss or damage to or in connection with the goods, the Legislature has in the 6th paragraph of this Article left the words "loss or damage" unqualified. The object of the rule however being to give immunity to the carriers and the shippers from claims of compensation made by the owners of the goods in respect of loss sustained by them, it will be unreasonable to read the word " loss " in that paragraph as restricted to only loss of the goods ". When the object of this particular paragraph and the setting of this paragraph in the Article after the previous paragraphs are considered there remains no doubt whatsoever that the learned judges of the Bombay High Court were right in their conclusion that the loss or damage in this paragraph is a wide expression used by the Legislature to include any loss or damage caused to shipper or consignee in respect of which he makes a grievance and in respect ,of which he claims compensation from the shipping company. The argument that loss due to failure to deliver the goods is not covered by this clause is merely to be mentioned to deserve rejection. The very use of the 833 words " the date on which the goods should have been delivered" clearly contemplates a case where the goods have not been delivered. The clause gives the owner of the goods one year 's time to bring the suit the year to be calculated from the date of the delivery of the goods where the goods have been delivered and from the date when the goods should have been delivered where all or some of the goods have not been delivered. The fact that the first clause of the 6th paragraph speaks of removal of the goods may be an argument for thinking as the Bombay High Court thought that clause has no application when goods are not delivered. It may be mentioned that some authorities (See Carver 's Carriage of Goods by Sea, 10th Edition, p. 191) have suggested that the first clause of this paragraph appears to have little meaning. That is a matter which need not engage our attention. It is sufficient to mention that the fact that the rule of evidence provided in the first clause of the paragraph may have no application to cases of non delivery is wholly irrelevant in deciding whether the third clause applies to cases of non delivery. As we have already said the date when the goods should have been delivered necessarily contemplates a case where loss has arisen because goods have not been delivered. Reliance was sought to be placed on behalf of the appellants in the two Bombay appeals on Spens vs The Union Marine Insurance Co. Ltd. (1). What had happened in that case was that cotton belonging to different owners was shipped in bales specifically marked, including 43 bales belonging to the plaintiffs. In the course of the voyage the ship was wrecked; all the cotton was more or less damaged, some of it was lost, some was so damaged that it had to be sold before reaching the port and marks on a very large number of the bales were so obliterated by sea water that none of the cotton that was lost or sold and only a portion of what was carried to the port could be identified as belonging to any particular consignment. The plaintiffs had insured the goods with the defendant company against the usual risks. The question (1) 834 arose whether there was a total loss of a part of each owner 's cotton or whether there was a total loss of the plaintiffs ' consignment. The court held that it could not be said that there was an actual total loss of the plaintiffs ' consignment nor a constructive total loss of these, that the principle of proportion applied in cases of general average or jettison where it is not known whose goods are sacrificed should be properly applied to cases of this nature where because of the bales of different shippers being undistinguishable by reason of the action of the sea and without the fault of the respective owners it becomes impossible to ascertain to whom the goods actually lost belonged. This case it has to be noticed had to consider in view of the special terms of an insurance policy, whether there was a total or partial loss for the purposes of claims under the policy and the argument that there was a total loss within the meaning of the policy because it was impossible for the ship owner to deliver the plaintiffs ' own bales of cotton to them was rejected. This case is of no assistance in the interpretation of the word " loss " in the Articles of the Schedule. In cases of such mixture of cargo of different owners it was pointed out by Lord Moulton in Sandeman & Sons vs Tyzack and Branfoot Steamship Co. Ltd. (1) which was cited by the learned Solicitor General himself : " It may well be that they could assert the position of joint owners in the mixed cargo, and as such take action against any person who sought to get possession of it or convert it to his own use. But it does not follow that the ship owners would have performed their contract of carriage. Their duty is to deliver the goods entrusted to them for carriage, and they do not perform that duty if all that the consignee obtains is a right to claim as tenant in common a mixture of those goods with the goods of other people. No doubt, if such a right is of some value, and the consignee avails himself of it, the shipowners are entitled to credit for whatever value the goods possessed if they were delivered (1) , 697. 835 mixed up with some extraneous substance which lessened their value or compelled the consignee to go to expense in separating it out. " There is nothing however to justify the conclusion that the consignee is bound to avail himself of the right to claim as tenant in common. The breach of contract remains and the claim for compensation for such breach is in no way affected. Neither authority nor principle therefore supports the contention of the learned Solicitor General that where the goods are in existence but cannot be delivered because they have been mixed up with the cargo of other owners there has been no " loss " within the meaning of the third clause of the 6th paragraph of article III. On the first question, therefore, we have come to the conclusion that the word "loss" in the third clause of the 6th paragraph of article III to the Act means and includes any loss caused to a shipper or a consignee by reason of the inability of the ship or the carrier to deliver part or whole of the goods, to whatever reason such failure may be due. On the next question whether this clause prescribes only a rule of limitation or provides for the extinction of a right to compensation, it will be observed that the Bombay High Court has not discussed it at all, apparently because on the facts of the case before it would have mattered little whether the provision was one of limitation or of extinction of right. The question is however of some importance in the facts of the Madras Case. For if the provision is one of limitation there would be some scope for argument in the facts of that case that the period was extended by acknowledgments of liability within the meaning of article 19 of the Limitation Act. The question we have to decide is whether. in saying that the ship or the carrier will be " discharged from liability ", only the remedy of the shipper or the consignee was being barred or the right was also being terminated. It is useful to remember in this connection the international character of these rules, as has been already emphasised above. Rules of limitation are likely to vary from country to country. Provisions for extension of periods prescribes for limitation would similarly vary,. 836 We should be slow therefore to put on the word " discharged from liability " an interpretation which would produce results varying in different countries and thus keeping the position uncertain for both the shipper and the shipowner. Quite apart from this consideration, however, we think that the ordinary grammatical sense of "discharged from liability" does not connote " freed from the remedy as regards liability " but are more apt to mean a total extinction of the liability following upon an extinction of the right. We find it difficult to draw any reasonable distinction between the words "absolved from liability" and " discharged from liability " and think that these words " discharged from liability " were intended to mean and do mean that the liability has totally disappeared and not only that the remedy as regards the liability has disappeared. We are unable to agree with the learned Judge of the Madras High Court that these words merely mean that " that even though the right may inhere in the person who is entitled to the benefits, still the liability in the opposite party is discharged by the impossibility of enforcement. " The distinction between the extinction of a right and the extinction of a remedy for the enforcement of that right, though fine, is of great importance. The Legislature could not but have been conscious of this distinction when using the words " discharged from all liability " in an article purporting to prescribe rights and immunities of the shipowners. The words are apt to express an intention of total extinction of the liability and should, specially in view of the international character of the legislation, be construed in that sense. It is hardly necessary to add that once the liability is extinguished under this clause, there is no scope of any acknowledgment of liability thereafter. This brings us to the question as to how the date " when the goods should have been delivered " should be calculated. References were made at the Bar to some of the numerous decisions in the different courts in India as regards the interpretation of somewhat similar words in article 31 of the Limitation Act in respect of suits for recovery of compensation for 837 non delivery. Indeed the learned Judge in the Madras High Court himself has based his conclusion on this question on the view of law he had earlier expressed as regards article 31 of the Limitation Act that the starting point of limitation there is the final repudiation of the liability by the company. With great respect to the learned Judge, we are of opinion that the cases as regards the ascertainment of the date when the goods " ought to be delivered " as used in article 31 of the Limitation Act are of no assistance for our present purpose. Most, if not all of the cases which have considered the question of the ascertainment of the date when the goods " ought to be delivered " for the purpose of article 31 deal with cases of transport by Railways where no date has been or can be specified in the contract for carriage. We cannot however ignore the fact that the conditions of carriage of goods by ship are essentially different from contracts of carriage of goods by Railways in one respect, viz., that whereas in contracts of carriage of goods by Railways there is ordinarily no knowledge as to by which particular train the goods will be despatched nor is there any undertaking by the Railways as regards such trains, there is ordinarily in contracts of carriage of goods by sea distinct arrangement that the goods will be shipped by a particular vessel. Whether the bill of lading in the older form beginning with the words " shipped on board the. . or in the form more recently employed by some shipping companies, beginning with the words " Received for shipment by. . (See Scrutton on Charter Parties, 15th Edition, p. 10) the name of the vessel is ordinarily indicated in the bill of lading itself. The duty of the carrier under the contract of carriage is to carry the goods by a particular ship and then to deliver the same on the arrival of the ship at the port. The manner in which the delivery will take place will depend on the particular terms of the bill of lading and on the custom of the port of destination. But whether the delivery has to be made to the consignee at the ship 's side or is made on the quay side there can be little doubt that the carrier 's duty is to start the delivery of goods as soon as the ship arrives at the 109 838 port of destination and to complete the delivery before the ship leaves the port. In a particular case the carrier may not do his duty. That cannot however alter the fact of the existence of his duty to complete the delivery between the arrival of the ship at the port and the departure of the ship from the port. If as regards any particular goods this duty remains unperformed at the time when the ship leaves the port there can be no escape from the conclusion that the point of time when the ship leaves the port is the latest point of time by which the goods should have been delivered. On the records of both the Bombay appeals we find the bills of lading for these carriages of contract. Paragraph 10 of the bill of lading in Civil Appeal No. 92 of 1948 contains the terms as regards the discharge of cargo in these words: " 10. Discharge of goods: The goods may be discharged as soon as the ship is ready to unload and as fast as she is able, continuously day and night. Sundays and holidays included, and if the consignee fails to take delivery of his goods immediately the ship is ready to discharge then the company shall be at liberty to land the said goods on to the wharf or quay or into warehouse, or discharge into hulk, lazaretto or craft or any other suitable place without notice and the goods may be stored. . . . The company shall have the option of making delivery of goods either over the ship 's side or from lighter or store ship of hulk or custom house or warehouse or dock or wharf or quay at consignee 's risk. In all cases the company 's liability is to cease as soon as the goods are lifted from and leave the ship 's desk". In the Civil Appeal No. 91 of 1958 the terms of delivery are in paragraph 15 and is in these words: " 15. The company is to have the option of delivering these goods or any part thereof, into receiving ship or board or craft or landing them at the risk and expense of the shipper or consignee as per scale of charges to be seen at the Agents Offices. . " In these appeals we are not concerned with the facts of these terms of delivery of contract except that they 839 show that it is clearly understood between the parties to the contract that delivery is to commence as soon as possible after the arrival of ship at port and completed before the ship leaves the port. Indeed even if there were not definite terms in the bill of lading as regards the delivery it would follow necessarily from the very nature of the carriage of goods by ship that the delivery of the cargo carried by the ship should be made between the date of the arrival at the port and its departure from the port. For our present purpose it is unnecessary to consider whether delivery to the dock authority in any of there cases was or would have been equivalent to the delivery to the consignee. That would depend upon the custom of the port of discharge or on statutory provisions or express stipulations in the bill of lading. But whether the delivery is to be made to the consignee or to anybody else on his behalf the duty of the ship 's master is to start the delivery as soon as possible after the ship 's arrival at the port and to complete it before the date of departure from the port. Before the ship has actually left, the port it is not possible to say that the time when delivery should be made has expired. Once however the vessel has left the port it cannot but be common ground between the carrier and the consignee that the time when delivery should have been made is over. It is this point of time, viz., the time when the ship leaves the port, which in our opinion should be taken as the time when the delivery should have been made. The fact that after this point of time correspondence started between the carrier and the consignee as regards the failure to deliver and at a later point of time the carrier communicates his inability to deliver cannot affect this question. Nor can the ultimate repudiation of any claim that may be made by the shipper or the consignee affect the ascertainment of the date when the goods should have been delivered. The arrival at port of the vessel by which the goods have been contracted to be carried being known and the departure being equally an ascertainable thing and the duty of the carrier being necessarily to complete the delivery before leaving the port, the date 'by which the delivery should have been made is 840 already a fixed point of time and later correspondence, claims or repudiation thereof can in no way change it. We have therefore come to the conclusion that whatever be the proper mode of ascertaining the date when delivery " ought to be made" under article 31 of the Limitation Act whether that be the reasonable time for delivery in the circumstances of the case or the date when after correspondence the carrier intimates its inability to deliver or the date of the final repudiation of the claim on a claim for compensation having been made or in the case of part delivery the date when the bulk of the consignment was delivered the date when the goods should have been delivered for the purpose of the third clause of the 6th paragraph of article III of the Act is the date when the ship by which the goods were contracted to be carried has left the port at which delivery was to be made. Applying the above clause to the facts of the cases before us it is obvious that these suits for compensation were not maintainable. It is hardly necessary therefore to consider the additional defence raised in all the three suits by the shipping companies, viz., that the claim for compensation not having been made within thirty days from the date of arrival of the vessel in accordance with the terms of the bill of lading no compensation is payable. The learned Judges of the Bombay High Court did not think it necessary to consider this additional defence as they accepted ,the defence based on the third clause of the 6th para.graph of article III which has been discussed above. The learned Judge in the Madras High Court had however to consider this additional defence in view of his conclusions against the shipping company on the other defence. He held that the stipulation in the bill of lading that if no claim for compensation is made within thirty days from the date of arrival of the ship the shipping company will not be liable for compensation is void as it offends against para. 8 of article 111. The relevant portion of this paragraph is in these words: 8. Any clause, covenant or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection 841 with goods arising from negligence, fault or failure in the duties and obligations provided in this article or lessening such liability otherwise than as provided in these Rules, shall be null and void and of no effect. " It cannot be seriously disputed that the stipulation under consideration does directly offend against the provisions of the 8th paragraph. For it seeks at least to " lessen ", otherwise than provided in the rules in the Schedule the liability of the ship or carrier for loss or damage to goods or in connection with goods caused by the failure to deliver. This stipulation requiring claim for compensation being made within one month from the date of arrival of the ship is therefore null and void. Though the additional defence raised by the shipping companies must therefore fail, the main defence, as we have already found, succeeds. None of the suits were brought within a year from the date when the ship carrying the goods left the port of discharge. We therefore dismiss with costs the Civil Appeals Nos. 91 and 92 of 1958 and confirm the order of dismissal made by the Bombay High Court. One set of hearing costs will have to be paid. Civil Appeal No. 88 of 1956 is infructuous because of the fact, as already indicated, that after the order of remand now appealed from was made by the Madras High Court the suit was heard in the Small Causes Court and a decree was passed and that decree has become final. We therefore dismiss Civil Appeal No. 88 of 1956, as already ordered by this Court when giving leave to appeal; the appellant will pay the costs of the appeal to the respondent. Appeals dismissed. [/INST] The appellant in the first case (C. A. No. 88/56) and the respondents in the other two cases (C. As. Nos. 91 & 92 of 1958) were shipping companies carrying goods by sea from one port to another. They carried goods of the opposite parties by ships to their places of destination but failed to deliver the whole of the goods consigned. In the suits brought by the owners of the goods for compensation the main question related to the interpretation of the 3rd clause of para. 6 of article III in the Schedule to the Indian Carriage of Goods by Sea Act, 1925 (XXVI Of 1925) which runs thus: " In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after the delivery of the goods or the date when the goods should have been delivered ". In the first case the Madras High Court expressed the opinion that the above clause did not provide for the extinction of the consignor 's right to claim compensation but merely prescribed a rule of limitation. It also held that the term in the bill of lading requiring that the claim for compensation should be made within one month from the date of arrival of the vessel was repugnant to Rule 8 to article III of the Schedule and was void. The Bombay High Court held that article 111(6) dealt with all cases of loss or damage whether the loss or damage was caused by the deterioration of the goods or by their non delivery and further that the words " the loss or damage " included any loss or damage caused to the consignee in respect of his claim for compensation from the shipping company. If also held that the goods should have been delivered as soon as they were landed. On appeal by special leave: Held, that the word " loss " in cl. 3, para. 6 of article III in the schedule to the Indian Carriage of Goods Act, 1925, meant and included any loss caused to a shipper or consignee by reason of the inability of the ship or the carrier to deliver part or whole of the goods, to whatever reason such failure might be due. Spens and another vs The Union Mayine Insurance Co. Ltd., 3 Common Pleas 427, distinguished, 821 Sandeman & Sons vs Tyzack and Branfoot Steamship Co. Ltd., , referred to. The words "discharged from liability" were intended to mean and did mean that the liability had totally disappeared and not only that the remedy as regards the liability had disappeared. The date when the goods should have been delivered for the purpose Of cl. 3, para. 6 of article III of the Act was the date when the ship by which the goods were carried left the port of delivery. The stipulation in the bill of lading requiring claim for compensation being made within one month from the date of arrival of the ship was null and void. </s>

<s>[INST] Summarize the following judgement: Appeal No. 100 of 1.959. Appeal from the judgment and order dated February 11, 1957, of the Bombay High Court in Income tax Reference No. 53 of 1956. R. J. Kolah, Dwarkadas, section N. Andley; J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellants. K. N. Rajagopal Sastri and D. Gupta, for the respondent. May 3. The Judgment of the Court was delivered by S.K. DAS, J. This is an appeal on a certificate granted by the High Court of Bombay, under section 66A (2) of the Indian Income tax Act, 1922. The short facts are these. The Cotton Agents Limited, Bombay, are a limited liability company registered under the Indian Companies Act and will be called the assessee Company in this judgment. It held a substantial number of shares of the New Swadeshi Mills of Ahmedabad, Ltd. (hereinafter called the Mills Company). Messrs. Shivnarayan Surajmal Nemani (called the Nemani group) also held a block of shares of the Mills Company along with its managing agency. The assessment year was 1946 47, and the year ending with Diwali, 1945 (October 18, 1944, to November 4, 1945) was the accounting year. Sometime in 1944 some differences arose between the assessee Company and the Nemani group; these differences were referred to one Govindram Seksaria, who decided that the Nemani group should sell its block of shares to the assessee Company at an agreed price, It was further decided 813 that a sum of Rs. 5,00,000 be paid by the assessee Company to the Nemani group as the price of the, managing agency rights. This arrangement was approved by the share holders of the Mills Company by a resolution dated January 4, 1945, and came into effect immediately. The agreement further was that the assessee Company would come in as managing agents of the Mills Company in place of the Nemani group and would be entitled to the emoluments of the managing agents as from April 1, 1944. The managing agency commission from April 1, 1944, to December 31, 1944, amounted to Rs. 2,20,433 and from January 1, 1945, to March 31, 1945, to Rs. 67,959. The case of the assessee Company was that for the assessment year 1946 47 it was liable to pay tax only on the commission of Rs. 67,959 which it had earned by working as managing agent of the Mills Company and it was not liable to pay tax on the sum of Rs. 2,20,433. This contention of the assessee Company was not accepted by the departmental taxing authorities; but the Tribunal decided in its favour. The assessee Company 's case before the Tribunal was that as the managing agency commission was based on the sales, the com mission accrued to the managing agents as and when the sales were made and furthermore the sum of Rs. 5,00,000 paid by the assessee Company to the retiring managing agents included the purchase price of the managing agency commission which had accrued in the hands of the retiring agents. The Tribunal expressed the view that on a true construction of the relevant managing agency agreement, the 31 per cent. commission on sales made when the Nemani group was the managing agent accrued to that group and not to the assessee Company and thus a debt was created in favour of the Nemani group on every sale during its period of managing agency and only the payment of the debt was deferred till the accounts of the Mills Company were passed at a general meeting; therefore, the commission prior to the close of the year 1944 was assessable in the hands of the Nemani group and thereafter in the hands of the assessee Company. The Department, however, contended that the whole 106 814 of the managing agency commission accrued to the assessee. Thereupon, at the instance of the Department, the Tribunal referred the following question of law to the High Court for decision : " Whether on the facts and circumstances of the case the managing agency commission at 3 1/2 on sales made by the New Swadeshi Mills of Ahmedabad Ltd., between April 1, 1944, and December 31, 1944, accrued to Shivnarayan Surajmal Nemani, or to the assessee ?" The High Court held that the matter was concluded by the decision of this Court in E. D.Sassoon and Company Ltd. vs Commissioner of Income tax, Bombay City (1). With reference to the argument of learned counsel for the assessee Company that the commission was payable on the sale proceeds and not on the profits as in Sassoon 's case (1), it said: " We would have given serious thought to this aspect of the matter but for the view we take that the decision of the Supreme Court with regard to the question of creation of the debt and with regard to the serving by the managing agents for a term of one year being a condition precedent for their being entitled to receive payment, is indistinguishable on the facts of this case. We may point out that here as in the Sassoon 's case (1) the commission of 31 per cent. is to be earned in any year, and also by clause 3 of the agreement the commission is to become due to the managing agents at the end of each financial year. Therefore, till the end of the financial year there is no debt whatsoever created in favour of the managing agents and also their right to receive payment depends upon their having served for a whole year. Under the circumstances we must hold, following the decision of the Supreme Court, that the assessees are liable to pay tax on the whole of the commission as the commission accrued due on March 31, 1945, and they became entitled to receive it at the end of the year. We do not agree with the view of the Tribunal that according to the agreement of the managing agents the debt was (1) ; 815 created in favour of the agents when the goods were sold by the company and that the payment was deferred to a date after the accounts having been passed by the shareholders in the general meeting of the company. In no view of the case can it be said that the debt was created in favour of the agents when the goods were sold ". The answer to the question really depends on a construction of the relevant terms of the managing agency agreement dated March 15, 1925, entered into between the Mills Company and the Nemani group. Before we proceed to a consideration of those terms it is necessary to state that the Department has assessed the Nemani group also to tax in respect of the commission for the period April 1, 1944, to December 31, 1944. That circumstance has, however, no bearing on the question of construction and learned counsel for the Department has stated before us that there is no intention to tax two parties for the same income and if the tax has been realised from both for the same income, it will have to be refunded to one of the two parties after the decision of this Court. We are not considering in this case the validity or otherwise of what are known as protective or precautionary assessments, and nothing said in this judgment has any bearing on that question. We go at once to the Managing Agency Agreement dated March 15, 1925. Under that agreement the managing agents were appointed for a period of fifty. one years, but with liberty to them to resign the appointment and retire from the agency at any time by twelve calendar months ' notice in writing, such notice to expire at the end of any financial year of the Mills Company. Then came cls. (2) and (3) of the agreement, which are material and must be quoted so far as they are necessary for our purpose: ", (2) The remuneration of the Agents as such Agents of the Company as aforesaid shall be as follows: A commission at the rate of three and a half per cent. on the gross proceeds of all sales of the yarn, cloth, waste and other articles manufactured 816 by the Company earned in any year or other period for which the accounts of the Company are made up and laid before the General Meeting." Provided, etc., (it is unnecessary to quote the proviso). " (3) The said commission shall become due to the Managing Agents at the end of each financial year or other period for which the accounts of the Company are to be laid before the General Meeting and shall be payable and paid immediately after such accounts have been passed by the General Meeting". Clauses (6) to (11) recited the rights and duties of the managing agents, one of such rights being to retain, reimburse and pay themselves " all sums due to the agents for commission ". Clauses (13) and (14) dealt with the right to assign the remuneration and the managing agency, and said inter alia that " it shall be lawful for the agents to assign this agreement and the benefit thereof and their rights and privileges, etc., to any person or firm or company having authority by its constitution to become bound by the obligations undertaken by the agents. . . . . and the Company shall be bound to recognise the person, firm or company aforesaid as the agents of the Company". It is unnecessary to read the other clauses of the managing agency agreement, The controversy before us hinges really on the scope and effect of clauses (2) and (3), read in the context of the agreement as a whole. On behalf of the assessee Company the argument is that under el. (2) the managing agency remuneration accrued at the rate of 31 per cent. on the gross proceeds of all sales; the word " all " is emphasised, and it is argued that the remuneration accrued as each sale took place, the totality of sales giving the gross sale proceeds. It is argued that embedded in each sale was the managing agency commission of the assessee Company. It is further suggested on behalf of the assessee Company that though cl. (3) uses the word " due ", it merely indicated the time of payment and not that of accrual. 817 We do not think that this reading of the two clauses is correct. In our view, cl. (3) is the accrual clause;( it shows that the commission became due at the end of each financial year or other period for which the accounts of the Mills Company were to be laid before the General Meeting. Significantly enough, the clause consists of two parts; one part says when the commission becomes due and the other says when it is to be payable and paid. In very clear terms, the clause says that the commission becomes due normally at the end of the financial year, but is payable after the accounts have been passed by the General Meeting. Let us contrast el. (3) with cl. Clause (2) states how the remuneration has to be calculated. It says in effect that the remuneration has to be calculated at the rate of 3 1/2 per cent. on the gross proceeds of all sales, etc., earned in any year or other period for which the accounts of the Mills Company are made up. Putting the two clauses side by side, the conclusion at which we have arrived is that in their true scope and effect cl. (3) determines the time of accrual of the managing agency remuneration and cl. (2) determines the rate at which the remuneration is to be calculated; and as to the time of payment, that is determined by the second part of cl. This view of the managing agency agreement of March 15, 1925, concludes the appeal. If the remuneration accrued at the end of the financial year, then undoubtedly it accrued in the hands of the assessee Company. It remains now to refer briefly to some of the decisions cited at the Bar. As to the decision in Sassoon 's case(1) it is pointed out that the commission there payable by way of remuneration was a percentage on the net profits and this, it is argued for the assessee Company, distinguishes that decision from the present case. Indeed, it is true that in Sassoon 's case (1) the remuneration was fixed at a percentage on the net profits, but the real point of the decision was as to when the remuneration accrued. On this point the majority of learned Judges said: (1) ; 818 " It is clear therefore that income may accrue to an assessee without the actual receipt of the same. If the assessee acquires a right to receive the income, the income can be said to have accrued to him though it may be received later on its being ascertained. The basic conception is that he must have acquired a right to receive the income. There must be a debt owed to him by somebody. There must be as is otherwise expressed debitum in presenti, solvendum in futuro: see W. section Try Ltd. vs Johnson(1) and Webb vs Stenton (2). Unless and until there is created in favour of the assessee a debt due by somebody it cannot be said that he had acquired a right to receive the income or that income has accrued to him". It has been argued before us that the decision requires reconsideration because it failed to make a further distinction, a distinction which it is stated arises in law, between the right to receive payment and the creation of a debt. We consider it unnecessary to consider such a distinction, if any such exists, in the present case. On our view of the managing agency agreement, the commission of the managing agents became due at the end of the financial year and that is when it accrued; and there were neither any debt created nor any right to receive payment when each transaction of sale took place. We were also addressed at some length on the further question whether managing agency is service and if so, whether it must be for one full year or whether apportionment is permissible. These questions do not fall for decision in the present case and we express no opinion thereon. We have proceeded in this case on the footing that the managing agency work of the assessee Company constituted business within the rule of the decision in Lakshminarayan Ram Gopal and Sons Ltd. vs The Government of Hyderabad (3) and on that footing we have decided the question of accrual. In Commissioners of Inland Revenue vs Gardner Mountain & D 'Ambrumenil Ltd. (4), on which learned counsel for the appellant placed reliance, the facts were quite (1) , 539. (2) , 522,527. (3) ; (4) 819 different and on a true construction of the agreements there, it was held that the commission payable under certain under writers ' agreements arose in the year in which the policies were underwritten. That decision proceeded on a construction of the agreements there considered; and it is no authority for construing other agreements of a different character. Learned counsel for the appellant relied on Turner Morrison & Co. Ltd. vs Commissioner of Income tax, West Bengal(1) for his contention that in the sale proceeds of each transaction of sale were embedded the income, profits or gains to be earned by the managing agents and, therefore, the accrual took place on each transaction, of sale. The observations at page 160 of the report on which reliance was placed were made in a different context, namely, in the context of the place of receipt of income in relation to the provisions of section 4(1)(a) of the Income tax Act. Learned counsel for the respondent has pointed out to us that the observations of Lord Justice Fry in Colquhoun vs Brooks (2) were not very accurately reproduced in Rogers Pyatt Shellac and Co. vs Secretary of State for India (3). He submitted that Lord Justice Fry did not say that the words " accrual " or " arising " represented a stage anterior to the point of time when the income becomes receivable and connote a character of the income which is more or less inchoate. He has argued that there is nothing inchoate about the income when it arises or accrues. We consider it unnecessary to embark on a discussion as to how far the aforesaid observations require consideration by us. It is enough to say that on the view which we have taken of the relevant clauses of the managing agency agreement, no income arose or accrued on the sale proceeds at the time of each transaction of sale; the income accrued at the end of the financial year at the rate of 31 per cent. on the gross proceeds of all sales of yarn, cloth, waste, etc., earned in any one year. In that view of the matter, the High Court correctly answered the question. The appeal fails and is dismissed with costs. Appeal dismissed. (1) (2) , 59. (3) , 372. [/INST] Messrs. Shivnarayan Surajmal Nomani were the managing agents of the New Swadeshi Mills of Ahmedabad Ltd. The Nemani group and the appellant company which is the assesses 811 held a substantial number of shares of the said mills. Sometime in 1944 some difference arose between them and it was decided that the Nemani group should sell its block of shares to the appellant company at an agreed price and then the appellant company would become the managing agents of the mills company on payment of Rs. 5,00,000 to the Nemani group and would be entitled to the emoluments of the managing agents as from April 1, 1944. The relevant portion of the Managing Agency Agreement ran thus: " (2) The remuneration of the agents as such agents of the company as aforesaid shall be as follows: A commission at the rate of three and a half per cent. on the gross proceeds of all sales of the yarn, cloth, waste and other articles manufactured by the company earned in any year or other period for which the accounts of the company are made up and laid before the General Meeting." " (3) The said commission shall become due to the Managing Agents at the end of each financial year or other period for which the accounts of the company are to be laid before the General Meeting and shall be payable and paid immediately after such accounts have been passed by the General Meeting. ,, The assessment year was 1946 47, and the year ending with Diwali, 1945 (October 18, 1944, to November 4, 1945) was the accounting year. The managing agency commission from April 1, 1944, to December 31, 1944, amounted to Rs. 2,20,433 and from January 1, 1945, to March 31, 1945, to Rs. 67,959. The case of the appellant company was that for the assessment year 1946 47 it was liable to pay tax only on the commission of Rs. 67,959 which it had earned by working as managing agent of the Mills company and it was not liable to pay tax on the sum of Rs. 2,20,433. On a difference of opinion having arisen between the departmental taxing authorities and the Tribunal the following question was referred to the High Court for decision : " Whether on the facts and circumstances of the case the managing agency commission of 3 1/2 on sales made by the New Swadeshi Mills of Ahmedabad Ltd., between April 1, 1944, and December 31, 1944, accrued to Shivnarayan Surajmal Nemani or to the assessee ? " The High Court following the decision of the Supreme Court in E. D. Sassoon and Company Ltd. V. Commissioner of Income tax, Bombay City, held that the appellant company was liable to pay tax on the whole of the commission as the commission accrued due on March 31, 1945, and they became entitled to receive it at the end of the year; it also held that no debt was created in favour of the agents when the goods were sold. On appeal by the assessee company on a certificate of the High Court: Held, that the view of the High Court was correct. The commission of the managing agents accrued and became due at the end of the financial year and that neither any debt nor any right to receive payment arose in favour of the agents when each 812 transaction of sale took place. No income arose or accrued on the sale proceeds at the time of each sale. E. D. Sassoon and Company Ltd. vs Commissioner of Income tax, Bombay; , , referred to. Lakshminarayan Ram Gopal and Sons vs The Government of Hyderabad, ; , followed. Commissioners of Inland Revenue vs Gardner Mountain & D 'Ambrumenil Ltd., and Turner Morrison & Co. Ltd. vs Commissioner of Income tax, West Bengal, , distinguished. </s>

<s>[INST] Summarize the following judgement: Appeal No. 427 of 1957. Appeal from the judgment and order dated September 9, 1955, of the Bombay High Court in Income tax Reference No. 31/X of 1954. K.N. Rajagopal Sastri and D. Gupta, for the appellant. N. A. ~Palkhivala, section N. ~Andley and J. B. Dadachanji, for the respondents and intervener. 955 1960. May 4. The Judgment of the Court was delivered by HIDAYATULLAH J. The High Court of Bombay in a reference under section 66(1) of the Indian Income tax Act by the Income tax Appellate Tribunal, Bombay, was referred the following two questions for decision: (1) Whether the assessee Company was liable to pay additional income tax ? and (2) If the answer to question No. 1 is in the affirmative, whether the levy of the additional income tax is ultra vires The High Court answered the first question in the negative and in the circumstances, left the second question unanswered. This appeal is against the judgment and order of the High Court on a certificate granted by it. The Commissioner of Income tax is the appellant, and the Elphinstone Spinning and Weaving Mills Co. Ltd., Bombay (the assessee Company) is the respondent. The facts may now be stated briefly. For the assessment year 1951 52 (the previous year being the calendar year 1950), the assessee Company was found to have incurred a loss of Rs. 2,19,848 and was thus adjudged to be not liable to income tax. In that year, the assessee Company had made profits, but the depreciation allowance under the Income tax Act came to Rs. 7,84,063, thus converting the profit into loss for income tax purposes. In the same year, the assessee Company declared dividends &mounting to Rs. 3,29,062. The Income tax Officer treated this amount as 'excess dividend ' and levied additional income tax as provided in Paragraph B of Part I of the First Schedule to the Indian Finance Act, 1951. This additional income tax was computed to be Rs. 41,132 12 0. The contention of the assessee Company that it was not liable to pay additional incometax was not accepted by the Tribunal, but the High Court, on an examination of the relevant provisions and the scheme of the Indian Income tax Act and the Finance Act, 1951, held that it was sound. Hence this appeal by the Commissioner of Income tax. We are concerned with the Finance Act, 1951, and Paragraph B of the First Schedule reads: 956 B. In the case of every company Rate Surcharge On the whole of Four annas one twentieth total income in the of the rate rupee specified in the preceding column: Provided that in the case of a company which, in respect of its profits liable to tax under the Income tax Act for the year ending on the 31st day of March, 1952, has made the prescribed arrangements for the declaration and payment within the territory of India excluding the State of Jammu and Kashmir, of the dividends payable out of such profits, and has deducted super tax from the dividends in accordance with the provisions of subsection (3D) or (3E) of section 18 of the Act (i) Where the total income, as reduced by seven annas in the rupee and by the amount, if any, exempt from income tax, exceeds the amount of any dividends (including dividends payable at a fixed rate) declared in respect of the whole or part of the previous year for the assessment for the year ending on the 31st day of March, 1952, and no order has been made under sub section (1) of section 23A of the Income tax Act, a rebate shall be allowed at the rate of one anna per rupee on the amount of such excess; (ii) Where the amount of dividends referred to in clause (1) above exceeds the total income as reduced by seven annas in the rupee and by the amount, if any, exempt from income tax, there shall be charged on the total income an additional income tax equal to the sum, if any, by which the aggregate amount of income tax actually borne by such excess (hereinafter referred to as 'the excess dividend ') falls short of the amount calculated at the rate of five annas per rupee on the excess dividend. For the purposes of the above proviso, the expression ' dividend ' shall have the meaning assign ed to it in clause (6A) of section 2 of the Income tax Act, but any distribution included in that expression, 957 made during the year ending on the 31st day of March, 1952, shall be deemed to be a dividend declared in respect of the whole or part of the previous year. For the purposes of clause (ii) of the above proviso, the aggregate amount of income tax actually borne by the excess dividend shall be determined as We, follows: (i) the excess dividend shall be deemed to be out of the whole or such portion of the undistributed profits of one or more years immediately preceding the previous year as would be just sufficient to cover the amount of the excess dividend and as have not likewise been taken into account to cover an excess dividend of a preceding year; (ii) such portion of the excess dividend as is deemed to be out of the undistributed profits of each of the said years shall be deemed to have borne tax, (a) if an order has been made under sub section (1) of section 23A of the Income tax Act, in respect of the undistributed profits of that year, at the rate of five annas in the rupee, and (b) in respect of any other year, at the rate applicable to the total income of the company for that year reduced by the rate at which rebate, if any, was allowed on the undistributed profits. " The contention of the assessee Company was that inasmuch as there was no income at all which was taxable, the words "OD the total income" (lid not apply to it and no additional income tax could be charged. The Tribunal interpreted the Paragraph to cover even a case where there was a loss holding that even a loss may be a total income ', because if total income had to be computed in the manner laid down in the Indian Income tax Act, the total income might, be a negative figure. The Tribunal also held that inasmuch as excess dividend,,; were to be deemed to have come out of the undistributed profits of the preceding year or years and such undistributed profits ",ere available,, the assessee Company was liable. The High Court did not accept those reasons, and reluctantly held, for reasons which may not be detailed at the present 124 958 moment, that the assessee Company did not come (If within the letter of the law, however much the intention might have been to impose an additional income tax under such circumstances. The Commissioner now contends that, the High Court ought to have read the Paragraph B as modified by the intention or to have treated it as an independent charging Section. The liability to tax is imposed not by the Finance Act but by the Indian Income tax Act. Section 3 of the latter Act is the charging section, and it provides that the tax should be collected at such rate or rates on the total income as laid down in any Central Act. The Finance Act is an annual Act prescribing the rate or rates. We are concerned with the Finance Act, 1951. Section 2 of the Finance Act prescribes the rates of income tax by its First, Schedule, and by the seventh subsection of that section provides: "For the purposes of this section and of the rates of tax imposed thereby, the expression 'total income ' means total income as determined for the purposes of income tax or super tax, as the case may be, in accordance with the provisions of the Income tax Act. " It is thus clear from this that if there is no income, there is no question of applying a rate to the ' total income ' and no income tax or super tax can possibly result. The Commissioner, however, relies upon the proviso to Paragraph B of the First Schedule, and says that the tax is imposed on excess dividend and if excess dividend is paid out, the liability to tax must arise. The proviso was framed to discourage the paying of large dividends quite disproportionate to the income. For this purpose, A ceiling was laid down. That ceiling was nine annas in the rupee of the total income reduced by any portion of that income which was exempt from income tax. If only nine annas in the rupee from the income were paid as dividend, there were no consequences in law. If, however, the dividends paid amounted to less, a rebate of one anna in the rupee in the tax was given. This was provided by the first part of the proviso. There was, 959 however, a provision for enhanced tax. in the second part, which worked the other way round. Where the dividend distributed exceeded the total income as reduced by seven annas in the rupee, there was charged on the total income an additional, income tax equal to the sum, if any, by which the aggregate amount of income tax actually borne by such excess We. (hereinafter referred to as the " excess dividend ") falls short of the amount calculated at the rate of five annas per rupee on the excess dividend. In simpler language, there was a rebate of one anna on anything saved from 9/16th of the total income, and there was an extra payment of one anna on the amount paid in excess of it. The income tax, in either event, was payable on the total income and the additional incometax on the excess dividends. Now, the difficulty arises in applying this proviso. Where there is a total income and there is a payment of dividend either more or less than the limit fixed, one can easily find the figures by which the total income as reduced exceeds or falls short of the dividends and the additional tax that has to be paid. But when the total income is a negative figure and no tax on the total income is levied, the words of the second part of the Paragraph 'total income ', 'profits liable to tax ', 'dividends payable out of such profits ' and ' an additional income tax ', cease to have the meaning they were intended to convey. The Commissioner contends that some of these words may be ignored as being surplusage or a drafting error, and refers to rulings in which such a course was adopted. The first case he relies on is Curtis vs Stovin (1). In that case, the words of the statute were: " It shall be lawful for either party to the action. to apply to a judge of the High Court . to order such action to be tried in any court in which the action might have been commenced, or in any court convenient thereto. " The word " court " was defined as " county court " in that statute. Lord Esher, M.R., held that the words should be extended to mean " in any county court in which, if it had been a county court action, the action (1) 960 might have commenced". The ambiguity which would have otherwise arisen was removed by taking aid from the alternative clause " or in any court convenient there to" which referred to locality, and it was said that the first clause meant a county court in the district of which the parties resided, or in which one of them resided. In that case, however, there were determinative words helping construction. It is to be noticed that Lord Esher, M. R., also warned against doing by construction what only a legislature could do by enactment, in the following words: " It is, no doubt, very easy for a judge to say that be is introducing words into an Act only by way of construing it, while he is really making a new Act. " The words " if it had been a county court action " which were read as implicit in the section were necessary to give a sensible meaning consistent with the intention expressed by other clear words. The above case was applied and followed in Commissioner of Income tax vs Teja Singh(1), which is next relied upon. In that case, the construction, if literally made, was apt to make one section nugatory. This Court laid down that "a construction which leads to such a result must, if that is possible, be avoided ". It, however, quoted also the observations of Lord Dunedin in Whitney vs Commissioners of Inland Revenue (2) that: " A statute is designed to be workable, and the interpretation thereof by a court should be to secure that object, unless crucial omission or clear direction makes that end unattainable. " The next case relied upon is Special Commissioners of Income tax vs Linsleys Ltd. (3). It dealt with an obvious drafting error. Section 68(2) of the English Finance Act,1952, contained a reference to Paragraph(a) of the proviso to sub section (2) of section 262 of the Incometax Act, 1952, and the section went on to say of that Paragraph parenthetically " which relates to the deductions allowable in computing the actual income from all sources of an investment company in relation to which a direction is in force under sub section I of (1) S.C. (2) , 11o. (3) 961 that section". As a summary of Paragraph (a), it was entirely wrong and misleading. Since the Paragraph was there for every one to read, the draftsman 's summary of it in the brackets was not accepted. Lord Reid observed: " The difficulty does not arise from the enacting words but from the words in brackets which purport to describe the proviso to Section 262(2) of the Income Tax Act, 1952. Those words could well be held to support the view of the Court of Appeal, but they seem to me to be a misdescription of the proviso to Section 262(2). This is one of the places where 1 think that obscurity has resulted from a; failure of the draftsman to anticipate a case like the present as I have said, a very natural failure. In fact the proviso merely deals with the deductions to be allowed in computing actual income. But the words in brackets in Section 88(2) refer to deductions in computing actual income of a company in relation to which a direction is in force ' under Section 262(1). It would seem that these words have crept in because the draftsman assumed that a direction would always be given automatically in the case of an investment company and did not realise that a computation must first be made to determine whether the company has in fact any actual income. Whether that be the true explanation or not, I cannot regard the presence of these words in brackets, which are mere description, as of much weight in comparison with the other considerations to which I have referred. " If the section was there, its meaning could be taken from the words used there and not from a description of what it enacted, put parenthetically in another statute. The case cited is hardly in point. The last case cited is Commissioners of Inland Revenue vs South Georgia Co. Ltd. (1). The words of a: proviso there construed, ran as follows: " Provided that where the said gross relevant distributions exceed the profits computed without abatement and including franked investment income, (1) 962 the net relevant distributions shall be. " (section 34(2) of the English Finance Act, 1947). The word " including "gave some difficulty. In the Court of Session, the word was equated to " adding " correcting, as it was felt, a drafting inaccuracy. In the House of Lords, however, this change was not accepted and a meaning was found. The learned counsel for the respondent, on the other hand, relies upon the observations of Rowlatt, J., in The Cape Brandy Syndicate vs The Commissioners of Inland Revenue (1) to the effect that in a taxing measure one can only look at the language since there is no room for an intendment. He also refers to the speech of Lord Simonds in Wolfson vs Commissioners of Inland Revenue (2), where the following passage occurs at p. 169: " It was urged that the construction that I favour leaves an easy loophole through which the evasive taxpayer may find escape. That may be so; but I will repeat what has been said before. It is not the function of a court of law to give to words a strained and unnatural meaning because only thus will a taxing section apply to a transaction which, had the Legislature thought of it, would have been covered by appropriate words. It is the duty of the Court to give to the words of this Sub section their reasonable meaning and I must decline on any ground of policy to give to them a meaning which, with all respect to the dissentient Lord Justice, I regard as little short of extravagant. It cannot even be urged that unless this meaning is given to the Section it can have no operation. On the contrary, given its natural meaning it will bring within the area of taxation a number of cases in which by a familiar device tax had formerly been avoided." The learned counsel contends that the artificial construction should not be resorted to in this case. There is no doubt that if the words of a taxing statute fail, then so must the tax. The Courts cannot, except rarely and in clear cases, help the draftsman by a favourable construction. Here, the difficulty is not one of inaccurate language only. It is really this (1) , 366, (2) , 169. 963 that a very large number of taxpayers are within the words but some of them are not. Whether the enactment might fail in the former case on some other ground (as has happened in another case decided to day) is not a matter we are dealing with at the moment. It is sufficient to say here that the words do not take in the modifications which the learned counsel for the appellant suggests. The word ' additional ' in the expression 'additional income tax ' must refer to a state of affairs in which there has been a tax before. The words 'charge on the total income ' are not appropriate to describe a case in which there is no income or there is loss. The same is the case with the expression 'profits liable to tax '. The last expression ' dividends payable out of such profits ' can only apply when there are profits and not when there are no profits. It is clear that the legislature had in mind the case of persons paying dividends beyond a reasonable portion of their income. A rebate was intended to be given to those who kept within the limit and an enhanced rate was to be imposed on those who exceeded it. The law was calculated to reach those persons who did the latter even if they resorted to the device of keeping profits back in one year to earn rebate to pay out the same profits in the next. For this purpose, the profits of the earlier years were deemed to be profits of the succeeding years. So far so good. But the legislature failed to fit in the law in the scheme of the Indian Income tax Act under which and to effectuate which the Finance Act is passed. The legislature used language appropriate to income, and applied the rate to the ' total income '. Obviously, therefore, the law must fail in those cases where there is no total income at all, and the Courts cannot be invited to supply the omission made by the legislature. It is quite possible that the legislature did not con template the imposition of tax in circumstances such as these, and we are not prepared to read the proviso without the words on the total income ' or after modifying this and other expressions. The High Court has given adequate reasons to show that these words are quite inappropriate, where the total income, if it 964 can be described as income at all, is a loss. The imposition of the additional. income tax is conditioned by the existence of income and profits, to the total of which income the rate is made applicable. Unless some other amount, not strictly income, is by law deemed to be income (see for example, McGregor & Balfour Ltd. vs Commissioner of Income tax (1)), we cannot improve the existing law by deeming it to be so by our interpretation. The Commissioner next contends that the proviso speaks of excess dividends, which means that dividends in excess of the permissible limits have been paid. He sayS that where the income is nit or a negative figure, whatever is paid is excess dividend, and indeed, the Tribunal also felt that the excess dividends in this case were more because of the loss sustained. This argument has a familiar ring, It is really that " you can have more than nothing ". Reference was made in this connection to Commissioners of Inland Revenue vs South Georgia Co. Ltd. (2) where Lord Simonds observed at p. 736: " Upon this proviso, interpreted in the light of Paragraph "of the Schedule as amended, the Crown makes a very simple case: upon the undisputed figures the gross relevant distributions were pound 181,000, and the profits including franked investment income were nil (I may interpolate that the reference to abatement may throughout be disregarded) : therefore the net relevant distribution must be the excess of pound 181,000 over nil, i.e., pound 181,000: nothing has to be brought in under (a ' of the proviso, for there were no profits. " Reliance was also placed upon the observations at p. 737 (ibid) where it was observed : ,,The learned Dean of Faculty on behalf of the Respondents urged, in support of the construction that he invited your Lordships to adopt, that it was really meaningless to speak of a nil profit or of adding something to it, and this plea found favour with the Lord President. As I understood it, this was only relevant if the view was accepted that there were two separate operations and not a single (1) (1950] S.C. (2) [[1958] 965 computation. In the view which I take, therefore, it does not arise, but I think it right to say that I see no impropriety of language in ,;peaking of a nil profit where the question is whether any or what profit has been made. And the answer would be equally valid in the case of an exact balance or of a loss. " These passages were used in the other case decided today, in which there were no profits of the previous years. There is, however, this difficulty that there the tax was laid on the net relevant distribution, and it was conceded that no charge could be imposed if the proviso was inapplicable (see p. 736). The provisions of Paragraph 7 of the Schedule as amended by section 32 of the English Finance Act, 1947, were entirely different, and the proviso to section 34(2) of the English Act was held applicable. The scheme of the provisions we are interpreting is entirely different. Reliance was also placed upon Rajputana Agencies Ltd. vs Commissioner of Income tax (1), but we find nothing there to support the appellant 's case. Similarly, in McGregor and Balfour Ltd. vs Commissioner of Income tax(1), the words were held to be apt ' to impose a charge '. It is obvious enough that unless they were so or unless the Act covered the instant cases, the tax must fail. The gist of the matter is not the possibility of an arithmetical calculation as in the English case. The rate in the proviso is applicable to the 'total income ' though after the application of a simple arithmetical calculation. The 'total income ', however, is still the total income as determined for the purpose of incometax, and in the case of businesses, the rules require that the total income shall not include the depreciation allowance. By the application of those rules if the total income ceases to exist, the second paragraph of the proviso, as it is worded, ceases to be workable. All the four expressions to which we have referred earlier cease to have natural meaning, and the Com missioner is again driven to contend that we must delete the offending words or suitably modify them. This we are not prepared to do, because the intention might well have been not to comprehend such cases. (1) 125 (2) S.C. 966 The Commissioner next contends that we may treat this as an independent charging section and give effect to it. The proviso is to Paragraph B in the First Schedule of the Finance Act, and the Schedule only imposes a rate of tax and this rate, either by itself or with rebate or with additional tax at a higher rate, has to be applied to the total income. The extra tax under the second part of the proviso, though called an additional tax, is only the difference between the tax charged at one rate and the tax subsequently chargeable at another rate. The function of the proviso is thus to prescribe varying rates for varying circumstances, and it deals with rate or rates, first and last, and not with chargeability to tax, which is the subjectmatter of section 3 of the Income tax Act. There are no words here making the excess dividend into income or subjecting it to tax independently of the charge to tax on the total income. We are thus unable to treat the proviso as an independent charging section. In this view of the matter, no useful purpose will be served by referring to those cases noted by this Court in Commissioner of Income tax vs Calcutta National Bank Ltd. (1), where a schedule which went beyond the purpose for which it was enacted was given effect to. The proviso here was framed to lay down the rates, and has done no more. It remains to consider two other arguments, which were addressed to us on behalf of the Commissioner. The first pointed out an anomaly that if there was a total income of even one rupee, the proviso could be made applicable according to its terms but not if the income was nil or negative. The Commissioner contended that such an anomaly should be avoided, and that the proviso should be interpreted in such a way as to take in all the kinds of cases. Our answer to this is much the same as was given by the learned Chief Justice of the Bombay High Court. The learned Chief Justice observes: " There seems to be no logic, there seems to be no reason nor principle why a distinction should be made between the cases of two such companies. But if life is not logic, income tax is much less so, (1) 967 and it is clear that we cannot impose tax upon a subject by implication or because we think that the object of the legislature was a particular object. " We respectfully agree with the learned Chief Justice that though the interpretation we have placed upon the proviso might lead to some anomalies, it is for the legislature to avoid the anomalies which, according to us, spring not from our interpretation but from the language employed. The second argumeint is that the proviso itself states that the excess dividend shall be deemed to be out of the undistributed profits of one or more years immediately preceding the previous year, and that the fiction makes the profits take the place of total income for purposes of tax. In our opinion, the fiction cannot be carried further than the purpose for which it has been put in the statute. The Income tax Act creates an assessment year and a corresponding previous year. Assessment to tax in any assessment year can only be in respect of the profits of the immediately preceding previous year. All that the fiction does is to bring profits of back years into the immediately preceding previous years, so that the requirements of the Income tax law may be complied with. As we have already stated, this fiction cannot be carried further than what it is intended for; it cannot be used to make these profits take the place of total income, which did not exist in the previous year and to which the rate is to be applied under the terms of the proviso. We do not accept both the arguments, and agree with the High Court in the answer given to the first question. As pointed out by the High Court, the second question does not survive, after the first question is answered against the Department. In the result, the appeal fails, and will be dismissed width costs. Appeal dismissed. [/INST] The assesses had made profits during the assessment year 1951 52 but after deduction of the depreciation allowance it was found to have incurred a loss for income tax purposes. In the same year the assesses declared dividends. The Income tax Officer treated this amount as 'excess dividend ' and levied additional income tax as provided in paragraph B of Part I of the First Schedule to the Indian Finance Act, 1951. The assesses contended that inasmuch as there was no income at all which was 954 taxable the words " on the total income " in paragraph B did not apply to it and no additional income tax could be levied. The appellant, relying on the proviso to paragraph B, contended that additional income tax was imposed on excess dividend and if excess dividend was paid out, the liability to tax arose: Held, that the assessee was not liable to pay additional incometax. The liability to tax was imposed by section 3 of the Income tax Act and the Finance Act merely laid down the rates at which tax was to be levied on the total income. If there was no income there was no question of applying a rate to the " total income " and no income tax or super tax could possibly result. The word " additional " in the expression "additional income tax " implied that there was a tax before. The expressions " charge on the total income " and " profits liable to tax " in paragraph B contemplated only those cases where there was income and not cases where there was loss. Consequently the expression " dividends payable out of such profits " could only apply when there were profits and not when there were no profits. The imposition of additional income tax was conditioned by the existence of income and profits. The legislature used language appropriate to income and applied the rate to the " total income ". Where there was no total income the law could not apply and the courts could not be asked to supply the omission made by the legislature or to delete or to modify any words. If the words of a taxing statute failed then so did the tax. The courts could not, except rarely and in clear cases, help the draftsman by a favourable construc tion. Curtis vs Stovin, , Commissioner of Incometax vs Teja Singh, S.C., Whitney vs Commissioners of Inland Revenue, , Special Commissioners of Income Tax vs Linsleys, Ltd., and Commissioners of Inland Revenue vs South Georgia Co. Ltd. , distinguished. The Cape Brandy Syndicate vs The Commissioners of Inland Revenue,(1620) and Wolfson vs Commissioners of Inland Revenue,(1949) , referred to. The proviso to paragraph B prescribed varying rates for varying circumstances; it dealt with rates alone and not with the chargeability to tax. There were no words in this proviso making the excess dividend into income or subjecting it to tax independently of the charge to tax on the total income. </s>

<s>[INST] Summarize the following judgement: minal Appeal No. 117 of 1958. Appeal by special leave from the judgment and order dated September 13, 1957, of the Bombay High Court in Criminal Petition Application No. 834 of 1957, arising out of the judgment and order dated April 30, 1957, of the Presidency Magistrate, IV Class, Girgaon, Bombay, in Case No. 6/1 & R of 1956. H. M. Choksi, Rajni Patel, B. K. B. Naidu and I. N. Shroff, for the appellant. Janardan Sharma, for respondent No. 1. Purshottam Trikamdas, H. R. Khanna, D. Gupta and R. H. Dhebar, for respondent No. 2. 1960, May 6. The Judgment of the Court was delivered by 3 section K. DAS, J. This is an unfortunate case in which a complaint filed in the Court of the Presidency Magistrate, Bombay, on October 31, 1956, by one Dattatraya Dulaji Ghadigaonkar, respondent herein, has to be finally disposed of in the year 1960 in circumstances which we shall state at once. On June 3, 1956, in the evening, a public meeting was held at a place called Chowpatty in Bombay which was to be addressed by the Prime Minister of India. The meeting was called in connexion with an agitation which was then going on for the reorganisation of the State of Bombay. There was considerable disturbance at the meeting as a result whereof it had to be dispersed, and large crowds of people began to wander about in various localities around Chowpatty including an area round Charni Road Station. The case of the complaining respondent was that at about 8 p. m. his younger brother Sitaram was crossing Queen 's Road Dear a building called Laud Mansion. At that time there was a large crowd on the road and members of that crowd were stopping vehicles passing by that road. One taxi cab which had come from the direction of the Opera House and was going towards Churchgate was already stopped. Sitaram was then accompanied by Sashikant Kamtekar and Nand Kumar Vagal. When these three had crossed the road, they heard the reports of revolver shots and on looking back they found that a person called Bhayya was injured by one of the shots and fell down on the footpath. Sitaram and his friends went to help Bhayya; at this stage, another shot was fired by one of the occupants of a blue car which was near the taxi cab referred to earlier. Sitaram was hit on his chest, and the bullet having entered the chest cavity injured the right ventricle of the heart. Sitaram was removed to the G. T. Hospital but died before medical assistance could be given. Dr. H. section Metha, Police Surgeon, who made a postmortem examination of the dead body, opined that Sitaram died of shock and hemorrhage as a result of the gun shot wound he had received. The doctor further said that the charring round the wound indicated that the shot had been fired from a distance of 2 to 18 inches only. 4 The case of the respondent was that Vadilal Panchal, appellant before us, fired the shot from the blue car. The occupants of the car were K. K. Shah, advocate, his son Vinay, and one Ratilal Sanghvi on the back seat, and the appellant and chauffeur Mohiddin on the front seat. K. K. Shah was mentioned in the complaint as one of the complainant 's witnesses. He was examined and said that after the meeting was over, he and his companions were returning in his car to his house. Because of the trouble, the car travelled by a longer route and when it reached Queen 's Road, there were large crowds on that road who were pelting stones. shouting slogans and committing other acts of violence; a public bus was burnt, and a taxi cab which was proceeding ahead of K. K. Shah 's car was stopped. Some three or four hundred people surrounded his car, pelted stones and shouted " maro " "maro". Some of them attempted to drag out Ratilal Sanghvi who occupied a corner seat; some caught hold of the appellant by his neck and hair and wanted to drag him out of the car. The appellant then opened fire with his revolver. The rioters then held back, and the way was clear for the car to pass. The car then drove away and after some time K. K. Shah and the appellant went to Gamdevi Police Station where the latter made a report of what had happened. The appellant was sent to Nair Hospital where he was medically treated and allowed to go. The Coroner of Bombay held an inquest into the death of Sitaram at which K. K. Shah, Sashikant Kamtekar and several other witnesses were examined. The Coroner 's Jury returned a verdict that Sitaram died of the gunshot wound caused by a bullet fired by the appellant " under such circumstances as would render the firing to be in exercise of the right of private defence and as such justified ". This verdict was returned on October 16, 1956. Sometime earlier, on July 3, 1956, to be precise, the complaining respondent had made an enquiry through his advocate from the Commissioner of Police, Bombay, as to whether the appellant had been arrested: the reply received was that the enquiries made by the police did not 5 reveal any offence having been committed by the appellant and the police proposed to take no action. On October 31, 1956, the respondent filed his complaint. The learned Presidency Magistrate to whom,, the complaint was made referred it to the Superintendent of Police, C. 1. D., for enquiry and report. Presumably, he acted under section 202 of the Code of Criminal Procedure. On November 15, 1956, the Superintendent of Police submitted the report of his Inspector in which it was stated: "From the exhaustive enquiries made immediately after the incident it was disclosed that Shri Vadilal Panchal was justified in resorting to firearms in self defence of himself and the other occupants of the motor car ". On January 17, 1957, the learned Magistrate gave the respondent another opportunity to examine his witnesses before the enquiring officer, because by reason of a revision application made to the High Court earlier against the order referring the case to the police for enquiry, the respondent did not produce his witnesses before the enquiring officer. The enquiring officer then examined all the witnesses and submitted his report on March 12, 1957. This time also the enquiring officer said : " From their statements and other evidence on record, it is clear that Shri Wadilal Panchal opened fire in the exercise of his, right of private defence, which verdict the learned Coroner 's Jury also brought after a protracted hearing of the Inquest Proceedings. Copies of all statements recorded by me, are attached for reference ". On April 30, 1957, the learned Presidency Magistrate considered the report of the enquiring officer in great detail with reference to the statements of all the witnesses and said: " The Police have recorded in detail the statements of all witnesses produced by the complainant as well as of all the occupants of the car. There is, therefore, material on record showing fully whether the circumstances existed making out the right of private defence available to the accused. The fact 6 whether the case falls within one of exceptions or not can be established on the evidence of the witnesses produced by the prosecution itself though of course the burden of proof lies on the accused. From the statements, recorded by the Police in this case and from the surrounding circumstances of the case, I have come to the definite conclusion that the report of the police stating that the shot was fired by the accused in self defence is true. As I have stated the statement of the police surgeon conclusively supports the conclusion. I have come to the conclusion that the state ments of the four eye witnesses brought by the complainant are false. These eye witnesses are not credible witnesses. It will be harassment to the accused and waste of public time if any process is issued in this case ". Accordingly, he dismissed the complaint under section 203, Code of Criminal Procedure. Against this order of dismissal the respondent complainant moved the High Court. The High Court set aside the order of dismissal and directed the learned Presidency Magistrate to issue process against the appellant and deal with the case in accordance with law, on a ground which the High Court expressed in the following words: " Now, in the case before us, causing of the death of Sitaram being indisputable, if it was found as the petitioner alleges that it was the shot fired by the res pondent that caused the death of Sitaram, the accused ,would have to establish the necessary ingredients of the right of private defence as laid down in section 96 and onwards of the Penal Code. We do not find anything in any of the sections in Chapter XVI to show that such an exception can be held to be established from the mere report of the police. That, in our view, is contrary to the provisions of section 105 of the Indian Evidence Act which are mandatory provisions. There is nothing in section 202 or section 203 of the Criminal Procedure Code which abrogates the rule as to the presumption laid down in section 105 of the Evidence Act and the mode of proof of exception laid down in imperative language in that section. 7 In these circumstances and for the reasons aforesaid, we find that this was not a case in which it was proper for the learned Magistrate to dismiss the complaint under section 203, there being no evidence before the learned Magistrate as and by way of proof to establish the exception of the right of private defence pleaded by the respondent The appellant then moved this Court and obtained special leave to appeal from the order of the High Court dated September 13,1957. The short question before us is was the High Court right in its view that when a Magistrate directs an enquiry under section 202 of the Code of Criminal Procedure for ascertaining the truth or falsehood of a complaint and receives a report from the enquiring officer supporting a plea of self defence made by the person complained against, it is not open to him to hold that the plea is correct on the basis of the report and the statements of witnesses recorded by the enquiring officer ? Must he, as a matter of law, issue process in such a case and leave the person complained against to establish his plea of self defence at the trial ? It may be pointed out here that the High Court itself recognised that it would not be correct to lay down a proposition in absolute terms that whenever a defence under any of the exceptions in the Indian Penal Code is pleaded by the person complained against, the Magistrate would not be justified in dismissing the complaint and must issue process. Said the High Court: " As we have already observed, if there is a complaint, which itself discloses a complete defence under any of the exceptions, it might be a case where a Magistrate would be justified in dismissing such a complaint finding that there was no sufficient ground to proceed with the case. " We are of the view that the High Court was in error in holding in this case that as a matter of law, it was not open to the learned Presidency Magistrate to come to the conclusion that on the materials before him no offence had been made out and there was no sufficient ground for proceeding further on the complaint. 8 The relevant sections bearing on the question are sections 200, 202 and 203. " section 200. A Magistrate taking cognizance of an Offence on complaint shall at once examine the complainant and the witnesses present, if any, upon oath, and the substance of the examination shall be reduced to writing and shall be signed by the complainant and the witnesses, and also by the Magistrate: Provided as follows: (a) . . . . . (aa) . . . . . (b) where the Magistrate is a Presidency Magistrate, such examination may be on oath or not as the Magistrate in each case thinks fit, and where the complaint is made in writing need not be reduced to writing; but the Magistrate may, if he thinks fit, before the matter of the complaint is brought before him, require it to be reduced to writing ; (c) . . . . . . section 202(1). Any Magistrate, on receipt of a complaint of an offence of which he is authorised to take cognizance, or which has been transferred to him under section 192, may, if he thinks fit, for reasons to be recorded in writing, postpone the issue of process for compelling the attendance of the person complained against, and either inquire into the case himself or, if he is a Magistrate other that a Magistrate of the third class, direct an inquiry or investigation to be made by any Magistrate subordinate to him, or by a police officer, or by such other person as he thinks fit, for the purpose of ascertaining the truth or falsehood of the complaint. Provided that . . . (it is unnecessary to read the proviso. (2) If any inquiry or investigation under this section is made by a person not being a Magistrate or a police officer, such person shall exercise all the powers conferred by this Code on an officer in charge of a police station, except that he shall not have power to arrest without warrant. (2A) Any Magistrate inquiring into a case under 9 this section may, if he thinks fit, take evidence of wit nesses on oath. (3) This section applies also to the police in the towns of Calcutta and Bombay. section 203. The Magistrate before whom a complaint is made or to whom it has been transferred, may dismiss the complaint, if, after considering the statement on oath (if any) of the complainant and the witnesses and the result of the investigation or inquiry (if any) under section 202, there is in his judgment no sufficient ground for proceeding. In such cases he shall briefly record his reasons for so doing ". The general scheme of the aforesaid sections is quite clear. Section 200 says inter alia what a Magistrate taking cognisance of an offence on complaint shall do on receipt of such a complaint. Section 202 says that the Magistrate may, if he thinks fit, for reasons to be recorded in writing, postpone the issue of process for compelling the attendance of the person complained against and direct an inquiry for the purpose of ascertaining the truth or falsehood of the complaint; in other words, the scope of an inquiry under the section is limited to finding out the truth or falsehood of the complaint in order, to determine the question of the issue of process. The inquiry is for the purpose of ascertaining the truth or falsehood of the complaint; that is, for ascertaining whether there is evidence in support of the complaint so as to justify the issue of process and commencement of proceedings against the person concerned. The section does not say that a regular trial for adjudging the guilt or otherwise of the person complained against should take place at that stage; for the person complained against can be legally called upon to answer the accusation made against him only when a process has issued and he is put on trial. Section 203, be it noted, consists of two parts: the first part indicates what are the materials which the Magistrate must consider, and the second part says that if after considering those materials there is in his judgment no sufficient ground for proceeding, he may dismiss the complaint. Section 204 says that if 10 in the opinion of the Magistrate there is sufficient ground for proceeding, he shall take steps for the issue of necessary process. Now, in the case before us it is not contended that the learned Presidency Magistrate failed to consider the materials which he had to consider, before passing his order under section 203 of the Code of Criminal Procedure. As a matter of fact the learned Magistrate fully, fairly and impartially considered these materials. What is contended on behalf of the respondent complainant is that as a matter of law it was not open to the learned Magistrate to accept the plea of right of self defence at a stage when all that he had to determine was whether a process should issue or not against the appellant. We are unable to accept this contention as correct. It is manifestly clear from the provisions of section 203 that the judgment which the Magistrate has to form must be based on the statements of the complainant and his witnesses and the result of the investigation or inquiry. The section itself makes that clear, and it is not necessary to refer to authorities in support thereof. But the judgment which the Magistrate has to form is whether or not there is sufficient ground for proceeding. This does not mean that the Magistrate is bound to accept the result of the inquiry or investigation or that he must accept any plea that is set up on behalf of the person complained against. The Magistrate must apply his judicial mind to the materials on which he has to form his judgment. In arriving at his judgment he is not fettered in any way except by judicial considerations; he is not bound to accept what the inquiring officer says, nor is he precluded from accepting a plea based on an exception, provided always there are satis factory and reliable materials on which he can base his judgment as to whether there is sufficient ground for proceeding on the complaint or not. If the Magistrate has not misdirected himself as to the scope of an enquiry under section 202 and has applied his mind judicially to the materials before him, we think that it would be erroneous in law to hold that a plea based on an exception can never be accepted by him in 11 arriving at his judgment. What bearing such a plea has on the case of the complainant and his witnesses, to what extent they are falsified by the evidence of other witnesses all these are questions which must be answered with reference to the facts of each case. No universal rule can be laid in respect of such questions. In support of its view the High Court has relied on some of its earlier decisions: Emperor vs Dhondu Bapu (1); Emperor vs Finan (2) and Tulsidas vs Billimoria (3). We do not think that any of the aforesaid decisions lays down any such proposition in absolute terms as is contended for on behalf of the respondent. In Emperor vs Dhondu Bapu (1) a complaint charging defamation was dismissed by the Magistrate under section 203 without taking any evidence, on the ground that the accused was protected by section 499, exception 8. It was held that the order of dismissal was bad. Patkar, J., significantly observed: " If the Magistrate in this case had taken evidence on behalf of the prosecution and on behalf of the accused, and passed a proper order for discharge, the order of the District Magistrate ordering a further enquiry without giving reasons might have stood on a different footing. We do not think that, under the circumstances of this case, there are adequate grounds for interfering with the order of the District Magistrate. " In Emperor vs Finan (2) the accused did not dispute the correctness of the statements made by the complainant, but in justification pleaded the order passed by his superior officer and claimed protection under sections 76 and 79 of the Indian Penal Code. It is worthy of note that the order of the superior officer was not produced, but that officer very improperly wrote a letter to the Magistrate saying that he bad given such an order. In these circumstances, the same learned Judge who decided the earlier case observed: "It was, therefore, incumbent on the Magistrate to investigate the complaint and to find out whether (1) ,715. (2) (1931) 33 Bom. L.R. 1182. (3) 12 the allegation of the accused that he was protected by sections 76 and 79 of the Indian Penal Code was made out by legal evidence before him. " The facts in Tulsidas vs Billimoria (1) were different, and the question there considered was whether a member of the Bar in India had absolute privilege. That decision has very little bearing on the question now before us. Our attention has also been drawn to a decision of the Lahore High Court where the facts were somewhat similar: Gulab Khan, deceased, through Karam Khan vs Gulam Muhammad Khan and Others (2). In that case also the person complained against took the plea of self defence, which was accepted. In the High Court an objection was taken to the procedure adopted and it was argued that the order of discharge should be set aside. In dealing with that argument Broadway, J., said : " Now a Magistrate is empowered to hold an enquiry into a complaint of an offence in order to ascertain whether there is sufficient foundation for it to issue process against the person or persons complained against. In the present case the Magistrate clearly acted in the exercise of these powers under section 202, Criminal Procedure Code. He allowed the complainant to produce such evidence in support of his com plaint as he wished to produce, and after a consideration of that evidence came to the conclusion that that evidence was so wholly worthy (unworthy ?) of credence as to warrant his taking no further action in the matter." Therefore, none of the aforesaid decisions lay down as an absolute proposition that a plea of self defence can in no event be considered by the Magistrate in dealing with a complaint under the provisions of sections 200, 202 and 203 of the Code of Criminal Procedure. On the facts, there is very little to be said. Learned Counsel for the State of Bombay supported the order of the learned Magistrate and pointed out that even on the narrow view taken by the High Court, a view (1) (2) A.I.R. 1927 Lah 30 13 to which he did not, however, subscribe, the learned Magistrate rightly held that there was no sufficient ground for proceeding; because the earlier version of some of the witnesses for the complainant itself showed that there was a riotous mob on the road which attacked cars, burnt a public bus, pelted stones, etc., which was quite inconsistent with their later version that Sitaram and his companions were quietly crossing the road and a shot was fired from a passing or moving car. There was overwhelming material to show Chat K. K. Shah 's car was surrounded by the mob and some of the rioters tried to drag out and attack the appellant. K. K. Shah was one of the witnesses mentioned by the complainant and so also two of the Inspectors of Police. Their evidence clearly supported the plea of the appellant and in any case, showed that the witnesses examined on behalf of the respondent were totally unworthy of credence as to the circumstances in which the shots were fired. We cannot therefore say that the learned Magistrate was wrong in his judgment that there was no sufficient ground for proceeding further on the complaint. We accordingly hold that the High Court set aside the order of the learned Magistrate on an erroneous view of the scope of section 203 of the Code of Criminal Procedure. We allow the appeal, set aside the order of the High Court dated September 13, 1957, and restore that of the learned Presidency Magistrate dated April 30, 1957. Appeal allowed. [/INST] On June 3, 1956, riots broke out after a public meeting held in Bombay in connection with the re organisation of the State of Bombay was dispersed on account of the disturbances created therein. The car in which the appellant was travelling was stopped by the crowd and some of those who surrounded the car caught hold of him by his neck and hair and wanted to drag him out of the car. The appellant then opened fire with his revolver. The respondent 's brother, S, who was hit on the chest by one of the shots fired was removed to the hospital but died before medical assistance could be given. The police surgeon who made a postmortem examination expressed the opinion that the shot must have been fired from a distance of 2 to 18 inches only. The Coroner 's jury returned a verdict that S died of the wound caused by a bullet fired by the appellant " under such circumstances as would render the firing to be in the exercise of the right of private defence and as such justified. " The respondent filed a complaint in the court of the Presi dency Magistrate, Bombay, on the allegation that his brother died as a result of the firing resorted to by the appellant who thereby committed an offence punishable under section 302 of the Indian Penal Code and prayed that process might be issued against him. The Magistrate referred the complaint to the police for enquiry and report under section 202 of the Code of Criminal Procedure and after considering the report said: " From the statements recorded by the Police in this case and from the surrounding circumstances of the case, I have come to the definite conclusion that the report of the Police stating that the shot was fired by the accused in self defence is true. The statement of the police surgeon conclusively supports the conclusion. The eye witnesses brought by the complainant are not credible witnesses. It will be harassment to the accused and waste of public time if any process is issued in this case ". The Magistrate, accordingly, dismissed the complaint under section 203 of the Code of Criminal 2 Procedure. The High Court, in revision, set aside the order of dismissal and directed the Magistrate to issue process against the appellant and deal with the case in accordance with law, on the grounds that this was not a case in which it was proper for the Magistrate to dismiss the complaint under section 203 of the Code of Criminal Procedure, that proof of the plea of self defence could not be held to have been established from the mere report of the police, and that there was nothing in section 202 or section 203 of the Code of Criminal Procedure which abrogated the rule as to the pre sumption laid down in section 105 of the Indian Evidence Act. Held, that under section 203 of the Code of Criminal Procedure the judgment which the Magistrate has to form must be based on the statements of the complainant and his witnesses and the result of the investigation or inquiry, and in arriving at his judgment he is not fettered in any way except by judicial considerations ; provided that there are satisfactory and reliable materials on which he can base his judgment as to whether there is sufficient ground for proceeding on the complaint or not, if he has not misdirected himself as to the scope of an enquiry under section 202 and has applied his mind judicially to the materials before him, it would be erroneous in law to hold that a plea based on an exception can never be accepted by him in arriving at his judgment. Held, further, that on the facts of the present case, the order of the Magistrate was correct and that the judgment of the High Court setting aside that order on an erroneous view of the scope of section 203 of the Code of Criminal Procedure must be set aside. </s>

<s>[INST] Summarize the following judgement: Civil Appeal No. 2329 of 1977. Appeal by Special Leave from the Judgment and Order dated 30 11 1976 of the Karnataka High Court in W.P. No 2307/71. CIVIL APPEAL NOS. 2330 2350/77 Appeals by Special Leave from the Judgment and Order dated 30 11 1976 of the Karnataka High Court in W.P. Nos. 2307/71, 796/72, and 462 467, 553 560, 943, 944, 1033, 1027 and 1032/73; and CIVIL APPEAL NOS. 2351 2370/77 Appeals by Special Leave from the Judgment and Order dated 30 11 1976 of the Karnataka High Court in W.P. Nos. 462 467, 553 560, 796, 943,944, 1027, 1033/73. P. Ram Reddy and section section Javali for the Appellant in CA 2329/77. F. section Nariman, B. P. Singh and A. K. Srivastava for the Appellants in C.A. Nos. 2351 2370/77. L. N. Sinha and Narayan Nettar for the Appellants in C.A. 2330 to 2370/77. A. K. Sen, Muralidhar Rao and P. R. Ramasesh for RR. 2,3,5, and 7 in C.A. 2329/77. P. R. Ramasesh for RR/Promotees in CA 2330 2350/77 and RR in C.A. 2352 2370/77. 941 Y. section Chitale, M. Muralidhar Rao, P. R. Ramasesh and section section khanduja, for the RR in C.A. 2351/77. The Judgment of the Court was delivered by KOSHAL, J. By this judgment we shall dispose of 42 appeals by special leave, namely, Civil Appeals Nos. 2329 to 2370 of 1977, all of which are directed against a judgment dated the 30th November, 1976 of a Division Bench of the High Court of Karnataka. Civil Appeals Nos. 2329 and 2351 to 2370 of 1977 have been filed by different persons who were appointed Assistant Engineers in the Karnataka State on 31st October, 1961, by way of direct recruitment while the other 21 appeals have been filed by that State. The facts giving rise to the impugned judgment may be set down in some detail. A new State came into existence on the 1st of November, 1956 as a result of integration of the areas which formed part of the erstwhile States of Mysore, Madras, Coorg, Bombay and Hyderabad (hereinafter referred to as the Merged States). It was then given the name of one of its constituents, namely, the State of Mysore, which was later changed to that of the Karnataka State. In the Public Works Departments of the Merged States there was a class of non gazetted officers ranking below Assistant Engineers. The class was designated as Graduate Supervisors in the Merged State of Mysore, as Junior Engineers in the Merged State of Madras and as Supervisors in the Merged States of Hyderabad and Bombay. The Graduate Supervisors were paid a fixed salary of Rs. 225/ per mensem which was lower by Rs. 25/ per mensem as compared to the starting salary of Assistant Engineers, who, in the normal course, were expected to head sub divisions. To the post of Assistant Engineer a Graduate Supervisor was appointed only on promotion. Prior to the 1st of November, 1956, quite a few Graduate Supervisors were given charge of sub divisions and designated as Sub Divisional Officers in order to meet the exigencies of service and they continued to act as such after the merger when they claimed equation of their posts with those of Assistant Engineers in the matter of integration of services. To begin with their claim was turned down by the Central Government who equated the posts of Graduate Supervisors with the posts of Junior Engineers of the Merged State of Madras and the posts of Supervisors of the Merged States of Hyderabad and Bombay. By a notification dated the 6th of February, 1958, the Government of Karnataka (then known as the Government of Mysore) 942 promulgated the Mysore Government Servants (Probation) Rules, 1957 (hereinafter called the Probation Rules) and on the next day came into force the Mysore Government Servants (Seniority) Rules, 1957 (hereinafter referred to as the Seniority Rules), both having been framed under Article 309 of the Constitution of India. On the 1st of October, 1958, the Karnataka Public Service Commission invited applications from candidates for appointment to the posts of Assistant Engineers by direct recruitment. In the meantime Graduate Supervisors and Government employees holding equivalent posts had continued to press their claim for the equation of their posts with the posts of Assistant Engineers and they succeeded partially when, on the 15th of November, 1958, the Karnataka Government promoted 167 of them (including 107 Graduate Supervisors who had been working as such in the Merged State of Mysore) as officiating Assistant Engineers with immediate effect. The promotion was notified in the State Gazette dated the 20th of November, 1958 (Exhibit A) the relevant portion whereof may be reproduced for facility of reference: ". . The following supervisors of Public Works Department are promoted as officiating Assistant Engineers with immediate effect and until further orders against the existing vacancies subject to review after the finalisation of the Inter Se Seniority List of Supervisors and the Cadre and Recruitment Rules of Public Works Department. The promotion of officers from Sl. No. 74 to 167 against existing vacancies will be purely on a temporary basis pending filling up of the vacancies by Direct Recruitment as per rules. The Seniority inter se of the Promotees will be provisional according to the order given below : . . ". 299 more persons of the same class were promoted to the posts of Assistant Engineers by eight notifications published during the period from 22nd of December, 1958 to the 13th of October, 1960. On the 21st (31st?) of August, 1960, the State Government passed an order in regard to the 107 Graduate Supervisors from the Merged State of Mysore and mentioned above, directing that they be treated as Assistant Engineers and be paid the pre revision scale of pay of Rs. 250 25 450 from the 1st of November, 1956 to the 31st of December, 1956 and the revised scale of pay of Rs. 250 25 450 30 600 from the 1st of January, 1957 onwards. The order further directed that the said 107 officers shall be placed in the inter se seniority list below the Assistant Engineers. 943 On the 3rd of December, 1960, the Karnataka Government promulgated the Mysore Public Works Engineering Department Services (Recruitment) Rules, 1960 (hereinafter referred to as the Recruitment Rules) under Article 309 of the Constitution of India, which envisaged appointment of Assistant Engineers in the Public Works Department by direct recruitment to the extent of 40 per cent and by promotion for the rest, viz., 50 per cent from the cadre of Junior Engineers and 10 per cent from the cadre of Supervisors. The cadre of Assistant Engineers was stated in the Rules to consist of 344 permanent and 345 temporary posts. On the 23rd of October, 1961, the Recruitment Rules were amended so as to be operative retrospectively i.e., with effect from the 1st of March, 1958. On the 31st of October, 1961, 88 candidates were appointed as Probationary Assistant Engineers by direct recruitment. Two notifications were issued by the State Government on the 27th of February, 1962. By each one of them 231 Junior Engineers were given "regular promotions" as Assistant Engineers with effect from specified dates falling within the period 15th of November, 1958 to the 10th of November, 1960. The first of these notifications stated inter alia: ". . However, the promotions are subject to review after finalisation of the interse Seniority List of Junior Engineers. ." The second of the notifications issued on the 27th of February. 1962, mentioned that the officers named therein would be deemed to be temporarily promoted and permitted to continue to officiate as Assistant Engineers on a provisional basis and until further orders. The case of the said 107 officers received further consideration at the hands of the State Government, who, on the 6th of October, 1962, issued another order (Exhibit D) superseding the one dated the 31st of August, 1960, and promoting them as Assistant Engineers with effect from the 1st of November, 1956. By the 24th of September, 1966, the number of Probationary Assistant Engineers appointed through direct recruitment (hereinafter called direct recruits) had fallen to 85 for reasons which need not be stated. On that day the State Government passed an order that they had all completed their period of probation satisfactorily and stood absorbed against substantive vacancies with effect from the 1st of November, 1962. 944 In 1971 various orders were passed promoting some of the direct recruits to the posts of Executive Engineers and those orders were challenged in a writ petition dated the 15th of September, 1971, by the promotees to the posts of Assistant Engineers (hereinafter referred to as the promotees). On the 28th of September, 1972, a list (Exhibit G) of Assistant Engineers indicating their seniority inter se as on the 1st of November, 1959, was prepared by the State Government. In that list the promotees were accorded seniority to their satisfaction. However, that list was superseded by another list dated the 4th of September, 1973, in which the seniority inter se of all Assistant Engineers functioning in the State Public Works Department as on 1st of January, 1973 was declared. The new list purported to have been framed in accordance with the Recruitment Rules. Objections to the list were invited and were submitted by various officers. During the year 1973 more writ petitions challenging the promotion of direct recruits to the posts of Executive Engineers were instituted by the promotees on whose behalf two claims were made before the High Court, namely: (1) that they had been regularly promoted as Assistant Engineers against substantive vacancies with retrospective effect and rightly so; and (2) that in the case of those of them whose promotion was made effective from a date prior to the 1st of March, 1958, the Recruitment Rules, especially the quota rule, could not affect them adversely. Both these claims were accepted by the High Court, the first on the basis of the decision of this Court in Ram Prakash Khanna & others vs section A. F. Abbas(1) coupled with the pleadings of the parties and the various orders issued by the State Government and mentioned above, and the second on the authority of another decision of this Court in V. B. Badami & others vs State of Mysore & others(2). The High Court accordingly held that the quota rule would not be attracted to the case of those promotees who had been appointed to the posts of Assistant Engineers with effect from a date prior to the 1st of March, 1958. By way of a 'clarification ' the High Court further ruled that the promotion of the 107 officers working in the Merged State of 945 Mysore was made to substantive posts of Assistant Engineers with effect from the 1st of November, 1956, and that the State Government or the direct recruits could not be allowed to urge to the contrary. According to the High Court such promotion was subject to review only if the course was warranted and necessitated by the final inter se seniority list of Junior Engineers, the right to review having been reserved by the Government in its orders dated the 27th of February, 1962. In relation to the direct recruits the High Court made a reference to the judgment of this Court in B. N. Nagarajan vs State of Mysore & others(1) wherein it was held that their appointments, although made after the Recruitment Rules had come into force, were valid, as the process of direct recruitment had been set in motion by the State Government in exercise of its executive powers under article 162 of the Constitution of India well before the Recruitment Rules were promulgated and that those appointments were therefore "outside the Recruitment Rules". The High Court consequently held that the direct recruits were also not subject to the quota rule which could not, according to it, affect them adversely. Summing up, the High Court gave the following directions: (1) Promotees other than those covered by direction (2) and direct recruits would not be governed by the quota system as envisaged in the Recruitment Rules. (2) Promotees who were appointed to posts of Assistant Engineers with effect from the 1st of March, 1958, or later dates, would be governed by the quota system as envisaged in the Recruitment Rules. (3) Promotees appointed Assistant Engineers prior to the 31st of October, 1961, would rank senior to the direct recruits whose appointments were made on that date. (4) The claim of each of the promotees to the next higher post shall be considered with effect from a day prior to that on which any officer found junior to him was promoted. The first contention we would like to deal with is one raised by Mr. F. section Nariman appearing for the direct recruits. He argued that the scope of the writ petitions instituted by the promotees was limited to the question of promotion of Assistant Engineers as Executive Engineers and that no challenge to the seniority list dated the 4th of September, 1973 could be entertained. In this connection 946 reference was made to the prayer clause appearing in Writ Petition No. 462 of 1973 which is in the following terms: "In this writ petition, it is prayed that this Court may be pleased to: (1) quash the promotion of respondents 2 to 31 to the cadre of Executive Engineers made as per order dated 3 2 1973; (2) direct the respondent 1 to consider the case of the petitioner for promotion to the cadre of Executive Engineers with effect from 3 2 1973 on which date respondents 2 to 31 were promoted; and (3) pass an interim order, restraining the respondent 1 from making further promotion to the cadre of Executive Engineers without considering the case of the petitioner for such promotion, pending disposal of this writ petition." (It was assumed at the hearing of the appeals that the prayer made in the other writ petitions is to a similar effect). It is true that no prayer has been made by the promotees to quash or rectify the seniority list dated the 4th of September, 1973, but then their whole case is based on the contention that they had been promoted to the posts of Assistant Engineers in a substantive capacity prior to the appointment of the direct recruits, that they would take precedence over direct recruits in the matter of seniority and regular absorption in the cadre of Assistant Engineers and that it was on that account that the promotion of direct recruits to the posts of Executive Engineers without consideration of the case of the promotees for such promotion was illegal. The attack on the said seniority list therefore is inherent in the case set up by the promotees, of which it forms an integral part. In this view of the matter we cannot agree with Mr. Nariman that the scope of the writ petitions is limited as stated by him. No exception is or can be taken on behalf of the promotees to the finding arrived at by the High Court that the appointment of direct recruits to the posts of Assistant Engineers was in order, in view of the judgment of this Court in B. N. Nagarajan vs State of Mysore(supra). Nor can it be urged with any plausibility on behalf of direct recruits that the appointment of the promotees as Assistant 947 Engineers prior to the enforcement of the Recruitment Rules lay outside the powers of the Government or was otherwise illegal. The real dispute between the direct recruits and the promotees revolves round the quality of the tenure held by the latter immediately prior to the enforcement of the Recruitment Rules and that is so because of the language employed in rule 2 of the Seniority Rules. The relevant portion of that rule is extracted below: "2. Subject to the provisions hereinafter contained, the seniority of a person in a particular cadre of service or class of post shall be determined as follows: (a) Officers appointed substantively in clear vacancies shall be senior to all persons appointed on officiating or any other basis in the same cadre of service or class of post; (b) The seniority inter se of officers who are confirmed shall be determined according to dates of confirmation, but where the date of confirmation of any two officers is the same, their relative seniority will be determined by their seniority inter se while officiating in the same post and if not, by their seniority inter se in the lower cadre; (c) Seniority inter se of persons appointed on temporary basis will be determined by the dates of their continuous officiation in that grade and where the period of officiation is the same the seniority inter se in the lower grade shall prevail. Explanation. . . . . . . (d). . " Now in so far as the direct recruits, are concerned they were appointed as Probationary Assistant Engineers,i.e., Assistant Enginers "appointed on probation" which term is defined in rule 2 of the Probation Rules. That rule states" "2. For the purpose of these rules : (1) "Appointed on Probation" means appointed on trial in or against a substantive vacancy. (2) "Probationer" means a Government servant appointed on probation. A Government servant so appointed (and continuing in service) remain a probationer until he is confirmed. " 948 In view of these definitions it cannot be gainsaid that the direct recruits were appointed Assistant Engineers "substantively in clear vacancies" as envisaged by clause (a) of rule 2 of the Seniority Rules. If any of the promotees also satisfied that requirement at any time earlier to the 31st of october, 1961, he would be bracketed with the direct recruits under that clause and his seniority vis a vis those recruits would the be governed by clause (b) of the rule, i.e., on the basis of his and their respective dates of confirmation. If, on the other hand, none of the promotees can be said to have been appointed substantively in a clear vacancy, clause (a) aforesaid would have no application to them and all direct recruits would rank senior to them; and it is in the ligrht of the said clauses (a) and (b) therefore that learned counsel for the State and the direct recruits have challenged the finding of the High Court that the promotion of the 107 officers working in the Merged State of Mysore was made to substantive posts of Assistant Engineers with effect form the 1st of November, 1956 and that the State Government or the direct recruits could not be allowed to urge to the contrary. The controversy has to be resolved in the light of the orders passed by the State Government from time to time in relation to those officers and others similarly situated. The first order appointing promotees as Assistant Engineers is dated the 15th of November, 1958 (Exhibit A). That order made, it clear that all the promotees covered by it were appointed officiating Assistant Engineers and were to hold office until further orders. The promotion was also made subject to review after the finalisation of the inter se seniority list of Supervisors and the Recruitment Rules. The notification went on to state that in the case of 94 of the officers promoted under it, their appointment as Assistant Engineers was being made on a purely temporary basis inasmuch as they would have to vacate the posts against which they were being fitted, as soon as candidates were available through a process of direct recruitment. The language employed leaves no doubt that the promotion of the 167 officers was not substantively made, the tenure being specifically stated to be either "officiating" or "purely temporary" which expressions clearly militate against a substantive appointment. Orders made by the State Government later on and right upto the 31st of October, 1961 when the direct recruits were appointed Assistant Engineers did not improve the position of any of the promotees in any manner. Those orders were either silent on the point of the nature of the tenure of the promotees as Assistant Engineers, or stated 949 in no uncertain terms that the promotees would hold the posts of Assistant Engineers on a temporary or officiating basis. That is why Dr. Chitaley and Mr. Sen, learned counsel for the promotees, mainly placed their reliance on the two notifications dated the 27th of February, 1962, and order exhibit D dated the 6th of october, 1962, the combined effect of which was to promote the said 107 officers as Assistant Engineers with effect from the 1st of November, 1956 "on a regular basis". It was argued that the regularisation of the promotion gave it the colour of permanence and the appointments of the promotees as Assistant Engineers must therefore be deemed to have been made substantively right from the 1st of November, 1956. The argument however is unacceptable to us for two reasons. Firstly the words "regular" or "regularisation" do not connote permanence. They are terms calculated to condone any procedural irregularities and are meant to cure only such defects as are attributable to the methodology followed in making the appointments. They cannot be construed so as to convey an idea of the nature of tenure of the appointments. In this connection reference may with advantage be made to State of Mysore and Another vs section V. Narayanappa(1) and R. N. Nanjundappa vs T. Thimmiah and Another(2). In the former this Court observed: "Before we proceed to consider the construction placed by the High Court on the provisions of the said order we may mention that in the High Court both the parties appear to have proceeded on an assumption that regularisation meant permanence. Consequently it was never contended before the High Court that the effect of the application of the said order would mean only regularising the appointment and no more and that regularisation would not mean that the appointment would have to be considered to be permanent as an appointment to be permanent would still require confirmation. It seems that on account of this assumption on the part of both the parties the High Court equated regularisation with permanence." In Nanjundappa 's case also the question of regularisation of an appointment arose and this Court dealt with it thus: ". . Counsel on behalf of the respondent contended that regularisation would mean conferring the quality of permanence on the appointment whereas counsel on behalf 950 of the State contended that regularisation did not mean permanence but that it was a case of regularisation of the rules under Article 309. Both the contentions are fallacious. It the appointment itself is in infraction of the rules or if it is in violation of the provisions of the Constitution illegality cannot be regularised. Ratification or regularisation is possible of an act which is within the power and province of the authority but there has been some non compliance with procedure or manner which does not to to the root of the appointment. Regularisation cannot be said to be a mode of recruitment. To accede to such proposition would be to introduce a new head of appointment in defiance of rules or it may have the effect of setting at naught the rules. " Apart from repelling the contention that regularisation connotes permanence, these observations furnish the second reason for rejection of the argument advanced on behalf of the promotees and that reason is that when rules framed under article 309 of the Constitution of India are in force, no regularisation is permissible in exercise of the executive powers of the Government under article 162 thereof in contravention of the rules. The regularisation order was made long after the Probation Rules, the Seniority Rules and the Recruitment Rules were promulgated and could not therefore direct something which would do violence to any of the provisions thereof. Regulaisation in the present case, if it meant permanence operative from the 1st of November, 1956, would have the effect of giving seniority to promotees over the direct recruits who, in the absence of such regularisation, would rank senior to the former because of the Seniority Rules read with the Probation Rules and may in consequence also confer on the promotees a right of priority in the matter of sharing the quota under the Recruitment Rules. In other words, the regularisation order, in colouring the appointments of promotees as Assistant Engineers with permanence would run counter to the rules framed under article 309 of the Constitution of India. What could not be done under the three sets of Rules as they stood, would thus be achieved by an executive fiat. And such a course is not permissible because an act done in the exercise of the executive power of the Government as already stated, cannot override rules framed under Article 309 of the Constitution. The case has, for both the above reasons, to be decided on the footing that all though the relevant period the promotees held appointments as Assistant Engineers in a non substantive capacity, i.e. either on an officiating or a temporary basis. This being the position, 951 they would all rank junior to the direct recruits who, from the very start, held appointments made "substantively in clear vacancies. We may here make it clear that this order does not cover such officers as were holding the posts of Assistant Engineers on a substantive basis prior to the 1st of November, 1956 when the new State of Mysore now known as Karnataka came into being. Nor would it adversely affect the case of any Assistant Engineer who acquired a substantive status prior to the promulgation of the Recruitment Rules and the appointment of the direct recruits. Persons falling within these two categories will first have to be accommodated in the clear vacancies available and only the remaining vacancies will have to be utilised for fitting in the direct recruits and the Assistant Engineers who have disputed their claim in these proceedings. It may also be mentioned that the quota rule will not stand in the way of the Government giving effect to this arrangement which has been taken care of in the amendment (promulgated on the 23rd of October, 1961) to the Recruitment Rules. The relevant portion of that amendment is contained in item 3 thereof which is reproduced below: "3. To rule 2 of the following proviso shall be added and shall be deemed always to have been added, namely "Provided that in respect of direct recruitment of Assistant Engineers for the first time under these rules the percentages relating to direct recruitment and recruitment by promotion specified in column 2 of the Schedule shall not be applicable and the minimum qualifications and the period of production shall be the following, namely "Qualifications :. . . . " It is common ground between the parties that the posts comprised in the cadre of Assistant Engineers constituted by the Recruitment Rules have yet to be filled in for the first time. The proviso extracted above therefore will apply fully to the utilization of those vacancies as stated above. It goes without saying that all questions of seniority shall be decided in accordance with the Seniority Rules and that the Recruitment Rules, as amended from time to time, shall be fully implemented as from the date of their enforcement, i.e., 1st of March, 1958. In the result we accept the appeals, set aside the judgment of the High Court and decide the dispute between the parties in accordance with the observations made in paragraphs 5 and 6 hereof. V.D.K. Appeals allowed. [/INST] In the new State of Mysore (Now Karnatake) which came into existence on 1 11 56 as a result of integration of the areas which formed part of erstwhile States of Mysore, Madras, Coorg, Bombay and Hyderabad, the Government on 6 2 58, 7 2 58 and 2 12 60 respectively promulgated the following Rules (all framed under Article 309 of the Constitution) namely, "The Mysore Government Servants (Probation) Rules 1957, "The Mysore Government Servants (Seniority) Rules 1957 and "The Mysore Public Works Engineering Department Services (Recruitment) Rules, 1960" The recruitment Rules envisaged appointment of Assistant Engineers in the Public Works Department by direct recruitment to the extent of 40% and by promotion for the rest viz. 50% from the cadre of Junior Engineers and 10% from the cadre of supervisors. The cadre of Assistant Engineers was to consist of 344 permanent and 345 temporary posts. Prior to 1 11 56 in the merged States, there was a non gazetted class designated as graduate supervisors in Mysore State, as Junior Engineers in the Madras State and as supevisors in the States of Bombay and Hyderabad. The claim of the graduate supervisors who were given charge of sub divisions prior to 1 11 56 and continued to hold the same even thereafter, for equation of their posts with those of Assistant Engineers, was rejected by the Central Government. However, on 15 11 58, 167 of them (including 107 graduate supervisors from Mysore) and between the period 2nd Dec. 1958 and 13th October '60, 299 more persons of the same class were promoted as officiating Assistant Engineers. With reference to three notifications of the Mysore Public Service Commission dt. 1 10 58, 4 5 59 and 1 4 61, eighty eight candidates were appointed on 31st Oct. ' 61, i.e. 8 days after the amendement of the Recruitment Rules giving them retrospective effect from 1st March 1958, as Probationary Assistant Engineers by direct recruitment. The challenge to their appointment was ultimately rejected by this Court in B. N. Nagarajan vs State of Mysore & Ors., [1966] 3 S.C.R. p. 682 holding that their appointment although made after the Recruitment Rules had come into force, were valid, as the process of direct recruitment had been set in motion by the State Government in exercise of its executive power under Article 162 of the Constitution of India well before the Recruitment Rules were promulgated and that these appointments were therefore, "outside the Recruitment Rules". In the year 1971 various orders were passed promoting some of the direct recruits to the posts of Executive Engineers and those orders were challenged by 938 the promotees on the ground that they had been given promotions "on regular basis" which amounted to substantive appointments and that therefore they should rank senior to the direct recruits. Subsequent to the issue on 4 9 73 of a revised seniority list snperseding the list (G) prepared on 28 9 72 further writ petitions were filed by the promotees. All the petitions were heard together by the High Court and allowed with the following directions: (i) Promotees other than those covered by direction (ii) and direct recruits, would not be governed by the quota system as envisaged in the Recruitment Rules. (ii) Promotees who were appointed to posts of Assistant Engineers with effect from 1st of March 1958, or later dates, would be governed by the quota system as envisaged in the Recruitment Rules. (iii) Promotees appointed as Assistant Engineers prior to 31st October 1961 would rank senior to the direct recruits whose appointments were made on that date. (iv) The claim of each of the promotees to the next higher post shall be con sidered with effect from a day prior to that on which any officer found junior to him was promoted. Allowing the appeals by special leave, the Court ^ HELD: 1. The scope of the writ petition was not limited to thq question of preme tion of Assistant Engineers as Executive Engineers. The attack on the seaiority list dated 4th Sept. 1973 was inherent in the case set up by the promotees, of which it formed an integral part. Though no prayer had been made by the promotees to quash or rectify the seniority list dated 4th September 1973, their whole case was based on the contention that they had been promoted to the posts of Assistant Engineers in a substantive capacity prior to the appointment of direct recruits, that they would take precedence over direct recruits in the matter of seniority and regular absorption in the cadre of Assistant Engineers and that it was on that account that the promoion of direct recruits to the posts of Executive Engineers without consideration of the case of the promotees for such promotion was illegal. [946E G] 2. No exception is or can be taken on behalf of the promotees to the finding arrived at by the High Court that the appointment of direct recruits to the posts of Assistant Engineers was in order, in view of the judgment of this Court in B. N. Nagarajan vs State of Mysore, [1966] 3 SCR p. 682. Nor can it be urged with any plausibility on behalf of direct recruits that the appointment of the promotees as Assistant Engineers prior to the enforcement of the Recruitment Rules lay outside the powers of the Government or was otherwise illegal. [946G H, 947A] V. B. Badami and Ors. vs State of Mysore and Ors. , [1976] 1 SCR 815 and B. N. Nagarajan vs State of Mysore and Ors., ; followed. A combined reading of Rule 2 of the Seniority Rules and the definition of the words "appointed on probation" and "Probationer" in Rule 2 of the Probation Rules, makes it clear that the direct recruits were appointed as Assistant 939 Engineers, "substantively in clear vacancies" as envisaged by clause (a) of rule 2 of the Seniority Rules. If any of the promotees also satisfied that requirement at any time earlier to the 31st of October 1961, he would be bracketed with the direct recruits under that clause and his seniority vis a vis those recruits would then be govened by clause (b) of the rule i.e., on the basis of his and their respective dates of confirmation. If, on the other hand, none of the promotees can be said to have been appointed substantively in a clear vacancy, clause (a) aforesaid would have no application to them and all direct recruits would rank senior to them. [947G H, 948A B] 4. In the instant case, all through the relevant period the promotees held appointments as Assistant Engineers in non substantive capacity, i.e., either on an officiating or a temporary basis. This being the position, they would all rank junior to the direct recruits who, from the very start, held appointments made "substantively in clear vacancies". [950H, 951A] (a) The language employed in the first order dated 15th November 1958 (exhibit A) appointing promotees as Assistant Engineers makes it clear that the promotion of the 167 officers was not substantively made, the tenure being specifically stated to be either "officiating" or "purely temporary" and "subject to review after the finalisation of the inter se seniority list of supervisors and the Recruitment Rules", which expressions clearly militate against a substantive appointment. [948E G] (b) Orders made by the State Government later on right upto the 31st October, 1961 when the direct recruits were appointed as Assistant Engineers did not improve the position of any of the promotees in any manner. These orders were either silent on the point of the nature of the tenure of the promotees as Assistant Engineers, or stoted in no uncertain terms that the promotees would hold the posts of Assistant Engineers on a temporary or officiating basis. [948G H. 949A] (c) The two Notifications dated 27th February 1962, and order Exhibit (D). dated 6th October 1962 the combined effect of which was to promote the said 107 officers as Assistant Engineers with effect from 1st of November 1956 "on a regulaur basis" do not give it the colour of permanence to the appointments of the promotees as Assistant Engineers which cannot therefore be deemed to have been made substantively right from the 1st of November 1956 for two reasons; Firstly, the words "regular" or "regularisation" do not connote permanence. They are terms calculated to condone any procedural irregularities and are meant to cure only such defects as are attributable to the methodology followed in making the appointments. Secondly, when rules framed under Article 309 of the Constitution of India are in force, no regularisation is permissible in exercise of the executive powers of the Government under Article 162 thereof in contravention of the Rules. The regularisation order was made long after the Probation Rules. the Seniority Rules and the Recruitment Rules were promulgated and could not therefore direct something which would do violence to any of the provisions thereof. Regularisation in the present case, if it meant permanence operative from the 1st of November, 1956 would have the effect of giving seniority to promotees over the direct recruits who, in the absence of such regularisation. would rank senior to the former because of the Seniority Rules read with the Probation Rules and may in consequence also confer on the promotees a right of priority in the matter of sharing the quota under the Recruitment Rules. In 940 other words, the regularisation order, in colouring the appointments of promotees as Assistant Engineers with permanence would run counter to the rules framed under Article 309 of the Constitution of India. What could not be done under the three sets of Rules as they stood, would thus be achieved by an executive fiat. And such a course is not permissible because an act done in the exercise of the executive power of the Government, cannot override rules framed under Article 309 of the Constitution. [949B D, 950D G] State of Mysore and Anr. vs section V. Naraynaswami, [1967] 1 SCR 128 and R. N. Nanjundappa vs T. Thimmiah, ; ; applied. The Court made it clear (a) "that this order does not cover such officers as were holding the posts of Assistant Engineers on a substantive basis prior to the 1st of November, 1956 when the new State of Mysore now known as Karnataka came into being, and the case of any Assistant Engineer who acquired a substantive status prior to the promulgation of the Recruitment Rules and the appointment of the direct recruits; (b) that persons falling within these two categories will first have to be accommodated in the clear vacancies available and only the remaining vacancies will have to be utilised for fitting in the direct recruits and the Assistant Engineers who have disputed their claim in these proccedings; and (c) that the quota rule will not stand in the way of the Government giving effect to this arrangement which has been taken care of in the anemendment (promulgated on the 23rd of October 1961) to the Recruitment Rules"]. </s>

<s>[INST] Summarize the following judgement: section 443 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 of India, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P.L. Vohra, for the petitioners (In all the petitions). R. H. Dhebar and 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. A. V. Viswanatha Sastri and M. R. Krishna Pillai, for respondents Nos. 2 to 9. Purshottam Trikamdas and M. B. Krishna Pillai, for respondent No. 12 (In Petn. 40 41 of 56). A. V. Viswanatha Sastri and K. R. Krishnaswami, for respondents Nos. 13 and 15 17 (In Petn. No. 443 of 55). K. B. Krishnaswami for respondents Nos. 11 and 14 (In all the petitions). 892 Purshottam Trikamdas 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. 1960. May 4. The judgment of Sinha, C. J., Subba Rao and Shah, JJ., was delivered by Subba Rao, J. The judgment of Imam and Sarkar, JJ. was delivered by Sarkar, J. SUBBA RAO, J. These three connected petitions filed under article 32 of the Constitution raise the question of the constitutional validity of the Madras Marumakkathayam (Removal of Doubts) Act, 1955, (Madras Act 32 of 1955) (hereinafter referred to as the impugned Act). These petitions were heard by this Court on a preliminary question raised by the respondents and the judgment thereon was delivered on March 4, 1959. This Court rejected the preliminary objection and directed the petitions to be heard on merits, and pursuant to that order, these petitions were posted for disposal on merits. The facts have been fully stated by Das, C. J., in the preliminary judgment and it would, therefore, be sufficient if the relevant facts pertaining to the questions raised were stated here. The petitioner in Petition No. 443 of 1955 is Kavalappara Kottarathil Kochunni Moopil Nair. He is the holder of the Kavalappara sthanam to which is attached Kavalappara estate situate in Walluvanad Taluk in the district of South Malabar. In pre British times the Kavalappara Moopil Nair, who was the senior most male member of Kavalappara Swaroopam (dynasty), was the ruler of Kavalappara territory. He had sovereign rights over his territory. Besides the Rajasthanam, the Kavalappara Moopil Nair held five other sthanams granted by the Raja of Palghat for rendering military services and two other sthanams granted to his ancestors by the Raja of Cochin for rendering similar services. Properties are attached to each of these sthanams. The petitioner 's immediate predecessor died in 1925 and the petitioner became the Moopil Nair of Kavalappara estate and as such the sthanee of the properties 893 attached to the various sthanams held by him. The petitioner in Petition No. 443 of 1955 will hereafter be referred to as " the sthanee ". Respondents 2 to 17 are the junior members of the Kavalappara tarwad, and, according to the sthanee, they have no interest in the said properties. In 1932, the Madras Marumakkathayam Act (Mad. Act XXII of 1932) came into force where under the members of a Malabar tarwad were given a right to enforce partition of tarwad properties or to have them registered as impartable. After some infructuous proceedings under the provisions of the said Act, respondents 10 to 17, who then constituted the entire Kavalappara tarwad, filed O.S. 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 sthanee were tarwad properties belonging equally and jointly to the sthanee and the members of the tarwad. The Subordinate Judge dismissed the suit. On appeal, the High Court of Madras on April 9, 1943, allowed the appeal and reversed the decision of the Subordinate Judge and decreed the suit,. On farther appeal to the Privy Council, the Board by its judgment dated July 29, 1947, restored the judgment of the Subordinate Judge. The Privy Council found that the Kavalappara estate in Walluvanad Taluk was an impartible estate and that nothing had happened to alter the original character of the property in its relation to the members of the family. On that finding, the Privy Council held that respondents 10 to 17 were not entitled to the declaration they sought in that case. The result of that litigation was that all the properties in the possession of the sthanee were declared to be sthanam properties and that the members of the tarwad had no interest therein. After the title of the sthanee was thus established, the Madras Legislature passed the impugned Act in 1955. Under the impugned Act, every sthanam possessing one or other of the three characteristics mentioned therein it is common case that the impugned Act applies to the petitioner 's sthanam shall be deemed and shall be deemed always to have been properties belonging to the tarwad. The sthanee 116 894 states that the impugned Act is ultra vires the Madras Legislature, void and inoperative and that the said Act cannot affect the rights of the sthanee or his estate to any extent. The first petitioner in Petition No. 40 of 1956 is the wife of the sthanee, who has also been added as respondent 18 to this petition ; and petitioners 2 and 3 therein are their daughters. The first respondent to the said petition is the State of Madras and respondents 2 to 17 are the members of the tarwad. On August 3, 1955, the sthanee executed a gift deed in favour of the petitioners in the said petition in respect of properties granted to his predecessor by the Raja of Palghat. This petition raised the same questions as Petition No. 443 of 1955 and seeks for the same reliefs. Petition No. 41 of 1956 is filed by Ravunniarath Rajan Menon, who is the son of the sthanee. The first respondent therein is the State of Madras and respondents 2 to 17 are the members of the tarwad and respondent 18 is the stanee. This petitioner alleges that on August 3, 1955, the sthanee executed a gift deed in his favour in respect of the properties granted to the sthanee 's predecessor by the Raja of Cochin. This petition contains similar allegations as the other two petitions and asks for similar reliefs. The learned Attorney General, appearing for the petitioners in all the three petitions, raised before us the following points: (1) The impugned Act is constitutionally void, because it offends against article 14 of the Constitution. (2) It is also void because it deprives the sthanee of his fundamental right to hold and dispose of property and thereby offends against article 19(1) (f) of the Constitution and is not saved by cl. (5) of article 19. (3) The impugned Act is further bad because it has been made by the Legislature not in exercise of its legislative power but in exercise of judicial power. Learned counsel for the respondents while countering the arguments advanced by the learned Attorney General raised two further points, viz., (1) the petitioner 's sthanam is an " estate " within the meaning of article 31A of the Constitution and therefore the Act 895 extinguishing or modifying the rights pertaining to the said sthanam cannot be questioned on the ground that it infringes articles 14, 19 and 31 of the Constitution; and (2) the impugned Act purports to deprive the petitioner of his sthanam properties by authority of law within the meaning of article 31(1) of the Constitution and, as he is legally deprived of his properties, article 19(1) (f) of the Constitution has no application, for, it is said, article 19(1) (f) pre supposes the existence of the petitioner 's title to the sthanam and its properties, and, as he is deprived of his title therein by the impugned Act, he can no longer rely upon his fundamental right under article 19(1) (f). Learned counsel for the respondents further contended that the gifts of the sthanam properties by the sthanee in favour of the petitioners in the other two petitions were void and that, therefore, they have no fundamental right to enable them to come to this Court under article 32 of the Constitution. Before we pass on to the merits of the case, it would be convenient at the outset to clear the ground. It cannot be disputed that the impugned Act passed by the Madras Legislature could not have had any extra territorial operation so as to affect the properties in the quondam Cochin State. It is not disputed that, after the States Reorganization, the provisions of the Act were not extended by any legal process to the properties situate in that area of the Kerala State which originally formed part of Cochin State. In the premises, we are not called upon to decide the fundamental right of the sthanee in respect of the sthanam properties in the said area. We do not also propose to express any opinion on the validity or otherwise of the gift deeds executed by the sthanee in favour of his wife and daughters, and son; for, if the gifts were valid, the donees would have a right to maintain the petitions, and if they were not valid, the donor would continue to be the owner of the properties gifted. The title inter se is not really germane to the present. enquiry, for the validity of the Act in respect of sthanam properties other than those in the Cochin State, falls to be decided in the first petition itself. 896 We, therefore, leave open the question of the validity of the gift deeds. We shall take first the contention of the respondents based on article 31A of the Constitution, for, if that contention was accepted, no other questions except one would arise for consideration. Learned Attorney General contends that the question was not specifically raised in the pleadings, that it was a mixed question of fact and law, and that if it was allowed to be raised at this stage, his clients would be irreparably prejudiced. Further, he argues that there is no material on the record on the basis of which we can decide whether the properties of the petitioners are held in janmam right or not. In the counter affidavit filed by respondents 2 to 17, no plea on the basis of article 31A is taken. Only in the counter filed by the State of Kerala, this contention is raised. Paragraph 6 of the counter affidavit contains the said plea and it is: " I am advised that the impugned statute is Dot open to attack on any of the grounds set forth in the petition and further and in any view of the case that it is saved by virtue of the provisions of article 31A of the Constitution as amended by the Constitution (Fourth Amendment) Act, 1955. " Except this bald statement, no statement is made to the effect that all the properties of the sthanee, or any portion thereof, are held in janmam right. Learned Advocate General, appearing for the State of Kerala, while conceding that the plea could have been more precise, and supported by definite particulars, contends that there is material on the record containing the admission of the petitioner in the first petition that the properties are janmam properties, and, even apart from such admission, whatever properties the petitioner held as appertaining to the sthanam, they could not be other than janmam properties or properties held as a subordinate tenure holder under a janmi and that in either case they would form part of an it estate" within the meaning of article 31 A of the Constitution. It is true that in the previous proceedings which went up to the Privy Council, there is a statement 897 that in regard to the properties under the management of the Court of Wards, " sthanam registration took place in Malabar and all the properties belonging to the sthanee were registered in the name of Kavalappara Moopil Nair ". But that in itself does not conclude the matter. Ordinarily, when a question raised depends upon elucidation of further facts not disclosed in the statements already filed, we would be very reluctant to allow a party to raise such a plea at the time of arguments. But in this case we do not think we would be justified in not allowing the respondents to raise the contention, as the validity of the impugned Act depends upon the application of ' article 31A of the Constitution. We would, therefore, for the purpose of this petition, assume against the petitioner that he is in possession of the properties in janmam right and proceed to consider on that basis the contention raised. Learned counsel for the respondents contends that article 31A of the Constitution excludes the operation of Art.13 in the matter of the extinguishment or modification of any rights in an estate, that the impugned legislation either extinguishes or modifies the sthanam right in the janmam property which is an " estate as defined in the said Article and that, therefore, the impugned Act cannot be challenged on the ground that it infringes articles 14, 19 and 31 in Part III of the Constitution. To appreciate this contention it will be convenient to read the material portions of article 31A. Article 31A. (1) Notwithstanding anything contained in article 13, no law providing for (a) the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights, . . . . . . . . . shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by article 14, article 19 or article 31. . . . . . . . (2) In this article, 898 (a) The expression " estate " shall, in relation to any local area, have the same meaning as that expression or its local equivalent has in the existing law relating to land tenures in force in that area, and shall also include any jagir, inam or muafi or other similar grants and in the States of Madras and Kerala any janmam right. (b) the expression " right ", in relation to an estate, shall include any rights vesting in a proprietor, sub proprietor, under proprietor, tenure holder, raiyat, under raiyat or other intermediary and any rights or privileges in respect of land revenue. " This Article was introduced in the Constitution by the Constitution (First Amendment) Act, 1951. As it originally stood, the said Article only provided that no law affecting rights of any proprietor or intermediate holder in any estate shall be void on the ground that it is inconsistent with any of the fundamental rights Included in Part III of the Constitution. Article 31A has been amended by the Constitution (Fourth Amendment) Act, 1955. The object of the amendment was explained in the Statement of the Objects and Reasons and the relevant part thereof reads: "It will be recalled that the Zamindari abolition laws which came first in our programme of social welfare legislation were attacked by the interests affected mainly with reference to articles 14, 19 and 31, and that in order to put an end to the dilatory and wasteful litigation and place these laws above challenge in the courts, articles 31A and 31B and the Ninth Schedule were enacted by the Constitution (First Amendment) Act. Subsequent judicial decisions interpreting articles 14, 19 and 31 have raised serious difficulties in the way of the Union and the States putting through other and equally important social welfare legislation on the desired lines, e.g., the following: (i) While the abolition of zamindaries and the numerous inter mediaries between the State and the tiller of the soil has been achieved for the most part, our next objectives in land reform are the fixing of limits to the extent of agricultural land that may be owned or occupied by any person, the disposal of 899 any land held in excess of the prescribed maximum and the further modification of the rights of land owners and tenants in agricultural holdings. . . . . . . . . . . It is accordingly proposed in clause 3 of the Bill to extend the scope of article 31A so as to cover these categories of essential welfare legislation. " The object of the amendment relevant to the present enquiry was only to enable the State to implement its next objective in the land reform, namely, the fixing of limits to the extent of agricultural lands that may be owned or occupied by any person, the disposal of any land held in excess of the prescribed maximum and the further modification of the rights of land owners and tenants in agricultural holdings. The object was, therefore, to bring about a change in the agricultural economy but not to recognize or confer any title in the whole or a part of an estate on junior members of a family. This Court has held in Aswini Kumar Ghose vs Arabinda Bose(1) that the statement of objects and reasons is not admissible as an aid to the construction of a statute. But we are referring to it only for the limited purpose of ascertaining the conditions prevailing at the time the bill was introduced, and the purpose for which the amendment was made. Unhampered by any judicial decision, let us now scrutinize the express terms of the Article to ascertain its scope and limitations. Sub el. (a) of article 31A(1) enables the State to acquire any estate or of any rights therein or to extinguish or modify any such rights. " Estate " is defined in el. (2)(a) to have the same meaning as that expression or its local equivalent has in the existing law relating to land tenures in force in that area, and by inclusive definition it takes in any jagir, inam, or muafi or other similar grants and in the States of Madras and Kerala any janmam right. Clause (2)(b) defines the expression " rights ", in relation to an estate, to include any rights vesting in a proprietor, sub proprietor, under proprietor, tenure holder, raiyat, under raiyat or other intermediary and any rights or privileges in respect of land revenue. If (1) ; 900 an estate so defined is acquired by the State, no law enabling the State to acquire any such estate can be questioned as inconsistent with the rights conferred by articles 14, 19 or 31 of the Constitution. So too, any law extinguishing or modifying any such rights mentioned in cl. (1)(a) and defined in el. (2)(b) cannot be questioned on the said grounds. The broad contention that a law regulating inter se the rights of a proprietor in his estate and the junior members of his family is also covered by the wide phraseology used in cl. (2)(b), may appear to be plausible but that argument cannot be sustained if that clause is read along with the other provisions of article 31 A. The definition of " estate" refers to an existing law relating to land tenures in a particular area indicating thereby that the Article is concerned only with the land tenure described as an " estate ". The inclusive definition of the rights of such an estate also enumerates the rights vested in the proprietor and his subordinate tenure holders. The last clause in that definition, viz., that those rights also include the rights or privileges in respect of land revenue, emphasizes the fact that the Article is concerned with land tenure. It is, therefore, manifest that the said Article deals with a tenure called "estate" and provides for its acquisition or the extinguishment or modification of the rights of the land holder or the various subordinate tenure holders in respect of their rights in relation to the estate. The contrary view would enable the State to divest a proprietor of his estate and vest it in another without reference to any agrarian reform. It would also enable the State to compel a proprietor to divide his properties, though self acquired, between himself and other members of his family or create interest therein in favour of persons other than tenants who had none before. Such acts have no relation to land tenures and the.), are purely acts of expropriation of a citizen 's property without any reference to agrarian reform. Article 31A deprives citizens of their fundamental rights and such an Article cannot be extended by interpretation to overreach the object implicit in the Article. The unsondness of the wider interpretation will be made clear if the Article is construed with reference to the 901 janmam right. Under the definition, any janmam right in Kerala is an " estate ". A janmam right is the freehold interest in a property situated in Kerala. Moor in his " Malabar Law and Custom " describes it as a hereditary proprietorship. A janmam interest may, therefore, be described as " proprietary interest of a landlord in lands " and such a janmam right is described as "estate" in the Constitution. Substituting janmam right " in place of "estate " in cl. 2 (b), the rights " in article 31 A (1) (a) will include the rights of a proprietor and subordinate tenure holders in respect of a janmam right. It follows that the extinguishment or modification of a right refers to the rights of a proprietor or a subordinate tenure holder in the janmam right. A proprietor called the janmi or his subordinate tenure holder has certain defined rights in janmam right ". Land tenures in Malabar are established by precedents or immemorial usage. Janmam right is a freehold interest in property and the landlord is called " janmi ". He can create many subordinate interests or tenures therein, such as verum pattom (simple lease), kushikanom (mortgage of waste land with a view to its being planted on), kushikara pattam (mortgage of waste land for improvements, the tenant paying rent), kanom kuzhikanom (mortgage of waste land for improvements, the landlord receiving some pecuniary consideration), kanom (mortgage with possession, a fee being generally paid), mel kanom (higher mortgage), koyu panayam (mortgage of the right of cultivation), kanom poramkadani (loan advanced on the security of land already held on mort gage), otti usufructuary mortgage, the full value of the land being advanced), kaivituka otti (usufructuary mortgage, with relinquishment of the power of transfer), ottikkumpuiram (where a sum is advanced beyond the otti amount), neermuthal (where a further sum is advanced on an otti mortgage in addition to the ottikkunipuram), peruvartham (usufructuary mortgage, the land being redeemable at its value in the market at the time of redemption), anubham or anubhavam (relinquishment of land for enjoyment by the tenant in perpetuity), karankari or jamma koyu (sale 117 902 or transfer in perpetuity of the right of cultivation), kariama (right of perpetual enjoyment), cooderoopad or nelamuri (assignment of rent produce), kutti kanom (mortgage of forests, the mortgagee felling the timber for trade and paying a fee on each stump or tree to the landlord). These rights may be extinguished or modified. A law may regulate the rights between a janmi and his subordinate tenure holders; but it may also affect his rights unconnected with the tenure. To illustrate: A janmi holds 10 acres of land in janmam right, out of which he may sell 2 acres each to five persons; the land is divided into 5 plots held by different holders, but each one continues to have full rights of a janmi ; the janmam right is not extinguished or modified, though the land is divided between 5 persons. That is what the impugned Act purports to do. It does not modify any of the rights appertaining to " janmam right ", but only confers shares in the property on other members of the tarwad. It is said that the inclusive definition of the expression " rights " in cl. (2) (b) takes in such a case as it extinguishes or modifies the proprietor 's right in the land. This is a superficial reading of the Article. We have already explained how such a modification is not a modification of a right pertaining to a " janmam right ", but only a deprivation of a particular janmi of his right in his property or a curtailment of his right therein, leaving all the characteristics of a janmam right intact. It is said that a contrary construction has been accepted by this Court in two decisions. The first is that in Sri Ram Ram Narain vs State of Bombay (1). In that case, the constitutional validity of the Bombay Tenancy and Agricultural Lands (Amendment) Act, 1956 (Bom. XIII of 1956), was canvassed. Under that Act the title to the land which vested originally in the landlord passes to the tenant on the tiller 's day or within the alternative period prescribed in that behalf. This title is defeasible only in the event of the tenant failing to appear or making a statement that he is not willing to purchase the land or committing default in payment of the price thereof as determined (1) [1959] SUPP. 1 S.C.R. 489. 903 by the Tribunal constituted for that purpose. This Act was, therefore, enacted to implement the agrarian reform in that part of the country and it expressly confers certain rights on tenants in respect of their tenements which they did not have before. The Act creates absolute rights in a tenant which was either by the extinguishment or by modification of a landlord 's rights and conferment of the same on the tenant. This law is, therefore, one pertaining to the land tenure of the State. The second decision is that in Atma Ram vs State of Punjab (1). There, this Court was concerned with the provisions of the Punjab Security of Land Tenure Act (IO of 1953) (as amended by Act 11 of 1955). Under that Act, the substantive rights of a landowner were modified in three respects, namely, (1) it modified his rights of settling his lands on any terms and to any one he chooses; (2) it modified, if it did not altogether extinguish, his right to cultivate the surplus area as understood under the Act; and (3) it modified his right of transfer in so far as it obliged him to sell lands not at his own price but at a price fixed under the statute, and not to any one but to specified persons, in accordance with the provisions of the Act. It is clear from the said Act that the provisions thereof purport to regulate the rights in respect of lands which are estates within the meaning of the law relating to land tenures in Punjab. It was contended therein that in the purview of article 31A, only the entire estates were included but not portions thereof, but that contention was negatived. Sinha, J. (as he then was), who delivered the judgment of the Court, observed at p. 526 thus: "Keeping in view the fact that article 31A was enacted by two successive amendments one in 1951 (First Amendment), and the second in 1955 (Fourth Amendment) with retrospective effect, in order to save legislation effecting agrarian reforms, we have every reason to hold that those expressions have been used in their widest amplitude, consistent with the purpose behind those amend. ments ". (1) [1959] Supp. 1 S.C.R. 748. 904 This Court has, therefore, recognised that the amendments inserting article 31A in the Constitution and subsequently amending it were to facilitate agrarian reforms and in that case it was held that the impugned Act affected the rights of the landlords and tenants. Neither of the two decisions, therefore, supports the contention that article 31A comprehends modification of the rights of an owner of land without reference to the law of land tenures. The impugned Act does not purport to modify or extinguish any right in an estate. The avowed object of it is only to declare particular sthanams to be Marumakkathayam tarwads and the property pertaining to such sthanams as the property of the said tarwads. It declares particular sthanams to have always been tarwads and their property to have always been tarwad property. The result is that the sole title of the sthanee is not recognised and the members of the tarwad are given rights therein. The impugned Act does not effectuate any agrarian reform and regulate the rights inter se between landlords and tenants. We, therefore, hold that the respondents cannot rely upon article 31A to deprive the petitioner of his fundamental rights. Now coming to the arguments advanced by the learned Attorney General, as we propose to hold in his favour on point (2), we are relieved of the necessity to express our opinion on points (1) and (3) raised by him. On the basis of this elimination, the question that falls to be decided is whether the impugned Act deprives the petitioner of his fundamental right to hold and dispose of property and is not protected by cl. (5) of article 19 of the Constitution. This question is inextricably connected with the contention raised by the respondents that article 31(1) excludes the operation of article 19(1)(f) of the Constitution. We shall, therefore, proceed to consider both these questions. The argument of the learned counsel for the respondents is that article 19(1)(f) must give place to article 31(1) of the Constitution. In other words, a 905 person 's fundamental right to acquire, hold and dispose of property is conditioned by the existence of property and if he is deprived of that property by authority of law under article 31(1), his fundamental right under article 19(1)(f) disappears with it. Fundamental rights have a transcendental position in the Constitution. Our Constitution describes certain rights as fundamental rights and places them in a separate Part. It provides a machinery for enforcing those rights. Article 32 prescribes a guaranteed remedy for the enforcement of those rights and makes the remedial right itself a fundamental right. Article 13(1) declares that " All laws in force in the territory of India immediately before the commencement of this Constitution, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void "; and article 13(2) prohibits the State from making any law which takes away or abridges the rights conferred by Part III of the Constitution and declares that any law made in contravention of that clause shall, to the extent of the contravention, be void. It is true that any other Article of the Constitution may exclude the operation of the fundamental rights in respect of a specific matter for instance, articles 31A and 31B. It may also be that an Article embodying a fundamental right may exclude another by necessary implication, but before such a construction excluding the operation of one or other of the fundamental rights is accepted, every attempt should be made to harmonise the two Articles so as to make them co exist, and only if it is not possible to do so, one can be made to yield to the other. Barring such exceptional circumstances, any law made would be void if it infringes any one of the fundamental rights. The relevant Articles read: Article 19. (1) AU citizens shall have the right . . . . . . . . . (f)acquire, hold and dispose of property. . . . . . (5) Nothing in sub clauses (d), (e) and (f) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State 906 from making any law imposing, reasonable restrictions on the exercise of any of the rights conferred by the said sub clauses either in the interests of the general public or for the protection of the interests of any Scheduled Tribe. " Article 31. (1) No person shall be deprived of his property save by authority of law. (2) No property shall be compulsorily acquired or requisitioned save for a public purpose and save by authority of a law which provides for compensation for the property so acquired or requisitioned and either fixes the amount of the compensation or specifies the principles on which, and the manner in which, the compensation is to be determined and given; and no such law shall be called in question in any court on the ground that the compensation provided by that law is not adequate. (2A) Where a law does not provide for the transfer of the ownership or right to possession of any property to the State or to a Corporation owned or controlled by the State, it shall not be deemed to provide for the compulsory acquisition or requisitioning of property, notwithstanding that it deprives any person of his property. " Clause (2) of article 31 has been amended and cl. (2A) has been inserted in article 31 by the Constitution (Fourth Amendment) Act, 1955. The said cl. (2) in its original form, i.e., before the Constitution (Fourth Amendment) Act, 1955, read as follows : " (2) No property, moveable or immoveable, including any interest in, or in any company owning, any commercial or industrial undertaking, shall be taken possession of or acquired for public purposes under any law authorizing the taking of such possession or such acquisition, unless the law provides for compensation for the property taken possession of or acquired and either fixes the amount of the compensation, or specifies the principles on which and the manner in which, the compensation is to be determined and given. " To have a correct appreciation of the scope of the amended clauses of article 31, it is necessary to consider, 907 in the words of Lord Coke, the following circumstances : (i) What was the law before the Act was passed; (ii) What was the mischief or defect for which the law had not provided; (iii) What remedy Parliament has appointed; and (iv) the reason of the remedy. The unamended clauses of the Article were the subject of judicial scrutiny by this Court in the State of West Bengal vs Subodh Gopal Bose (1). There, the respondent purchased certain property at a revenue sale and as such purchaser he acquired under section 37 of the Bengal Revenue Sales Act, 1859, the right " to avoid and annul all under tenures and forthwith to eject all under tenants " with certain exceptions. In exercise of that right he brought a suit for eviction of certain under tenants and obtained a decree therein. When the appeal against the said decree was pending, the Act was amended. The amending Act substituted by section 4 the new section 37 in place of the original section 37 and it provided by section 7 that all pending suits, appeals and other proceedings which had not already resulted in delivery of possession, should abate. It was contended on behalf of one of the respondents therein that section 7 was void as abridging his fundamental rights under article 19(1)(f) and article 31. The Court by a majority held that the Act was void as it infringed article 31 of the Constitution. The majority of the Judges, who constituted the bench, took the view that cls. (1) and (2) of article 31 related to the same subject of eminent domain and that the State had no power to seriously impair the rights of a citizen in property without paying compensation. Patanjali Sastri, C. J., expressed his view thus at p. 618: " Under the Constitution of India, however, such questions must be determined with reference to the expression " taken possession of or acquired " as interpreted above, namely, that it must be read along with the word " deprived " in clause (1) and understood as having reference to such substantial abridgement of the rights of ownership as would (1) ; 908 amount to deprivation of the owner of his property. No cut and dried test can be formulated as to whether in a given case the owner is " deprived of his property within the meaning of article 31 each case must be decided as it arises on its own facts. Broadly speaking it may be said that an abridgement would be so substantial as to amount to a deprivation within the meaning of article 31, if, in effect, it withheld the property from the possession and enjoyment of the owner, or seriously impaired its use and enjoyment by him, or materially reduced its value. " Das, J. (as he then was), observed that article 31(2) dealt with only acquisition and requisition of property where under title passed to the State and that article 31(1) conferred police power on the State. Ghulam Hasan, J., concurred with the view of the Chief Justice. Jagannadhadas, J., did not agree with the view of Das, J., that article 31(1) conferred police power on the State, but he was not also able to agree with the view of the Chief Justice that article 31(1) has reference only to the power of eminent domain. He also expressed his disagreement with the view of Das, J., that acquisition and taking possession in article 31(2) have to be taken as necessarily involving transfer of title or possession. The result of the decision is that this Court by majority held that article 31(1) and (2) provided for the doctrine of eminent domain and that under cl. (2) a person must be deemed to have been deprived of his property, if he is " substantially dispossessed " or if his right to use and enjoy his property has been "seriously impairedor the value of the property is " materially reducedby the impugned law. This view was followed in Dwarakadas Shrinivas of Bombay vs The, Sholapur Spinning and Weaving Co. Ltd. (1) and in Saghir Ahmad vs The State of U.P. (2). Presumably, Parliament accepted the minority view of Das, J., on the interpretation of el. (2) of article 31 and amended the Constitution by the Constitution (Fourth Amend ment) Act, 1955. The amendment made it clear that cl. (2) of article 31 applies only to acquisition and requisition. Clause (2A) of the said Article which was inserted (1) ; (2) ; 909 by the said amendment. explains that unless a law provides for the transfer of the ownership or right to possession of any property to the State or to a corporation owned or controlled by the State, it shall not be deemed to provide for the compulsory acquisition or requisitioning of property, notwithstanding that it deprives any person of his property. The result is that it did not accept the majority view of this Court that deprivation of property need not be by acquisition alone but also by any serious impairment of an dividual 's right to property, whether his ownership or right to possession of the property has been transferred to the State or its nominee or not. This amendment also in effect accepted the view of Das, J., that deprivation of property in el. (1) of article 31 covers cases other than acquisition or requisition of property by the State. But the amendment in other respects does not give any indication as regards the interpretation of article 31(1) of the Constitution, for no change in the phraseology of that clause is made. Therefore, we must look at the terms of that clause to ascertain its true meaning. The words are clear and unambiguous and they do not give rise to any difficulty of construction. The said clause says in a negative form that no person shall be deprived of his property save by authority of law. The law must obviously be a valid law. Article 13(2) says that " the State shall not make any law which takes away or abridges the rights conferred by this Part and any law made in contravention of this clause shall, to the extent of the contravention, be void ". The law depriving a person of his property cannot,therefore, take away or abridge the right conferred by Part III of the Constitution. In a recent decision in Deep Chand vs State of U.P. (1) this Court considered the limitations placed by the Constitution on the Parliament and the Legislatures of the States in making laws. After reading articles 245, 246, 13 and 31 of the Constitution, this Court proceeded to state, at p. 655, thus : " The combined effect of the said provisions may be stated thus: Parliament and the Legislatures of States have power to make laws in. respect of any (1) [1959] SUPP. (2) S.C.R. 8. 118 910 of the matters enumerated in the relevant lists in the Seventh Schedule and that power to make laws is subject to the provisions of the Constitution including article 13 i.e., the power is made subject to the limitations imposed by Part III of the Constitution. . When cl. (2) of article 13 says in clear and unambiguous terms that no State shall make any law which takes away or abridges the rights conferred by Part III, it will not avail the State to contend either that the clause does not embody a curtailment of the power to legislate or that it imposes only a check but not a prohibition. A constitutional prohibition against a State making certain laws cannot be whittled down by analogy or by drawing inspiration from decisions on the provisions of other constitutions; nor can we appreciate the argument that the words " any law " in the second line of article 13(2) posit the survival of the law made in the teeth of such prohibition. " The same view was expressed by this Court in Basheshar Nath vs Commissioner of Income tax, Delhi Therein Das, C. J., says at p. 158 thus: " As regards the legislative organ of the State, the fundamental right is further consolidated by the provisions of article 13. Clause (1) of that Article, provides that all laws in force in the territories of India immediately before the commencement of the Constitution, in so far as they are inconsistent with the provisions of Part III shall, to the extent of the inconsistency, be void. Likewise cl. (2) of ' this Article prohibits the State from making any law which takes away or abridges the rights conferred by the same Part and follows it up by saying that any law made in contravention of this clause shall, to the extent of the contravention, be void. It will be observed that so far as this Article is concerned, there is no relaxation of the restriction imposed by it such as there are in some of the other Articles . . . " Bhagwati, J., observed much to the same effect at p. 161 thus: " It is absolutely clear on a perusal of article 13(2) of the Constitution that it is a constitutional mandate (1) [1959] SUPP. 1 S.C.R. 528. 911 to the State and no citizen can by any act or con. duct relieve the State of the solemn obligation imposed on it by article 13(2). . . ." One of us had also stated to the same effect, after citing article 13, at p. 181 : " This Article, in clear and unambiguous terms, not only declares that all laws in force before the commencement of the Constitution and made thereafter taking away or abridging the said rights would be void to the extent of the contravention but also prohibits the State from making any law taking away or abridging the said rights. " It is, therefore, manifest that the law must satisfy two tests before it can be a valid law, namely, (1) that the appropriate legislature has competency to make the law; and (2) that it does not take away or abridge any of the fundamental rights enumerated in Part III of the Constitution. It follows that the law depriving a person of his property will be an invalid law if it infringes either article 19(1)(f) or any other Article of Part III. Learned counsel, appearing for the respondents, while conceding that the validity of a law must pass the test of the foregoing two conditions, contends that in the context of article 31, we should apply the construction analogous to that put upon by this Court on the word " law " in article 21 of the Constitution in the case of A. K. Gopalan vs The State of Madras(1). In the said case, the question was whether the provisions of the (IV of 1950), were ultra vires the Constitution. This Court by a majority held that the said Act, with the exception of section 14 thereof, did not contravene any of the Articles of the Constitution and, therefore, the detention of the petitioner therein was not illegal. In that context, a question was raised whether the said Act must be struck down as infringing article 19(1)(d) of the Constitution. This Court held that the concept of the right " to move freely throughout the territory of India " referred to in article 19(1)(d) of the Constitution was entirely different from the concept of the right to "personal liberty" referred to in article 21 and that article 21 (1)[1950] S.C.R. 88. 912 should not, therefore, be read as controlled by the provisions of article 19. Though the learned Judges excluded the operation of article 19 in considering the question of fundamental right under article 21, the judgment of the court discloses three shades of opinion. As much of the argument is centred on the analogy drawn from this decision the relevant Articles may be summarized: Under article 21, no person shall be deprived of his life or personal liberty except in accordance with the procedure established by law. Clauses(1) and (2) of article 22 afford protection in the matter of arrest and detention in certain cases. Clauses 4, (5) and (6) thereof provide for preventive detention and constitutional safeguards relating thereto. It may not be inappropriate to describe these provisions as forming an exhaustive code, as they elaborately deal with a particular subject, namely, life and personal liberty. In construing the said provisions, Kania, C. J., said at p. 100 101 thus: " So read, it clearly means that the legislation to be examined must be directly in respect of one of the rights mentioned in the sub clauses. If there is a legislation directly attempting to control a citizen 's freedom of speech or expression, or his right to assemble peaceably and without arms, etc., the question whether that legislation is saved by the relevant saving clause of article 19 will arise. If, however, the legislation is not directly in respect of any of these subjects, but as a result of the operation of other legislation, for instance, for punitive or preventive detention, his right under any of these sub clauses is abridged, the question of the application of article 19 does not arise. The true approach is only to consider the directness of the legislation and not what will be the result of the detention otherwise valid , on the mode of the detenue 's life. " Mahajan, J. (as he then was), gave the reason for his conclusion at p. 226: " I am satisfied on a review of the whole scheme of the Constitution that the intention was to make article 22 self contained in respect of laws on the subject of preventive detention. " 913 The learned Judge further elaborated the point thus at p. 228: " If the intention of the Constitution was that a law made on the subject of preventive detention had to be tested on the touchstone of reasonableness, then it would not have troubled itself by expressly making provision in article 22 about the precise scope of the limitation subject to which such a law could be made and by mentioning the procedure that the law dealing with that subject had to provide. Some of the provisions of article 22 would then have been redundant. . . . " Mukherjea, J. (as he then was), said much to the same effect at p. 225: " In my opinion, the group of articles 20 to 22 embody the entire protection guaranteed by the Constitution in relation to deprivation of life and personal liberty both with regard to substantive as well as to procedural law. " Patanjali Sastri, J. (as he then was), stated at p. 191 " Read as a whole and viewed in its setting among the group of provisions (articles 19 to 22) relating to " Right to Freedom ", article 19 seems to my mind to pre suppose that the citizen to whom the possession of these fundamental rights is secured retains the substratum of personal freedom on which alone the enjoyment of these rights necessarily rests." The learned Judge further dilated on the point at p. 191. " Deprivation of personal liberty in such a situation is not, in my opinion, within the purview of article 19 at all but is dealt with by the succeeding articles 20 and 21. In other words, article 19 guarantees to the citizens the enjoyment of certain civil liberties while they are free, while articles 20 22 secure to all persons citizens and non citizenscertain constitutional guarantees in regard to punishment and prevention of crime. " Das, J. (as he then was), stated at p. 302 thus: " The purpose of article 19(1)(d) is to guarantee that there shall be no State barrier. It gives protection against provincialism. It has nothing to do with the freedom of the person as such. " 914 The learned Judge continued to state at p. 304: " Therefore, the conclusion is irresistible that the rights protected by article 19(1), in so far as they relate to rights attached to the person, i.e., the rights referred to in sub clauses (a) to (e) and (g), are rights which only a free citizen, who has the freedom of his person unimpaired, can exercise. " The views of the learned Judges may be broadly summarized under three heads, viz., (1) to invoke article 19(1), a law shall be made directly infringing that right; (2) articles 21 and 22 constitute a self contained code; and (3) the freedoms in article 19 postulate a free man. On the basis of the said theories, this Court, with Fazl Ali, J., dissenting, rejected the plea that a law made under article 21 shall not infringe article 19(1). Had the question been res integra, some of us would have been inclined to agree with the dissenting view expressed by Fazl Ali, J.; but we are bound by this judgment. Even so, there is no analogy between article 21, as interpreted by this Court, and article 31(1). Article 21 deals with personal liberty. Personal liberty, Kania, C.J., observed, includes " the right to eat or sleep when one likes or to work or not to work as and when one pleases and several such rights " and " deprivation of such liberty ", in the words of the learned Chief Justice, " is quite different from restriction (which is only a partial control) of the right to move freely (which is relatively a minor right of a citizen)". " Personal Liberty " is a more comprehensive concept and has a much wider connotation than the right conferred under article 19(1)(d). articles 19(1)(d) and 22 deal with different subjects, whereas both articles 19(1)(f) and 31(1) deal with the same subject, namely, property; while under article 19(1)(f), a citizen has the right to acquire, hold and dispose of property, article 31(1) enables the State to make a law to deprive him of that property. Such a law directly infringes the fundamental right given under article 19(1)(f). Further, articles 21 and 22 are linked up together; while article 21 enables the State to deprive a person of his life or personal liberty according to the procedure established by law, article 22 prescribes certain procedure in respect of both punitive and preventive detention. They constitute, an 915 integrated code in the matter of personal liberty. On the other hand, article 31(1), by reason of the amendment, ceases to be a part of the guarantee against acquisition or requisition of property without the authority of law and must therefore be construed on its own terms. The said Articles are not in pari materia and they differ in their scope and content. There is material difference not only in the phraseology but also in their setting. Article 31(1), therefore, cannot be construed on the basis of the construction placed upon article 21. The decision in The State of Bombay vs Bhanji Munji (1), on which reliance is placed by learned counsel for the respondents in support of their contention that article 31(1) excludes the operation of article 19(1), is one based on the pre existing law before the Constitution (Fourth Amendment) Act, 1955. In that case it was contended that sections 5(1) and 6(4)(a) of the Bombay Land Requisition Act,, 1948 (Bom. Act XXXIII of 1948), as amended by Bombay Act 11 of 1950 and Bombay Act XXXIX of 1950, were ultra vires articles 19(1)(f) and 31(2) of the Constitution. The premises in question there belonging to the respondents were requisitioned by the Governor of Bombay under the said Act. The Act also provided for compensation, and this Court found that there was a clear public purpose for the requisition, and upheld the law under article 31(2) of the Constitution. This Court also considered the alternative argument advanced, namely, that the Act was hit by article 19(1)(f) of the Constitution inasmuch as unreasonable restrictions were imposed on the rights of the respondents to acquire, bold and dispose of property. In rejecting that argument, Bose, J., speaking for the Court, observed at p. 780 thus : " We need not examine those differences here because it is enough to say that article 19(1)(f) read with clause (5) postulates the existence of property which can be enjoyed and over which rights can be exercised because otherwise the reasonable restrictions contemplated by clause (5) could not be brought into play. If there is no property which can be acquired, held or disposed of, no restriction (1) [1955] 1 S.C.R. 777. 916 can be placed on the exercise of the right to acquire, hold and dispose of it, and as clause (5) contemplates the placing of reasonable restrictions on the exercise of those rights it must follow that the article postulates the existence of property over which these rights can be exercised. " For these observations the learned Judge has drawn upon the principle laid down in A. K. Gopalan 's Case (1). These observations prima facie appear to be against the contentions of the petitioner herein. But a further scrutiny reveals that they have no bearing on the construction of article 31(1) of the Constitution after cl. (2) of article 31 has been amended and el. (2A) has been inserted in that Article by the Constitution (Fourth Amendment) Act, 1955. Before the amendment, this Court, as we have already noticed, held by a majority in The State of West Bengal vs Subodh Gopal Bose (2) that cls. (1) and (2) of article 31 were not mutually exclusive in scope and content, but should be read together and understood as dealing with the same subject, namely, the acquisition or taking possession of property referred to in cl. (2) of article 31. In that view, article 31, before the amendment, was a selfcontained Article providing for a subject different from that dealt with in article 19. On that basis it was possible to hold, as this Court held in The State of Bombay vs Bhanji Munji (3) on the analogy drawn from article 21, that when the property therein was requisitioned within the meaning of article 31, the opera tion of article 19 was excluded. But there is no scope for drawing such an analogy after the Constitution (Fourth Amendment) Act, 1955, as thereafter they dealt with two different subjects: article 31(2) and (2A) with acquisition and requisition and article 31(1) with deprivation of property by authority of law. The decision of this Court in Bhanji Munji 's Case (3) no longer holds the field after the Constitution (Fourth Amendment) Act, 1955. Strong reliance is placed upon the observations of Das, J. (as he then was), in Subodh Gopal Bose 's Case ( 2 ). Therein the learned Judge dissented from the view of the majority on the interpretation of article 31(1) and (2) of the Constitution. In the course (1) ; (2) ; (3) [1955] 1 S.C.R. 777, 917 of his dissenting judgment, the learned Judge made certain observations on the effect of his interpretation of article 31 on article 19. The learned Judge said at p. 632 thus: " Such being the correct correlation between article 19(1), sub clauses (a) to (e) and (g) on the one hand and article 21 on the other, the question necessarily arises as to the correlation between article 19(1) (f) and article 31. Article 19(1)(f) guarantees to a citizen, as one of his freedoms, the right to acquire, hold and dispose of property but reasonable restrictions may be imposed on the exercise of that right to the extent indicated in clause (5). Article 31, as its heading shows, guarantees to all persons, citizens and non citizens, the ' right to property ' as a fundamental right to the extent therein mentioned. What, I ask myself, is the correlation between article 19(1)(f) read with article 19(5) and article 31 ? If, as held by my Lord in A. K. Gopalan 's Case(1) at p. 191, subclauses (a) to (e)and (g) of article 19(1) read with the relevant clauses (2) to (6) ' presuppose that the citizen to whom the possession of these fundamental rights is secured retains the substratum of personal freedom on which alone the enjoyment of these rights necessarily rests ', it must follow logically that article 19(1)(f) read with article 19(5) must likewise presuppose that the person to whom that fundamental right is guaranteed retains his property over or with respect to which alone that right may be exercised. I found myself unable to escape from this logical conclusion. " The learned Judge earlier expressed the same opinion in Chiranjit Lal Chowdhuri vs The Union of India (2). When it was pointed out to the learned Judge that, if his view was correct, the legislature while it cannot restrict a person 's right to property unless the restriction is reasonable and for a public purpose, it can deprive him of his property without any such limitations, the learned Judge negatived the objection in the following words at p. 654: (1) ; , (2) ; 119 918 " What is abnormal if our Constitution has trusted the legislature, as the people of Great Britain have trusted their Parliament ? Right to life and personal liberty and the right to private property still exist in Great Britain in spite of the supremacy of Parliament. Why should we assume or apprehend that our Parliament or State legislatures should act like mad men and deprive us of our property without any rhyme or reason?" Further, the learned Judge was of the view that unless article 3 l(l) was construed in the manner he did, it would not be possible for the State to bring about a welfare State which our Constitution directs it to do. Elaborating this point, the learned Judge observed, at p.655, thus: We must reconcile ourselves to the plain truth that emphasis has now unmistakably shifted from the individual to the community. We cannot overlook that the avowed purpose of our Constitution is to set up a welfare State by subordinating the social interest in individual liberty or property to the larger social interest in the rights of the community. As already observed, the police power of the State is the most essential of powers, at times most insistent, and always one of the least limitable powers of the government '. . In the matter of deprivation of property otherwise than by the taking of posession or by the acquisition of it within the meanings of article 31(2) our Constitution has trusted our legislature and has not thought fit to impose any limitation on the legislature 's exercise of the State 's police power over private property ". Relying upon the said observations, learned counsel for the respondents pressed on us the following three points: (1) After the Constitution (Fourth Amendment) Act, 1955, cl. (1) of article 31 must be read independently of el. (2) thereof and, if so read, cl. (1) must be held to deal with police power. (2) Without such power the State cannot usher in a welfare State which the Constitution enjoins it to do. (3) The fact that there is no limitation on the power of the legislature to make law depriving a citizen of his property need not deter us from recognising such power, as we 919 can trust our legislatures and Parliament as the people of Great Britain have trusted their Parliament. We cannot agree with the con tention of the learned counsel that article 31(1) deals with " police power ". In the view expressed by Das, J. (as he then was), the legislature can make any law depriving a person of his property and the only limitation on such power is its good sense. But " police power ", as it is understood in American Law, can never be an arbitrary power. Willis on Constitutional Law " says at p. 727: " The United States Supreme Court has said that the police power embraces regulations designed to promote the public convenience or the general prosperity, as well as regulations designed to promote the public health, the public morals or the public safety '. " In the Constitution of the United States of America, prepared by the Legislative Reference Service, Library of Congress (Senate Document No. 170, 82D Congress), " police power " is generally defined thus at p. 982: " The police power of a State today embraces regulations designed to promote the public convenience or the general prosperity as well as those to promote public safety, health, morals, and is not confined to the suppression of what is offensive, disorderly, or unsanitary, but extends to what is for the greatest welfare of the State ". Prof. Willoughby states in his Constitutional Law of the United States (Vol. III, p. 1774):. . the police power knows no definite limit. It extends to every possible phase of what the Courts deem to be the public welfare ". Holmes, J., in Noble State Bank vs Haskell(1) concisely defines 'police power" thus: " It may be said in a general way that the police power extends to all the great public needs ". It is, therefore, clear that police power cannot be divorced from social control and public good. We cannot, therefore, import the doctrine of police power in our Constitution divorced from the necessary restrictions on that power as evolved by judicial decisions of the Supreme Court of the United States. Indeed, uninfluenced by any such doctrine, the plain meaning of the clear words (1)219 U.S. 104. 920 used in article 31(1) of the Constitution enables the State to discharge its functions in the interest of social and public welfare which the State in America can do in exercise of police power. The limitation on the power of the State to make a law depriving a person of his property, as we have already stated, is found in the word " law " and that takes us back to article 19 and the law made can be sustained only if it imposes reasonable restrictions in the interest of the general public. We find it also very difficult to accept the second and third aspects of the approach to the question. The duty of this Court is only to interpret the provisions of the Constitution in a liberal spirit, but not to eradicate or modify the fundamental rights. That apart, our constitution makers thought otherwise. The Constitution declares the fundamental rights of a citizen and lays down that all laws made abridging or taking away such rights shall be void. That is a clear indication that the makers of the Constitution did not think fit to give our Parliament the same powers which the Parliament of England has. While the Constitution contemplates a welfare State, it also provides that it should be brought about by the legislature subject to the limitations imposed on its power. If the makers of the Constitution intended to confer unbridled power on the Parliament to make any law it liked to bring about the welfare State, they would not have provided for the fundamental rights. The Constitution gives every scope for ordered progress of society towards a welfare State. The State is expected to bring about a welfare State within the framework of the Constitution, for it is authorized to impose reasonable restrictions, in the interests of the general public, on the fundamental rights recognized in article 19. If the interpretation sought to be placed on article 31(1) was accepted, it would compel the importation of the entire doctrine of police power and grafting it in article 31(1) or the recognition of arbitrary power in the legislature with the hope or consolation suggested that our Parliament and legislatures may be trusted not to act arbitrarily. The first suggestion is not legally permissible and the second does not stand to reason, 921 for the Constitution thought fit to impose limitations on the power of the legislatures even in the case of lesser infringements of the rights of a citizen. Another argument raised by learned counsel for the respondents may also be noticed. If the view expressed by us be correct, the argument proceeds, the law depriving a person of his property however urgent the need may be and whatever grave danger or serious vice it seeks to avert or suppress can never be a reasonable restriction on the right to enjoy property and therefore every such law would be void. The learned Attorney General argues that in the present case the petitioner is not deprived of his property, but his right is only restricted. It depends upon the per spective from which we look at the facts. In one sense, the petitioner has been deprived of his shares in the property given by the statute to the respondents, but, even on that assumption, we do not think that the argument of the respondents has any substance. The correct approach to the question is, first to ascertain what is the fundamental right of the petitioners; then to see, whether the law infringes that right. If the law ex facie infringes that right, the State can support that law only by establishing that the law imposes reasonable restrictions on the petitioner 's fundamental right in the interests of the general public. If so approached, the impugned Act by seeking to deprive the petitioner of his property certainly infringes his fundamental right. There is absolutely nothing on the record to sustain the validity of the law under the said clause (5) of article 19. The apprehension that deprivation can never be a restriction and therefore every law depriving a person of his property must necessarily be void, even if justifiable, cannot help the respondents, for if it is not saved by cl. (5), that result must flow from the promises. But that apprehension has no justification. This Court has held in a recent decision that under certain circumstances a law depriving a citizen of his fundamental right to property may amount to a reasonable restriction. In Narendra Kumar vs The Union of India (1), Das Gupta, J., observed: (1) ; 922 " It is reasonable to think that the makers of the Constitution considered the word 'restriction ' to be sufficiently wide to save laws ' inconsistent ' with article 19(1), or ' taking away the rights ' conferred by the Article, provided this inconsistency or taking away was reasonable in the interests of the different matters mentioned in the clause. There can be no doubt therefore that they intended the word 'restriction ' to include cases of ' prohibition ' also. The contention that a law prohibiting the exercise of a fundamental right is in no case saved, cannot therefore be accepted. It is undoubtedly correct, however, that when, as in the present case, the restriction reaches the stage of prohibition special care has to be taken by the Court to see that the test of reasonableness is satisfied. The greater the restriction, the more the need for strict scrutiny by the Court. " If so, the State can establish that a law, though it purports to deprive the petitioner of his fundamental right, under certain circumstances amounts to a reasonable restriction within the meaning of cl. (5) of article 19 of the Constitution. We, therefore, hold that a law made depriving a citizen of his property shall be void, unless the law so made complies with the provisions of el. (5) of article 19 of the Constitution. This leads us to the question whether the provisions of the Act infringe article 19(1)(f) of the Constitution. The impugned Act is The Madras Marumakkathayam (Removal of Doubts) Act, 1955 (Madras Act No. XXXII of 1955). As the argument turns upon the provisions of the Act and as the Act itself is a short one, it will be convenient to set out all the provisions thereof. The Madras Marumakkathayam (Removal of Doubts) Act, 1955 (Act No. XXXII of 1955). (An Act to remove certain doubts in the Madras Marumakkathayam Act, 1932 (Madras Act XXII of 1933), in regard to sthanams and sthanam properties). Whereas doubts have arisen about the true legal character of certain properties which are erroneously 923 claimed to be or regarded as sthanam properties, but which are properties of the tarwad, the male members of which are entitled to succeed to the sthanam and it is necessary to remove those doubts in respect of this question : Be it enacted in the Sixth Year of the Republic of India as follows 1. This Act may be called the MADRAS MARUMAKKATHAYAM (REMOVAL OF DOUBTS) ACT,, 1955. (2)It shall apply to all persons governed by the Madras Marumakkathayam Act, 1932 (Madras Act, XXII of 1933). 2.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 Marumakkathayam Act, 1932 (Madras Act XXII of 1933). The Act presupposes the existence of a sthanam and its properties. It says that the sthanam and its properties possessing one or more of the characteristics mentioned therein shall be deemed and shall be always deemed to have been a Marumakkathayam tarwad and its properties respectively. The 924 impugned Act applies also to sthanams whose title to properties has been declared by courts of law. Further the Act is given retrospective operation. It is suggested that the provisions of the Act have not been happily worded and, if properly understood with the help of the preamble, it would be clear that the sthanams were not converted into tarwads but only tarwads which were wrongly claimed to be sthanams were declared to be not sthanams. The preamble of a statute is " a key to the understanding of it " and it is well established that " it may legitimately be consulted to solve any ambiguity, or to fix the meaning of words which may have more than one, or to keep the effect of the Act within its real scope, whenever the enacting part is in any of these respects open to doubt ". We do not find any ambiguity in the enacting part of the Act. Assuming that there is some doubt, the preamble confirms our view of the construction of the Act. According to the preamble certain properties of the tarwad are erroneously claimed to be or regarded as sthanam properties and it has become necessary to remove those doubts by making the Act. The preamble also recognizes the existence of sthanams and the doubts related only to the title to the property of sthanams. The enacting part purports to resolve these doubts by laying down three tests, and if any one of these tests is satisfied, the sthanam shall be deemed to be a tarwad and the properties tarwad properties. In short, the Act, read with the preamble, takes the sthanam, lays down certain tests and proceeds to say that if one or other of the tests is satisfied in respect of any property claimed to be that of the sthanam, the sthanam by statutory fiction is treated as the tarwad and its properties as tarwad properties. The tests, as we will presently show, are arbitrary and not germane to the question whether the properties belong to a sthanam or a tarwad. Whatever may be the phraseology used, in effect and substance, the Act in the guise of applying certain tests seeks to convert certain sthanams into tarwards and their properties into tarwad properties. It applies equally to sthanams governed by decrees of courts and sthanams whose character and title to the properties can be established by clear 925 evidence and to sthanams whose title is admitted. In the said cases no question of doubt can conceivably arise. The Act in the guise of dispelling doubts abolishes a class of sthanams and deprives them of their properties. The question is whether the said legislation can stand the test of article 19(5) of the Constitution. The learned Advocate General of Kerala seeks to support the legislation on the ground that under the Marumakkathayam law, the three characteristics of properties mentioned in section 2 pertain to tarwad and, therefore, when wrong decisions were given by courts introducing confusion in titles, the legislature rightly stepped in to set right the wrong and declare such sthanams possessing definite characteristics of the tarwad to be and always to have been the tarwad properties. He further argues that, as the law was made to protect the rights of the members of the tarwad in a parti cular class of sthanams, the restrictions imposed on the sthanees ' rights in their properties would be reasonable and would be in the interests of the general public, notwithstanding the fact that the legislation indirectly affects the rights of a few decree holder sthanees, who have established their rights in a court of law. Mr. Purshottam Tricumdas supported the learned Advocate General in this contention. Mr. A. V. Viswanatha Sastri, who followed him, preferred to found his contention on a broader basis, namely, that the members of a tarwad and a sthanee have some interest in each other 's property and the legislation did nothing more than regulate their interest inter se to restore peace and harmony among them and to change the mutual relationship to bring it in accord with the concept of a modern welfare State. If that be the object of the Act, the argument proceeds, the mere fact that the law incidently disturbs the rights of parties who have obtained decrees of court does not make it unreasonable. Before we consider the validity of these arguments, it would be convenient at this stage to notice the scope of article 19(1)(f) and article 19(5) of the Constitution. The said Articles read 120 926 Article 19. (1) All citizens shall have the right . . . . . . . . . (f) to acquire, hold and dispose of property. . . . . . . . . . (5)Nothing in sub clauses (d), (e) and (f) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, reasonable restrictions on the exercise of any of the rights conferred by the said sub clauses either in the interests of the general public or for the protection of the interests of any Scheduled Tribe. Under cl. (5), the State can make a law imposing reasonable restrictions on the fundamental rights embodied in article 19(1)(f) in the interests of the general public. What is " reasonable restriction " has been succinctly stated by Patanjali Sastri, C. J., in State Of Madras vs V. G. Row(1) thus at p. 607: "It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict. " If we may say so, with respect, this passage summarizes the law on the subject fully and precisely. The learned Chief Justice in his description of the test of reasonableness, in our view, has not stated anything more than the obvious, for the standard of reasonableness is inextricably conditioned by the state of society and the urgency for eradicating the evil sought to be remedied. Some of the American decisions and passages from text books cited at the Bar may be useful in ascertaining whether in the instant case the restrictions imposed by the statute are reasonable. (1) ; 927 In Willoughby 's Constitutional Law it is stated at p. 795 thus: As between individuals, no necessity, however great, no exigency, however imminent, no improvement, however valuable, no refusal, however unneighbourly, no obstinacy, however unreasonable, no offers of compensation, however extravagant, can compel or require any man to part with an inch of his estate. " The Supreme Court of th United States of America in Henry Webster vs Peter Cooper(1) observed: " The result of the decision is, that the constitution of the State has secured to every citizen the right of acquiring, possessing, and enjoying property and that, by the true intent and meaning of this section, property cannot, by a mere act of the Legislature, be taken from one man and vested in another directly; nor can it, by the retrospective operation of law, be indirectly transferred from one to another, or be subjected to the government of principles in a court of justice, which must necessarily produce that effect." In The Citizens ' Savings and Loan Association of Cleveland, Ohio vs Topeka City (2), the Supreme Court of the United States of America again declares the importance of individual property right thus: " The theory of our governments, state and national, is opposed to the deposit of unlimited power anywhere. The executive, the legislative and the judicial branches of these governments are all of limited and defined powers. There are limitations on such power which grow out of the essential nature of all free governments. Implied reservations of individual rights, without which the social compact could not exist, and which are respected by all governments entitled to the same. No court, for instance, would hesitate to declare void a statute which enacted that A and B who were husband and wife to each other should be so no longer, but that A should thereafter be the husband of C, and B the wife of D. Or which should enact that the homestead now owned by A should (1) ; , 517. (2) ; , 461. 928 no longer be his, but should henceforth be the property of B." We have cited the relevant passages from the textbook and the decisions not with a view to define the scope of " reasonable restrictions " in article 19(5) of our Constitution, but only to point out that, as between citizens, the individual proprietary rights are ordinarily respected unless a clear case is made out for imposing restrictions thereon. There must, therefore, be harmonious balancing between the fundamental rights declared by article 19(1) and the social control permitted by article 19(5). It is implicit in the nature of restrictions that no inflexible standard can be laid down: each case must be decided on its facts. But the restrictions sought to be imposed shall not be arbitrary but must have reasonable relation to the object sought to be achieved and shall be in the interests of the general public. Before we proceed to consider whether the restrictions imposed by the impugned Act are reasonable within the meaning of el. (5) of article 19, it would be necessary to ascertain precisely the law on the following three matters: (1) What is a sthanam in Marumakkathayam law?; (2) what is tarwad under the said law ? ; and (3) what is the relationship between members of a tarwad and a sthanee? Marumakkathayam law governs a large section of people inhabiting the West Coast of South India. Marumakkathayam literally means descent through sisters ' children. It is a body of custom and usage which have received judicial recognition. Though Sundara Aiyar, J., in Krishnan Nair vs Damodaran Nair(1) suggested that " Malabar law is really only a school of Hindu law ", it has not been accepted by others. There is a fundamental difference between Hindu Law and Marumakkathayam system in that the former is founded on agnatic family and the latter is based on matriarchate. Marumakkathayam family consists of all the descendants of the family line of one common ancestor and is called a tarwad. The incidents of a tarwad are so well settled that it is not necessary to consider the case law, but it would (1) Mad. 929 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 union 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. " For the purpose of this case it is not necessary to go into further ramifications of the incidents of a tarwad, for nothing turns upon them. We are concerned in this case with a sthanam. In the book of Sundara Aiyar the origin, scope and incidents of a sthanam are discussed at p. 249: " As a technical word, ' stanom ' means a position of dignity of this kind, that is, one to which certain specific property is attached, and which passes with it, and is held by the person as the " stani. . . . . The origin of stanom is by no means clear and is more or less a matter for speculation." The learned author proceeds to give the three modes of the origin of sthanams, namely, (1) in a ruling family " it was considered necessary in the circumstances that for the maintenance of the dignity of the ruler he should own properties in which the 930 members of the tarwad as such had no right or interest and which would pass with the Crown to his successor": sthanams in the families of Zamorin, Palghat, Wulluvanad and other Rajas are given as instances of this class of sthanams; (2) " in the case of some chieftains and public officers, sthanams were created by the ruling king, who, when he appointed the head of a particular family to an office with hereditary succession attached also certain lands for the maintenance of the officer holder ": Para Nambi is given as a prominent instance of this class; and (3) " when a family became very opulent and influential, it was sometimes deemed necessary in order to keep its social position and influence that the head should be able to maintain a certain amount of state, and for that purpose the members of the family agreed to set apart certain property for him, and such property, would descend to the head of the family for the time being ". To some of the questions posed by the decisions or that are likely to arise, the learned author suggested some answers. The learned author describes the position of a sthanee vis a vis the members of the tarwad thus: " It is rather that of a member of a tarwad who separates himself from it by division. His accession to the stanom operates as a severance from the family. In consideration of his solely becoming entitled to the stanom property it was probably considered fair that he should give up his existing right in the property of the tarwad. But he and his tarwad will have the same right of succession to the properties of each other as if his severance from the family had been the result not of his accession to the stanom, but a voluntary division between him and the rest of the family." Another difficulty visualized and attempted to be answered by the learned author is the case of a family which has no male member to succeed to the sthanam. He gives three possible answers, namely, (i) escheat to the Crown ; (ii) descent according to the rules of devolution applicable to the property of a divided member ; and (iii) on the assumption that 931 the property is dedicated for the purpose of the tarwad, reverting to the tarwad. On the question, what would happen to the sthanam, if at the time of the death of the sthanee there was no male member in the tarwad, though he cited a decision of the Madras High Court where a subsequent born male infant was given a decree to recover the properties, he was of the view that the question was not an easy one to decide. The decided cases considered the nature of this institution and also its incidents. A division bench of the Madras High Court in Vira Rayen vs The Valia Rani of Pudia Kovilagom, Calicut (1) held that according to the custom obtaining in the family of the Zamorin Rajas of Calicut, property acquired by a sthanam holder and not merged by him in the properties of his sthanam, or otherwise disposed of by him in his lifetime, became, on his death, the property of the kovilagom in which he was born, and, if found in the possession of a member of the kovilagom, belonged presumably to the kovilagom as common property. In the course of the judgment, the learned judges pointed out that in the family of the Zamorin of Calicut there were five sthanams or places of dignity with separate properties attached to them, which were enjoyed in succession by the senior male members of the kovilagom. It appears from the judgment that the senior lady of the whole family also enjoyed a sthanam with separate property. The Judicial Committee in Venkateswaralyany Shekhari Varma (2) was considering the validity of a perpetual lease of sthanam lands effected by one of the Valia Rajas of Palghat. In that context, Sir Arthur Hobhouse, delivering the judgment of the Judicial Committee, described a sthanam thus at p. 386: " It appears that in the families of the Malabar Rajas it is customary to have a number of palaces, to each of which there is attached an establishment with lands for maintaining it, called by the name of a sthanam. The Palghat family have no less than nine sthanams. Each sthanam has a raja as its head or Sthanamdar. The Sthanamdar represents (1) Mad. 141. (2) Mad. 932 the corpus of his sthanam much in the same way as a Hindu widow represents the estates which have devolved upon her, and he may alienate the property for the benefit or proper expenses of the sthanam. " This passage equates a sthanamdar to a Hindu widow vis a vis his rights both in the matter of representation as well as his right to alienate the property pertaining to the sthanam. The decision in Mahomed vs Krishnan (1) dealt with a suit filed by the junior members of a tarwad, which consisted of the three sthanams, against the karnavan and others, including certain persons to whom he had alienated some tarwad property, inter alia, for a declaration that the alienations were invalid as against the tarwad and for possession of the property alienated. One of the questions raised was whether the plaintiffs were competent to maintain the suit. The suit was resisted on several grounds and one of them was that the tarwad was not a Malabar family in the ordinary sense of the term, but that it consisted of three sthanams and three illakur houses or subsidiary tarwads. In considering the objections the learned Judges considered the nature of a sthanam property and made the following observations at p. 112: " According to the custom of Malabar, the nature of stanom property is such that the present holder has in it a life interest and the successor derives no benefit from it during the life of his predecessor, whereas in ordinary tarwad property each member of the tarwad has a concurrent interest and a joint beneficial enjoyment. Although the position of a stani is analogous to that of a childless widow, in that both have a life interest, both represent the estate ate or the inheritance for the time being, and both have a disposing power only to the estate taken by reversioner. Each male reversioner becomes under Hindu Law the full owner when the reversion falls in, whereas the person that succeeds to a stanom takes the same qualified estate that his predecessor bad. The legal relation therefore between the Vayoth Nair and the other stanomdars and the karnavans of the three subsidiary tarwads is that (1) Mad. 106. 933 which subsists among a group of person , entitled to succeed to the stanom property in a certain order, each having only a life interest therein and qualified power of disposition over it. The relation between the stani and the junior members of each subsidiary tarwad is that which exists between the representative of the stanom for the time beinog and the class of persons who may become karnavans of their tarwads and therefore representatives of the junior and senior stanoms in the order of seniority. " This decision not only brings out the differences between a Hindu widow 's estate and the sthanee 's interest in a sthanam property but also points out that the interest of a member of a tarwad is only a right to succeed to the sthanam property in a certain order. It is nothing more than a spes successionis. Seshagiri Ayyar, J., in Krishnan Kidavu vs Raman(1) throws some light on the relationship to the tarwad of a person who had succeeded to a sthanam. The learned Judge says at p. 920 thus: " It is clear that if in his new sphere the stani acquires property and does not dispose of it, his tarwad will be entitled to it. The converse position is at least arguable. If the tarwad becomes extinct, the quondam member who had become a stani may lay claim to the property. It cannot, therefore, be said that the attainment to a sthanam severs the relationship altogether. The person thus ceasing to be a member is not in the position of a stranger. " The Judicial Committee in considering some of the aspects of the institution of a sthanam in K. Kochunni vs K. Kuttanunni (2 ), a case that was fought out between the petitioner and some of the respondents in the present petition, accepted the meaning given to the word " sthanam " by Sandara Aiyar in his book on " Malabar and Aliyasanthana Law ", namely, that it is a dignity to which property is attached for its maintenance and for the fulfilment of the duties attached to the position, but rejected the contention that the following two circumstances indicated that the sthanam was a tarwad: (1) maintenance was (1) Mad. (2) I.L.R. 121 934 decreed against Moopil Nair to the junior members of the family and that maintenance was being paid to the junior members; and (2) the Court of Wards treated the sthanam property as tarwad property. The first circumstance was explained away with the following remarks at p. 691: " The maintenance claimed was a customary one, originating in ancient times when admittedly the Muppil Nair was a sthani in possession of sthanam rights. There is no evidence as to how the maintenance allowance arose, whether it was given in recognition of a legal claim or was only a generous provision made for the benefit of the women and younger members, which the Raja was perfectly competent to do out of property which he regarded exclusively as his own. " In respect of the second circumstance, the Judicial Committee remarked at p. 693 thus: " It appears from the evidence that the Court of Wards throughout the entire period of their management from 1872 till 1910 treated the estate as if it was a tarwad, but this was apparently without any investigation into the true nature of the property. . . Besides there was no adult male at that time to question the treatment by the Court of Wards of the property as tarwad property." A third circumstance was relied upon, namely, that in 1872 the only surviving member of the family was then a girl of six years of age and that, therefore, there being no male heir to succeed to the sthanam, the sthanam became extinct. The Judicial Committee did not allow this plea to be raised for the first time before them. That apart, quoting from Sundara Aiyar 's book, they pointed out that the question whether a sthanam becomes extinct on the extinction of the male members or is only in abeyance during the absence of the male members so as to be capable of being revived, does not admit of an easy solution. " This decision lays down that if once it has been . established that a property is a sthanam property, the mere fact that the sthanamdar was giving maintenance to the members of the family or that the Court of Wards treated the entire property as tarwad 935 property would not in itself convert what, is sthanam property into a tarwad property. To summarize: The origin of the sthanam is lost in antiquity. It primarily means a dignity and denotes the status of the senior Raja in a Malabar Kovilagom or palace. It is surmised that sthaiiams were also created by the Rajas by giving certain properties to military chieftains and public officers and also by tarwads creating them and allocating certain properties for their maintenance. Most of the the incidents of a sthanam are well settled. Usually the seniormost male member of the family and occasionally a female member attains a sthanam. Properties are attached to the sthanam for the maintenance of its dignity. The legal position of a sthanee is equated to that of a Hindu widow in that he represents the estate for the time being and he can alienate the properties for necessity or for the benefit of the estate. Unlike a Hindu widow, the successor to a sthanee is always a life estate holder. In that respect his position is more analogous to an impartable estate holder. He ceases to have any present interest in the tarwad properties. Like a Hindu widow or an impartible estate holder, he has an absolute interest in the income of the sthanam properties or acquisitions therefrom. His position is approximated to a member separated from the family and that the members of the tarwad succeed to his acquisitions unless acereted to the estate and he succeeds to the tarwad properties, if the tarwad becomes extinct. Questions like what would happen if there is no male heir to a sthanam at any point of time whether the properties pertaining to the sthanam would escheat to the State or devolve upon the members of the tarwad or whether a subsequent birth of a male heir would revive the athanamare raised by Sundara Aiyar in his book, but there is a decision of the Madras High Court where in the case of Punnathoor family a subsequent born male heir was given a decree for the possession of the properties of a sthanam. On the question whether a sthanam property, not being the property of a member of a tarwad, be blended with the property of the tarwad so as to make it a tarwad property, there is no direct 936 decision. On principle if the sthanee, on attaining the sthanam is in the position of a separated member of a Hindu family, there may not be any scope for the application of the doctrine of blending. No member of a tarwad has any right to maintenance from out of the sthanam properties and the mere fact that a sthanee for the time being, out of generosity or otherwise, gives maintenance to one or other members of the tarwad cannot legally have the effect of converting the sthanam property into a tarwad property; nor the fact that the sthanam properties are treated as tarwad properties can have such a legal effect. Now, what is the relationship between the tarwad and the sthanee ? It is true that whatever may be the origin of the sthanam, ordinarily, the seniormost member of a tarwad succeeds to that position, but once he succeeds, lie ceases to have any proprietary interest in the tawad. So too, the members of the tarwad have absolutely no proprietary interest in the sthanam property. Thereafter, they continue to be only " blood relations" with perhaps a right of succession to the property of each other on the happening of some contingency. The said right is nothing more than a spes successions the tarwad may supply future sthanees. With this background let us look at the terms of the Act to see what it purports to do. What is the effect of the impugned Act ? It is not the form that matters but the substance of it in its operation on the vested rights of citizens. The Act destroys the finality of decrees of courts establishing the title of janmies to the sthanam properties. It affects the undisputed title of sthanees in sthanam properties, though they may not have obtained decrees in respect thereof. It statutorily confers title retrospectively on the members of the tarwad who had none before. It arbitrarily dislocates the title of particular sthanees in respect of certain sthanam with particular characteristics, which have no relation to the title of the sthanees. The first characteristic mentioned in the impugned Act is that there is or had been at any time an intermingling of the properties of the sthanam and the properties of 937 the tarwad. If the word "intermingling" conveys only the idea of mere factual mixing up of the sthanam properties with the tarwad properties, it cannot, by any known legal notion of Marumakkathayam Law or on any analogy drawn from Hindu Law, convert the sthanam property into the tarwad property. Even if it is understood in the sense of blending, the sthanee, who ceases to be a member of the tarwad and is in a position of a separated member, cannot legally blend his property with that of the tarwad, for the legal concept of blending implies that the person who blends his property with that of the family is an undivided member of the family. The second characteristic mentioned in the impugned Act is that the members have been receiving maintenance from properties purporting to be sthanam properties as of right or in pursuance of custom or otherwise. This characteristic is foreign to the concept of sthanam. No member of a tarwad is entitled as of right to any maintenance from out of properties of the sthanam. Under this clause, if maintenance is so received, the sthanam is deemed to be a tarwad on the basis that the receipt of maintenance from the sthanee out of the sthanam property brings about the said result. If a sthanee creates any such right in favour of a tarwad, it may bind him, but it cannot certainly be binding on the sthanam properties or its successor. If a custom be established on evidence, it may become an incident of the sthanam, but it cannot obliterate or extinguish it or convert it into a tarwad. The word "otherwise" in the context, it is contended, must be construed by applying the rule of ejusdem generis. The rule is that when general words follow particular and specific words of the same nature, the general words must be confined to the things of the same kind as those specified. But it is clearly laid down by decided cases that the specific words must form a distinct genus or category. It is not an inviolable rule of law, but is only permissible inference in the absence of an indication to the contrary. On the basis of this rule, it is contended, that the right or the custom mentioned in the clause is a distinct genus and the words " or otherwise " must be 938 confined to things analogous to right or custom such as lost grant, immemorial user, etc. It appears to us that the word " otherwise " in the context only means " whatever may be the origin of the receipt of maintenance ". One of the objects of the legislation is to by pass the decrees of courts and the Privy Council observed that the receipt of maintenance might even be out of bounty. It is most likely that a word of the widest amplitude was used to cover even acts of charity and bounty. If that be so, under the impugned Act even a payment of maintenance out of charity would destroy the character of an admitted sthanam which ex facie is expropriatory and unreasonable. Nor does the third characteristic embody an unimpeachable test of the extinction of a sthanam or the conversion of the same into a tarwad. Under the impugned Act, if there had been at any time a vacancy caused by there being no male member of the tarwad eligible to succeed to the sthanam the sthanam would be deemed to be a tarwad. Not only there is no justification for enacting that non existence of such a male heir at any point of time should put an end to the character of the sthanam, but the only decided case of the Madras High Court on the point recognized the right of a subsequently born male member in a tarwad to succeed to the sthanam and its properties. Therefore, the three tests laid down by the impugned Act to enable the drawing of the statutory fiction are not only not germane but extraneous to the object sought to be achieved. What is more, the impugned Act is made retrospective so as to make the sthanee liable to arrears of maintenance and past profits. The contention that the impugned Act is nothing more than a readjustment of rights inter se between the members of the tarwad and the sthanee is without substance, for, before the Act, except ties of blood and a right to succeed in a particular contingency the members of the tarwad had no interest in presenti in the sthanam property nor vice versa. The impugned Act is only a legislative device to take the property of one and vest it in another without compensation, and, therefore, on its face stamped with unreasonableness. In short, the 939 impugned Act is expropriatory in character and is directly hit by article 19(1) (f) and is not saved by cl. (5)of article 19. Another condition for the application of cl. (5) of article 19 is that the restrictions should be in the interests of the general public. We assume for the purpose of this case that there are sthanams with characteristics similar to those of the petitioner 's sthanam and that the Act confers title on the junior members of tarwad in properties of such sthanams and that they form a defined section of the public. If so, a question arises whether a section of the public is "general public " within the meaning of article 19(5). This fell to be considered by a full bench of the Calcutta High Court in Iswari Prosad vs N. R. Sen (1). It was contended before the full bench of the said High Court that the words " in the interests of the general public " mean " in the interests of the public of the whole of the Republic of India ". Negativing this contention, Harries, C.J., observed at p. 278 thus: " The phrase ' in the interests of the general public ' means I think nothing more than 'in the public interest ', and it may well be that legislation affecting a limited class of persons or a limited area might well be legislation in the public interests, though the public of other parts of India might not be directly affected by such legislation. If they are indirectly affected such would be quite sufficient to make such legislation in the public interest. Legislation affecting a particular class or a particular area would only directly affect the members of that class or the inhabitants of that particular area. But the removal of some serious abuse or grievance or discontent is a matter indirectly affecting the public generally. It is not in the interests of the general public or in the public interest to allow any class of persons to labour under some grievance and to be genuinely discontented. It is in the interests of the general public or in the public interest that all classes of the citizens of India are content and that their grievances should be removed. A festering sore on the human body may eventually affect the whole (1) A.I.R. 1952 Cal. 273. 940 body though at first its effect is localised. Grievances or discontent in some particular area or in some State or in some class of persons may eventually affect the whole Republic of India, though originally the effects might be limited. The removal of any grievance, abuse or discontent is a matter not only where the discontent or grievance is genuine it may well be in the public interest to remove such, though the public in other parts of India may not be directly affected. It is in the public interest that persons should be governed justly and well and removal of hardship and grievances of a particular class is I think clearly a matter of public interest. We agree with these observations. Relying upon these observations, it is said that the decision of the Privy Council created a stir among the members of that class of the public who are governed by the Marumakkathayam Law, either because the pre existing rights were disturbed or because there is no justification in a welfare State for one member of the tarwad succeeding to the entire sthanam property to the exclusion of the other members of the tarwad, and so, the argument proceeds, that the State has stepped in to rectify the mistake or to do justice consistent with modern trends. It is further argued that the redress of this grievance of a section of the com munity is in the interest of the public. This argument is purely based on surmises. We have pointed out that the junior members of the tarwad had never any interest in the sthanam properties. We cannot say on the materials placed before us that any public interest will be served by depriving a sthanee of his properties and conferring title in his properties so deprived on others. Nor is there any evidence that there was a real and genuine grievance in this particular section of the public belonging to tarwads justifying the interference by the State. We cannot on the materials placed before us hold that this reform is in the public interest. The learned Attorney General raised a further point that no law can impose restrictions retrospectively on fundamental rights aid, in support of his contention, he relied upon the wording of cl. (5) of article 19 of the 941 Constitution and also on the decision of the Privy Council in Punjab Province vs Daulat Singh (1). But, as we have held that the restrictions imposed are not reasonable within the meaning of cl. (5) of article 19 of the Constitution, this question need not be decided in this case. We declare that Madras Act 32 of 1955 is void and ultra vires the Constitution and issue a writ of mandamus restraining the State of Kerala from enforcing the provisions of the said Act against the petitioner and his sthanams. In the result, Petition No. 443 of 1955 is allowed with costs; Petition No. 40 of 1956 is allowed, but in the circumstances, without costs ; and Petition No. 41 of 1956 is dismissed, but in the circumstances, without costs. SARKAR, J. In our view these petitions fail. The petitions challenge the validity of an Act passed by the Madras Legislature called the Madras Marumakkathayam (Removal of Doubts) Act, 1955. The substantive provisions of the Act are contained in section 2 which is in these terms: "section 2. 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." (1) 122 942 Sthanams and tarwads are peculiar institutions of the Malabar area and a few words about them are necessary. A tarwad is an undivided family governed by the Marumakkathayam Law, the customary law of Malabar. The outstanding feature of that law is that for the purposes of inheritance, descent is traced through the female line. The property of the tarwad or family is owned by all its members but is managed ordinarily by the eldest male member, such manager being called the karnavan. Before the Madras Maru makkathayam Act, 1932, was passed, a member of the tarwad could not insist on a partition and a partition took place only when all the adult members agreed. The members had, however, the right to be maintained by the karnavan and had certain other rights to which it is not necessary for us to refer. The Madras Marumakkathayam Act, 1932, made some changes in the customary law. The more important changes were that the junior members were given power to inspect the accounts of the karnavan and a right to ask for partition subject to certain limitations. We turn now to sthanams. A sthanam is a station, rank or dignity. A sthani is the holder of a sthanam. A sthanam usually has lands attached or granted to keep up the station, rank or dignity of the sthani and it appears to have come into existence in one or other of the manners hereinafter stated. The ancient rulers of the Malabar coast possessed sthanams and it may be taken that the lands which they held as rulers were regarded as being sthanam lands in character. The sthanam held by a ruler went by the name of Rajasthanam. The Rajasthanams have continued though there are no rulers now. Apart from Rajasthanams, there are other kinds of sthanams. The rulers often granted sthanams with lands attached to them to their subsidiary chieftains or other persons of consequence in their States. Sthanams with lands were also sometimes granted for rendering military service. Again when a family became opulent and influential the members of the tarwad sometimes agreed to set aside for the karnavan certain lands in order that he might keep up his social position and influence and so again a sthanam was created. A sthanam with the 943 lands attached thereto devolved on the death of the holder for the time being to the next senior member of his tarwad. When a member of the tarwad becomes the sthani he loses his interest in the tarwad properties though he does not cease to be a member of the tarwad. The members of the tarwad in their turn have no interest in the sthanam lands. The sthani is entitled to utilize the income of the sthanam properties for his own purposes. For a more detailed state ment of the character of a sthanam reference may be made to P. R. Sundara Ayyar 's book on Malabar and Aliyasanthana Law. We have taken the greater part of what we have said in this paragraph from Kuttan Unni vs Kochunni (1). The important point to note for the purposes of these petitions is that the sthani for the time being is alone entitled to the lands of his sthanam and the members of his tarwad are not enti tled to them while all members of a tarwad except the sthani are entitled jointly to all the properties of a tarwad. There are altogether three petitions before us bearing numbers 443 of 1955 and 40 & 41 of 1956 and they have been heard together. The petitioner in Petition No. 443 of 1955 is the Moopil Nayar or the senior member of the Kavalappara tarwad or family to which the parties to this petition other than the States of Kerala and Madras, belong. As the head of. the family he claimed to be entitled to eight sthanams with the lands attached to them respectively. It appears that the Kavalappara family was a ruling dynasty in pre British times and ruled over the Kavalappara territory. The Moopil Nayar or senior member of this family for the time being was the ruler of the Kavalappara State. The Kavalappara territory was the Ruler 's Rajasthanam. When Malabar was ceded by Tippu Sultan to the East India Company in 1792, the Kavalappara family lost its sovereign rights. The Kavalappara territory, however, continued as a Rajasthanam held by the Moopil Nayar or the senior member of the family for the time being. The petitioner in Petition No. 443 of 1955 has been the Moopil Nayar of the Kavalappara family since his elder (1) I.L.R. 914 brother 's death in 1925 and claims the lands of the Rajasthanam as such. This is the first of the eight sthanams mentioned earlier. The head of the Kavalappara family was entitled to five other sthanams granted from time to time by the rulers of Palghat to whom the Kavalappara State was subordinate. Each of these sthanams also had lands attached to it. The lands attached to the Rajasthanam and sthanams granted by the rulers of Palghat were situate in the South Malabar district which originally appertained to the State of Madras and is now part of the State of Kerala. The head of the Kavalappara family was also entitled to two further sthanams with the lands attached to them which had been granted by the ruler of Cochin. The lands belonging to these two sthanams were situate in the former State of Cochin now merged in the State of Kerala. The petitioner made a gift of the lands attached to the five sthanams which had been granted by the Raja of Palghat, to his wife and daughters. The donees under this gift are the petitioners in Petition No. 40 of 1956. He likewise made a gift of the lands attached to the two sthanams which had been granted by the Raja of Cochin to his son who is the petitioner in Petition No. 41 of 1956. These gifts had been made before the impugned Act bad been passed. It is necessary now to refer to a previous litigation. On April 10, 1934, the then junior members of the Kavalappara family filed a suit in the Court of the Subordinate Judge of Ottapalam for a declaration that all the properties managed by the Moopil Nayar were tarwad properties belonging equally and jointly to all the members of the tarwad including the Moopil Nayar and that the latter was managing them as Karnavan and not as sthani. The defendant to this suit was the petitioner in Petition No. 443 of 1955, the Moopil Nayar or the senior member of the family. The Moopil Nayar resisted the suit claiming to be solely entitled to the disputed lands on the basis that they were sthanam lands and he was the sthani. The suit was dismissed by the learned Subordinate Judge but on appeal the decision of the Subordinate Judge was reversed by the High Court of Madras and a decree 945 was passed as claimed in the suit. It is this judgment of the High Court which is reported in I.L.R. , to which reference has been made earlier. On a further appeal to the Privy Council by the Moopil Nayar, the decision of the High Court was set aside and that of the Subordinate Judge restored. The decision of the Judicial Committee was given on July 29, 1947. The result was that the petitioner, Moopil Nayar, was declared to be entitled as sthani to the disputed properties and it was held that those properties were sthanam properties and not tarwad properties. The impugned Act came into force on October 19, 1955. At that time the South Malabar District was part of the State of Madras. Later, with the formation of the State of Kerala, this area became part of that State and continued to be governed by the Act. That Act was never extended to any other part of Kerala and never applied to the territories covered by the former Cochin State which had been merged in the State of Kerala. The petitions were filed challenging the validity of the Act soon after it came into force. We will take up Petition No. 443 of 1955 first. In this petition we are concerned only with the Kavalappara Rajasthanam. The petitioner, the Moopil Nayar, was entitled at the date of the petition only to the lands attached to that sthanam for he had earlier given away the lands belonging to the other sthanams to his wife, daughters and son as already stated. He complains that as a result of the impugned Act he has been deprived of the exclusive ownership of the lands attached to the Kavalappara Rajasthanam and has to share it with the other members of his tarwad or family. It is not in dispute that the Act applies to Kavalappara Rajasthanam. The respondents to this petition are the junior members of the Kavalappara family and the States of Kerala and Madras. The State of Madras has not appeared perhaps because the Act applies to lands which have since the filing of the petition, been transferred from Madras to Kerala, upon which transfer the State of Kerala had been made a party to the petition. There are three interveners in 946 this petition two of whom support the respondents and one supports the petitioner. The petitioner, Moopil Nayar, first says that the Act violates article 14 of the Constitution inasmuch as it applies to the stbanam held by him only and to no other sthanams. This raises a question of fact. He, however, also says that the Act is bad as infringing articles 19(1)(f) and 31(1) of the Constitution as it deprives him of his right to hold property and that it is not saved by cl. (5) of article 19. If, however, the Act enacts a law within the meaning of article 31 A of the Constitution, the petitioner cannot be heard to complain of violation of articles 14, 19(1)(f) and 31(1). So the question arises, Is it saved by article 31A? That article so far as is material in this case is set out below: " article 31A. (1) Notwithstanding anything contained in article 13, no law providing for (a) the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights, . . . . . . . . . . shall be deemed to be void on the around that it is inconsistent with, or takes away or abridges any of the rights conferred by article 14, article 19 or article 31 : Provided that where such law is a law made by the Legislature of a State, previsions of this article shall not apply thereto unless such law having been reserved for the consideration of the President, has received his assent. (2) In this article, (a) the expression ' estate ' shall, in relation to any local area, have the same meaning as that expression or its local equivalent has in the existing law relating to land tenures in force in that area, and shall also include any jagir, inam or muafi or other similar grant and in the States of Madras and Kerala, any janmam right; (b)the expression 'rights ', in relation to an estate, shall include any rights vesting in a proprietor, sub proprietor, under proprietor, tenureholder, raiyat, under raiyat or other intermediary 947 and any rights or privileges in respect of land revenue ". It appears that the Act had been reserved for the consideration of the President and had received his assent. If, then, the Act provides for a modification of rights in an " estate ", it would not be void on the ground that it is inconsistent with articles 14, 19 and 3l the violation of which the petitioner complains. Under article 31A (2) (a), an " estate " includes, in the State of Kerala, any janmam right. This of course means lands held in janmam rights for janmam rights exist only in lands. Again, under sub cl. (b) of el. (2) of article 31A the expression " rights " used in relation to an " estate " in that article includes the rights of the proprietor of the estate or others holding under him. In regard to this sub clause it has been held by this Court in Alma Ram vs State of Punjab (1) that the expression " rights " in relation to an estate has been used in a very comprehensive sense and includes not only the interest of the proprietor or sub proprietor but also of lower grades of tenants, that is, all those who have acquired rights under him by what are called processes of sub infeudation. The respondents contend that the rights affected by the Act are janmam rights and, therefore, the Act is one contemplated by article 31A. The petitioner, Moopil Nayar, states that the respondents have not alleged that the sthanam properties are held in janmam right. It appears that in the affidavit of the State of Kerala it is stated that the Act is saved by virtue of the provisions of article 31A. As we are concerned with lands in the State of Kerala, the Act could be saved by article 31A if the lands were held in janmam rights or in rights held under the holder of the janmam rights. The allegation that the Act is saved by article 31 A, therefore, clearly implies that the lands attached to the sthanams were held in janmam rights or rights subordinate to janmam rights. There is no statement by the petitioner anywhere on the records that the lands were not held on such rights. On the other hand, it would appear from what we state later that (1) [1959] SUPP. I S.C.R. 748. 948 the rights in the lands were janmam rights or rights subordinate to janmam rights. Janmam right is really a freehold interest in land. In section 3 (k) of the Malabar Tenancy Act, 1929, a janmi has been defined as a person entitled to the absolute proprietorship of land. What we have earlier stated leaves no doubt that the lands, belonging to the sthanams were lands held in absolute proprietorship, that is, in freehold interest. It has not been alleged that the freehold interest in the sthanam lands has undergone any change. Neither has it been shown to us that in the Malabar area land can be held in any right other than janmam right or subordinate rights created by the holder of a janmam right. Again in his written statement in the suit of 1934, earlier mentioned, which is on the record of this case, the petitioner, Moopil Nayar, stated that the lands of the sthanams situated in Madras remained in the management of the Court of Wards, Madras, from 1872 to 1916 and were registered as held in janmam rights. Therefore, it seems to us that it has been established that the lands belonging to the sthanams in South Malabar district are held in janmam rights. That being so, rights in such lands would be rights in an estate within the meaning of article 31 A (1) (a). It is said on behalf of the petitioner, Moopil Nayar, that the Act compels him to share the lands with the other members of his family. If so it seems to us that the effect of the Act is to modify the interest of a holder of a sthanam in the lands attached thereto. His rights as sole owner of the lands are modified by making him one of the, joint owners of them along with the other members of his family. As the lands were held in janmam rights or rights subordinate thereto, the Act would be saved by article 31A though it may infringe articles 14, 19 (1) (f) or 31(1). The petitioner, however, contends that even if the lands were held in janmam rights, article 31A would not protect the Act. He first says that the Act contemplated by Art,. 31A(l)(a) is an Act passed with the object of effecting agrarian reforms which the Act before us is not. But we find nothing in the article to justify this contention. The article does not mention 940 any agrarian reform. Under it any janmam right may be acquired, extinguished or modified; this would be so whether the land held on janmam right was agricultural land or land which can never be used for agricultural purposes. Article 31 A was introduced into the Constitution by the Constitution (First Amendment) Act, 1951. It was subsequently amended by the Constitution (Fourth Amendment) Act, 1955. Both these Acts made the amendments with retrospective effect from the commencement of the Constitution. The petitioner seeks to support the contention that the Act contemplated by article 31A (1)(a) is an Act dealing with agrarian reforms by referring to the objects and reasons stated in the Bills by which the Acts amending the Constitution were introduced in the Parliament. It does not seem to us that it is permissible to refer to such objects and reasons for the construction of a statute: see Aswini Kumar Ghose vs Arabinda Bose (1). We conceive therefore, that we are not entitled to read the word " law " in article 31A (1) in relation to sub cl. (a), only as a law intended to achieve agrarian reforms on the basis of the supposed object of the legislature in enacting article 31A. We also observe that apart from the objects and reasons found in the Bills, there is nothing on which the contention that the law contemplated by article 31 A (1)(a) is a law intended to achieve agrarian reform, can be based. It is next said that the Act did not effect any modification of janmam rights and hence again article 31A is of no avail to protect it. It is contended that the modification contemplated by the Article is a modification of the incidents of the janmam rights. It is said that what the Act did was to distribute janmam rights among various persons and several owners held the same janmam rights which, before the Act, had been held by one. That, it may be stated, is so but that does not affect the real question for decision. When the Article talks of modification of janmam rights it does not talk of such rights in the abstract. It contemplates the modification of the (1)[1953] S.C.R. 1. 950 rights held by a person. It would be as much modification of janmam rights if such rights held by one person are directed to be held by a number of persons jointly, as when the incidents of such rights are altered. Further our view receives support from two decisions of this Court, namely, Sri Ram Ram Narain Medhi vs The State of Bombay(1) and Atma Ram vs The State of Punjab (2 ). These cases dealt with Acts one of the provisions of which compelled a landlord to sell to his tenant the whole or a portion of the land held by the latter at a price to be fixed in the manner indicated. It was held that though this provision violated article 19(1)(f) yet it was saved by article 31A. It will be seen that here the incidents of the tenure on which the landlord held the land were not altered. After he had been compelled to transfer the lands to his tenants, he held the remainder on the same terms as before, yet it was held that the Acts compelling the landlord to sell a part of the land held by him were saved by article 31A. In our view, therefore, the Act now before us is saved by article 31A and it cannot be declared invalid even if it violates the provisions of articles 19(1)(f), 14 and 31 (1) of the Constitution. In this view of the matter it is not necessary for us to consider whether the Act in fact violates articles 14, 19(1)(f) and 31(1) or any of them or is saved by el. (5) of article 19. Next it is said that the Act is bad as it is really an exercise by the legislature of judicial power which it does not possess and not an exercise of a legislative power at all. We are unable to hold that this is so. There are two things in the Act on which this contention has been based. The first is that the Act has been given a retrospective operation. It is quite clear to us that by itself does not make the Act a thing done in the exercise of judicial power. The legislature has the power to give retrospective opera tion to an Act. That of course interferes with vested rights but the legislature can interfere with such rights in the exercise of its legislative power. That is not adjudicating between parties affected by the Act. It is laying down the law to be followed by (1) [1959] SUPP. I S.C.R. 489. (2) [1959] SUPP. 1 S.C.R. 748. 951 951 courts in future. It is so none the less that the law is altered as from a past date. Then it is said that the Act provides that it is to have effect notwithstanding any decision of the Court contrary to its provisions. That the Act no doubt does. Can it be said that it thereby adjudicates and not legislates ? In Piare Dusadh vs King Emperor (1) it was pointed out that in India the legislature very often in the enactments that it makes sets aside decisions of Courts. In America a rule appears to obtain that " Legislative action cannot be made to retroact on past controversies and to reverse decisions which the courts in the exercise of their undoubted autho rity have made ": Cooley 's Constitutional Limitations, 8th Ed., p. 190. It was held in Piare Dusadh 's case (1) at p. 104, that this rule had no application in India. The observation there made may be set out: It is clear from the American authorities that this limitation has been derived from the interpretation placed by the American courts on what are known as the Fifth and Fourteenth Amendments which provide against any person being " deprived of life, liberty or property without due process of law ". The expression " due process of law" has been interpreted as referring only to ' judicial process ' and as not including legislation . . As this requirement had been made part of the written constitution, it followed that no enactment passed by a legislature limited by that constitution could authorise anything in violation of it Hence the rule (stated by Cooley) that ' it would be incompetent for the legislature, by retrospective legislation, to make valid any proceedings which had been had in the courts but which were void for want of jurisdiction over the parties. ' The constitutional position in India is different. " It seems to us that this observation of the Federal Court which no doubt was made with reference to the Government of India Act,., 1935, applies with equal force to the position obtaining under our Constitution. It has been held by this Court that there is no scope (1) 952 under our Constitution for the application of the American concept of " due process of law". The American cases cited in support of the contention that a legislation cannot override judicial decisions therefore afford no assistance in our country. Article 31B itself provides that it would apply notwithstanding any judgment, decree or order of any court to the contrary and it had been enacted by an Act passed by the Parliament. There have been many Acts passed since the Constitution came into force which contained similar provisions. In no case has it ever been contended that such an Act amounted to an exercise of the judicial function by the legislature. The Act before us lays down a law to be applied by courts in future in the adjudication of disputes between parties. It also says that the courts shall apply the law notwithstanding that there is an earlier decision on the rights of the parties which are being litigated upon in a subsequent proceeding. The Act does not itself annul any decision of any court. All that it says is that the law laid down is to be applied by courts irrespective of any previous decision. It does not in any sense adjudicate between parties. It, therefore, seems to us that the contention that the impugned Act is really an exercise of judicial power is ill founded. In our view, the challenge brought against the impugned Act fails. Petition No. 443 of 1955 should, therefore, be dismissed with costs. Coming now to the Petition No. 40 of 1956 the petitioners here are the wife and the two daughters of the petitioner in Petition No. 443 of 1955. The respondents are the junior members of the tarwad as also the Moopil Nayar. The petitioners claim as donees from the Moopil Nayar to be entitled to the sthanam lands in the Palghat area. It is not necessary for us to decide whether the petitioner in Petition No. 443 of 1955 had the right to make the gift in favour of his wife and daughters. That question has not been gone into by consent of the parties. If the gift is valid then what we have said earlier in connection with Petition No. 443 of 1955, will apply to this petition also and it must for the same reason 953 fail. If the gift is invalid, the petition must fail on the ground that the Act has not affected the petitioners ' rights in any lands held by them. We would, therefore, dismiss that petition with costs except the costs of the hearing before us for all the three petitions were heard together. Lastly, we come to Petition No. 41 of 1956. This petition must clearly be dismissed. It was filed by the son of the petitioner in Petition No. 443 of 1955 claiming to be entitled to the sthanam lands situate in an area which was formerly part of the Cochin State. It is not in dispute that the impugned Act was never extended to that area. Therefore, whether the gift to him was valid or not, as to which we say nothing, the petitioner in this petition is not affected by that Act at all. His petition is clearly misconceived. His petition is, therefore, dismissed and he will pay the costs excepting the costs of the hearing. ORDER OF COURT. In view of the judgment of the majority, Petition No. 443 of 1955, is allowed with costs, Petition No. 40 of 1956, is allowed without costs, and Petition No. 41 of 1956, is dismissed without costs. [/INST] These petitions by the holder of Kavalappara Sthanam, his wife, daughters and soil challenged the constitutional validity of the Madras Marumakkathayam (Removal of Doubts) Act, 1955 passed by the Madras Legislature soon after the Privy Council had declared the properties in possession of the Sthanee to be Sthanam properties in which the members of the tarwad had not interest. Section 2 Of the Act, which contained the substantive provision, was as follows: " 2. 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 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, 888 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 .he provisions of the Madras Marumakkathayam Act, 1932 (Mad. XXII of 1933), shall apply. " The question for decision was whether the impugned Act infringed the fundamental rights of the petitioners guaranteed by articles 4, 19(1)(f) and 31 of the Constitution. Held (per Sinha, C. J., Subba Rao and Shah, JJ.) that the three tests laid down by the Act were contrary to the well settled principles of Marumakkathayam Law with regard to which there could be no scope for doubt and as such not only not germane but extraneous to the object it sought to achieve. They were a device to deprive the sthanam of its properties and vest them in the tarwad and as such directly hit by article 19(1)(f) and could not be saved by article 19(5). Assuming that the Sthanam properties were held in janmam right and as such were estates within the meaning of article 31A, the impugned Act was immune from challenge. That Article, properly construed, envisages agrarian reform and provides for the acquisition, extinguishment or modification of proprietary and various other kinds of subordinate rights in a tenure called the estate solely for that purpose and must be limited to it. Although it may not be permissible to refer to the statement of objects and reasons of its amendment for purposes of construction, it can be referred to for the limited purpose of ascertaining the conditions prevailing at the time and purpose underlying the amendment. Aswini Kumar Ghose vs Arabinda Bose, [19531 S.C.R. 1, con sidered. There is no substance in the argument that since the impugned Act seeks to regulate the rights of the Sthanee and the junior members of the tarwad inter se it falls within by cl. (2)(b) of article 31A. That clause has to be read with cl. (1)(a) of the Article and since the impugned Act does not contemplate any agrarian reform or seek to regulate the rights inter se between landlords and tenants or modify or extinguish any of the rights appertaining janmam right, leaving all its characteristics intact, it does not come within the purview of article 31A of the Constitution. Sri Ram Ram Narain vs State of Bombay, [1959] SUPP. 1 S.C.R. 489, and Atma Ram vs State of Punjab, [1959] SUPP. 1 S.C.R. 748, referred to. Fundamental rights have a transcendental position in the Constitution and before an Article embodying a fundamental right can be construed to exclude another every attempt should be made to harmonize them and not until it is found impossible to do so, can one be made to yield to the other. Barring such exceptional cases, any law that infringes any of the fundamental rights must be void. 889 The word 'law ' in article 31(1) must mean a valid law, and such a law must satisfy two tests, (1) that the legislature must be competent to enact it and (2) that it must not infringe any fundamental rights. A law that deprives a citizen of his property must, therefore, be invalid if it infringes article 19(1)(f) of the Constitution. Deep Chand vs State Of U. P., [1959] SUPP. (2) S.C.R. 8, and Basheshway Nath vs Commissioner of Income tax, Delhi, [1959] Supp. 1 S.C.R. 528, referred to. Article 31 Of the Constitution, since its amendment by the Constitution (Fourth Amendment) Act, 1955, is no longer a selfcontained Article providing for a subject different from that dealt with by article 19, but deals with two different subjects, CIS. (2) and (2A) dealing with acquisition and requisition and cl. (1) with deprivation of property by authority of law, and can no longer be construed on the analogy of article 2 1 so as to exclude the operation of article 19. The State of West Bengal vs Subodh Gopal Bose, [1954] S.C.R. 587, A. K. Gopalan vs The State of Madras, ; , referred to. State of Bombay vs Bhanji Munji and Any., [1955] 1 S.C.R. 777, held inapplicable. Nor does article 31(1) deal with police power. Although such power, as understood in America, is no arbitrary power divorced from social control and public good, there can be no need of importing such a doctrine into the Indian Constitution. The word 'law ' used by article 31(1) indicates its limitation and refers back to article 19 and any law made under article 31(1) can be sustained only if the restrictions it imposes are reasonable and in the interest of the general public. The Constitution does not confer on the Indian Parliament the same power which the Parliament of England possesses and while it does contemplate a welfare State, that has to be brought about within its frame work of the Constitution itself. The correct approach should, therefore, be first to ascertain the fundamental right and then to see whether the law infringes that right. If ex facie it does so, it has to stand the test of article 19(5). In certain circumstances, however, deprivation of fundamental right to property may also amount to a reasonable restriction under the Article. Narendra Kumar vs The Union of India, [196O] 2 S.C.R. 375, referred to. Individual proprietary rights being ordinarily inviolable unless a clear case is made out for restricting them, there must be a harmonious balancing between the fundamental rights declared by article 19(1) and social control permitted by article 19(5). It is implicit in the nature of restrictions that no inflexible standard can be laid down and each case must be decided on its own facts. But the restrictions must not be arbitrary and must have a reasonable relation to the object sought to be achieved and shall be in the interest of the general public. 890 State of Madras vs V. G. Rao, ; , Henry Webster vs Peter Cooper, ; , and The Citizens ' Savings and Loan Association and Cleaveland, Ohio vs Topeka City, ; , referred to. Although the redress of a real and genuine grievance of a section of the community may be in public interest, it is impossible to hold that the impugned legislation was either justified or in such public interest. Iswari Prosad vs N. R. Sen, A.I.R. 1952 Cal. 273, held in applicable. Marumakkathayam Law is a body of customs and usages that have received judicial recognition, and is fundamentally different from Hindu Law, being a matriarchal system. The family, called tarwad, consists of all the descendants of one common ancestor. It consists of a mother and her male and female children and the children of those female children and so on. Only the senior most male member can attain the sthanam, which is a position of dignity with specific properties attached to it. When he does so and becomes the Sthanee he ceases to have any interest in the tarwad properties. Occasionally a female member also becomes the Sthanee. Like a Hindu widow or an impartible estate holder the Sthanee has an absolute interest in the income of the Sthanam properties or acquisitions therefrom. A member of the tarwad has no right to maintenance from out of the Sthanam properties nor can such property be converted into tarwad property by the grant of such maintenance by custom or otherwise or intermingling of the Sthanam properties with the tarwad properties by the Sthanee. His position approximates to that of a member separated from a Hindu family and there can be no scope for the application of the doctrine of blending. Like the Sthanee who ceases to have any present proprietary interest in the tarwad, the members of the tarwad also can have no present proprietary interest in the sthanam property. They continue to be blood relations with a contingent right of succession to each others ' property that is no more than a spies successions. The right of a subsequently born male member of the tarwad to succeed to the Sthanam and its property is judicially recognised. Case law reviewed. Per Imam and Sarkar, JJ. The impugned Act is protected by article 31A and is not open to question in the ground that it violates articles 14, 19(1)(f) and 31(1) Of the Constitution. There is no basis for the contention that article 31(1)(a) contemplates a law relating to agrarian reform only. The Article makes no mention of any such reform and there can be no doubt that under it a janmam right may be acquired, extinguished or modified whether the land held in such right is agricultural or not. It is not permissible to refer to the objects and reasons stated in the Bills, by which the Acts amending article 31A of the Constitution were introduced, for the construction of the statute and, therefore, the word 'law ' in article 31A(1) cannot be read in relation to sub cl. (a) only as a law intended to achieve agrarian 891 reform on the basis of the supposed object of the Legislature in enacting article 31A. Aswini Kumar Ghose vs Arabinda Bose, ; referred to. It is not correct to say that the impugned Act does not effect any modification of janmam rights and therefore it does not come within article 31A. When the Article speaks of modification of janmam rights, it does not speak of such rights in the abstract but contemplates the modification of such rights held by a person. It would be as much modification of janmam rights, if such rights held by one person are directed to be held by a number of persons jointly, as when the incidents of such rights are altered. Sri Ram Ram Narain Medhi vs The State of Bombay, [1959] Supp. 1 S.C.R. 489, and Atma Ram vs State of Punjab, [1959] Supp. 1 S.C.R. 748, relied on. It is not correct to say that the Legislature in giving the provisions of the impugned Act retrospective operation or in providing that they should prevail notwithstanding any decision of the court to the contrary, was acting judicially and not in a legislative capacity and that the Act was on that ground invalid. The rule obtaining in America that legislative action cannot retract on past controversies and reverse decisions of courts and the relevant American decisions can have no application in India. Piare Dusadh 's case, , referred to. </s>

<s>[INST] Summarize the following judgement: Appeal No. 319 of 1958. Appeal from the judgment and order dated September 5, 1956, of the Bombay High Court in Income tax Reference No. 31 of 1956. H. N. Sanyal, Additional Solicitor General of India, K. N. Rajagopal Sastri and D. Gupta, for the appellant. N. A. Palkhivala, section N. Andley, J. B. Dadachanji and Rameshwar Nath, for the respondents. N. A. Palkhivala, section section Shukla and Mrs. Eluri Udayaratnam, for the intervener (The Punjab National Bank Ltd.) 128 990 1960. May 6. The Judgment of section K. Das and J.L. Kapur, JJ., was delivered by Kapur, J. Hidayatullah, J., delivered a separate Judgment. KAPUR, J. This is an appeal against the judgment and order of the High Court of Bombay passed in Income Tax Reference No. 31 of 1956. The appellant is the Commissioner of Income tax and the respondent is a firm carrying on business in Bombay and the question for decision arises under the Business Profits Tax Act (Act 21 of 1947), hereinafter referred to as the Act. The assessment relates to the year of assessment 1949 50 and the chargeable accounting period was from November 13, 1947, to October 31, 1948. On January 12, 1953, the lncome tax Officer issued a notice on the respondent under section 11(1) of the Act in respect of the above mentioned chargeable accounting period which was served on the respondent on January 21, 1953. The respondent filed a return under protest. The assessment was completed by the Income tax Officer on November 30, 1953. Against this order the respondent took an appeal to the Appellate Assistant Commissioner on the ground that the respondent was not liable to Business Profits Tax because it was beyond the period of four years limitation under section 14 of the Act. This plea was upheld by the Appellate Assistant Commis sioner. The Income tax Officer then appealed to the Appellate Tribunal and it confirmed the order of the Appellate Assistant Commissioner. At the instance of the appellant a case was stated to the High Court of Bombay on the following two questions of law : (1) " Whether the Income tax Officer had jurisdiction to assess the assessee firm under the Business Profits Tax Act by issue of a notice under Section 11 (1) of the Business Profits Tax Act on 12 1 1953 in respect of the chargeable accounting period 13 11 1947 to 31 10 1948 without having recourse to Section 14 of the Business Profits Tax Act ? (2) If the answer to Question No. 1 is in the negative whether the B. P. T. assessment could be considered to have been validly made ? " 991 The High Court modified the first question by deleting the words "without having recourse to Section 14 of the Business Profits Tax Act " and answered both the questions in the negative. The Income tax Appellate Tribunal had held that as under section 14 of the Act the period of limitation commenced from the end of the chargeable accounting period in question the notice under section 11 (1) had to be issued before that period. The High Court did not accept this view. It held that both sections 11 and 14 had to be read together and the mention of four years in section 14 was an important indication of the period of limitation in regard to the issue of notice under section 11 also and further if profits which escaped assessment, as in the present case, could only be taxed within four years of the end of the chargeable accounting period because of section 14 of the Act, then inferentially the escape of assessment must be at sometime anterior to the period mentioned in section 14 and as on the facts of the present case the notice had been issued four years after the close of the chargeable accounting period the notice under section 11 wag not valid. Against this order the appellant has come in appeal to this Court on a certificate of the High Court. It is submitted by the appellant that though sections 11 and 14 may have to be read together, they apply to different sets of circumstances; section 11 applies to a case where the Income tax Officer requires any person whom he believes to be engaged in any business to which the Act applies or to have been so engaged during any chargeable accounting period and calls upon him to furnish a return with respect to such chargeable accounting period; and section 14 applies to a case where, in consequence of definite information possessed by him, the Income tax Officer discovers in regard to any chargeable accounting period that the profits of any business have escaped assessment. In other words, section 11 applies to original assessments after the first notice calling upon an assessee to make a return in regard to the profits of any chargeable accounting period and section 14 applies where such notice was issued, and it either ended in no assessment at all or there was under assessment, 992 etc. According to the argument of the appellant, therefore,there is no period of limitation prescribed by the Act for the first notice to furnish a return in regard to any chargeable accounting period but if such notice was given and a return was made and for any reason whatsoever the profits were not assessed or were under assessed, etc., then section 14 comes into operation and notice has to be served within four years of the end of the chargeable accounting period in question. The provisions of the Act which arise for consideration are sections 2, 4, 5, 11 and 14. Section 2 is the definition section; section 4 the charging section and section 5 deals with the applicability of the Act. Section 11 provides for the " Issue of notice for assessment and section 14 is headed " profits escaping assessment Section 2 (2) defines accounting period and section 2(4) chargeable accounting period. Section 4 provides that in respect of any business to which the Act applies there shall be charged, levied and paid on the amount of taxable profit during any chargeable accounting period a tax equal to sixteen and twothird percent of the taxable profits, which in later years was fixed at a lower figure by the Finance Acts of 1948 and 1949. Under section 5 the Act applies to every business of which any part of the profits made during the chargeable accounting period is chargeable to income tax under section 4 (1) (b) (i) and (ii) or subcl. (c) of that sub section. Sections 11(1) and 14 of the Act may now be quoted : section 11(1). " The Income tax Officer may, for the purposes of this Act, require any person whom he believes to be enaged in any business to which this Act applies, or to have been so engaged during any chargeable accounting period, or to be otherwise liable to pay business profits tax, to furnish within such period, not being less than forty five days from the date of the service of the notice, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth (along with such other particulars as may be provided for in the notice) with respect to any chargeable accounting period specified in the notice, 993 the profits (taxable profits) of the business or the amount of deficiency, if any, available for relief under section 6 section 14. " If, in consequence of definite information which has come into his possession, the Income tax Officer discovers that profits of any chargeable accounting period chargeable to business profits tax have escaped assessment, or have been underassessed, or have been the subject of excessive relief, he may at any time within four years of the end of the chargeable accounting period in question serve on the person liable to such tax a notice containing all or any of the requirements which may be included in a notice under section 11, and may proceed to assess or reassess the amount of such profits liable to business profits tax, and the provisions of this Act shall, so far as may be, apply as if the notice were a notice issued under that section ". These sections lead to the conclusion that every business to which the Act applies is liable to the risk of being assessed to Business Profits Tax and it is well settled that income escapes assessment when the process of assessment has not been initiated as also in a case where it has resulted in no assessment after completion of the process of assessment. In our opinion, the High Court was right when it held that sections 11 and 14 of the Act have to be read together. The Act and the Indian Income tax Act are both taxing statutes operating on the same source. , i.e., profits of business which is similarly defined in the two statutes. If the provisions relating to escaping of assessment in the two statutes, i.e., in section 14 of the former and in section 34(1) of the latter as it existed after the amendment of 1939, employ the same language, they must receive the same interpretation and not be construed differently. Section 34(1) of the Indian Income tax Act as amended in 1939 provided: section 34(1). "If in consequence of definite information which has come into his possession the Income tax Officer discovers that income, profits or gains chargeable to income tax have escaped assessment in any year, or have been under assessed, or have 994 been assessed at too low a rate, or have been the subject of excessive relief under this Act the Incometax Officer may, in any case in which he has reason to believe, that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars thereof, at any time within eight years, and in any other case at any time within four years of the end of that year, serve on the person liable to pay tax on such income, profits or gains, or, in the case of a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub section (2) of section 22 and may proceed to assess or reassess such income, profits or gains and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub section The words " escaping income " in the Indian Income tax Act were interpreted as being applicable to a case where a person received notice under section 22(2) of the Income tax Act but the process ended in no assessment as to a case where there was no assessment at all because no notice was issued under section 22(2) of the Income tax Act; in other words, it includes cases where the process of assessment did not commence because no notice was given under section 22(2) of the Income tax Act due to inadvertence, oversight, negligence or any other cause as to cases where such notice proved abortive or ineffective. Both are cases of escaped assessment: Commissioner of Income tax, Bombay vs Pirojbai N. Contractor (1). In this Court these words were considered and interpreted in Kamal Singh vs Commissioner of Income tax (2 ). They were interpreted to comprise a case of no notice being given for the assessment and notice being given and resulting in no assessment. Gajendragadkar, J., observed We see no justification for holding that cases of income escaping assessment must always be cases where income has not been assessed owing to inadvertence or oversight or owing to the fact that no return has been submitted. In our opinion, even in a case where a return has been submitted, (1) (2) [1959] Supp. 1 S.C.R. 10, 18, 19. 995 if the Income tax Officer erroneously fails to tax a part of assessable income, it is a case where the, said part of the income has escaped assessment. The appellant 's attempt to put a very narrow and artificial limitation on the meaning of the word ' escape ' in section 34(1)(b) cannot therefore succeed ". This passage was quoted with approval in another case by this Court in Maharajadhiraj Sir Kameshwar Singh vs State of Bihar (1) (per Hidayatullah, J.). Chatturam Horilram Ltd. vs Commissioner of Income tax(2) was a somewhat different case. There assessment proceedings had been taken but had failed to result in a valid assessment owing to some lacuna other than that attributable to the Assessing Authorities and it was hold to be a case of chargeable income escaping assessment and not a case of mere nonassessment of income tax. All these cases show that the words " escaping assessment " apply equally to cases where a notice was received by the assessee but resulted in no assessment at all and to cases where due to any reason no notice was issued to the assessee and, therefore, there was no assessment of his income. It is also clear from the language of section 14 of the Act that when a notice is issued under that section all the requirements of the notice under section 11 apply and the Income tax Officer has to proceed in the manner as if the notice was issued under section 11. Therefore, any advantage or relief which was available to the assessee under section II as to allowable deductions, deficiency, etc., would be equally available, if the notice is issued under section 14. The legislature has adopted the language of section 34(1) of the Income tax Act in section 14 of the Act and it must, therefore, be considered to have adopted the construction of that section applied by the courts. Secondly, this Court has construed the words " escaping assessment " as used in section 34(1) of the Income tax Act. The same words in the same context as employed in section 14 of the Act must have the same meaning. It was submitted that in the present case a different meaning (1) ; (2) ; 996 should be given because although in section 34 of the Indian Income tax Act and section 14 of the Act, the word. ,; " escaping assessment " are used the language of section 11(1) of the Act and of section 22(2) of the Indian Incometax Act is different in. so far in the former the notice requires an assessee to furnish a return of the income of the previous year and in the latter he has to furnish the particulars with respect to any chargeable accounting period of the profits of the business. It becomes necessary, therefore, to examine the provisions of the Act as to the chargeable accounting periods and other provisions relevant thereto. In section 2(2) of the Act " Accounting period " in relation to any business means any period which is or has been determined as the previous year for the purpose of the Indian Income tax Act. Under section 2(4) of the Act Chargeable accounting period " means : (a) " any accounting period falling wholly within the term beginning on the first day of April, 1946, and ending on the thirty first day of March, 1947; (b) where any accounting period falls partly within and partly without the said term, such part of that accounting period as falls within the said term ". According to this definition, therefore, where the previous year was the financial year 1946 47 then the accounting period and the chargeable accounting period would be coincident, i.e., they would both be 1946 47; but if the previous year was the calendar year or the Diwali year the accounting periods of nine months in the former case, i.e., April 1, 1946, to December 31, 1946, and 7 months in the latter, i.e., April 1, 1946, to November 1, 1946, would be the chargeable accounting periods for the purposes of the Act. The extent of the periods will vary according to the determination of the previous year under the Incometax Act. It might be a full year or less which appears to be the reason for adopting the nomenclature which has been adopted in the Act instead of the previous year. It would be incongruous to call a period of less than a year as the previous year. For the chargeable accounting periods mentioned above the Business Profits Tax would be charged, levied and paid in the 997 financial year 1947 48 at the rate mentioned in section 4 of the Act on every business falling under section 5. But for all these periods the assessment year would be the financial year 1947 48. Keeping this in view we may now see what changes were made by the Finance Act of 1948. By that Act the Act was continued for another one year and for the figure " 1947 " in the definition of chargeable accounting period in section 2(4)(a) the figure " 1948 " was substituted and the following proviso was added: " Provided that where an accounting period falls partly before, and partly after, the end of March, 1947, so much of that accounting period as falls before, and so much of that accounting period as falls after, the end of March, 1947, shall be deemed each to be a separate chargeable accounting period ". By this proviso the accounting period or the previous year was split up in cases where it was not the preceding financial year or 1947 48. Thus the calendar year 1947 became two chargeable accounting periods of 3 months and 9 months, i.e., from January 1, 1947, to March 31, 1947, and April 1, 1947, to December 31, 1947, and the same would apply to accounting period from Diwali to Diwali, i.e., 5 months and 7 months. In effect the whole year 's profits thus became chargeable to Business Profits Tax instead of only of a part of the year as was the case for the financial year 1947 48. Other changes made by the Finance Act of 1948 were in section 4 where under section 10 of the Finance Act the rate of tax for the chargeable accounting. period up to the end of March, 1947, remained at 16 2/3 per cent. but for the chargeable accounting period after that date was to be fixed by the Annual Finance Act and by section 11(1) of that Act the rate was fixed at ten per cent. Thus Business Profits Tax rates also were to be fixed by the Annual Finance Act as were the Income tax rates. Then came the Finance Act of 1949 which continued the Act for another year and under section 4 fixed the rate chargeable in respect of any chargeable accounting period after March 31, 1948. The Finance Act of 1950 did not continue the Act and it thus came to 129 998 an end except for liabilities which had already arisen or accrued under the Act. As the tax under the Act is charged, levied and paid on the taxable profits of a chargeable accounting period but assessment is in respect of the financial year in which the Act operates it is not an unreasonable inference that notice for the chargeable accounting period must issue in the financial year following that period. .No difficulty would arise in regard to accounting periods which coincide with previous years, i.e., 1946 47, 1947 48 and 1945 49. For these years the notice will issue in the following chargeable accounting period which again will be the financial year in which the Act would be operative. But the question is how the proviso to section 2(4) added by the Finance Act of 1948 would affect this rule. Taking a calendar year 1946 as the accounting period, for the financial year 1947 48 the chargeable accounting period would be the nine months period from April 1, 1946, to December 31, 1946, and notice under section 11(1) of the Act must issue in the financial year because the tax is leviable and assessment is made for the year beginning April 1, 1947, when the Act came into force and remained operative during the year 1947 48. After the Finance Act of 1948 the accounting year, if it was a calendar year, became divided into two parts and both were assessable in the assessment year beginning with April 1, 1948, and, therefore, notice had to be given in the financial year 1948 49. Similarly in the financial year 1949 50 notice would have to be given in that year for the preceding chargeable accounting period. In this view of the matter the contention that there is no provision in section 11(1) of the Act as to the chargeable accounting period as there is for the previous year in section 22(2) of the Income tax Act is not well founded. That the notion of the previous year or the accounting period is as much applicable to the Act as to the Indian Income tax Act is shown by reference to Computation of Profits Rules in the Schedule to the Act. There the computation is related to the accounting periods. The previous year is shown applicable by reference to the Rules under the Act, 999 by which some of the Rules of the Income tax Act are made applicable to the Act; and some of the sections of that Act are made applicable by section 19 and by the Rules under the Act. Amongst the Rules applicable is r. 8 which, inter alia, related to allowances under section 10(2)(vi) of the Indian Income tax Act. The first and the second provisos to this rule are as follows : " Provided that if the buildings, machinery, plant or furniture have been used by the assessee in his business for not less than two months during the previous year, the percentage shall be increased proportionately according to the number of complete months of user by the assessee : Provided further that in the case of a seasonal factory worked by the assessee during all the working seasons of the previous year, the percentage shall be increased as if the buildings, machinery, plant, or furniture had been in use throughout the period the assessee was the owner thereof during the previous year ". Both these provisos use the word previous year which is same as the accounting year under the Act. By r. 4(A) of the Rules made under the Act certain sections of the Indian Income tax Act have been adapted with modifications therein mentioned. Of those section 50 of the Income tax Act is one. In the Act it has been substituted by the following: " No claim to any refund of tax under the Act shall be allowed unless it is made within four years from the last day of the financial year commencing next after the expiry of the accounting period which constitutes or includes the chargeable accounting period in respect of which the claim to such refund arises ". All these sections show not only that the two statutes, i.e., the Act and the Indian Income tax Act, have to be read together but also that the notion of the previous year has been inducted into the Act. The modified section 50, as introduced into the Act by the rules, means this that the refund, if any, can only be allowed within four years of the financial year which commences after the expiry of the accounting 1000 period which itself constitutes the chargeable accounting period or includes in it the chargeable accounting period in respect of which the refund is claimed. If the contention of the appellant is correct then this section will be wholly otiose where the assessment is levied after say 10 years from the end of the chargeable accounting period because by no method of calculation will a refund of tax in that circumstance be claimable under section 50. This furnishes a key to when a notice under section 11(1) has to be given. It must be given within the financial year which commences next after the expire of the accounting period or the previous year which is by itself or includes the charge able accounting period in question. Section 48 of the Income tax Act, as amended and applied to the Act, does not affect the operation of section 50 because the two sections have to be read together and the assessee must apply for the refund within the period specified by section 50: Adam Haji Dawood & Co. Ltd. vs Commissioner of Income tax, Burma (1). The language of section 14 and particularly the words may proceed to assess or reassess the amount of such profits to Business Profits Tax " support the contention of the respondent that it applies to cases of no assessment due to notice not being given as to cases of no assessment after notice was given and proceedings proved ineffective. The words " assess " and "reassess" do not mean the same thing and signify two different cases. The former applies to cases where there was no assessment to tax due to notice not being given and the process has to commence with the issuing of such notice and the latter to cases where the assessment process is recommenced by issuing a second notice, the previous notice having proved abortive or resulting in under assessment, etc. Construing in this manner effect is given to the words " profits of any chargeable accounting period . . have escaped assessment " and it also avoids the anomaly that some cases where there was no assessment can be dealt with under one section with a time limit as under section 14 but other equally clear cases of non assessment are dealt with under section 11 (1) [1936]4 I T.R. 100 (Rang.). 1001 without there being any limitation of time. If the contention of the appellant is accepted then it would come to this that it would depend upon the Incometax Officer as to which of the two sections he uses for the purposes of assessment and would lead to this absurdity that in a case of definite information of profits having escaped assessment there will be a limitation of four years and in cases where there is no such information but only belief there will be no such limitation. If the words " profits escaping assessment " are applicable to original assessments, i.e., where the process of assessment did not commence, as also to assessments where the process of assessment was commenced but proved wholly abortive or partially so, then section 14 would apply to both such cases. Thus construed section II would apply to normal original assessments and section 14 to profits escaping assessment as construed above whether the assessment is an original assessment or is a re assessment. In determining the scope of section 14 of the Act reference may be made to another statute which is relevant for the purpose, i.e., the Excess Profits Tax Act (Act XV of 1940), sections 13 and 15 of which are identical in language with sections 11 and 14 of the Act. Section 13 deals with the issue of a notice for assessment and section 15 with profits escaping assessment. Before the Income Tax and Excess Profits Tax (Amendment) Act, 1947 (Act 22 of 1947), there was a 5 years ' period of limitation prescribed in section 15 in the following terms: " within five years of the end of the chargeable accounting period in question ". By the aforesaid amendment these words were deleted. The Act, being Act 21 of 1947, as well as the Amendment Act above referred to were enacted about the same time one after the other. The legislature thought it necessary to remove the period of limitation and thereby made profits escaping assessment liable to taxation under the Excess Profits Tax Act without any period of limitation but in the Act the legislature thought it expedient to prescribe the period of limitation of four years in section 14. It cannot be said that this was 1002 without any purpose and the argument that prescribing the period of limitation in section 14 of the Act was deliberate and was intended to prevent taxing under the Act of profits which had escaped assessment for four years from the end of the chargeable accounting period in question is not without substance. It was argued for the appellant that section 11(1) construed according to the plain meaning of the words used therein applies to original assessments and section 14 to assessments in which notice was given but due to any cause whatsoever the proceedings resulted in no assessment or in under assessment. He referred to the words " require any person whom he believes to be engaged in any business or to have been engaged during any chargeable accounting period or to be otherwise liable ", and submitted that these words mean that if an Income tax Officer has such belief in regard to a person who is engaged in any business or was engaged in any business during any chargeable accounting period in question he can issue a notice at any time without limitation of time requiring a return to be filed, etc. In support counsel for the appellant relied upon two judgments, Gokuldas Ratanji Mandavia vs Commissioner of Income tax (1) which was an appeal from East Africa and Telu Ram Jain & Co. vs Commissioner of Income tax (2 ), a case decided by the Punjab High Court. In the former case a notice was issued to the assessee under section 59(1) of the East African Income Tax (Management) Act, 1952, which provided: The commissioner may, by notice in writing, require any person to furnish him within a reasonable time, not being less than thirty days from the date of service of such notice, with a return of income Sections 71(1) and 72 provided: section 71(1). The commissioner shall proceed to assess every person chargeable with tax as soon as may be after the expiration of the time allowed to such person for the delivery of his return. . " " section 72 Where it appears to the commissioner that any person liable to tax has not been assessed (1) (2) 1003 person at such amount as, according to his judgment, ought to have been charged. . The notice requiring the assessee to furnish returns of his income for the years of assessment 1943 53 was issued but no return was filed and assessment was made under section 72 of the East African Act for the years 1943 51. The assessee contended that section 72 did not apply until the machinery under section 71 had been put into operation and that the assessments were ultra vires and void because they were made before the time allowed by section 71. It was held that section 71 applied to all original assessments and s: 72 with reopening of cases which had been settled under a normal procedure. Accepting the contention of the assessee Lord Somervell of Harrow observed: If the power to make an assessment under section 72 applies to the making of an orginal assessment their Lordships are unable to imply a term restricting it to back cases or making it ultra vires to operate it at any time. One would expect an opportunity to make a return to be a condition precedent to assessment. This is supported by the provisions for personal allowances in Part VI of the Act. If the respondent is right any person can be assessed without having any such opportunity. There would be two concurrent jurisdictions one providing reasonable protection for the taxpayer and the other providing no protection quoad the original assessment, apart from a right to appeal. Such a construction seems to their Lordships inconsistent with the general and mandatory provisions of section 71. That section is providing how all original assessments are to be made ". The language of these sections 59(1), 71 and 72 is differs it from that of sections 11 and 14 of the Act. Section 72 was held not applicable because there would be two concurrent jurisdictions, one providing reasonable protection for the taxpayer and the other providing no protection which would be contrary to the provisions of section 71. According to the Privy Council it was necessary to restrict the words of section 72 to cases in which the machinery of section 59(1) having been operated 1004 no assessment resulted. The words of section 14 are entirely different. It applies to cases of profits escaping assessment and the words " escaping assessment " have already been interpreted under section 34 of the Income tax Act and there is no reason why the same words occurring in a statute which is in pair material should be given a different meaning in the two Acts. Further the difficulty which the Privy Council felt in regard to there being two jurisdictions, one giving protection to the assessee and the other not giving such protection, does not exist in the present case because the process of assessment under section 14 of the Act is exactly the same as it is where notice is given under section 11(1) of the Act and all the advantages which an assessee would have under section 11(1) are available to him under section 14. The Punjab case to which our attention has been drawn was a case under the Excess Profits Tax Act and it was held that because of the removal of the limitation clause in section 15 of that Act assessments were not hit by any period of limitation and a further observation not necessary for the decision of the case was made that even otherwise the language of section 13 of that Act was wide and there was no substance in the contention that after the assessment period a notice under section 13 of that Act could not be issued and that the only notice which could be given was one under section 15. In view of the construction we have placed on section 14 of the Act on the words " profits escaping assessment " that they apply to assessments where notice has been given and has resulted in no assessment and where due to inadvertence, oversight or other circumstances no notice was given, it is difficult to interpret section 11 in the manner contended for by the appellant. In our opinion, the assessment which was sought to be made was without jurisdiction and the appeal must, therefore, fail. We accordingly dismiss the appeal with costs. HIDAYATULLAH, J. The Commissioner of Incometax, Bombay has filed this appeal against the judgment and order of the High Court of Bombay dated September 5, 1956, with the certificate of the High 1005 Court granted under section 19 of the Business Profits Tax Act, 1947 (hereinafter called the Act) read with section 66(1) of the Indian Income tax Act, 1922. Messrs. Narsee Nagsee & Co., Bombay (hereinafter referred to as the assessee firm), are the respondents. The ssessee firm, at all material times, was doing business ' in Bombay. For the chargeable accounting period, November 13, 1947, to October 31, 1948, a notice was issued on January 12,1953, by the Incometax Officer under section 11(1) of the Act calling upon the assessee firm to submit its return. This notice was served on the assessee firm on January 21, 1953, and it filed a return under protest, stating that the notice was barred under section 14 of the Act. It may be men tioned that the assessment for purposes of income tax for the same year was completed on February 17, 1953. The objection of the assessee firm was overruled by the Income tax Officer, who completed the assessment under section 12(1) of the Act on November 30, 1953. The assessee firm then appealed to the Appellate Assistant Commissioner, who upheld the objection that the notice was invalid under section 14(1) of the Act. On appeal taken by the Commissioner of Income tax, Bombay, the Appellate Tribunal concurred with the Appellate Assistant Commissioner. At the instance of the Commissioner, however, the Tribunal stated a case, and referred two questions for the decision of the Bombay High Court which were as under: " (1) Whether the Income tax Officer had jurisdiction to assess the assessee firm under the Business Profits Tax Act by issue of a notice under Section 11(1) of the Business Profits Tax Act on 12 1 1953 in respect of the chargeable accounting period, 13 11 1947 to 31 10 1948, without having recourse to section 14 of the Business Profits Tax Act ? (2) If the answer to question No. 1 is in the negative, whether the Business Profits Tax assessment could be considered to have been validly made? " The High Court modified the first question by deleting its last 12 words. Both the questions were then answered by the High Court in the negative. The 130 1006 Commissioner of Income tax obtained a certificate from the High Court, and filed this appeal. Before dealing with the reasons given by the High Court and the Tribunal and considering arguments urged in this appeal, it will be convenient to reproduce sections 11(1) and 14 of the Act: " 11(1). The Income tax Officer may, for the purposes of this Act, require any person whom he believes to be engaged in any business to which this Act applies, or to have been so engaged during any chargeable accounting period, or to be otherwise liable to pay business profits tax, to furnish within such period, not being less than forty five days from the date of the service of the notice, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth (along with such other particulars as may be provided for in the notice) with respect to any chargeable accounting period specified in the notice, the profits (the taxable profits) of the business or the amount of deficiency, if any, available for relief under section 6 Provided that the Income tax Officer may, in his discretion, extend the date for the delivery of the return. If, in consequence of definite information which has come into his possession, the Income tax Officer discovers that profits of any chargeable accounting period chargeable to business profits tax have escaped assessment, or have been under assessed, or have been the subject of excessive relief, he may at any time within four years of the end of the chargeable accounting period in question serve on the person liable to such tax a notice containing all or any of the requirements which may be included in a notice under section II, and may proceed to assess or reassess the amount of such profits liable to business profits tax, and the provisions of this Act shall, so far as may be, apply as if the notice were a notice issued under that section. " The Tribunal construe(] both these sections together, and expressed the opinion that the notice under section 11 in respect of a chargeable accounting period should 1007 issue before the commencement of the next chargeable accounting period, and that if the notice was not so issued, profits must be considered to have escaped assessment, and that action could only be taken under section 14 within four years of the close of the chargeable accounting period in respect of which it was sought to tax the assessee. The Tribunal, therefore, held that inasmuch as the notice in this case was issued in January, 1953, more than four years after October 31, 1948, when the chargeable accounting period came to an end, the notice and the assessment.were barred by time. The Tribunal also pointed out that the intention of the legislature could be gathered from the fact that though in section 15 of the Excess Profits Tax Act the limitation of five years was deleted by Act 22 of 1947, a similar amendment was not made in section 14 of the Act, which corresponds to section 15 of the Excess Profits Tax Act, though the Act was passed at the same time being Act 21 of 1947. Holding, therefore, that the profits which were not taxed at all and were never brought under assessment must be deemed to have " escaped assessment " because notice under section 11 was not issued in time, the Tribunal was of opinion that action could only be taken under section 14 of the Act within the time specified there. The Bombay High Court did not accept that the notice under section 11 had to be given before the end of the chargeable accounting period, but held that the two sections must be interpreted together, and observed : " Inasmuch as section 11 does not indicate any period of time with regard to the issue of a notice, would it or would it not be right for us to import into section 11 the consideration which led the Legislature to fix a limitation of time for the purpose of issuing a notice under section 14 ? If we were not to do that we would arrive at this rather extraordinary conclusion that the Legislature while saving the subject from harassment of proceedings with regard to escaped assessment or under assessment, permitted that harassment with regard to the very initiation of the proceedings after the lapse of four years. It is contended that the period of four years mentioned in section 14 supplies an 1008 important indication for what the period of limitation should be with regard to the is ,,tie of a notice under section 11. If income which has escaped assessment can only be taxed within four years by reason of section 14, then it must inferentially follow that income must escape assessment at some point of time anterior to the period of four years mentioned in section 14. On efects of this case the most significant and salient fact is that the notice has been issued four years after the close of the chargeable accounting period and as that notice is beyond the time mentioned in section 14, in our opinion, the notice is not a valid notice under section 11." The Commissioner has contended that section 11 deals with the issuance of a notice for the first time before any income has been returned or brought to tax. The notice under section 11, it is submitted next, is without any limit of time, and a limitation cannot be read into a section, when the legislature has not thought it fit to lay it down. According to the Commissioner, section 14 deals with " escaped assessment ", which, under the scheme of the Act, must be given a narrow meaning as indicating the escapement of profits from tax either wholly or partly for any reason, after the process of assessment has taken place. Section 14, it is argued, operates after one set of proceedings for assessment of tax have taken place, and applies only where the profits either escape assessment, or are under assessed or excessive relief has been granted, while section 11, on the other hand, applies to all cases, where the assessee has not been called upon to file a return or has not filed one himself. As against this, the assessee firm adopts the reasons given by the Tribunal and the High Court, and adds that whereas under section 14 some definite information must be possessed by the Incometax Officer before he can issue the notice, the Incometax Officer has only to entertain a belief that business was carried on in the chargeable accounting period to enable him to serve the notice under section 11. The assessee firm, therefore, contends that it would be open to the Income tax Officer to ignore section 14 1009 altogether and to issue a notice under section 11 in a case even after the expiry of a considerable time. The Commissioner contends that the liability to pay tax arises under section 4 of the Act, and it remains till the liability is discharged by payment of tax, and the legislature has, therefore, advisedly left the power to the Income tax Officer to assess the tax where there has been no proceeding to assess it, without imposing any limit as to time. Section 14, on the other hand, has been so framed that persons whose profits have been brought to assessment once should not be exposed to a double peril, except within the stated period. The two sections must be reconciled. The learned Chief Justice of the Bombay High Court, who delivered the judgment of the Bench, stated that it was not an easy matter to give a rational meaning to them. He, however, felt that between the two rival contentions, the argument of the assessee firm was the more reasonable, and that where two constructions were possible, one strict and the other beneficial to the assessee, the latter should be preferred if it was equally reasonable. The scheme of the Act, in so far as asking for a return is concerned, is entirely different from that of the Indian Income tax Act. Under the latter Act, a general notice is issued calling upon every assessee whose income exceeds the minimum which is exempt under the Income tax Act, to file a return within the period stated in the notice. The Income tax Officer has further power to issue a notice to any individual assessee during any assessment year calling for a return of his income during the previous year. An assessee under the Income tax Act is, therefore, bound, if his income is liable to tax, to file a return whether it be in answer to the general notice or to the special notice issued to him. The assessee may even file a return voluntarily before the special notice is issued to him. Even before 1939, though there was no general notice the distinction between the previous year and the assessment year obtained. The notice under section 22 of the Indian Income tax Act must issue before the 1010 close of the assessment year and cannot be issued thereafter. The scheme of the Business Profits Tax Act is different. Business profits follow the assessment of income tax, and are payable for any chargeable accounting period in which, the assessee having carried on business, assessable profits have resulted Under the Act, the Income tax Officer, if he has reason to believe that the assessee was engaged in any business to which the Act applied, or to have been so engaged during any chargeable accounting period or to be otherwise liable to pay business profits tax, can call upon the assessee to furnish a return. That is section 11. Then comes section 14, which says that if in consequence of definite information which has come into his possession the Income tax Officer discovers that profits of any chargeable accounting period chargeable to business profits tax have ' escaped assessment ', he may at any time within four years from the end of the chargeable accounting period in question serve on the person liable to such tax, a notice. There is no compulsion to file a return except in answer to a notice issued either under section 11 or section 14. There is no period comparable to the assessment year. Mr. Palkhivala attempted to bring in the conception of an ' assessment year ' into the Act by saying that the next chargeable accounting period could be taken to be the assessment year for the previous chargeable accounting period. When it was pointed out to him that where the chargeable accounting period of a business ended, say, on March 15 every year the last charge able accounting period would be compressed to 15 days, he had no adequate answer. The Tribunal also stated that the chargeable accounting year was also the 'assessment year '. This cannot be correct, because section 11(1) speaks of the current as well as the back chargeable accounting periods, as will be explained in detail later. The question thus is whether a narrow meaning should be given to the words " profits which have escaped assessment " as denoting only those profits which by reason of a prior notice under section 11 were sought to be assessed but had escaped assessment or a wide meaning to include those profits 1011 which were never sought to be assessed or brought under assessment by the issuance of a notice under section 11. The question is primarily one of construction of the two sections of the Act. Before dealing with it is necessary to look at the scheme of some of the basic provisions of the Act. The accounting period under the Act is equated to the previous year of the business for the purposes of the Indian Income tax Act, 1922. The tax is laid on the taxable profit s of the 'chargeable accounting period ', which means an accounting period failing wholly within the term beginning on the first day of April, 1946, and ending on the thirty first day of March, 1949, or where any accounting period falls partly within and partly without the said term, such part as falls within the said term. A proviso further says that if the accounting period falls partly before, and partly after, the end of March, 1947, then the period before and the period after shall be deemed to be separate chargeable accounting periods. Then comes section 4, which is the charging sections That section, omitting the provisions about exemptions which do not concern us, reads : " Subject to the provisions of this Act, there shall, in respect of any business to which this Act applies, be charged, levied and paid on the amount of the taxable profits during any chargeable accounting period, a tax (in ' his Act referred to as 'business profits tax ') which shall, in respect of any chargeable accounting period ending on or before the 31st day of March, 1947, be equal to sixteen and two thirds per cent. of the taxable profits, and in respect of any chargeable accounting period beginning after that date, be equal to such percentage of the taxable profits as may be fixed by the annual Finance Act. Provided. . . (omitted). Section 5 deals with the application of the Act. That section, omitting again the provisos that do not affect the present matter, provides : " This Act shall apply to every business of which any part of the profits made during the chargeable accounting period is chargeable to income tax by 1012 virtue of the provisions of sub clause (i) or subclause (ii) of clause (b) of subsection (1) of section 4 of the Indian Income tax Act, 1922, or of clause of that sub section: Provided. . (omitted). It will appear from these sections quoted that the business profits tax comes in the wake of the incometax. That is to say, the assessability to profits tax follows the assessability to income tax. The tax is laid on the taxable profits accruing within a stated period which may include not more than four accounting periods corresponding either wholly or partly to the previous year under the Income tax Act. The chargeability to income tax is a condition precedent to the chargeability to profits tax, but not every business which pays income tax necessarily pays business profits tax. The Act, however, does not prescribe a period comparable to the assessment year under the Indian Income tax Act. It does not lay down any term within which the assessment should be completed. The short question thus is whether in section 11 of the Act a limitation corresponding to the limitation contained in section 14 must necessarily be read. It seems to be agreed on all hands, and it was not denied at the Bar before us that if section 11 is to be interpreted according to its own terms, then no such limitation can be read in it. The Tribunal and the High Court resort to section 14 to do so. It is always a serious matter to read into a section what the legislature has not chosen to put there. As pointed out by Lord Esher, M. B., in Curtis vs Stovin (1) : It is, no doubt, very easy for a judge to say that lie is introducing words into an Act only by way of construing it, while be is really making a new Act Such procedure is wholly out of place if the language of the section does not admit of any extension. The question invariably is Dot what the legislature might have said, or might be supposed to have intended to say, but what it did say. This is more so in an (1) 1013 Act which imposes a tax, and which cannot be added to or subtracted from except perhaps for the most clear and compelling reasons. Bearing these principles, which have received recognition on many an occasion, in mind, I address myself to the task. Under the scheme of the Act analysed above, it is quite clear that the liability to tax depends not on any action to be taken tinder the Act to recover the tax, but it attaches itself to the taxable profits when they have been made in any chargeable accounting period. Once this liability attaches, it can only be dissolved either by payment of the tax or by the levy becoming impossible due to lapse of stated time. The Commissioner contends that the liability to pay the tax in the case of a business not brought to tax does not cease by reason of any passage of time. It ceases only when by reason of an attempted assessment once, the proceedings under section 14 cannot be initiated again after the expiry of four years from the end of any chargeable accounting period. The Commissioner contends that the phrase " profits have escaped assessment" in section 14 must be limited to those cases only. For this purpose, reliance is placed upon a recent decision of the Privy Council in a case from Africa, Gokuldas Ratanji Mandavia vs Commissioner of Incometax (1), which will be referred to in some detail. The Income tax authorities in Nairobi in that case wrote on May 26, 1953, asking Mandavia for information and a deposit of pound 2,000 and saying: As you do not appear at any time to have made a return of total income and claim for allowances, I am sending under separate cover forms covering years of assessment 1943 to 1953. These should be completed and submitted to me along with the accounts of your professional activities and of your property dealings as set out in the preceding paragraphs ". Mandavia was at that time in England, and wrote on June 4, asking for time till the end of July. On June 15, 1953, the Regional Commissioner wrote to inform him that he was proceeding to assess him and impose penalties on the basis of such information as (1) 1014 had been submitted. These assessments were made on June 18, but were dated June 26 apparently to give the taxpayer more time in which to pay. Under section 59 of the East African Income Tax (Management) Act, 1952, it was provided: " 59(1). The commissioner may, by notice in writing require any person to furnish him within a reasonable time, not being less than thirty days from the date of service of such notice, with a return of income and of such particulars as may be required for the purposes of this Act with respect to the income upon which such person appears to be chargeable Under the third sub section of that section, a duty was laid upon every person to give notice to the Commissioner before October 15 in the year following the year of income that he was so chargeable, where no notice had been served under sub section (1) and no return had been furnished within nine months of the close of the year of account. Then followed two sections, which need to be quoted partly. Section 71 provided, inter alia: " (1). The commissioner shall proceed to assess every person chargeable with tax as soon as may be after the expiration of the time allowed to such person for the delivery of his return. " The section provided by sub section (2) for cases in which a return was made which was (a) accepted and (b) not accepted, and by sub section (3), for cases where no return was filed. Then followed section 72 which provided (leaving out the proviso): " Where it appears to the commissioner that any person liable to tax has not been assessed or has been assessed at a less amount than that which ought to have been charged, the commissioner may, within the year of income or within seven years after the expiration thereof, assess such person at such amount or additional amount as, according to his judgment, ought to have been charged, and the provisions of this Act as to notice of assessment, appeal and other proceedings under this Act shall apply to such assessment or additional assessment and to the tax charged thereunder. " 1015 Now, the Commissioner in the cited case justified the assessments under section 72, because it was contended that the assessments were ultra vires and void, in that they were made before the " time allowed ". He relied upon the general words of section 72, and submitted that they covered even a case where a person was not assessed whether he had a notice and a "time allowed " under sections 59 and 71 or not. The, argument on behalf of the taxpayer was that section 72 only dealt with cases where subsequent information led either to an assessment after a prior assessment or to an additional assessment but had no application to cases in which the machinery of section 59(1) had not been operated. The Privy Council accepted the contention of the taxpayer. It held that before assessments could be made, the " time allowed " had to elapse. It, however, gave a narrow meaning to the words as to assessing for the first time in section 72, as restricted to " cases in which, the machinery of section 59(1) having been operated, no assessment has been made ". Their Lordships gave three reasons for this conclusion, which may be set out in their own words: " If the power to make an assessment under section 72 applies to the making of an original assessment their Lordships are unable to imply a term restricting it to back cases or making it ultra vires to operate it at any time. One would expect an opportunity to make a return to be a condition precedent to assessment. This is supported by the provisions for personal allowances in Part VI of the Act. If the respondent is right any person can be assessed without having any such opportunity. There would be two concurrent jurisdictions, one providing reasonable protection for the taxpayer and the other providing no protection quoad the original assessment, apart from a right to appeal. Such a construction seems to their Lordships in consistent with the general and mandatory provisions of section 71. That section is providing how all original assessments are to be made. Section 72 deals, inter alia, with additional assessments, with cases in which, owing presumably to subsequent information, the Revenue desires to 1016 reopen what had apart from section 72 been settled. Having regard to the wording of section 71 it seems to their Lordships necessary to restrict the words as to assessing for the first time in section 72 to cases in which, the machinery of section 59 (1) having been operated, no assessment has been made. So far as the taxpayer is concerned, after be bad made his return or had an opportunity of doing so, it was settled that be was under no liability to tax for that year. Subsequent information leads the Revenue to reopen the matter and decide that he ought to be assessed. Section 72 is dealing with the reopening of cases which had been settled under the normal procedure. This explains the fact that section 72 contains a prima facie limitation of seven years whereas section 71 contains no limitation. On the respondents ' arguments this seems inexplicable. On the other argument it seems reasonable that there should after a certain time be no reopening of what has been settled unless there has been fraud or willful default. The construction also gains support from the words 'ought to have been charged ', when they occur for the second time in section 72. They there apply to ' such amount ' as well as ' such additional amount '. " The case, though it is easily distinguishable on the ground that the African Act and the Act are not in pari material shows that by the compulsion of the language employed and the scheme of taxation, a restricted meaning may have to be given to certain general words. When such a claim is made, only the statute under which the claim is made, can be the guide and not another not in pari material. The decision is also distinguishable on the ground that there a notice under section 59 (1) was pending and the " time allowed " had not expired. The assessee relies upon a decision of the Bombay High Court in Commissioner of Income tax vs P. N. Contractor (1), where the previous year ended on March 3l,1934. No notice was served on the assessee under s.22(2)of the Indian Income tax Act during (1) 1017 the year of assessment. Then a notice under section 34 of the Income tax Act was served on June 26, 1935. It was held by Beaumont, C. J., and Rangnekar, J., that section 34 of the Indian Income tax Act was wide enough to include those cases in which there was no notice under section 22 or a first assessment. Beaumont, C. J., dissented from the observations of Sir George Rankin in are Lachhiram Basantlal (1) made obiter that " income cannot be said to have escaped assessment except in the case where an assessment has been made which does not include the income ", and observed : " Under section 34 what must be escaped is assessment and that means the whole process of assessment, which, in the case of individuals, starts with the service of a notice under section 22(2). The liability to assessment is a risk to which every person in British India entitled to income is liable, and I cannot see why the process of assessment has not been just as much escaped by a person who receives no notice under section 22(2) as by a person who receives such a notice which proves in fact ineffective. It seems to me that a person who receives no notice under section 22(2) has escaped assessment, although, through no fault of his own, the process of assessment has never been set in motion. " The assessee also relied upon Commissioner of Income tax, Burma vs Ved Nath Singh (2), where Roberts, C. J., Mya Bu and Dunkley, JJ., observed: " We are of opinion that section 34 is applicable to cases in which either no assessment at all has been made upon the person who received the income, profits or gains liable to assessment, or, where an assessment has been made in the course of the year, but some portion of the income, profits or gains of such assessee for some reason or other has not been included in the order of assessment; such income is income which has ' escaped assessment ' in the year, and falls within the ambit of section 34 of the Act. " These cases arose before the amendments of 1939 and in those days there was no provision for a general (1) Cal. 909, 912. (2) ; , 1018 notice such as is now issued under section 22(1). Even in those days, the return asked for the particulars of the total income during the previous year. Thus, at the end of the assessment year it was not possible to issue a notice for a back period beyond the previous year. By the force of section 22(2) it could be said at the end of any assessment year that in so far as the income of the corresponding previous year was concerned, it had escaped assessment. The logical result of this was that if no notice calling for a return under section 22 was issued within the assessment year, then section 34 was the only means to get at the tax: See Rajendra Nath Mukerjee vs Commissioner of Income tax (1). The scheme of the Indian Income tax Act is entirely different, and by fixing a time limit for the issuance of a notice under section 22(2) makes it clear that in section 34 of the Indian Income tax Act the words "escaped assessment " ex facie covered all cases of escaped assessment whether within or without a prior assessment. The assessment there 'escapes ' when once the assessment year expires. The cases under the Incometax Act which expound section 34 are, thus, not in point. The cases of this Court relied upon by the assessee also do not help. In Kamal Singh vs Commissioner of Income tax (2), it was held that the word " information " was wide enough to include information as to the true and correct state of the law and the word " escaped " was wide enough to cover cases of inadvertence or oversight on the part of the assessing authorities. In Commissioner of Income tax vs Ranchhoddas Karsondas (3), the respondent assessee had submitted a 'voluntary ' return showing no taxable income ' and it was held that the Income tax Officer could not ignore the return and proceed under section 34 of the Income tax Act. In Maharajadhiraj Sir Kameshwar Singh vs State of Bihar (4), the income returned was not brought to tax and later under section 26 of the Bihar Agricultural , it was sought to be assessed. Section 26 of that Act was held to cover such a case, and the language of that section was extremely wide. These cases are hardly in point. (1) L R. (1933) 61 I.A. 10. (2) [1959] Supp. 1 S.C.R. 10. (3) ; (4) ; 1019 We are thus thrown back upon the construction of the two sections, and must find out where the compulsion of the language employed and the general scheme of the provisions lead to. Before doing so, I shall discuss one other extraneous consideration called in aid by both the Tribunal and the High Court. The Act followed the, Excess Profits Tax Act, 1940, which provided for the levy of tax on excess profits made during the chargeable accounting periods within the term beginning on the first day of September, 1939, and ending on the thirty first day of March, 1941. By succeeding Finance Acts, the year 1941 was changed to 1942, 1943, 1944, 1945 and 1946. Thereafter came the Act. Sections 13 and 15 of the Excess Profits Tax Act correspond respectively to sections 11 and 14 of the Act with the difference that the limitation in section 15 was five years. By Act 21 of 1947 (which immediately preceded the Act) this period of limitation was removed, by deleting retrospectively the words " within five years of the end of the chargeable accounting period in question" from section 15 of the Excess Profits Tax Act. Thus, by the amendment there was no limitation for bringing to tax profits which had escaped assessment, and it was so held by Falshaw and Kapur, JJ., in Telu foam Jain & Co. vs Commissioner of Income tax (1). Now, the Tribunal and the High Court reason that it was the simplest matter for the legislature to have ,deleted similar Words from section 14 of the Act, if the intention was to create no limitation for the assessment of profits which had not been assessed before. The fact that there was no corresponding change in the Act, it is said, shows that no first assessment or reassessment could be made after a lapse of four years. This argument views the matter from one angle only. There is another side to it which is equally plausible. The intention of the legislature in making the amendment in the Excess Profits Tax Act was manifestly to make the tax leviable by a first assess (1) rent and also by a reassessment without any limit of time. After the amendment, no limitation existed ,either in section 13 or section 15 of the Excess Profits Tax Act. (1) 1020 Such assessment or reassessment could be made at any time or even after considerable time. The question of hardship involved in calling for returns after the lapse of considerable time, which has weighed heavily with the High Court, did not seem to have distressed the legislature. It is thus impossible to think that the legislature left the Act untouched from a converse motive. We must not forget that the Act was then freshly enacted, and the first chargeable accounting period was hardly over for any assesesee and every case of escaped assessment or under assessment was also well within the time prescribed by section 14 of the Act. There would hardly be any present need for such a drastic provision to start with. It might well have been thought that there would not be cases in which four years could not be considered ample, except those cases where a particular business was never brought to tax at all. For that, it might equally have been thought that section 11, as is contended by the Commissioner, was sufficient. The amendment in section 15 of the Excess Profits Tax Act might have been advisedly made to reach even those cases where though the profits of a business had once been brought to assessment, they needed to be re assessed even though the first assessment resulted in some tax or no tax. For those cases it might have been felt that the limit of five years ought to go. If this is as good an explanation of the intention of the legislature in amending section 15, then the reason given by the High Court is not the only explanation, and it cannot be accepted. If the intention of the legislature can be gathered in two different ways, it is sheer speculation to say which is the true intention. As said earlier, it is always inadvisable to go by a supposed intention of the legislature and construe the words of the statute in the light of that supposed intention. The intention must be gathered from the words of the section in which the legislature has chosen to express its intention and not vice versa. I am accordingly of the view that this ground is not valid. The High Court and the Tribunal read section 11(1) somewhat differently. According to the Tribunal, 1021 the notice under that section must issue before the end of the chargeable accounting period, and according to the High Court, within four years from the end thereof There is nothing in the section which justifies any of these two readings. Three classes of persons are there mentioned. They are (a) persons believed to be engaged in any business, (b) persons believed to have been so engaged in any chargeable accounting period, and (c) persons believed to be otherwise liable to business profits tax. The first two categories clearly show that whereas for the first category the assessee must be engaged in business in the year of notice, for the second category the notice may issue in respect of a back chargeable accounting period. The words " to be engaged " and " to have been so engaged during any chargeable accounting period " cannot but refer to " current " and " back " chargeable accounting periods. The latter words plainly refer to a ,back" period and the word " any " shows that it need not be the " back " period immediately preceding the " current " chargeable accounting period only. Indeed, it is possible to issue the notice under section 11(1) after March 31, 1949, in respect of the very first chargeable accounting period and also every succeeding period lying within the term beginning on April 1, 1946, and ending on March 31, 1949. If this be the natural meaning of the section and this meaning is made more probable by the residuary category, viz., persons otherwise liable to pay business profits tax it is an irresistible conclusion that no period comparable to the assessment year under the was either introduced or contemplated. The distinction between " back " chargeable accounting periods and "current" chargeable accounting periods also disappears. Unless one can say when or after how much lapse of time profits escape assessment, section 14 cannot be made applicable at all. Section 4 of the Act says that in respect of any business to which the Act applies, there shall be charged, levied and paid a tax referred to as the business profits tax. The liability that is incurred can only be discharged by payment of the tax and the charging and levying 132 1022 are duties laid upon the Income tax Officers who execute them by issuing a notice under section 11 and by assessing and demanding the tax. For this purpose, any person believed to be engaged in business to which the Act applies, or to have been so engaged or to be otherwise liable can be called upon to make a return. Of course, the proceedings thus initiated may or may not result in tax, but that is another matter. This is the first operation of the Act against a likely taxpayer. For this purpose, it is admitted, on all hands, there is no express limitation in section 11(1) or elsewhere. The question next is whether there is anything in section 14, which impliedly imposes such a limitation. That section deals with " escaped assessment under assessment " or " excessive relief ". The last two categories ex facie refer to an assessment after a prior assessment. The question thus is whether the words " escaped assessment ", refer also to an assessment after a prior assessment,. The word " assessment ", was explained by the Judicial Committee in Commissioner of Income tax vs Khemchand Ramdas (1). It sometimes means the computation of income or profits, sometimes, the determination of the amount of tax payable, and, sometimes, the whole procedure laid down in a taxing Act for imposing the liability on an assessee. In section 14 where the words " escaped assessment " are used, it means that there was a determination of the amount of the tax payable but some profits escaped that process either wholly or partly. Profits cannot be said. to have escaped assessment when there are proceedings afoot and assessment is being made. In my opinion, they cannot be said to have escaped assessment when they are exposed to assessment and assessment has yet to be done. It is to be noticed that section 14 requires " definite information " in the possession of the Income tax Officer and to " discovery " by him of the fact of escaped assessment as a condition precedent to action under that section. If under section 4 the liability to tax exists and there is no limitation, and if under section 11(1) it can be (II) (1938) L.R 65 I.A 236. 1023 enforced without any limit as to time, the profits cannot be said to have escaped assessment any more than where assessment proceedings are afoot and are not yet over. This is not a case where by the operation of some other period of limitation the assessment proceedings can be said to be out of reach of the Department. If the profits are still assessable by reason of the charge under section 4 and are subject to the process under section 11(1), there is no " escaped assessment ". There are here no "back" periods which cannot be reached under section 11 like the period prior to the previous year of the , for which only section 34 is available. All chargeable accounting periods are on the same footing, and section 11 is wide enough to reach all of them. Further, it is to be noticed that there is no time limit for completing an assessment once begun. Also, if profits which have never been processed can be dealt with both under sections 11 and 14 and both have the limit of 4 years, why have two sections, one depending on belief and the other on definite information ? We must look to some different meaning and different fields of operation. That can only be if the words " escaped assessment " are given a restricted meaning in section 14. In this view of the scheme of the Act and the clear words of section II (1), it seems difficult to put a limit of time because one is contained in section 14 in respect of profits escaping assessment. No doubt, both the sections must be construed harmoniously ; but as was observed by Sir Lawrence Jenkins in Mohammad Sher Khan vs Seth Swami Dayal (1), the provisions of one section cannot be used to defeat those of another, unless it is impossible to effect reconciliation between them. Equally both sections must not be made to operate in the same field. In the Act with which we are concerned, reconciliation is only possible if the words of section 11(1) and section 14 are given meanings without importing certain implications from one into the other, and the only way different fields can be found is to read them differently. The interpretation of the High Court, if I may figuratively describe it, makes the two sections march hand in hand during the four (1) [1922] L.R. 49 I.A. 60. 1024 years which ex facie could not have been intended, as one section depends upon the entertainment of belief and the other section requires definite information leading to a positive discovery. Read in this way, it is clear that section 11 effectuates the assessment, levy and collection of tax from persons believed to be liable, while section 14 enables a reopening of cases where after an assessment there is discovery that profits have escaped assessment due to one reason or another. The use of the words " escaped assessment" in the context of the Act has reference only to those cases where profits of a business were brought to process once but for some reason some profits escaped assessment or were under assessed or received excessive relief. The insistence upon definite information leading to such a discovery before action is taken under section 14, also points in the same direction. " Definite information " denotes that there is something discovered which can demonstrate the falsity of something done previously. The existence of belief shows the possibility of there existing some profits which need to be taxed. Whereas " definite information " points to a state of affairs in which though there was a processing of the profits before, something definite having been found out the result of that processing is discovered to be incorrect, the word " belief " in section 11 shows that the Income tax Officer is to embark upon a first enquiry as to whether the business comes within the purview of the Act or not. To summarise, therefore, though it is possible to make the chargeable accounting period correspond to the 'previous year ' under the Income tax law, there is no method by which the conception of an assessment year can be brought in. To say that section 11 operates for full four years is to find not an " assessment year " but an " assessment period ". During the course of those four years, the tax would be realisable under section 11, because the assessment period could not be said to be over. But then, there would be no room for the operation of section 14, particularly where it speaks of " escaped assessment ". During the whole of the four years, there would never be any escaped assessment, and there would be no further time available 1025 for the operation of section 14. Even on this reasoning, some meaning other than what prevails under the will have to be given to the same words by the compulsion of the language employed in sections 11 and 14. On the reasoning of the High Court, the whole of the period of four years would be the " assessment period ". It would begin at the end of the chargeable accounting period and end after the lapse of four years. It would embrace all the chargeable accounting periods within reach. But then, section 14 also operates in the same manner and for the same time. This construction renders section 14 otiose. Nor do I think that there is any unreasonableness in the construction, which I have indicated above. The legislature might have been solicitous that persons who have been subjected to the process of assessment once should not be exposed to a second peril except within the reasonable period of four years from the end of the chargeable accounting period; but it did not view in a similar way those persons who were never troubled before but whose liability to pay tax remained unaltered. The motive with which limitation was introduced in one section cannot be the motive for the Courts to introduce the same period in quite another section. To adopt the reasoning of the High Court would be to make no distinction between sections 11 and 14 and to render meaningless the fiction to be found in the last words of section 14. For profits which have never been brought to assessment, there would be two notices possible in some cases, one under section 11 (1) and the other under section 14, one requiring only the entertainment of a belief as to a certain state of things and the other requiring definite information and discovery that profits have escaped assessment. These two conditions cannot co exist in the same case. Harmonious construction requires that there should arise no impossible situations. Such situations are avoided if the operation of section 11 is confined to those cases where there has been no prior assessment and the operation of section 14 to those cases where after a prior assessment there is an escaped assessment, under assessment or excessive relief. For the subsequent and reopened assessment there is a limit of 1026 four years, but for the assessment for the first time there is no limit. I have looked into the Rules framed under the Act. No doubt, R. 50 speaks of a period during which refunds can be claimed, and it may be argued that this rule has to be interpreted in harmony with the Act. If the Rule cannot be reconciled with the Act, then the Rule must fail. See Maxwell on Interpretation of Statutes, 10th Edn., p. 51, where the following passage occurs: " If reconciliation is impossible, the subordinate provision must give way, and probably the instrument would be treated as subordinate to the section. " See also Institute of Patent Agents vs Lockwood and Minister of Health vs R: Ex parte Yaffe (2 ). The breakdown of R. 50 would leave into operation R. 48, which is without any limitation of time, and refunds would be available under that Rule. This argument receives great support from the fact that under the Excess Profits Tax Act sections 48 and 50 of the Indian , were brought in mutatis mutandis. If, as has been shown above, there is no limitation either under section 13 or section 15 of the Excess Profits Tax Act section 50 will have to be applied to that Act without any limit as to time. It appears to me that R. 50 is not framed in consonance with the spirit underlying section II, and if it was necessary for me to say so, I would have been disposed to thinking that being a Rule of the Board of Revenue, it would have to give way, even though under the Act it has to be read as a part thereof. This argument, therefore, has no validity. In my opinion, the answer to the first question should be in the affirmative. In view of this answer, the second question would not fall to be answered. I would, therefore, allow the appeal with costs here and below. BY COURT: In accordance with the judgment of the majority, the appeal is dismissed with costs. Appeal dismissed. (1) , 360. (2) , 503. [/INST] The assesses firm which was doing business in Bombay was served with a notice on January 21, 1953, by the Income tax Officer under section 11(1) of the Business Profits Tax Act, 1947, in respect of the chargeable accounting period from November 13, 1947, to October 31, 1948, calling upon it to submit its return. It filed the return under protest stating that the notice was barred under section 14 of the Act as it was served beyond the period of four 989 years. The question was whether in section 11 of the Act a limitation corresponding to the limitation contained in section 14 must be necessarily read and whether in a case where the profits were not brought to assessment because notice under section 11 was not issued in time, they must be deemed to have escaped assessment and action could only be taken under section 14 within the time specified therein : Held (per section K. Das and Kapur, JJ., Hidayatullah, J., dissenting), (1) that the words " profits escaping assessment " in section 14 of the Business Profits Tax Act, 1947, apply equally to cases where a notice was received by the assessee but `resulted in no assessment, under assessment or excessive relief, and to cases where due to any reason no notice was issued to the assessee and therefore there was no assessment of his income; (2)that sections 11 and 14 Of the Act have to be read together and that a notice under section 11 cannot be issued against an assessee beyond the period of four years indicated in section 14. Kamal Singh vs Commissioner of Income tax, [1959] Supp. 1 S.C.R. 10 and Mahayajadhiraj Sir Kameshwar Singh vs State Of Bihar, ; , relied on. Gokuldas Ratanji Mandavia vs Commissioner of Income tax, , distinguished. Per Hidayatullah, J. Section 11 of the Business Profits Tax Act, 1947, is confined to cases where there has been no prior assessment, while section 14 is applicable to cases where after an assessment there is discovery that profits have escaped assessment due to one reason or another. The use of the words " escaped assessment " in the context of the Act has reference only to those cases where profits of a business were brought to process once but for some reason some profits escaped assessment or were under assessed or received excessive relief. For the subsequent and re opened assessment there is a limit of four years, but for the assessment for the first time there is no limit. </s>

<s>[INST] Summarize the following judgement: Appeal No. 37 of 1960. Appeal from the judgment and decree dated November 12, 1952, of the Bombay High Court in First Appeal No. 492 of 1949, arising out of the judgment and decree dated the 20th April, 1949, of the First Class Sub Judge, Dharwar, in Special Civil Suit No. 16 of 1943. section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellant. Naunit Lal, for respondent No. 1. B. R. L. Iyengar and T. M. Sen, for respondent No. 2. 1960. April 29. The Judgment of the Court was delivered by section K. DAS, J. This is an appeal on a certificate given by the High Court of Bombay, from the judgment and decree of the said High Court dated 791 November 12, 1952, by which it reversed the decision of the Civil Judge, First Class, at Dharwar dated ,, April 20, 1949, in Special Civil Suit No. 16 of 1943. The material facts are these. Gajendragad in Taluk Ron in the district of Dharwar is a Saranjam estate known as the Gajendragad Saranjam bearing number 91 in the Saranjam list maintained by Government. Within that estate lay village Dindur and survey field No. 302 of Unachgeri, which are the properties in suit. One Bhujangarao Daulatrao Ghorpade was the holder of the Saranjam estate at the relevant time. In 1932 the Saranjam was resumed and re granted to the said Bhunjangarao by Resolution No. 8969 dated June 7, 1932, of the Government of Bombay in the Political Department. This Resolution said: " The Governor in Council is pleased to direct that the Gajendragad Saranjam should be formally resumed and re granted to Bhujangarao Daulatrao Ghorpade, the eldest son of the deceased Saranjamdar Daulatrao Bhujangarao Ghorpade, and that it should be entered in his sole name in the accounts of the Collector of Dharwar with effect from the date of the death of the last holder. The Collector should take steps to place the Saranjamdar in possession of the villages of the Saranjam estate which were in possession of the deceased Saranjamdar. The Governor in Council agrees with the Commissioner, Southern Division, that the assignments held by the Bhaubands as potgi holders should be continued to them as at present. " One of the younger branches of the Ghorpade family was Babasaheb Bahirojirao Ghorpade, to be referred to hereinafter as Babasaheb. He held by way of maintenance (as potgi holder) the aforesaid village of Dindur and survey field No. 302 of Unachgeri. He had an undivided brother called Dattojirao, who was defendant No. 2 in the suit and is appellant before us. In this judgment we shall call him the appellant. Babasaheb died on May 14, 1940. On his death he left a widow named Abayabai and the appellant, his undivided brother. On July 10, 1941, Abayabai adopted Vijayasinhrao as a, son to her deceased husband. Vijayasinha was the plaintiff who brought the suit ' 792 and is now the principal respondent before us. It will be convenient if we call him the plaintiff respondent, and state here that he was the natural son of Bhujaugarao 's younger brother, another Dattajirao to be distinguished from the appellant who also bears the same name. On Babasaheb 's death Abayabai asked for sanction of Government to her taking a boy in adoption; this application was opposed by the appellant. On December 17, 1941, the Government of Bombay passed a Resolution in the following terms: " 1. Government is pleased to direct that the Saranjam potgi holding of village Dindur and Survey No. 302 of Unacbgeri, which were assigned for maintenance to the deceased potgidar, Mr. Babasaheb Bahirajirao Ghorpade, at the time of the re grant of the Gajendragad Saranjam, should be continued to his undivided brother, Mr. Dattajirao Babirojirao Ghorpade. 2.Government is also pleased to direct, under Rule 7 of the Saranjam Rules, that the new potgidar, Mr. Dattajirao Bahirojirao Gborpade, should give to Bai Abaibai, widow of the deceased Potgidar, Mr. Babasaheb Bahirojirao Ghorpade, an annual maintenance allowance of Rs. 300 for her life. 3.These orders should take effect from the 14th May, 1940, i.e., the date on which the deceased potgidar, Babasaheb Bahirojirao Ghorpade, died. 4.The Commissioner section D. should be requested to communicate these orders to Bai Abaibai, widow of the late potgidar, with reference to her petitions addressed to him and also to the Rayats of Dindur, with reference to their petition, dated the 12th May, 1941. The orders should also be communicated to the present Saranjamdar of Gajendragad. " On February 8, 1943, the plaintiff respondent brought the suit against the Province of Bombay as defendant No. 1, the appellant as defendant No. 2 and Abayabai as defendant No. 3. The suit was contested by the Province of Bombay (now substituted by the State of Bombay) and the appellant. Abayabai supported the case of the plaintiff respondent, but she died during. the Pendency of the suit. 793 The claim of the plaintiff respondent was that on his adoption the estate of his deceased adoptive father devolved on him by the, rule of lineal primogeniture in preference to the appellant. The main plea of the plaintiff respondent was stated in paragraph 6 of the plaint, which read as follows: " 6. The Government Resolution passed by defendant No. 1 in 1941 is ultra vires and null and void for the following reasons: (a)Defendant No. 1 made a re grant of the Saranjam estate to Shrimant Sardar Bhujaragarao Ghorpade in 1932 and therein the suit properties were, according to defendant No. 1, continued to the adoptive father of plaintiff Under the Saranjam rules no occasion has arisen for interference by Government at this stage. The re grant made by Government would in any case be effective during the life time of the grantee, viz., Shrimant Sardar Bhujangarao Ghorpade. Further the said Shrimant Sardar Bhujangarao Ghorpade was not consulted by defendant No. 1 before the said Government Resolution. (b)By the custom of the family to which the family belongs, the estate of a deceased person devolves by the rule of lineal primogeniture. Hence after the death of plaintiff 's adoptive father and the adoption of plaintiff himself, all the estate vested in plaintiff 's adoptive father has devolved on the plaintiff in preference to defendant No. 2. The action of defendant No. 1 in ignoring this rule of succession prevalent in the family is ultra vires and null and void. " On the aforesaid pleas, the plaintiff respondent prayed for (a) recovery of possession of properties in suit from the appellant, (b) mesne profits, and (c) costs. On behalf of the Province of Bombay several pleas by way of defence were taken. The main pleas were (1) assuming that the plaintiff respondent was validly adopted, he had nevertheless no legal claim to the properties in suit because under the relevant Saranjam Rules the interest of Babasabeb came to an end on his death and was not of such a nature as would 794 devolve on the plaintiff respondent despite the Government Resolution dated December 17, 1941, (2) that the alleged family custom did not apply to maintenance grants, and (3) that, in any event, the suit was barred under section 4 of the Bombay Revenue Jurisdiction Act, 1876. The appellant besides supporting the aforesaid pleas raised the additional pleas that there was no valid adoption of the plaintiff respondent and Abayabai was expressly prohibited by her husband from adopting a son. On these pleadings several issues were framed. The suit was originally dismissed on a preliminary ground, namely, that the plaint did not disclose any cause of action. The learned Civil Judge apparently took the view that the properties in suit were subject to the Saranjam Rules and on examining those rules, he came to the conclusion that as the plaintiff respondent on his adoption became a nephew of the appellant and in that sense was claiming maintenance from the latter, it was necessary for him to have alleged the necessary circumstances under which certain members of a Saranjam Family are entitled to claim maintenance under Rule 7 of the said Rules and as those circumstances were not pleaded by the plaintiff respondent, the plaint disclosed no cause of action. The High Court rightly pointed out that the plaintiff respondent did not make a claim for maintenance under Rule 7 of the Saranjam Rules, but claimed that the properties in suit devolved on him by reason of his adoption and the custom of lineal primogeniture. Therefore, the High Court held that the claim of the plaintiff respondent was much more fundamental than a mere claim of maintenance, and the learned Civil Judge had misdirected himself as to the true scope of the suit. Accordingly, the High Court set aside the decree of dismissal and directed the suit to be tried on all the issues. After this direction the learned Civil Judge tried all the issues. Issues 1 and 2 related to the question of adoption, namely, (1) whether the ceremony of adoption was properly proved and (2) whether Babasaheb during his life time had prohibited his wife from making an adoption. On the first issue the learned 795 Civil Judge found in favour of the plaintiff respondent and on the second against him. The High Court affirmed the finding on the first issue, and on a careful and detailed examination of the evidence held on the second issue that the learned Civil Judge was wrong in holding that the adoption was invalid by reason of the alleged prohibition of Babasaheb. The High Court held that there was no such prohibition, and the adoption was valid. We do not think that this finding of the High Court has been or can be successfully assailed before us. Therefore, we have proceeded in this appeal on the basis that the plaintiff respondent was validly adopted by Abayabai on July 10, 1941. We go now to a consideration of those issues which are material for a decision of this appeal. They are: Issue No. 3 Does plaintiff prove his title to the suit property ? Issue No. 4 Is it proved that the Government Resolution (D. G.) No. 8969 of December 17, 1941, is ultra vires and null and void as alleged in the plaint ? Issue No. 5 Is the suit barred under section 4 of the Revenue Jurisdiction Act ? Issue No. 7 Is the alleged custom set up in para. 6(b) of the plaint proved ? On all these issues the learned Civil Judge found against the plaintiff respondent, and held that the latter was not entitled to recover possession Of the properties in suit, that he had failed to prove the custom pleaded in paragraph 6(b) of the plaint, that the Government Resolution of December 17,1941, was not ultra vires, and that the suit itself was barred under section 4 of the Bombay Revenue Jurisdiction Act, 1876. The High Court reversed the decision of the learned Civil Judge on all the aforesaid issues, and held that as the properties in suit were given to the junior branch of Babasaheb for its maintenance and were impartible and governed by the rule of lineal primogeniture, they devolved on the appellant after Babasaheb 's death ; but as soon as Babasaheb 's widow 796 made a valid adoption, the properties were divested and inasmuch as the plaintiff respondent became the eldest member of the senior branch of Babasaheb 's family, he became entitled thereto as a result of the combined effect of the family custom and ordinary Hindu law. The High Court said that looked at from this point of view, no question arose of the validity of the Government Resolution dated December 17, 1941, and no relief for possession having been claimed against Government, the suit was not barred under section 4 of the Bombay Revenue Jurisdiction Act, 1876. On behalf of the appellant, it has been very strenuously argued that the High Court was in error in holding that the properties in suit which are part of a Saranjam, vested in the appellant on 'the death of Babasaheb and were then divested on the adoption of the plaintiff respondent; it is contended that such a conclusion is inconsistent with the nature of a Saranjam tenure and furthermore, the properties in suit having vested in the appellant by reason of the re grant dated December 17, 1941, they could not be divested by the adoption made on July 10, 1941. Nor does it follow, it is contended, from the custom pleaded in paragraph 6(b) of the plaint, apart from the question whether even that custom has been proved or not, that the properties in suit having once vested in the appellant will be divested on a valid adoption. Secondly, it has been contended that the High Court was also in error in holding that there was no claim against Government within the meaning of the fourth sub cl. of section 4(a) of the Bombay Revenue Jurisdiction Act, 1876. The argument before us has been that there was such a claim, and no Civil Court had jurisdiction to determine it. We are satisfied that these arguments are correct and should be accepted. The claim of the plaintiff respondent that the properties in suit devolved on him on his adoption may be examined either from the point of view of the Saranjam Rules or the custom which he pleaded in paragraph 6(b) of the plaint. Let us examine the claim first from the point of view of the Saraniam Rules assuming here that they apply, 797 as far as practicable, to maintenance grants (potgis) within the Saranjam. In the Resolution of June 7, 1932, quoted earlier, the Government of Bombay treated the potgi holders as being within the Saranjam and made provision for them. The Resolution of December 17, 1941, also proceeded on that footing. Two earlier Resolutions, one of 1891 (exhibit 100) and the other of 1936 (exhibit 101), also treated the whole of Gajendragad and also parts thereof as a Saranjam. Babasaheb in his lifetime wanted to surrender the grant in his favour to the Saranjamdar, but Government refused to accept such relinquishment. Even Abayabai asked for permission of Government to take a boy in adoption, which permission she did not obtain. All this shows that the potgi holding was part of the Saranjam and was treated as such by all the parties concerned. What is a Saranjam ? The word " Saranjam literally means apparatus, provisions or materials. In his Glossary, Wilson defines Saranjam as temporary assignments of revenue from villages or lands for support of troops or for personal service usually for the lifetime of the grantees. Dr. G. D. Patel in his book on " The Indian Land Problem and Legislation has said: " According to the account given by Col. Etheridge in his preface to the Saranjam List, it was the practice of the former Governments, both the Muslims and the Marathas, to maintain a species of feudal aristocracy for the State purposes by temporary assignments of revenue either for the support of the troops or personal service, the maintenance of official dignity or for other specific reasons. The holders of such lands were entrusted at the time with the necessary powers for enabling them to collect and appropriate the revenue and to administer the general management of the lands. Under the Muslim rule, such holdings were called Jahagirs and under the Maratha rule, they came to be called Saranjam. However, this distinction between these tenures ceased to exist during the Maratha period. At the time of the introduction of the British rule, 104 798 the difference between a Jahagir and a Saranjam ceased to exist, to all intents and purposes. The two terms became convertible and all such grants came to be known by the general term "saranjam". Apart from the Saranjam grants, which were found only in the Deccan, there were other grants of a political nature found scattered over the whole State. Their origins did not materially differ from those of the Saranjam with the result that the British treated them under the same rules called the Saranjam Rules ". The Saranjam Rules were made in exercise of the powers referred to in r. 10 of Schedule B of Act Xi of 1852 and of the second sub cl. to el. 3 of section 2 of Bombay Act VII of 1863. We may here reproduce some of these Rules: " Rule I Saranjams shall be ordinarily continued in accordance with the decision already passed or which may hereafter be passed by Provincial Government in each case. Rule 2 A Saranjam which has been decided to be hereditarily continuable shall ordinarily descend to the eldest male representative in the order of primogeniture, of the senior branch of the family descended from the First British grantee or any of his brothers who were undivided in interest. But Provincial Government reserve to themselves the rights for sufficient reasons to direct the continuance of the Saranjam to any other member of the said family, or as an act of grace, to a person adopted into the same family with the sanction of Provincial Government. When a saranjam is thus continued to an adopted son, he shall be liable to pay to Provincial Government a nazarana not exceeding one year 's value of the saranjam, and it shall be levied from him in such instalments as Provincial Government may in each case direct. Rule 5 Every saranjam shall be held as a life estate. It shall be formally resumed on the death of the holder, and in cases in which it is capable of further continuance, it shall be made over to the next holder as a, fresh grant from Provincial 799 Government, unencumbered by any debts or charges save such as may be specially imposed by Provincial Government itself Rule 7 Every saranjamdar shall be responsible for making a suitable provision for the maintenance of the widow or widows of the preceding saranjamdar, his own brothers, or any other member of his family who, having a valid claim arising from infancy, mental or physical deformity rendering such member incapable of earning a livelihood, may be deemed deserving of support at his hands. When this obligation is not fulfilled by any saranjamdar, Provincial Government may direct him to make suitable provision for such person and may fix the amount, which he shall pay in each instance; provided that no one who has independent means of his own, or is, in the opinion of Provincial Government, otherwise sufficiently provided for, shall be entitled to maintenance from the Saranjamdar. Rule 8 Every order passed by Provincial Government under the above rule for the grant of maintenance by a Saranjamdar shall hold good ' during his life only The true nature of a Saranjam tenure was considered by a Full Bench of the Bombay High Court in Daulatrao Malojirao vs Province of Bombay(1) where their Lordships after referring to the earlier decisions in Shekh Sultan Sani vs Shekh Ajmodin (2) and Raghojirao vs Laxmanrao(3) observed: " An examination of the authorities, makes it clear that the whole structure of a Saranjam tenure is founded in the sovereign right, which can only change by conquest or by treaty. So founded, jagirs and Saranjams, with the feudal incidents connected with them, are granted or withheld at the will and pleasure of the sovereign power, and, if granted, the fixity of tenure is always subject to interruption and revocation by resumption, be it temporary or absolute in character. No incident normally applicable (1) (2) (1892) L.R. 20 I.A. 50. (3) 800 to private rights between subject and subject can fetter or disturb the sovereign will ". It seems to us manifestly clear that the Saranjam Rules furnish no basis for the claim of the plaintiff respondent. Abayabai asked for sanction to her taking a boy in adoption. No such sanction was given. On the death of Babasaheb, it was open to Government to resume the grant, and by its Resolution of December 17, 1941, Government directed that the Saranjam potgi holding of village Dindur and Survey No. 302 of Unachgeri should be continued to the appellant. This really amounted to a resumption and fresh grant and we do not agree with the High Court that the order passed amounted to no more than recognising the legal position according to the rule of succession and stood on the same footing as any order of ordinary mutation. The High Court has emphasised the use of the word " continued " in the Resolution dated December 17, 1941, and has contrasted that Resolution with the earlier Resolution dated June 7, 1932, which was clearly a Resolution giving effect to a resumption and regrant of the Gajendragad Saranjam. It may, however, be pointed out that in paragraph 2 of the earlier Resolution, Government used the same word " continued " in connection with the maintenance grants, namely, potgi holdings within a Saranjam. Nothing, therefore, turns upon the use of the word " continued " and if the ]Resolution dated December 17, 1941, is read as a whole it is clear that the potgi of village Dindur and Survey field No. 302 of Unachgeri was granted to the present appellant. It was open to Government to pass such an order, and we see no reasons to hold that it was null and void. Indeed, the High Court did not say that it was an invalid order; on the contrary, it said that it was a good order and operated with effect from the death of Babasaheb. But it said erroneously in our opinion, that by reason of the subsequent event of adoption, the order ceased, for all practical purposes, to have any effect from that event. It is well to remember that the adoption took place on July 10, 1941, and the Resolution was passed on December 17, 801 1941, though it took effect retrospectively from the date of death of Babasaheb. We see no reasons why S, a valid order made by Government will cease to have any effect because of an adoption made by Abayabai without sanction of Government. To hold that the Government Order ceased to have any effect by reason of the act of a private party will be to go against the very nature of a Saranjam tenure. Let us now examine the claim of the plaintiff respondent from the point of view of the custom pleaded in paragraph 6(b) of the plaint. The custom pleaded was the rule of lineal primogeniture. In its written statement Government said: " The family custom alleged in clause (b) is not admitted, and it is denied that such a custom can apply in respect of maintenance grants. Under Rule 7 of the Saranjam Rules, which merely embody the customary law relating to Saranjams, Government is given absolute discretion to determine whether or not to make an order and what provision to make and in whose favour The appellant said: " The contents of para. 6(b) of the plaint are not correct. The custom of descent by the rule of primogeniture is denied. This defendant has become the owner by survivorship, after the death of Babasaheb ". The learned Civil Judge found that the custom pleaded in paragraph 6(b) of the plaint was not proved. The High Court has not referred to any evidence on which the custom could be said to have been proved, but observed that " it is common ground that the properties which had been assigned to this branch for its maintenance is impartable and goes by primogeniture". Even if we assume that the High Court is right in its observation, though in face of the denial in the two written statements it is difficult to see how this could be common ground between the parties, we fail to appreciate how the assumption helps the plaintiff respondent. On the operation of the rule of lineal primogeniture after the death of Babasaheb, the appellant became entitled to and got the 802 properties. It was not pleaded in the plaint that the properties once vested by the customary rule of lineal primogeniture were divested on subsequent adoption, by the widow. No such plea was specifically taken, but the High Court relied on the concession made by learned advocate for the appellant that under ordinary Hindu law the properties which were vested in the appellant were divested on a subsequent valid adoption by the widow. We consider it unnecessary to go into the vexed question of divesting of an estate on a subsequent valid adoption by the widow. It is enough to point out that the plaint disclosed no such case; no such issue was raised and it was not open to the plaintiff respondent to make out a new case for the first time in appeal. The plaintiff respondent set up a family custom of lineal primogeniture different from the ordinary law of inheritance; it was incumbent on him to allege and prove the custom on which he relied and to show its precise extent and how far it prevailed over ordinary Hindu law. In our opinion, he failed to plead or prove any family custom by which the properties devolved on him. Moreover, in order to succeed the plaintiff respondent must further establish that the custom was such as would bind the Government. The appellant and the Government never conceded that the custom of lineal primogeniture, if it prevailed in the family, took away the right of Government to resume the maintenance grant which was part of a Saranjam and make a fresh grant thereof in accordance with the Saranjam Rules. Now, as to section 4 of the Bombay Revenue Jurisdiction Act, 1876. The section, so far as it is relevant for our purpose, says: " section 4. Subject to the exceptions hereinafter appearing, no Civil Court shall exercise jurisdiction as to any of the following matters: (a)claims against the Government relating to any property appertaining to the office of any hereditary officer appointed or recognised under Bombay Act No. III of 1874 or any other law for the time being in force, or of any other village officer or servant, or 803 claims to perform the duties of any such officer or servant, or in respect of any injury caused by,, exclusion from such office or service, or suits to set aside or avoid any order under the same Act or any other law relating to the same subject for the time being in force passed by the State Government or any officer duly authorized in that behalf, or claims against the Government relating to lands held under treaty, or to lands granted or held as Saranjam, or on other political tenure, or to lands declared by the Provincial Government or any officer duly authorized in that behalf to be held for service". In Mallappa alias Annasaheb Basvantrao Desai Nadgouda vs Tukko Narshimha Mutalik Desai and Others (1) it was pointed out that in the section a distinction has been made between claims and suits. The subclause we are concerned with is the fourth sub clause which relates inter alia to " claims against the Government relating to lands granted or held as Saranjam ". The High Court has taken the view that no claim was made against Government in the present case. We are unable to agree. In express terms, the plaintiff respondent asked for a finding that the Government Resolution dated December 17, 1941, was null and void and did not affect the properties in suit because the Government had either no authority to make such an order or no occasion to do so. He asked for possession of those properties in spite of the orders of Government. In these circumstances we must hold that Government was more than a purely formal party, and a claim was made against it in respect of the orders contained in its Resolution dated December 17, 1941. Unless the Resolution is out of his way, the plaintiff respondent is not entitled to claim recovery of possession from the appellant with mesne profits, etc. The Civil Court has no jurisdiction to determine any claim against the Government in the matter of the Resolution of December 17, 1941, relat ing to Saranjam lands, and the suit was barred under section 4 of the Bombay Revenue Jurisdiction Act, 1876. (1) I.L.R. 804 We accordingly allow this appeal, set aside the judgment and decree of the High Court dated November 12, 1952, and restore that of the learned Civil Judge dated April 20, 1949. The appellant will be entitled to his costs throughout from the plaintiff respondent. Appeal allowed. [/INST] Upon the death of the holder in 1932, the Government of Bombay by order dated June 7, 1932, resumed the Saranjam estate of Gajendragad and re granted the same to his eldest son. By the same order the assignment of some lands out of the estate in favour of B, a younger member of the family, by way of maintenance was also continued. On May 14, 1940, B died leaving his widow, A, and his undivided brother, D. A asked the Government for permission to adopt a son but without the permission being granted adopted V on July 10, 1941. By an order dated December 17, 1941, the Government continued the maintenance grant (Saranjam potgi) to D. Thereupon V filed a suit against the Government and D for recovery of the lands on the grounds (i) that the order of the Government dated December 17, 1941, was ultra vires, null and void, and (ii) that by the custom of lineal primogeniture which prevailed in the family the lands, upon the death of B and upon the adoption of V by A, devolved upon V in preference to D. The suit was contested, inter alia, on the grounds: (i) that under the relevant Saranjam Rules the interest of B came to an end on his death and was not such as could devolve upon V despite the order dated December 17, 1941, (ii) that the alleged family custom did not apply to maintenance grants and (iii) that the suit was barred under section 4 Of the Bombay Revenue jurisdiction Act, 1876: Held, that the plaintiff was not entitled to the lands either under the Saranjam Rules or under the custom; further that the suit was barred by $ 4 of the Bombay Revenue jurisdiction Act, 1876. 103 790 The maintenance grant (potgi holding) was part of the Saranjam and was governed by the incidents of Saranjam tenure and by the relevant Saranjam Rules. Saranjam grants were granted or withheld at the will and pleasure of the sovereign power and the grant was always subject to interruption and revocation by resumption, temporary or absolute. On the death of B it was open to the Government to resume the grant and to grant it to D and this is what it did by the order dated December 17, 1941. The taking in adoption of the plaintiff by the widow of the deceased could not affect the operation of the order passed by the Government. Daulatrao Malojiyao vs Province of Bombay (1946) 49 Bom. L.R. 270, referred to. Even under the custom of lineal primogeniture pleaded by the plaintiff, D was entitled to get the properties after the death of B. It was not pleaded that the properties once so vested were divested by subsequent adoption by the widow. Further it was neither pleaded nor proved that the custom took away the right of the Government to resume the maintenance grant and to make a fresh grant thereof. Sub clause 4 of the Bombay Revenue jurisdiction Act, 1876, barred the jurisdiction of civil courts in respect of " claims against the Government relating to lands granted or held as Saranjam". The plaintiff asked for a finding that the order of December 17, 1941, was null and void and did not affect the properties in suit. Unless the order was out of his way, the plaintiff was not entitled to claim recovery of possession. The claim was one which fell within the mischief of section 4 and the suit was barred. </s>

<s>[INST] Summarize the following judgement: Appeal No. 21 of 1960. Appeal from the judgment and order dated January 16, 1959, of the Madras High Court in Writ Appeal No. 67 of 1958, arising out of the judgment and order dated July 15, 1958, of the said High Court in Writ Petn. No. 922 of 1957. C. B. Aggarwala, section N. Andley, J. B. Dadachanji and Rameshwar Nath, for the appellant. R. Ganapathy Iyer, H. J. Umrigar, R. H. Dhebar and T. M. Sen, for respondent No. 2. 1960. May 4. The Judgment of the Court was delivered by WANCHOO, J. This is an appeal on a certificate granted by the Madras High Court. The appellant Company had been carrying on various classes of insurance business other than life insurance after its incorporation in September, 1941. On October 15, 1956, an extraordinary general meeting of the shareholders of the Company passed a resolution by which all its insurance business was to cease forthwith and no further policies of insurance of any kind were to be issued thereafter. It was also resolved that no application should be made for renewal of the certificate granted under section 3 of the , No. IV of 1938 (hereinafter called the Act), and that thence forward the Company should only carry on the business of money lending as a loan Company and also to do investment business. In consequence of these resolu tions, the Company informed the Controller of Insurance in December, 1956, that it was not applying for renewal of its registration for carrying on the business of insurance. In May, 1957, the Controller wrote to the Company that its certificates for carrying on insurance business would be deemed to be cancelled from July 1, 1957, and the cancellation was notified in the Gazette of India. It appears that the Government of India had been receiving complaints against the Company. Consequently on July 17, 1957, the Government of India passed an order under section 33 of the Act directing the Controller of Insurance to investigate the affairs of the Company and to submit a report. Thereupon the Controller appointed Messrs. Fraser and Ross to act as auditors to assist him in the investigation. The Company was informed of this order in September 1957. Thereupon it wrote to the Controller that no order under section 33 of the Act could be passed 860 against it, as it had closed its business of insurance and the order in question was without jurisdiction. The Controller sent a reply to this communication and pointed to the provisions of section 2D of the Act in justification of the order. Thereupon the Company made an application under article 226 of the Constitution in the Madras High Court. Two main contentions were raised by it in the petition. In the first place it was submitted that the Company having closed all its insurance business no order could be passed against it under section 33. as that section only applied to companies actually carrying on the business of insurance and that in any case no such order could be passed even with the help of section 2D of the Act. In the second place it was contended that even if such an order could be passed under section 33 read with section 2D of the Act, it could not be done in the present case, as the Company 's liabilities in respect of its insurance business did not remain unsatisfied or not otherwise provided for. Messrs. Fraser and Ross as well as the Controller were made parties to the petition. The petition was opposed on behalf of the Controller, and his contention was that the case was clearly covered by section 2D of the Act and therefore the order under section 33 was validly passed in this case and that it had not been shown that the liabilities had been satisfied or had been otherwise provided for. The learned Single Judge held that an order under section 33 read with section 2D could be passed against the Company and that it had not been shown that the Company 's liabilities had been satisfied or otherwise provided for. He therefore dismissed the writ petition. This was followed by an appeal by the Company, which was dismissed. The Division Bench sub stantially agreed with the view taken by the learned Single Judge. Thereupon the Company applied for a certificate to enable it to appeal to this Court and obtained it; and that is how the matter has come up before us. Mr. Aggarwala appearing for the Company has urged the same two points before us. The Act was passed in 1938 to control persons carrying on the business of insurance. Section 2(9) thereof defines an ' insurer ' inter alia as weaning any body corporate 861 (not being a person specified in sub cl. (c) of this clause) carrying on the business of insurance, which is a body corporate incorporated under any law for the time being in force in India or stands to any such body corporate in the relation of a subsidiary company within the meaning of the Indian Companies Act, 1913, as defined by sub section (2) of section 2 of that Act. Section 3 provides for registration of any person carrying on the business of insurance and no such business can be carried on unless a certificate of registration for the particular class of insurance business has been obtained from the Controller. Section 3(4) gives power to the Controller to cancel the certificate for reasons specified therein and section 3(5B) lays down that when a registration is cancelled the insurer shall not after the cancellation has taken effect, enter into new contracts of insurance, but all rights and liabilities in respect of contracts of insurance entered into by him before such cancellation takes effect shall, subject to the provisions of sub section (5D), continue as if the cancellation had not taken place. In order to safeguard the interest of policy holders, section 7 provides for deposits by the insurer for various classes of his business. Section 8 lays down that any deposit made under section 7 shall be deemed to be part of the assets of the insurer but shall not be susceptible of any assignment or charge; nor shall it be available for the discharge of any liability other than liabilities arising out of policies of insurance issued by the insurer so long as any such liability remains undischarged ; nor shall it be liable to attachment in execution of any decree except a decree obtained by a policy holder of the insurer in respect of a debt due upon a policy which debt the policy holder has failed to realise in any other way. Section 9(1) lays down that where an insurer has ceased to carry on in India any class of insurance business in respect of which a deposit has been made under section 7 and his liabilities in India in respect of business of that class have been satisfied or are other. wise provided for, the court may on the application of the insurer order the return to the insurer of so much of the deposit as does not relate to the classes of insurance. , if any, which he continues to carry on. Under 112 862 section 10 an insurer who carries on business of more than one kind is required to keep a separate account of all receipts and payments in respect of each such class of insurance business. Section 33(1) with which we are directly concerned, is in these terms: " The Central Government may at any time by order in writing direct the controller or any other person specified in the order to investigate the affairs of any insurer and to report to the Central Government on any investigation made by him: Provided that the controller or the other person may, wherever necessary, employ an auditor or actuary or both for the purpose of assisting him in any investigation under this section. " Section 2D is in these terms: " Every insurer shall be subject to all the provisions of this Act in relation to any class of insurance business so long as his liabilities in India in respect of business of that class remain unsatisfied and not otherwise provided for. " The contention of Mr. Aggarwala is that section 33 and section 2D both refer to an insurer which is defined in section 2(9) as a person carrying on the business of insurance. He, therefore, contends that as soon as the insurer who was carrying on the business of insurance closes it down completely be no longer remains an insurer and the provisions of the Act do not apply to him. Therefore, according to him, when section 33 provides for an order of investigation by the Central Government such an order can only be made in respect of a, person who is actually carrying on the business of insurance and is thus an insurer and cannot be made against a person who was an insurer but has closed his business. Further, according to Mr. Aggarwala, section 2D also speaks of an insurer and makes him subject to all the provisions of the Act with respect to any class of insurance business so long as his liabilities in respect of that class remain unsatisfied or not other. wise provided for and therefore section 2D would only apply to those cases where insurance business is being carried on, though some class of insurance business might have been closed. The contention therefore is that reading sections 33 and 2D together, no order under 863 section 33 can be made in case of an insurer who has completely closed his business of insurance. The main basis of this contention is the definition of the word "insurer" in section 2(9) of the Act. It is pointed out that definition begins with the words " insurer means" and is therefore exhaustive. It may be accepted that generally the word " insurer" has been defined for the purposes of the Act to mean a person or body corporate, etc., which is actually carrying on the business of insurance, i.e., the business of effecting contracts of insurance of whatever kind they might be. But section 2 begins with the words " in this Act, unless there is anything repugnant in the subject or context " and then come the various definition clauses of which (9) is one. It is well settled that all statutory definitions or abbreviations must be read subject to the qualification variously expressed in the definition clauses which created them and it may be that even where the definition is exhaustive inasmuch as the word defined is said to mean a certain thing, it is possible for the word to have a somewhat different meaning in different sections of the Act depending upon the subject or the context. That is why all definitions in statutes generally begin with the qualifying words similar to the words used in the present case, namely, unless there is anything repugnant in the subject or context. Therefore in finding out the meaning of the word " insurer " in various sections of the Act, the meaning to be ordinarily given to it is that given in the definition clause. But this is not inflexible and there may be sections in the Act where the meaning may have to be departed from on account of the subject or context in which the word has been used and that will be giving effect to the opening sentence in the definition section, namely, unless there is anything repugnant in the subject or context. In view of this qualification, the court has not only to look at the words but also to look at the context, the collocation and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words under the circumstances. Therefore, though ordinarily the word " insurer " as used in the Act would mean a 864 person or body corporate actually carrying on the business of insurance it may be that in certain sections the word may have a somewhat different meaning. A perusal of a few sections of the Act will illustrate this and immediately show that the word " insurer " has been used in some sections to mean not merely a person actually carrying on the business of insurance but also a person who intends to carry on the business of insurance but has not actually started it and also a person who was carrying on the business of insurance but has ceased to do so. For example, section 3(2) which deals with an application for registration which naturally has to be made before the business of insurance actually commences, lays down in cl. (b) that the application shall be accompanied by the name, address and the occupation, if any, of the directors where the insurer is a company incorporated under the Indian Companies Act. Here the word ,insurer" has been used to indicate the company which is not actually carrying on the business of insurance but is intending to do so and is applying for registration. Further in section 3(2) (e) which also deals with an application for registration, it is provided that an insurer having his principal place of business or domicile, outside India shall send along with the application a statement verified by an affidavit of the principal officer of the insurer setting forth various requirements. Here again, the word " insurer " has been used for an intending insurer, for the business of insurance would only begin after the registration certificate is granted on the application made under section 3(2). Then in section 9 it is provided that, where an insurer has ceased to carry on business, the court may on the application of the insurer order the return to him of the deposit made under section 7. shows that though the, insurer is not actually carrying on the business of insurance he is still termed an insurer and on his application the deposit may be refunded to him. Again section 55 which deals with a situation arising out, of the winding up of an insurance company or the insolvency of any other insurer, provides that the value of the assets and liabilities of the insurer shall be ascertained in such manner and upon such basis as the liquidators 865 or the receiver in insolvency thinks fit. The word " insurer" has thus been used in this section for a person or body corporate, etc., which is not actually carrying on the business of insurance and has gone into liquidation or ' has become insolvent. Therefore, though the ordinary meaning to be given to the word "insurer " is as given in the definition clause (section 2(9)) and refers to a person or body corporate, etc., carrying on the business of insurance, the word may also refer in the context of certain provisions of the Act to any intending insurer or quondam insurer. The contention therefore that because the word " insurer" has been used in section 33 or section 2D those sections can only apply to insurers who are actually carrying on business cannot necessarily succeed, and we have to see whether in the context of these provisions an insurer will also include a person who was an insurer but has closed his business. As we have said already the Act was passed to control the business of insurance in the interest of policy holders and the general public and section 33 is obviously a provision by which the Central Government can order investigation into the affairs of any insurer in order to carry out the policy of the Act. Could it be said in the circumstances that section 33 only applies to insurers actually carrying on business and not to insurers who have closed their business? If the policy of the Act is to be carried out and the policy holders and the general public are to be protected, the need for making investigation into the affairs of an insurer who has closed his business is greater, for he may have done so dishonestly. We are therefore of opinion that the word " insurer" as used in section 33 not only refers to a person who is actually carrying on business but in the context of that section and taking into account the policy of the Act and the, purposes for which the control envisaged by the Act was imposed on insurers also refers to insurers who were carrying on the business of insurance but have closed it. Further if there were any doubt whether the word " insurer " in section 33 refers to those insurers also who had closed their business that doubt in our opinion is completely dispelled by section 2D. That section 866 provides that every insurer shall be subject to all the provisions of the Act in relation to any class of insurance business so long as his liability in India in respect of business of that class remains unsatisfied or not otherwise provided for. Obviously this section applies to those insurers who have closed their business. It was not necessary to enact this section if the word ,insurer" here also meant a person actually carrying on the business of insurance, for the provisions of the Act apply to such a person proportion vigor. Therefore, when the word " insurer " is used in section 2D it must mean a person who was carrying on the business of insurance but has closed it. If that is so, section 33, which provides for investigation, would apply to such an insurer who has closed his business, by virtue of section 2D. Mr. Aggarwala next contends that section 2D would only apply to those cases where an insurer was carrying on different classes of insurance business and had closed some of them but not all of them. He contends that the section provides that the insurer shall remain subject to the provisions of the Act in relation to any class of insurance business so long as his liabilities with respect to that class of business remain unsatisfied or not otherwise provided for. This, according to him, contemplates a closure of only some out of many classes of business of insurance and not of all. We see no reason however to limit the words used in this section only to a case where out of many classes of business, some are closed and others are being carried on. Under section 13 of the , No. X of 1897, in all Central Acts and Regulations, unless there is anything repugnant in the subject or context, words in the singular shall include the plural and vice versa. Though therefore section 2D speaks of any class of insurance business in the singular it, includes the plural also and would refer to all classes of insurance business. Mr. Aggarwala does not contend that where, for example, four classes of business are being carried on and three of them are closed and one is continued, the section will not apply; but he contends that at least one must continue and the section will not apply if all are closed. We do not see why if the section 867 applies, even though the word "class" is in the singular, to a case where three out of four classes are closed and one is continued it should not apply to a case where all four classes are closed. We see no repugnancy in the context in holding that if all classes of business are closed the insurer shall be subject to all the provisions of the Act so long as his liabilities in India in respect of any business of all classes remain unsatisfied or not otherwise provided for. Therefore on a plain reading of, section 2D there can be no doubt that an insurer who has closed all classes of his insurance business remains subject to all the provisions of the Act in relation to such classes so long as his liabilities in India remain unsatisfied or not otherwise provided for. Therefore section 33 will certainly apply to a case where all classes of insurance business have been closed so long as the liabilities remain unsatisfied or not otherwise provided for. The first contention of the appellant therefore that no investigation can be ordered under section 33 in its case because it has closed all classes of its insurance business fails. Turning now to the second contention, the argument on behalf of the appellant is three fold. In the first place it is urged that an order can only be made under section 33 read with section 2D when the Central Government is satisfied that the liabilities have not been satisfied or otherwise provided for, and that the order should show on the face of it that the Central Government had considered this aspect of the matter and had come to the conclusion that the liabilities remained unsatisfied or not otherwise provided for. Further there is nothing in the present order to show that the Central Government ever considered this aspect of the matter and was satisfied that the liabilities of the appellant Company remained unsatisfied or not otherwise provided for. There is no doubt that the order is utterly silent on this point and it was only in his letter of October 15, 1957, that the Assistant Controller pointed out section 2D of the Act and referred to this aspect of the matter. It seems to us only just and proper that when an order is being passed under section 33 read with section 2D of the Act it should show on the face of it that the 868 Central Government was prima facie satisfied that the liabilities had remained unsatisfied or not otherwise provided for it is only when the liabilities have not been satisfied or otherwise provided for that an order under section 33 read with section 2D would be justified in the case of an insurer who has closed his business. We use the word " prima facie " advisedly, for it seems to have been suggested in the High Court that no order could be passed under section 33 unless it was proved to the hilt that there were liabilities which remained unsatisfied or otherwise unprovided for. It is obvious that such proof would only be available after investigation in to the affairs of the insurer. Therefore in order that section 2D may be workable, all that is required under it is that the Central Government should be satisfied after such prima facie inquiry as it considers necessary that there are reasons to believe that the liabilities of the insurer who has closed his business remain unsatisfied or not otherwise provided for and in coming to this prima facie conclusion the Central Government may make enquiry from the insurer with respect to complaints that it may have received against him. But the fact that the order does not on the face of it show that the Central Government considered this aspect of the matter would not make it bad, if in subsequent proceedings taken to challenge it is shown that there were materials before the Central Government which would justify its coming to the prima facie conclusion that the liabilities had Dot been satisfied or otherwise provided for, and therefore an investigation into the affairs was called for. In the present case we find from the materials on the record that there were complaints before the Central Government from those who had claims against the company. Those complaints were apparently referred to the Company and it does not appear that the Company satisfied the Central Government that the complaints were unjustified. It was in this situation that the order for investigation was made in July, 1957, after the Company had closed its insurance business. Further on the materials available on the record it does appear that even now there are claims pending to the tune of about one lac of rupees against the Company. So it cannot 869 be said that there were no liabilities of the Company outstanding which were not satisfied or otherwise provided for when the order was made in July, 1957. In the circumstances the order cannot be held to be bad because it does not show on the face of it that there were liabilities which had remained unsatisfied or not otherwise provided for. In the second place it is urged that there can be no question of satisfying or otherwise providing for liabilities unless the liabilities are ascertained and either admitted or proved. In other words the argument is that it is only those liabilities which are admitted by the insurer or which have been decreed against him and the decrees have become final which can be taken into account in deciding whether the liabilities have remained unsatisfied or not otherwise provided for. It is urged that only those liabilities which are ascertained and either undisputed or proved can be satisfied and that the same applies to their being otherwise provided for. It is true that only those liabilities, which are ascertained and either admitted or proved, can be satisfied; but it does not follow that " provision otherwise " must also be only of liabilities which are ascertained and either admitted or proved. If that were go a dishonest insurer who closes his business could always get out of the provisions of section 33 read with section 2D by repudiating all claims made against him and then saying that there are no liabilities which remained unsatisfied or otherwise `unprovided for. There can be no doubt, therefore, if these provisions have to serve the purpose for which they were enacted, (namely, the protection of the interest of the policy holders and the general public), the words ',not otherwise provided for" in section 2D must refer to liabilities in the nature of claims against the insurer whether the insurer admits them or not and whether a decree has been finally passed in respect of them or not. The intention of making this provision in section 2D is to ensure that probable claims arising out of the insurance business that is closed are provided for before the insurer who has closed his business can say that he is not governed by all the provisions of the Act. There can be no doubt, therefore, 113 870 that when " provision otherwise " has to be made it must be with respect to probable claims also that are likely to arise out of the insurance business which has been closed. In the present case even the Company admits that there are probable claims to the tune of about rupees one lac still pending and in the circumstances until they are satisfied or it is shown that they have been provided for otherwise, all the provisions of the Act, including section 33, will apply to the Company. The last argument in support of the second contention is that the liabilities have been otherwise provided for. It is said that the Company deposited Rs. 3,94,000 as security under section 7 of the Act, which is still available to pay off the liabilities of the Company and therefore when such liabilities do not appear to exceed that amount they have otherwise been provided for. The question thus raised is whether the Company is entitled to take into account the security deposit under section 7 in order to show that the liabilities have been otherwise provided for. The contention on behalf of the Controller is that when the Act envisages " provision otherwise ", this provision has to be over and above the security deposit made by the Company under section 7. It appears from section 8 that this deposit is available for the discharge of liabilities arising out of policies of insurance issued by the insurer so long as any such liability remains unsatisfied. But even if a decree has been obtained by a policy holder on the basis of a liability under the policy he is not entitled to attach any part of this deposit until he shows that he has failed to realise the decree in any other way. Further it appears that section 8 only contemplates policy holders holding a decree attaching part of the security deposit in case they fail to realise their debt in any other way ; it does not contemplate, for example, third parties who have decrees against an insurer, like the Company (which in its motor insurance business indemnifies the policy holders against third party risk up to a certain extent), doing so. Such third parties cannot under any circumstances attach any part of the deposit, for section 8 only permits its attachment in the last resort by a policy holder of the 871 insurer in respect of a debt due upon a policy. But under section 2D the decree of a third party in such a case would be the liability of the insurer in respect of his motor insurance business which could not be realised by attachment of any part of the deposit under section 7. Besides, even with respect to decrees of policy holders the deposit could only be attached when all other ways of realising the money have failed. In these circumstances it can hardly be said that the fact that this deposit is there is itself a " provision otherwise " to meet the liabilities of the insurer. The policy holder cannot attach this deposit unless he first exhausts all other means. Even if be has got a decree and even if the insurer admits his claim and wants to pay it, he cannot do so out of the money in deposit under 'section 7. As for third parties who may have decrees against the insurer, they can never attach this deposit in view of the provisions of section 8. It could not be the intention of the legislature when it was in effect exempting the insurer from all the provisions of the Act on his liabilities being otherwise provided for that such provision should include the security deposit under section 7, when it has made it so difficult for a policy holder to get his debt satisfied from that deposit and when it is clear that a third party could not in any way attach the deposit. In these circumstances we are of opinion that when section 2D provides that the insurer shall be subject to all the provisions of the Act so long as his liabilities in India in respect of the business which is closed remain unsatisfied or not otherwise provided for, the satisfaction or " provision otherwise " does not refer to the deposit under section 7 and has to be over and above that deposit. It is true that section 9 provides that the insurer can take back the deposit after satisfying the court that he has satisfied or otherwise provided for his liabilities. But this " provision otherwise " for the purposes of section 9 must obviously be other than the deposit itself. Further when the insurer wants to take back his deposit on making " provision otherwise " he will have to satisfy the court that the " provision otherwise " has been fully made and the court will be in a position to investigate into the matter. This, however, does not mean that if the insurer does 872 not want to take advantage of section 9 of the Act he can say without submitting to the terms of that section that he has made " provision otherwise ", because the deposit which is made under section 7 is more than all his liabilities of the insurance business that he has closed. It is urged that it is hard, for example, on an insurer who has a large deposit and whose liabilities are small that he should not be able to fall back on his deposit for the purposes of section 2D. We do not, however, see any hardship in a case of this kind, for if it is a fact that the deposit of the insurer is large and his liabilities are small he can always take advantage of section 9 of the Act and submit to an investigation by the court and take back his deposit after depositing the small sum required to meet his liabilities. We are, therefore, of opinion that when section 2D speaks of satisfaction or " provision otherwise " for the liabilities of insurance business which is closed it contemplates such satisfaction or " provision otherwise" over and above the deposit made under section 7. It is not in dispute in this case that there are some liabilities still pending; it is also not in dispute that they are not satisfied and no provision has been made otherwise for them irrespective of the security deposit. This also appears to have been the position when the order was made in July, 1957. In the circumstances the order is good and cannot be called in question by the Company. The appeal therefore fails and is hereby dismissed with costs. Appeal dismissed. [/INST] The appellant company had been carrying on various classes of insurance business other than life insurance after its incorporation in 1941, but in 1956 the shareholders of the company passed a resolution by which all its insurance business was to be closed. Accordingly, on application made by the company to the Controller of Insurance, the certificate granted to it for carrying on insurance business was cancelled with effect from July 1, 1957. in the meantime, complaints against the company were being received by the Government of India, who, thereupon, passed an order on July 17, 1957, under section 33 of the , directing the Controller of Insurance to investigate the affairs of the company and to submit a report. The company challenged (1)(1923) L.R. 51 I.A. 129. (2) I.L.R. 858 the legality of the order on the grounds, (1) that as all its insurance business had been closed the Central Government had no jurisdiction to pass an order under section 33 of the Act, which only enables the investigation of the affairs of an insurer who, as defined in section 2(9), is one who is actually carrying on the business of insurance, (2) that such an order could not be sustained under section 2D of the Act as that section was applicable only to those cases where an insurer was carrying on different classes of insurance business and had closed some of them but not all of them, (3) that even if such order could be passed under section 33 read with s.2D it could not be done in the present case as the company 's liabilities did not remain unsatisfied or not otherwise provided for, and (4) that, in any case, the order in question was invalid because it did not show on the face of it that the Central Government was prima facie satisfied that the liabilities had remained unsatisfied or not otherwise provided for: Held, (1) that the word " insurer " in section 33 of the , refers not only to a person who is actually carrying on the business of insurance but also to one who has subsequently closed it. (2) that in section 2D of the Act an " insurer " means a person who was carrying on the business of insurance but has closed it. (3)that the word " class " in section 2D though used in the singular includes the plural also and the section is applicable to the case where an insurer who was carrying on different classes of insurance business closes all of them. (4) that the expression " not otherwise provided for " in section 2D refers to liabilities in the nature of claims against the insurer whether the insurer admits them or not and whether a decree has been finally passed in respect of them or not. (5) that under section 2D the satisfaction or " provision other wise " for the liabilities of insurance business which is closed, does not refer to the deposit made under section 7 and has to be over and above that deposit. (6) that though an order under section 33 read with section 2D of the Act should show on the face of it that the Central Government was prima. ' facie satisfied that the liabilities had remained unsatisfied or not otherwise provided for, the fact that the order does not on the face of it show that the Central Government considered this aspect of the matter would not make it bad, if in subsequent ,proceedings taken to challenge it, it is shown that there were materials before the Central Government which would justify its coming to the prima facie conclusion that the liabilities had not been satisfied or otherwise provided for, and therefore an investigation into the affairs was called for. </s>

<s>[INST] Summarize the following judgement: Appeal No. 121 of 1956. Appeal by special leave from the judgment and order a dated January 29, 1953, of the former Saurashtra High Court in Civil Second Appeal No. 82 of 1952, arising out of the judgment and decree dated April 29, 1952, of the District Judge, Rajkot, in Civil Appeal No. 4 of 1952. 843 W. section Barlingay and A. G. Ratnaparkhi, for the appellant. M. L. Jain, for respondent No. 1. 1960. May 4. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. This appeal by special leave raises an interesting question of Hindu Law. If a Hindu son wants to challenge an alienation made by his father to pay his antecedent debt is it necessary for him to prove not only that the said antecedent debt was immoral but also that the alienee had notice of the immoral character of the said debt? The High Court has held that the son must prove both the immoral character of the debt and notice of it to the alienee; the correctness of that view is challenged before us by the appellants in the present appeal. The appellants are two brothers, Amritlal and Mohanlal Nagji, and their mother, Bai Jakal Arjan. The three appellants and respondent 2, Nagji Govind, the father of appellants 1 and 2 and the husband of appellant 3, constitute an undivided Hindu family. Respondent 2 executed a mortgage deed in favour of respondent 1, Jayantilal Doshi, in respect of the joint family property for Rs. 2,000. This document was executed on February 5, 1946. In 1950, respondent 1 sued respondent 2 on his mortgage, obtained a decree for sale and filed an application for execution for sale of the mortgaged property. Sale was accordingly ordered to be held. At that stage the appellants filed the present suit on April 30, 1951, and claimed a declaration that the decree passed in the mortgage suit (Civil Suit No. 589 of 1949) in favour of respondent 1 and against respondent 2 was not binding in respect of the 3/4th share of the appellants in the mortgaged property; they also asked for a perpetual injunction restraining respondent 1 from executing the said decree in respect of their share. To this suit the mortgagor, respondent 2, was impleaded as a party. In their plaint the appellants have stated that respondent 2 had speculated in gold and silver and had thereby lost a large amount of money which he sought to make up by borrowing amounts from several creditors. One of such creditors was Dharsi Shamji 844 to whom Rs. 2,000 were payable by respondent 2. According to the appellants the impugned mortgage had been executed by respondent 2 for the payment of the said debt of Rs. 2,000, and since the said debt was immoral or avyavaharik the appellants were not bound by it. The claim was resisted by both respondent 1 and respondent 2 who pleaded that the mortgage had been executed for the payment of debts which were binding on the family and that there was no substance in the plea of immoral debts raised by the appellants. It was also alleged by them that the mortgaged property was not the property of the undivided Hindu family. On these pleadings the trial court framed appropriate issues. It found that the mortgaged property was the coparcenary property of the family, that the mortgage deed in question had been executed to pay off a debt which was immoral and that in consequence the mortgage was not binding against the appellants. According to the trial court the debt contracted by respondent 2 to pay the losses incurred by him in speculative transactions must be held to have been contracted for illegal and immoral purposes and as such the subsequent alienation for the payment of the said debt cannot bind the appellants. The trial court also observed that respondent 1 had not stepped into the witness box to give evidence to show that he had made any enquiries about the existence of any antecedent debts payable by respondent 2. In the result the suit filed by the appellants was decreed. Against the said decree respondent preferred. an appeal before the District Judge, but the District Judge agreed with all the findings made by the trial court and dismissed the said appeal. Respondent then took the matter before the High Court of Saurashtra in second appeal. The High Court agreed that the mortgaged property was the property of the joint Hindu family and that respondent 1 had made no attempt to prove any enquiry on his part before he entered into the transaction. The High Court did not think it necessary to consider whether the antecedent debt due to Dharsi Shamji, for the repayment of which the impugned 845 mortgage was created, was in law immoral or illegal, it proceeded to deal with the appeal on the assumption that the said debt was illegal or immoral. On that assumption the High Court considered the material principles of Hindu Law and held that it was for the appellants to prove not only that the antecedent debt was immoral or illegal, but also that respondent 1 had, notice of the said character of the debt; and since the appellants had led no evidence to discharge this onus they were not entitled to claim any relief against respondent 1. On this finding the second appeal preferred by respondent was allowed and the suit filed by the appellants was ordered to be dismissed. It is against this decree that the appellants have come to this Court by special leave. On behalf of the appellants Dr. Barlingay has urged that the principles of Hindu Law do not justify the view taken by the High Court that the appellants had to prove the alienee 's knowledge about the immoral character of the antecedent debt. He concedes that the judicial decisions on this point are against his contention; but he argues that there is paucity of case law on the subject, and that, having regard to the importance of the point raised by him, we should examine the true legal position by reference to the texts rather than by reference to judicial decisions. Let us then set out the appellant 's argument based on the textual provisions of Hindu Law. The doctrine of pious obligation under which sons are held liable to discharge their father 's debts is based solely on religious considerations; it is thought that if a person 's debts are not paid and he dies in a state of indebtedness his soul may have to face evil consequences, and it is the duty of his sons to save him from such evil consequences. The basis of the doctrine is thus spiritual and its sole object is to confer spiritual benefit on the father. It is not intended in any sense for the benefit of the creditor. As has been observed by the Privy Council in Sat Narain vs Das (1) this doctrine " was not based on any necessity for the protection of third parties but was based on (1) (1936) L.R. 63 I.A. 384, 395. 110 846 the pious obligation of the sons to see their father 's debts paid. " This doctrine inevitably postulates that the father 's debts which it is the pious obligation of the sons to repay must be vyavaharik. If the debts are not vyavaharik or are a vyavaharik the doctrine of pious obligation cannot be invoked. The expression 'avyavaharik ' which is generally used in judicial decisions has been based on the text of Usanas which has been quoted by Mitakshara in commenting on the relevant text of Yajnavalkya (1). According to Usanas, whatever is not vyavaharik has not to be paid by the son. 'Na vyavaharikam ' are the words used by Usanas, and put in a positive form they mean 'avyavaharik '. Colebrooke has translated these words as meaning " debt for a cause repugnant to good morals ". These words have received different interpretations in several decisions. Sometimes they are rendered as meaning "a debt which as a decent and respectable man the father ought not to have incurred ": Darbar Khachar vs Khachar Hansar(2); or, "not lawful, usual or customary": Chhakauri Mahton vs Ganga Prasad (3) ; or, " not supportable as valid by legal arguments and on which no right could be established in a court of justice in the creditor 's favour ": Venugopala Naidu vs Ramanathan Chetty (4). But it appears that in Hemraj vs Khemchand (5) the Privy Council has, on the whole, preferred to treat Colebrooke 's translation as making the nearest approach to the real interpretation of the word used by Usanas; whatever may be the exact denotation of the word, it is clear that the debt answering the said description is not such a debt as the son is bound to pay, and so as soon as it is shown that the debt is immoral the doctrine of pious obligation cannot be invoked in support of such a debt. In this connection, it has also been urged by Dr. Barlingay that the onus placed on the sons to prove the immoral character of the debt is already very heavy. In discharging the said onus the sons are required to prove not merely that their father who (1) Yajnavalkya, ii, 47. (2) Bom. 348, 351 (3) Cal. 862, 868, 860. (4) (1912) I.L.R. , 460, (5) I.L.R. [1943] All. 847 contracted the impugned debt lived an extravagant or immoral life but they are required to establish a direct connection between the immorality of the father and the impugned debt. If this onus is made still more onerous by requiring the sons to prove that the alienee had knowledge of the immoral character of the antecedent debt, it would virtually make the sons ' task impossible, and notwithstanding the spirit underlying the doctrine of pious obligation the sons in fact would be compelled to pay the immoral or impious antecedent debt of their father. That is why the rule which requires that the sons should prove the knowledge of the alienee is inconsistent with the basis of the doctrine of pious obligation. Thus presented the argument is no doubt simple and prima facie attractive. The question which we have to consider is whether we should attempt the task of examining the texts and determining the true effect of the original provisions of Hindu Law in spite of the fact that the point raised is covered by judicial decisions which have been treated for many years as laying down the correct law on the subject. Before answering this question it is necessary to consider the relevant judicial decisions. In 1874, the Privy Council had occasion to consider this branch of Hindu Law in Girdharee Lal vs Kantoo Lal and Muddun Thakoor vs Kantoo Lal (1). It appears that Kantoo Lal and his minor cousin had brought a suit to recover possession of certain properties belonging to their family which had been sold respectively by a private sale and at court auction. The private sale had taken place on July 28, 1856, and the deed had been executed by the fathers of the two ' plaintiffs. The case of the plaintiffs was that they were not bound by the impugned transaction. The Principal Sudder Ameen dismissed the suit but the High Court set aside that decision and, awarded Kantoo Lal one half of his father 's share. The claim made by the other plaintiff was dismissed on the ground that he had not been born at the time of the, impugned transaction. The decree passed, in, favour of Kantoo Lal was challenged by the alienee before the Privy Council. Evidence showed that at the (1) (1874) L.R. 1 I.A. 321. 818 time when the sale deed was executed a decree had been obtained against Bhikharee Lal, the father of Kantoo Lal, upon a bond executed by him in favour of his creditor and an execution had issued against him upon which the right and share in the property had been attached. It was therefore thought necessary to raise money to pay the debt of Bhikharee Lal and get rid of the execution. It was on these facts that the Privy Council had to consider whether Kantoo Lal was justified in challenging the binding character of the sale transaction. In dealing with this point the Privy Council referred with approval to the rule which had been enunciated by the Board earlier in the case of Hunooman Persad Panday vs Mussummat Babooee Munraj Koonweree The rule of Hindu Law had been thus stated by Lord Justice Knight Bruce in that judgment : " The freedom of the son from the obligation to discharge the father 's debt, has respect to the nature of the debt, and not to the nature of the estate, whether ancestral or acquired by the creator of the debt ". Then the Privy Council held that if the debt of the father had been contracted for immoral purpose the son might not be under any pious obligation to pay it; but that was not the case before the Board. It had not been shown that the bond upon which the decree was obtained was for immoral purpose; and on the other band, it appealed that an action bad been brought on the bond, a decree had been passed on it and there was nothing whatever to show that the debt was tainted with immorality. The Privy Council also noticed that Kantoo Lal had brought the action probably at the instigation of the father, and, we may add, that is many times the feature of such litigation. On these facts the Privy Council set aside the decree passed by the High Court and held that Kantoo Lal was not entitled to any relief It would thus be seen that this decision merely shows that where any alienation has been effected by the father for the payment of his antecedent debt and the said antecedent debt is not shown to be immoral the son cannot challenge the validity of the alienation. Since the antecedent debt was not shown to be immoral no question arose as to (1) ,421. 849 what would be the nature of the onus which the son would have to discharge if the antecedent debt is in fact shown to be immoral. In regard to the auction sale which the plaintiffs challenged in that suit the Privy Council held that a purchaser under an execution is surely not bound to go back beyond the decree to ascertain whether the court was right in giving the decree, or having given it, in putting up the property for sale under an execution upon it. Evidence showed that the auction purchaser acted bona fide, had made enquiries and was satisfied that the decree had been properly passed and purchased the property at auction sale on payment of valuable consideration. On these facts it was held that the plaintiffs were not entitled to any relief. This decision also was not concerned with the position that would arise if the antecedent debt had in fact been proved to be immoral. That question arose before the Privy Council in Suraj Bunsi Koer vs Sheo Proshad Singh(1). In that case an ex parte decree for money had been obtained against a Hindu governed by Mitakshara on a mortgage bond, the property mortgaged being ancestral immoveable estate. Under the said decree the mortgaged property was attached and the decree holder sought to bring the said property to sale. Prior to the execution sale, however, the judgment debtor died and his infant sons and co heirs filed a petition of objections; but they were referred to a regular suit. In the suit which they filed they challenged the binding character of the debt and claimed appropriate relief against the execution creditor and the purchasers. The Privy Council held that as between the infant sons Of the judgment debtor and the execution creditor neither the sons nor the ancestral immoveable properties in their hands was liable for the father 's debt; and as regards the purchasers, it was held that, since they had purchased after objections had been filed by the plaintiffs, they must be taken to have had notice actual or constructive thereof and therefore to have purchased with the knowledge of the plaintiffs ' claim and subject to the result of the suit to which they had been referred. (1) (1879) L.R. 6 I.A. 88. 850 The subordinate judge decreed the claim, set aside the mortgage bond, the decree thereon and the execution sale thereof By this decision the mortgage, the decree and the execution sale in regard to the alienor 's share had also been set aside. The High Court, however, reversed that judgment and dismissed the suit. The Privy Council partly allowed the appeal preferred by the plaintiffs, and held that the shares of the plaintiffs were not bound either by the mortgage deed, the decree or the execution sale. Thus it is clear that in that case the Privy Council held that the antecedent debt was for immoral purposes and that the auction purchaser had notice of it. But in dealing with the question of law raised before it the Privy Council had occasion to examine the relevant provisions of Hindu Law and the decisions bearing on them. Amongst the decisions considered by the Privy Council was the case of Kantoo Lal(1). Sir James Colvile, who delivered the judgment of the Board, referred to the case of Kantoo La (1) and observed that " this case then, which is a decision of this tribunal, is undoubtedly an authority for these propositions: 1st that where joint ancestral property has passed out of a joint family, either under a conveyance executed by a father in consideration of an antecedent debt, or in order to raise money to pay off an antecedent debt, or under a sale in execution of a decree for the father 's debt, his sons, by reason of their duty to pay their father 's debts, cannot recover that property, unless they show that the debts were contracted for immoral purposes, and that the purchasers had notice that they were so contracted; and 2ndly, that the purchasers at an execution sale, being strangers to the suit, if they have not notice that the debts were so contracted, are not bound to make inquiry beyond what appears on the face of the proceedings ". The first proposition which has been laid down in this judgment as deduced from Kantoo Lal 's case (1) is clear and unambiguous. Where ancestral property has been alienated either under a conveyance executed by the father in consideration of an antecedent debt, or in order to raise money to pay off an antecedent debt, or under a sale in execution of (1) (1874) L.R. 1 I.A. 321. 851 a decree for the father 's debt, the sons have to prove not only that the antecedent debts were immoral but also that the purchasers had notice that they were so contracted. With respect, it is open to argument whether the two propositions inevitably arise from the earlier decision of the Privy Council in Kantoo Lal 's case but since 1879 when this proposition was thus,enunciated it has apparently been accepted by all the courts in India as the correct statement of Hindu Law on the point. In Sat Narain vs Behari Lal (2) while dealing with the question as to whether the property of the joint family consisting of an insolvent Hindu father and his sons does not, by virtue of the father 's adjudication as insolvent, became vested in the official assignee, Sir John Edge, has incidentally referred to these two propositions with approval. No decision has been cited before us where the correctness of these propositions has ever been doubted or questioned. In this connection it may be relevant to recall that soon after the Privy Council pronounced its judgment in the case of Kantoo Lal (1) Bbattacharyya, in his Tagore Law Lectures on the " Law relating to Joint Hindu Family " (pp. 549, 550), examined the said decision and observed that " many in the profession think that the case dealt a death blow to the institution of Hindu family, that it has done away with the essential feature of that institution, that it has rendered the father independent of the control of his sons in dealing with ancestral property which had all along been looked upon as a common fund belonging as much to the sons as to the father". Having thus expressed his surprise at the decision Mr. Bhattacharyya also added that " the shifting of the burden of proof to the son imposed upon him a difficulty which is almost practically insuperable ". Nevertheless, he has not failed to take notice of. the fact that the promulgation of the principle which was adopted by the Privy Council had become almost a necessity to put an end to serious abuse which had become rife in the Mitakshara districts; and he has added that "in those places the fathers of families knowing well that ancestral properties were secure against the claims of their own (1) (1874) L.R.1 L.A. 321. (2) (1924) L.R. 52 I.A. 22. 852 creditors bad established almost a regular system of inveigling innocent persons of substance to lend money to them and when a decree was obtained and properties were attached they used to put forward their sons to contest the creditor 's claims ". According to the author the resuscitation by the Privy Council of the forgotten rule of Hindu Law " served as a timely intervention to deal a death blow to a revolting practice of systematic fraud These observations incidentally explain the genesis of the decision in Kantoo Lal 's case ( ) and give us a clear idea as to the mischief which the Privy Council intended to check by laying down the said principles. Whilst we are dealing with this question we may refer to the decision of the Privy Council in the case of Brij Narain vs Mangla Prasad (2) where the vexed question about the powers of the manager and the father to bind the undivided estate was finally resolved by the Privy Council, and Lord Dunedin, who delivered the judgment of the Board laid down five pro positions in that behalf in these words: (1)The managing member of a joint undivided estate cannot alienate or burden the estate qua manager except for purposes of necessity; but (2) if be is the father and the other members are the sons, he may, by incurring debt, so long as it is not for an immoral purpose, lay the estate open to be taken in execution proceeding upon a decree for payment of that debt. (3) If he purports to burden the estate by mortgage, then unless that mortgage is to discharge an antecedent debt, it would not bind the estate. (4)Antecedent debt means antecedent in fact as well as in time, that is to say, that the debt must be truly independent and not part of the transaction impeached. (5) There is no rule that this result is affected by the question whether the father, who contracted the debt or burdens the estate, is alive or dead. Propositions 2, 3 and 4 with which we are concerned in the present appeal show that a mortgage created by the father for the payment of his antecedent debt (1) (1874) L.R. 1 I.A. 321. (2) (1923) L.R. 51. I.A. 129. 853 would bind his sons; so that, if the sons want to challenge the validity of the mortgage they would have to show not only that the antecedent debt was immoral but that the alienee had notice of the immoral character of the said debt. That would be the result of the first proposition laid down in the case of Suraj Bunsi Koer (1). Now the propositions laid down by the Privy Council in the case of Brij Narain (2 ) as well as in the case of Suraj Bunsi Koer (1) may be open to some objections based on ancient Hindu texts. As Dr. Kane has pointed out, for the words " antecedent debt " which were used for the first time by the Privy Council in the case of Suraj Bunsi Koer (1)there is nothing corresponding in the Sanskrit authorities, and that the distinction made by the Privy Council in the case of Brij Narain (2) between a simple personal money debt by the father and the debt secured by the mortgage is also not borne out by the ancient texts and the commentaries alike(3). So we go back to the question with which we began: Would it be expedient at this stage to consider the question purely in the light of ancient Sanskrit texts even though for more than three quarters of a century the decision in Suraj Bunsi Koer 's case (1) has apparently been followed without a doubt or dissent. We have carefully considered this matter and we are not disposed to answer this question in favour of the appellants. First and foremost in cases of this character the principle of stare decisis must inevitably come into operation. For a number of years transactions as to immovable property belonging to Hindu families have taken place and titles passed in favour of alienees on the understanding that the propositions of law laid down by the Privy Council in the case of Suraj Bunsi Koer (1) correctly represent the true position under Hindu Law in that behalf It would, we think, be inexpedient to reopen this question after such a long lapse of time. Besides it would not be easy to decide today what ,the relevant Sanskrit texts really provide in this (1) (1879) L.R. 6 I.A. 88. (2) (1973) L.R. 51 I.A. 120. (3) " History of Dharmasastra " By Dr, P. V. Kane, Vol. III, P. 450. 854 matter. It is well known that though the Smriti texts are given a place of pride among the sources of Hindu Law, in the development of Hindu Law sadachar or approved conduct, which is another source, has played an important part(1). The existence of different schools of Hindu law and sub schools clearly brings out the fact that during the ages Hindu Law has made changes so as to absorb varying customs and usages in different places from time to time. It is a remarkable feature of the growth of Hindu Law that, by a skilful adoption of rules of construction, commentators successfully attempted to bridge the distance between the letter of the Smriti texts and the existing customs and usages in different areas and at different times. This process was arrested under the British Rule; but if we were to decide to day what the true position under Hindu Law texts is on the point with which we are concerned, it would be very difficult to reconcile the different texts and come to a definite conclusion. In this branch of the law several considerations have been introduced by judicial decisions which have substantially now become a part and parcel of Hindu Law as it is administered; it would, therefore, not be easy to disengage the said considerations and seek to ascer tain the true effect of the relevant provisions contained in ancient texts considered by themselves. It is also well known that, in dealing with questions of Hindu Law, the Privy Council introduced considerations of justice, equity and good conscience and the interpretation of the relevant texts sometimes was influenced by these considerations. In fact , the principle about the binding character of the antecedent debts of the father and the provisions about the enquiry to be made by the creditor have all been introduced on considerations of equity and fair play. When the Privy Council laid down the two propositions in the case of Suraj Bunsi Koer (2) what was really intended was to protect the bona fide alienees (1)"The Sruti, the Smriti, the approved usage, what is agreeable to one 's soul (or good conscience) and desire sprung from due deliberation, are ordained the foundation of Dharma (law) Yajnavalkya, I. 7. " Whatever customs, practices and family usages prevail in a country shall be preserved intact when it comes under subjection by conquest" Yajnavalkya, 1343 (2) (1879) L. R. 6. I.A. 88. 855 against frivolous or collusive claims made by the debtors ' sons challenging the transactions. Since the said propositions have been laid down with the object of doing justice to the claims of bonafide alienees, we do not see any justification for disturbing this well established position on academic considerations which may perhaps arise if we were to look for guidance to the ancient texts to day. In our opinion, if there are any anomalies in the administration of this branch of Hindu Law their solution lies with the legislature and not with the courts. What the commentators attempted to do in the past can now be effectively achieved by the adoption of the legislative process. Therefore, we are not prepared to accede to the appellants ' argument that we should attempt to decide the point raised by them purely in the light of ancient Sanskrit texts. It now remains to consider some of the decisions to which our attention was invited. In Pulavarthi Lakshmanaswami & Ors. vs Srimat Tirumala Peddinti Tiruvengala Raghavacharyulu (1) the Madras High Court was dealing with the debt contracted by the father on a promissory note executed by him for the payment to his concubine for meeting the expenses of her grand daughter 's marriage. The sons had no difficulty in proving that the debt was immoral; but it was urged on behalf of the creditor that the sons could not succeed unless the creditor 's knowledge about the immoral character of the debt had been established, and reliance was apparently placed upon the two propositions laid down by the Privy Council in the case of Suraj Bunsi Koer (2 ). This plea was rejected by the High Court. Patanjali Sastri, J., as he then was, who delivered the judgment for the Court observed that " the remarks made by the Privy Council had reference to family property sold in execution of a decree obtained against the father as to which different considerations arise, the bona fide purchaser not being bound to go further back than the decree ". In other words, this decision shows that the principles which apply to alienations made by a Hindu father to ,satisfy his antecedent debts cannot be extended and (1) A.I.R. 1943 Mad. 292. (3) (1879) L.R. 6 I.A. 88, 856 invoked to cases where the sons are challenging the binding character of the debts which are not antecedent and are in fact immoral. The Allahabad High Court has had occasion to consider different aspects of this problem in several cases, and different, if not somewhat conflicting, views appear to have been taken in some of the decisions. We will, however, refer to only two decisions which are directly in point. In Kishan Lal vs Garuruddhwaja Prasad Singh & Ors. (1), Burkitt, J., has observed that had it been proved that the debt had been contracted for immoral purpose and that the person who advanced the money was aware of the purpose for which it was being borrowed the son would not have been liable. This, however, is a bare statement of the law, and the judgment does not contain any discussion on the merits of the proposition laid down by the judge nor does it cite the relevant judicial decisions bearing on the point. In Maharaj Singh vs Balwant Singh (2) the same High Court was dealing with a mortgage by Sheoraj Singh to pay the antecedent debts of the father. Maharaj Singh, the younger brother, also joined in the execution of the document. It was, however, found that at the material time Maharaj Singh was a minor and Bo the mortgage was, as regards his interest in the mortgaged property, absolutely void. This finding was enough to reject the mortgagee 's claim against the share of Maharaj Singh in the mortgaged property; but the High Court proceeded to consider the alternative ground urged by Maharaj Singh and held that it was not necessary for Maharaj Singh to prove notice of the immoral character of the antecedent debt because the ancestral property in question had not passed out of the hands of the joint family. Maharaj Singh was defending his title; he was not a plaintiff seeking to recover property, but a defender of his interest in ancestral property of which he was in possession. These observations show that the High Court took the view that the propositions laid down in the case of Suraj Bunsi Koer (3) would not apply to cases of mortgage but were confined to cases of purchase. We do not think that the distinction between a purchase and a mortgage made in this (1) All. 238. (2) (1906) I.L.R.28 All. (3) L.R.6 I.A.88. 857 decision is well founded. The propositions in question treated an alienation made for the payment of the father 's antecedent debt on the same footing as an alienation made in execution of a decree passed against him and in both cases the principle enunciated is that in order to succeed in their challenge the sons must prove the immoral character of the antecedent debt and the knowledge of the alienee. Having regard to the broad language used in stating the two propositions, we do not think that a valid distinction could be made between a mortgage and a sale particularly after the decision of the Privy Council in the case of Brij Narain (1). That is the view taken by the Nagpur High Court in Udmiram Koroodimal and Anr. vs Balramdas Tularam & Ors.(2). In the result the appeal fails, but in the circumstances of this case there will be no order as to costs. Appeal dismissed. [/INST] A Hindu father, speculating in gold and silver, lost heavily and sought to recoup by borrowing on a mortgage. The mort gagee obtained a decree and sought to execute it by sale of the mortgaged property. The sons and the wife sued for a declaration that the decree was not binding since the debt though antecedent was immoral (avyavaharik). The trial court found in their favour and on appeal the District judge affirmed its decision. On second appeal the High Court held that it was for the plaintiff s to prove not merely that the antecedent debt was immoral but also that the mortgagee had notice of the said character of the debt and since they had led no evidence to discharge that onus, they were not entitled to a decree. The plaintiffs came up on appeal by special leave: Held, that the High Court took the correct view of the law and the appeal must fail. Any attempt to test the correctness of the principles laid down by the Privy Council in the case of Suraj Bunsi Koer, which have held the field for more than three quarters of a century, purely in the light of ancient Sanskrit texts would now not merely be hit by the principle of state decisis, which must inevitably come into operation, but would also be inexpedient and futile. Suraj Bunsi Koer vs Sheo Proshad Singh, (1879)) L.R. 6 I.A. 88 and Brij Narain vs Mangla Prasad (1923) L.k. 51 I.A. 129, applied. The principles laid down in those two cases make no distinc tion between an alienation made for the payment of the father 's antecedent debt and an alienation made in execution of a decree passed against him and in both cases the sons must prove not only the immoral character of the antecedent debt but also the knowledge of the alience. Case law considered. </s>

<s>[INST] Summarize the following judgement: Civil Appeal No. 4 of 1952. Appeal from the judgment and order of the High Court of Judicature for the Punjab at 698 Simla dated 24th May, 1951, in Civil Writ No. 15 of 1951. M.L. Manekshaw (P. N. Bhagwati, with him) for the appellant. M.C. Setalvad, Attorny General for India (G. N. Joshi, with him) for the respondent. May 26. The Judgment of the Court was delivered by MAHAJAN J. This is an appeal from the judgment of the High Court of Judicature of the State of Punjab dated the 24th May, 1951, dismissing the petition filed by the appel lants for writs of certiorari, prohibition and mandamus against the respondent. Aboobaker Abdul Rahman, the father of the appellants, was ,possessed of considerable movable as well as immovable properties including a. cinema theatre, known as the Imperi al Cinema. situateat Bombay. Soon after the partition of India, he went to Pakistan and was in Karachi in the month of September, 1947, where he purchased certain properties in that month. On information supplied by one Tek Chand Dolwani to the Additional Custodian of Evacuee Property, the Addi tional Custodian started proceedings under the Bombay Evacu ees (Administration of Property) Act, 1949, against Aboobak er in or about the month of July, 1949. During the pendency of the said proceedings, the Government of India Ordinance XXVII of 1949 came into force. Thereupon, on the 16th Decem ber, 1949, the Additional Custodian issued a notice to the said Aboobaker under section 7 of the Ordinance and a fur ther notice on the 11th January, 1950, to show cause why his property should not be declared to be evacuee property. Pursuant to the said notices an enquiry was held by the Additional Custodian of Evacuee Property who after recording the statement of the said Aboobaker and examining some other evidence produced by the said Tekchand Dolwani and taking into consideration the written statement filed by him, adjudicated on the 8th February, 1950, that 699 the said Aboobaker was not an evacuee. He, however, issued another notice to Aboobaker on the same day calling upon him to show cause why he should not be declared an intending evacuee under section 19 of the said Ordinance. On the 9th February, 1950, he adjudicated him as an intending evacuee. On the 31st March, 1950, Tekchand Dolwani being the informant and interested in the adjudication of the said Aboobaker as an evacuee, filed an appeal against the order of the 9th February to the respondent (The Custodian General of India) praying for an order declaring the said Aboobaker an evacuee and that he being the first informant should be allotted the said cinema. On the 18th April. 1950, the Ordinance was replaced by Act XXXI of 1950. The appeal was heard by the respondent in New Delhi on the 13th May. 1950. At the hearing it was urged on behalf of Aboobaker that he having been declared an intending evacuee and he having accepted that order, no appeal lay therefrom and that the said Tekchand Dolwani was not a person ag grieved by any order passed by the Additional Custodian and therefore had no locus standi to appeal under the provisions of section 24 of Ordinance XXVII of 1949. The hearing of the appeal was concluded on the lath May, 1951 and it is alleged in the written statement of the respondent that the order was dictated by him on the same day after the conclusion of the hearing and was also signed by him and it bore that date. Aboobaker suddenly died on the 14th May, 1950, which was a Sunday and the respondent pronounced the order written on the 13th to the counsel of Aboobaker on the 15th May, 1950. By this order the respond ent held that the appeal purporting to be from the order passed by the Additional Custodian on the 9th February, 1950, declaring the said Aboobaker an intending evacuee in effect and in substance was directed against the order made on the 8th February in the proceedings started under section 7 of the Ordinance declining to declare the said Aboobaker 's property as evacuee property. 700 He further held that the said Tekchand Dolwani was interest ed in the appeal and had locus standi to prefer it. Having overruled the preliminary objections raised by the appel lants, the hearing of the appeal was adjourned and further inquiry was directed to be made in the matter. Notices of the adjourned hearing of the appeal were given from time to time to the two appellants. On the 30th February, 1951, they were informed that the appeal would be heard on the 7th March, 1951. The two appellants allege that they are some of the heirs enti tled to the estate of the said Aboobaker. Two of his sons migrated to Pakistan and one of the appellants is his third son and the other appellant is his only daughter. Being aggrieved by the order of the respondent dated the lath May, 1950, the appellants filed a petition in the High Court of the State of Punjab at Simla on the 26th February, 1951, under article 226 of the Constitution, praying for a writ of certiorari for quashing and setting aside that order and for a writ of prohibition or mandamus directing the said respondent to forbear from proceeding with the hearing of the said appeal on the 7th March, 1951, or on any other date or dates. The appellants raised the following contentions in the petition: 1. That the appeal preferred by Tekchand Dolwani before the respondent was in terms an appeal against the order of the 9th February, 1950, and not an appeal against the conclusion reached on the 8th February, 1950, and inas much as the said order was made against Aboobaker and not in his favour, Tekchand had no right of appeal against the same and the respondent had no jurisdiction to entertain it or make any order therein. That Tekchand was not a person aggrieved by the order dated the 8th February, 1950, within the meaning of section 24 of the Ordinance and was not entitled to appeal against the said order and inasmuch as no appeal lay at his instance, the respondent had no jurisdiction to entertain it or make any order therein. 701 3. That after the death of Aboobaker on the 14th May, 1950, the respondent ceased to have jurisdiction to proceed with the hearing of the appeal or make any order therein. The High Court held that the order of the respondent pronounced on the 15th May, 1950, was not a nullity and the appeal preferred by Tekehand was in effect and in substance an appeal from the order passed by the Additional Custodian on the 8th February, 1950, and that Tekchand was a person aggrieved within the meaning of section 24 of the Ordi nance. It accordingly dismissed the petition with costs but on the 27th June, 1950, granted him leave to appeal to this Court under article 133 of the Constitution. On the 30th July, 1951, during the pendency of the appeal in this Court, the respondent finally pronounced orders on the appeal of Tekchand and held that Aboobaker was an evacuee and his property was declared evacuee property. A petition under article 226 for quashing. this order is pending in the High Court of the State of Bombay. The learned counsel for the appellants canvassed the following points before us: 1. That the appeal to the respondent was against the order of the 9th and not against the order of the 8th, and as no appeal lay against the order of the 9th the respondent had no jurisdiction to hear it. That assuming that the appeal was preferred against the order of the 8th, that order was not an appealable order inasmuch as section 24 allows an appeal against an order declaring properties evacuee properties and not against any conclusion that a certain person is or is not an evacuee, and thus no appeal was Competent at all which could be heard by the respondent. That Tekchand was not a person aggrieved within the meaning of section 24 of the Ordinance and had no locus standi to prefer the appeal and the respondent had no juris diction to entertain it at his instance. 702 4. That the order pronounced on the 15th after the death of Aboobaker was a nullity. It is mentioned in the judgment of the High Court that Shri M.L. Manekshah conceded that the death of Aboobaker does 'not in any way affect the validity of the order pro nounced by the Custodian General on the 15th May, 1950. The learned counsel adopted practically the same attitude before us in view of the affidavit of the respondent in which it was affirmed that the order in question was dictated on the 13th May, 1950, and was signed on the same date. the High Court on the principle of Order XXII, Rule 6, Code of Civil Procedure, held that an order written but not pronounced could be pronounced even after the death of the party af fected. In these circumstances the last contention of the learned counsel does not require any further consideration and is rejected. The larger question that has been raised in the petition pending before the High Court of the State of Bombay that the properties of Aboobaker could not be declared evacuee properties after his death as they had devolved on his heirs was not raised in these proceedings and we have not been invited to decide it. That being so, the question is left open. The remaining three questions canvassed before us, unless they are of such a nature as would make the decision of the respondent dated the 13th May, 1950, a nullity, cannot be the subject matter of a writ of certiorari. It is plain that such a writ cannot be granted to quash the deci sion of an inferior court within its jurisdiction on the ground that the decision is wrong. Indeed, it must be shown before such a writ is issued that the authority which passed the order acted without jurisdiction or in excess of it or in violation of the principles of natural justice. Want of jurisdiction may arise from the nature of the subjectmatter, so that the inferior court might not have authority to enter on the inquiry or upon some part of it. It may also arise from the absence of some essential preliminary or upon the existence of some 703 particular facts collateral to the actual matter which the court has to try and which are conditions precedent to the assumption of jurisdiction by it. But once it is held that the court has jurisdiction but while exercising it, it made a mistake, the wronged party can only take the course pre scribed by law for setting matters right inasmuch as a court has jurisdiction to decide rightly as well as wrongly. The three questions agitated before us do not seem to be ques tions which bear upon the jurisdiction of the court of appeal, or its authority to entertain them. It was contended that no court of limited jurisdiction can give itself jurisdiction by a wrong decision a point collateral to the merits of the case upon which the limit of its jurisdiction depends and that the questions involved in the appeal before the respondent were collateral to the merits of the case. As pointed out by Lord Esher, M.R., in Reg. vs Commissioner Income Tax(1),, the formula enunciated above is quite plain but its application is often mislead ing. The learned Master of the Rolls classified the cases under two categories thus: "When an inferior court or tribunal or body which has to exercise the power of deciding facts, first established by Act of Parliament, the legislature has to consider what powers it will give that tribunal or body. It may in effect say that, if a certain stab of facts exists and is shown to such tribunal or body before it proceeds to do certain things, it shall have jurisdiction to do such things but not otherwise. There it is not for them conclusively to decide whether that state of facts exists, and, if they exercise the jurisdiction without its existence, what they do may be questioned, and it will be held that they have acted without jurisdiction. But there is another state of things which may exist. The legislature may entrust the tribunal on body with a jurisdiction which includes the jurisdiction, to determine whether the preliminary state of facts exists as well as the jurisdiction, and on finding that it doe: exist, to proceed further or do something more. Wher (1) 21 Q .B DD. 313. 704 the legislature are establishing such a tribunal or body with limited jurisdiction, they also have to consider what ever jurisdiction they give them, whether there shall be any appeal from their decision, for otherwise there will be none. In the second of the two cases I have mentioned it is erroneous application of the formula to say that the tribu nal cannot give themselves jurisdiction by wrongly deciding certain facts to exist, because the legislature gave them jurisdiction to determine all the facts. including the existence of the preliminary facts on which the further exercise of their jurisdiction depends; and if they were given jurisdiction so to decide, without any appeal being given, there is no appeal from such exercise of their juris diction. " The tribunal constituted to hear appeals under section 24 has been constituted in these terms: "Any person aggrieved by an order made under section 7, section 16, section 19 or section 38 may prefer an appeal in such manner and within such time as may be prescribed (a) to the Custodian, where the original order has been passed by a Deputy or Assistant Custodian; (b) to the Custodian General, where the original order has been passed by the Custodian, an Additional Custodian or an Authorized Deputy Custodian. " Like all courts of appeal exercising general jurisdic tion in civil cases, the respondent has been constituted an appellate court in words of the widest amplitude and the legislature has not limited his jurisdiction by providing that such exercise will depend on the existence of any particular state of facts. Ordinarily, a court of appeal has not only jurisdiction to determine the soundness of the decision of the inferior court as a court of error, but by the very nature of things it has also jurisdiction to deter mine any points raised before it in the nature of prelimi nary issues by the parties. Such jurisdiction is inherent in its very constitution as a court of appeal. Whether an appeal is competent, whether a party has locus standi to prefer it, whether the appeal in substance is from one or another order 705 and whether it has been preferred in proper form and within the time prescribed, are all matters for the decision of the appellate court so constituted. Such a tribunal falls within class 2 of the classification of the Master of the Rolls. In these circumstances it seems to us that the order of the High Court of Punjab that a writ of certiorari could not issue to the respondent quashing the order of the 13th May, 1950, was right. We are further of the opinion that none of the contentions raised has any merit whatsoever. For a proper appraisal of the contention that Tekchand Dolwani is not a "person aggrieved" within the meaning of those words in section 24 of the Ordinance, it is necessary to refer to the rules made under the Ordinance. It is provided in rule S (5), that any person or persons claiming to be interested in the enquiry or in the property being declared as evacuee property, may file a written statement in reply to the written statement filed by the persons interested in the property claiming that the property should not be declared evacuee property; the Custodian shall then either on the same day or on any subsequent day to which the hearing may be adjourned, proceed to hear the evidence, if any, which the party appearing to show cause may produce and also evidence which the party claiming to be interested as mentioned above may adduce. In the proceedings before the Additional Custodian, Tekchand Dolwani filed a reply to the written statement of Aboobaker and adduced evidence in support of the stand taken by him that the property of Aboobaker was evacuee property. Further Tekchand Dolwani was the first informant who brought to the notice of the Custodian concerned that the property of Aboobaker was evacuee property and in view of the order of the Ministry of Rehabilitation he was, as a first informant, entitled to first consideration in the allotment of this property, the Additional Custodian was bound to hear him on the truth and validity of the information given by him. When a person is given a right to raise a contest in a certain matter and his contention is negatived, then 706 to say that he is not a person aggrieved by the order does not seem to us to be at all right or proper. He is certain ly aggrieved by the order disallowing his contention. Sec tion 24 allows a right of appeal to any person aggrieved by an order made under section 7. The conclusion reached by the Additional Custodian on the 8th February, 1950, that Aboo baker was not an evacuee amounted to an order under section 7 and Tekchand therefore was a person aggrieved by that order. Section 43 bars the jurisdiction of the civil court in matters which fall within the jurisdiction of the Custo dian. In clause 1 (a) it provides as follows: "no civil court shall have jurisdiction to entertain or adjudicate upon any question whether any property is or is not evacuee property or whether an evacuee has or has not any right or interest in any evacuee property . " It is clear therefore that the Additional Custodian has to find and adjudicate on the question whether a certain property is or is not evacuee property and whether a certain person is or is not an evacuee and such an adjudication falls within the ambit of section 7 of the Ordinance. Lord Esher M.R. in In re Lamb, Ex parte Board of Trade(1) observed as follows : "The meaning of the term 'person aggrieved ' was ex plained by this Court in Ex parte Official Receiver U). It was there determined that any person who makes an applica tion to a Court for a decision, or any person who. is brought before a Court to submit to a decision, is, if the decision goes against him, thereby a 'person aggrieved ' by that decision." Lord Justice Kay in the same judgment made the following observations: "The preliminary objection to the appeal is two/old: (1) It is said that the Board of 'trade are not 'persons aggrieved '. They are persons whom the court was bound to hear, If they wished to be heard, on the validity of this objection, and the decision has (1) (2) 707 been against them. How it can be said that they are not 'persons aggrieved ', by the decision, passes my understand ing. When two persons are in the position of litigants before the High Court, and the decision of the Court goes against one of them, how it can be said that he is not a 'person aggrieved ' by the decision, I cannot understand. I am clearly of opinion that the Board were 'persons ag grieved ' by this decision. Then (2) it is said that the decision is not an 'order '. When the High Court makes a declaration of right, and further orders the costs of the application to be paid (which is the common form here used), and that is drawn up and sealed with the seal of the Court, and, I suppose placed on record, as all orders of the High Court are, it seems to me that it is clearly an order of the Court. " In our opinion, Tekchand Dolwani is a person aggrieved within the rule stated in the decision mentioned above and the respondent rightly held that he had locus standi to prefer the appeal. The next point urged was that the appeal had been pre ferred against the order of the 9th February and not against the order of the 8th and that the respondent had no juris diction to hear it. Whether the appeal in substance had been preferred against the order of the 8th or the order of the 9th was a matter which was certainly within the compe tence of the respondent to decide and does not involve any question of jurisdiction whatsoever. Be that as it may. we have examined the memorandum of appeal presented by Tekchand Dolwani to the respondent and it appears to us that the High Court was right when it held that the appeal was in effect and in substance an appeal from the order passed by the Additional Custodian on the 8th February. The relief claimed in appeal concerns the order of the 8th and the grounds of appeal only relate to this matter. The only defect pointed out was in the description of the order attacked in appeal. It is well settled that such errors of description cannot be allowed to prejudice the right of a party. The two 708 orders of the 8th and 9th made on consecutive days, though under different provisions of the Ordinance, were inter linked and the latter order was merely consequential on the conclusion reached on the 8th and the description in the memorandum of appeal that the appeal was against the order of the 9th cannot be considered as really an error of a kind of which serious notice could be taken. The last point raised before us was not taken in the High Court and therefore we have not the benefit of that court 's decision on the point. It was contended that no appeal lay against the order of the Additional Custodian dated the 8th February declining to declare Aboobaker an evacuee, that the only order that the Custodian is entitled to pass under section 7 is an order declaring any property to be evacuee property and that it is this order and this order alone which is appealable under section 24. In our opinion, this contention is without force. Section 24 con fers a right of appeal against all orders made under section 7 and does not specify the nature of the orders made appeal able. In an enquiry under section 7 the first point for adjudication is whether a certain person falls within the definition of the word "evacuee" given in the Ordinance. Ii he comes within the ambit of the definition, then any property heldby him becomes evacuee property. The civil court is barred from entertaining or adjudicating upon the questions whether the property is or is not evacuee proper ty, or whether an evacuee has any right or interest in any evacuee property. The decision of the Custodian whether in the affirmative or in the negative amounts to an adjudica tion under section 7 and is as such appealable. It was contended that when the Custodian reached the conclusion that a certain person is not an evacuee, then he is not entitled to make any order whatsoever but has just to file the proceedings. This contention is unsound. When a certain person claiming to be interested in getting a property declared evacuee property is allowed to put in a written statement and lead 709 evidence, then the decision of the court whether favourable or unfavourable to him has to take the form of an adjudica tion and necessarily amounts to an order. Reference in this connection may be made to the decision of the Federal Court in Rayarappan Nayanar vs Madhavi Amma(1) on an analogous,provision of the Code of Civil Procedure contained in Orders XL, Rule 1, and XLIII, Rule 1 (s). Order XLIII, Rule 1 (s) makes any order made under Order XL, Rule 1, appealable, while Order XL, Rule 1, only empowers the court to appoint a receiver. It was held that the order removing a receiver was appealable under Order XLIII, Rule 1, inas much as such an order fell within the ambit of Order XL, Rule 1, and the power of appointing a receiver included the power of removing or dismissing him. The present case stands on a higher footing. The power of granting a certain relief includes obviously the power of refusing that relief. In our opinion, therefore, the order made by the Additional Custodian refusing to declare Aboobaker an evacuee and his property evacuee property was an order made under section 7 of the Ordinance and was therefore appealable under section, 24. The result is that this appeal fails and is dismissed with costs. Appeal dismissed. [/INST] A writ of certiorari cannot be granted to quash the decision of an inferior court within its jurisdiction on the ground that the decision is wrong. It must be shown before such a writ is issued that the authority which passed the order acted without jurisdiction or in excess of it, or in violation of the principles of natural justice. Want of jurisdiction may arise from the nature of the subject mat ter, so that the inferior court might not have authority to enter on the inquiry or upon some part 0 697 it. It may also arise from the absence of some essential preliminary or upon the existence of some particular facts collateral to the actual matter which the court has to try and which are conditions precedent to the assumption of jurisdiction by it. But once it is held that the court has jurisdiction but while exercising it, it made a mistake, the wronged party can only take the course prescribed by law for setting matters right inasmuch as a court has jurisdiction to decide rightly as well as wrongly. When an inferior court or tribunal which has the power of deciding facts is established by the legislature. it may in effect say that, if a certain state of facts exists and is shown to such tribunal or body before it proceeds to do certain things, it shall have jurisdiction to do such things but not otherwise. There, it is not for them conclusively to decide whether that state of facts exists, and, if they exercise the jurisdiction without its existence, what they do may be questioned, and it will be held that they have acted without jurisdiction. But the legislature may entrust the court or tribunal itself with a jurisdiction which includes the jurisdiction to determine whether the prelimi nary state of facts exists and on finding that it does exist, to proceed further or do something more. In the second case the rule that a tribunal cannot give itself jurisdiction by wrongly deciding certain facts to exist does not apply. Ordinarily, a court of appeal has not only jurisdiction to determine the soundness of the decision of the inferior court as a court of error, but by the very nature of things it has also jurisdiction to determine any points raised before it in the nature of preliminary issues by the par ties. Such jurisdiction is inherent in its very constitu tion as a court of appeal. Whether an appeal is competent, whether a party has locus standi to prefer it, whether the appeal in substance is from one or another order and whether it has been preferred in proper form and within the time prescribed, are all matters for the decision of the appel late court so constituted. An order by an Additional Custodian in a proceeding under Ordinance No. XXVII of 1949 refusing to declare a person an evacuee and his property evacuee property is an order under section 7 of of the Ordinance and is appealable under section 24. A person claiming to be interested in an enquiry as to whether a person is an evacuee and his property evacuee property, who has filed a written statement and adduced evidence, is a "person aggrieved" by an order that the latter is not an evacuee and has a locus standi to prefer an appeal from the order. </s>

<s>[INST] Summarize the following judgement: Appeal No. 349 of 1957. Appeal by special leave from the judgment and decree dated November 29, 1954, of the Punjab High Court in Regular Second Appeal No. 891 of 1951. Hardayal Hardy and N. N. Keswani, for the appellant. N. section Bindra and D. Gupta, for the respondent. July 21. The Judgment of the Court was delivered by WANCHOO J. This is an appeal by special leave against the judgment of the Punjab High Court in a service matter. The brief facts necessary for present purposes are that the appellant was appointed as a foot constable in 1931 in the Punjab Police and was dismissed on January 25, 1944. Shortly before, he was acting as an Assistant Sub Inspector and actually working as a Police Censor. The charge against him was that while he was working as Police Censor, he detained certain letters illegally and had copies and photo graphs made of them and later used these copies and photographs for blackmail. He was consequently reverted to his substantive post of head constable on 9 66 January 14, 1944. Thereafter on January 21, 1944, an enquiry was started against him by the Superintendent of Police and he was eventually dismissed. He went in appeal to the Deputy Inspector General of Police, which was dismissed. He then went in revision to the Inspector General of Police, which also failed. Finally he made several representations and memorials to the Punjab Government but without avail. Consequently the present suit was filed by the appellant in February 1949. The plaint as originally filed, after narrating the facts relating to the appellant 's service, merely stated that the charge of misconduct was brought against the appellant on account of enmity and that the departmental enquiry made by the Superintendent of Police was arbitrary and not according to law, rules and regulations prescribed for the same. Besides this vague general allegation, the only specific grievance made out by the appellant in the plaint was that the Superintendent of Police had dismissed him without recording his defence evidence and without giving him an opportunity to produce the same. The appellant amended the plaint later and added one more grievance, namely, that he had been appointed by the Deputy Inspector General of Police and could only have been dismissed by him and not by the Superintendent of Police. As to the Departmental enquiry, certain further defects therein were pointed out besides the allegation already made that his defence had not been taken and that he had not been given an opportunity to produce it. Those further defects were (i) that he was not permitted to engage counsel, (ii) that he was not allowed full opportunity to crossexamine the prosecution witnesses, and (iii) that he was not asked by the enquiry officer to state what he had to say in answer to the charge against him and was not permitted to file a written statement explaining the alleged incriminating circumstances against him. The suit was opposed on behalf of the Punjab Government and among others their main defence was that the enquiry was in accordance with the 67 Regulations and was not arbitrary. It was also denied that no opportunity had been given to the appellant to lead defence evidence or to cross examine prosecution witnesses or to make his own statement in answer to the charge. It was admitted that permission was refused to engage a counsel; but it was finally averred that taking the enquiry as a whole there was no such defect in its conduct as to invalidate it or call for interference by the courts. Three issues, all of a general nature, were framed by the trial court, namely 1. Whether the plaintiff 's dismissal is void, illegal, inoperative and wrongful and what is its effect ? 2. Whether the Civil Courts have jurisdiction to entertain the suit or to go into the question of the validity of the departmental enquiry ? 3. Whether the suit for a declaration lies and is competent and why ? It is unfortunate that the specific points raised by the appellant whatever they were were not made the subject matter of specific issues. However, the trial court came to the conclusion that the case of the appellant was governed by section 240(3) of the Government India Act, 1935; and it was reinforced in this conclusion by the Police Regulations which, according to it, provided for the same safeguards as were contained in section 240(3). It therefore held that as section 240(3) had not been complied with, the dismissal was void and illegal. As to the other two issues relating to the jurisdiction of civil courts they were decided in favour of the appellant. There was an appeal to the District Judge by the Punjab Government. The District Judge agreed with the conclusions of the trial court on the applicability of section 240(3) to the case of the appellant and further referred to an amendment in the Police Regulations which required that before an order of dismissal or reduction in rank is made, the officer to be punished shall be produced before the officer empowered to punish him and shall be informed of the charges 68 proved against him and called upon to show cause why an order of dismissal or reduction in rank should not be passed. The District Judge was conscious that this amendment in the Regulations was made in September 1946 long after the dismissal of the appellant and therefore would not apply to the appellant 's case; but he overruled this contention on the ground that the rule was merely declaratory of the law and only removed the ambiguity that might have arisen because of section 243 of the Government of India Act. He therefore dismissed the appeal. Then followed a second appeal by the Punjab Government to the High Court. The High Court held that section 240(3) did Dot apply to the case of the appellant and that section 243 was the governing section. In consequence the High Court further held that the appellant was not entitled to the protection of section 240(3) and as the amendment to the Police Regulations which brought in the substance of section 240(3) therein was made after the dismissal of the appellant, he could not take advantage of it. As to the enquiry, the High Court held that though there might have been minor procedural defects in the enquiry it was on the whole substantially in accordance with the Regulations and principles of natural justice and could not therefore be held to be invalid. The High Court pointed out that there was no serious contraven tion of the Regulations and the witnesses who had appeared were cross examined by the appellant who was also called upon to produce his defence within 48 hours. He however did not choose to do so and wanted a postponement which was refused and thereafter the Superintendent of Police proceeded to dismiss him. Learned counsel for the appellant challenges the cor erectness of the view taken by the High Court and three points have been urged on his behalf before us, namely, (1) section 240(3) of the Government of India Act applied to police officers of subordinate rank and there was nothing in section 243 which took away from such officers the protection of section 240(3) ; (2) Even if the Police Regulations alone applied, there was such violation of the relevant regulations as to vitiate the enquiry 69 proceedings; and (3) The Superintendent of Police could not hold a departmental enquiry as a criminal offence had been committed, and reliance in this connection was placed on sections 29 and 35 of the , No. V of 1861. Section 243 of the Government of India Act appears in Chapter 11 of Part X dealing with 'Civil Services '. That Chapter begins with section 240 and sub section (3) thereof provides that no member of a civil service or holding any civil post in India shall be dismissed or reduced in rank until he has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. Section 243 however is in these terms: " Notwithstanding anything in the foregoing provisions of this chapter, the conditions of service of the subordinate ranks of the various police forces in India shall be such as may be determined by or under the Act relating to those forces respectively. " Obviously section 243 was a special provision with regard to subordinate ranks of police forces in India and it is not in dispute that the appellant belonged to the subordinate ranks. Therefore according to section 243, the conditions of service of the subordinate ranks are governed by or under the Acts relating to police forces and section 240(3) can have no application to them. The non obstante clause of section 243 makes it clear that so far as the subordinate ranks of police forces in India are concerned, a. 243 will apply and not the earlier provisions including section 240(3). We are therefore of opinion that in view of the special provisions in section 243 relating to the subordinate ranks of police forces in India (to which the appellant undoubtedly belonged), section 240(3) would have no application. We may in this connection refer to the judgment of the Privy Council in North West Frontier Province vs Suraj Narain Anand (1), where it was held that the non obstante clause in section 243 excluded the operation of section 240(2) in the case of subordinate ranks of police forces in India and that conditions of service included the right of dismissal. (1) 70 That case dealt with section 240(2) but the same reasoning would in our opinion apply to section 240(3). As has already been pointed out by the learned District Judge, the substance of section 240(3) was brought into the Police Regulations in September 1946 long after the appellant had been dismissed and would therefore not apply to the appellant. He would therefore not be entitled to the second notice under section 240(3) as explained in I. M. Lall 's case by the Privy Council: (See High Commissioner for India & High Commissioner for Pakistan vs I. M. Lall (1)). Nor was such notice necessary under the Police Regulations as they existed at the time of the appellant 's dismissal. The view taken by the High Court under the circumstances is correct. So far as violation of the material provisions of r. 16.24 of the Police Regulations is concerned, we find that only three specific allegations material for the purpose were set out by the appellant, namely, (i) that he was not given the chance to defend himself, (ii) that he was not allowed to cross examine the prosecution Witnesses, and (iii) that he was not allowed to explain the circumstances appearing against him and was not allowed to file a written statement. It is enough in this connection to say that he was certainly given a chance to produce defence but did not himself avail of it. It also appears as found by the High Court that the witnesses were cross examined by the appellant at length and on the whole there is nothing to show that he was not allowed to explain the circumstances appearing against him. We therefore agree with the High Court that there is no such serious contravention of the Regulations as to call for interference by the Courts. Reliance in this connection is placed on sections 29 and 35 of the . Section 29 provides for penalties for neglect of duty etc. by police officers and lays down the extent of punishment on conviction by a magistrate. Section 35 defines what magistrate can try a (1) 71 charge against a police officer above the rank of a con stable under the and such a magistrate has to be a First Class Magistrate. These sections nowhere exclude departmental enquiry. All that they lay down is that where an offence punishable under the is committed by a police officer above the rank of a constable and is to be tried by a court of law it has to go before a First Class Magistrate. That, however, does not mean that no departmental enquiry can be held with respect to a matter where it is also possible to prosecute a police officer under the . There is no force in this contention also and it is hereby rejected. The appeal therefore fails and is hereby dismissed, but in the circumstances of this case we pass no order as to costs. Appeal dismissed. [/INST] The appellant, who was employed in the Punjab Police, was found while working as a Police Censor to have detained certain letters illegally and later to have made use of copies and photographs of the them for blackmail. He was consequently reverted to his substantive post of head constable on January 14, 1944. Thereafter an enquiry was started against him by the Superintendent of Police and eventually he was dismissed from service on January 25, 1944. His representations to higher authorities having failed he instituted a suit challenging the legality of the order of dismissal on the grounds, inter alia, (1) that section 240(3) of the Government of India Act, 1935, had not been complied with, and (2) that as the appellant was alleged to have committed a criminal offence the Superintendent of Police could not hold a departmental enquiry in respect of such allegations in view of SS. 29 and 35 of the . Held : (1) that section 243 of the Government of India Act, 1935, 65 which was a special provision with regard to the subordinate ranks of police forces in India, excluded the operation of section 24G(3) of the Act to the appellant, who was, therefore, governed by the conditions of service as provided under the Police Regulations, and that the substance of section 240(3) which was brought into the Police Regulations in September 1946 long after the appellant had been dismissed was not applicable to him. Accordingly, he was not entitled to the second notice, under section 240(3), giving him a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. North West Frontier Province vs Suraj Narain Anand and High Commissioner for India and High Commis sioner for Pakistan vs I. M. Lal, , referred to. (2) that the provisions of the , relating to offences committed by a police officer above the rank of a constable do not bar a departmental enquiry in respect of a matter where it is also possible to prosecute such an officer under that Act. </s>

<s>[INST] Summarize the following judgement: Appeal No. 236 of 1955. Appeal from the judgment and order dated August 3, 1953, of the Punjab High Court in Civil Reference No. 7/1952. M. C. Setalvad, Attorney General for India, K. N. Rajagopal Sastri and D. Gupta, for the appellant. N. C. Chatterjee and section K. Sekhri, for the respondent. July 27. The Judgment of the Court was delivered by 76 section K. DAS J. This is an appeal on a certificate of fitness granted under the provisions of sub section 2 of section 66A of the Indian Income tax Act, 1922, by the High Court of Judicature for the State of Punjab then sitting at Simla. The certificate is dated December 28, 1953, and was granted on an application made by the Commissioner of Income tax, Punjab, appellant herein The relevant facts are shortly stated below. For the assesment year 1946 47, one Pandit Thakurdas Bhargava, an advocate of Hissar and respondent before us, was assessed to income tax on a total assessable income of Rs. 58,475/ in the account year 1945 46. This sum included the amount of Rs. 32,500/stated to have been received by the respondent in July, 1945 for defending the accused persons in a case known as the Farrukbnagar case. The assessee claimed that the said amount of Rs. 32,500/ was not a part of his professional income, because the amount was given to him in trust for charity. This claim of the assessee was not accepted by the Income tax Officer, nor by the Appellate Assistant Commissioner who heard the appeal from the order of the Income tax Officer. Both these officers held that the assessee had received the amount of Rs. 32,500/ as his professional income and the trust which the assessee later created by a deed of Trust dated August 6, 1945, did not change the nature or character of the receipt as professional income of the assessee; they further held that the persons who paid the money to the assessee did not create any trust nor impose any obligation in the nature of a trust binding on the assessee, and in fact and law the trust was created by the assessee himself out of his professional income ; therefore, the amount attracted tax as soon as it was received by the assessee as his professional income, and its future destination or application was irrelevant for taxing purposes. From the order of the Appellate Assistant Commissioner a further appeal was carried to the Income tax Appellate Tribunal, Delhi Branch. We shall presently state the facts which the Tribunal found, but its conclusion drawn from the facts found was expressed in the following words:"The income in this case did not at 77 any stage arise to the assessee. Keeping in mind the express stipulation made by the assessee when he accepted the brief there was a voluntary trust created, which had to be and was subsequently reduced into writing after the money was subscribed. The payments received from the accused and other persons were received on behalf of the trust and not by the assessee in his capacity as an individual. In this view, we delete the sum of Rs. 32,500/ from the assessment. " The appellant then moved the Tribunal for stating a case to the High Court on the question of law which arose out of the order of the Tribunal. The Tribunal was of the opinion that a question of law did arise out of its order, and this question it formulated in the following terms: " Whether the sum of Rs. 32,500/ received by the assessee in the circumstances set out in the trust deed later executed by him on August 6, 1945, was his professional income taxable in his hands, or was it money received by him on behalf of a trust and not in his capacity as an individual. " It appears that in stating a case the Tribunal framed an additional question as to whether the trust was created at or before the payment of Rs. 32,500/ , but expressed the view that this additional question was implicit in the principal question formulated by it. A case was accordingly stated to the High Court under section 66 of the Indian Income tax Act, and the High Court by its judgment dated August 3, 1953, answered the question in favour of the assessee, hold ing that " the sum of Rs. 32,500/ received by the assessee was not received by him as his professional income but was received on behalf of the trust and not in his capacity as an individual ". The appellant then moved the High Court and obtained the certificate of fitness referred to earlier in this judment. We shall presently state the facts found by the Tribunal in connection with the receipt of the sum of Rs. 32,500/ by the assessee, from which the Tribunal drew its inference. But the question as framed by the Tribunal and answered by the High Court, was 78 whether in the circumstances set out in the trust deed dated August 6, 1945, the amount of Rs. 32,500/received by the assessee was professional income in his hand. It is, therefore, appropriate to refer first to the recitals in the trust deed. The respondent stated in the trust deed that he had "decreased" his legal practice for the last few years and had reserved his professional income accruing after June 1944 for payment of taxes and charity. He then said: " accordingly, I have been acting on that. In the Farrukh Dagar, district Gurgaon case, Crown vs Chuttan Lal etc., the relatives and the accused expressed a strong desire to get the case conducted by me during its trial. At last on their persistence and promise that they would provide me with Rs. 40,000/ for charitable purposes and I would create a public charitable trust thereof I agreed to conduct the case. The case is now over. The accused and their relatives have given me Rs. 32,500/ for charity and creating a trust. The said amount has been deposited in the Bank. If they pay any other amount that will also be included in that. Accor dingly, I create this trust with the following conditions and with the said amount and any other amount which may be realized afterwards or included in the trust;". (then followed the name and objects of the trust, etc.). The Tribunal accepted as correct the statements of the respondent that he was at first unwilling to accept the brief in the Farrukhnagar case; he was then persuaded to accept it at the request of some members of the Bar and some influential local people on the understanding, as the respondent put it, that the accused persons of that case would provide Rs. 40,000/ for a charitable trust which the respondent would create. Eventually, the sum of Rs. 32,500/ was paid by or on behalf of the accused persons, and as the Tribunal has put it, a charitable trust was created by the respondent by the trust deed dated August 6, 1945, the recitals whereof we have q noted above. The question before us is what is the proper legal inference from the aforesaid facts found by the Tribunal. Both the Tribunal and the High Court have drawn the inference that a charitable trust was created 79 by the persons who paid the money to the assessee, and all that the assessee did under the deed of trust dated August 6, 1945, was to reduce the terms of the trust to writing. The High Court, therefore, applied the principle laid down by the Privy Council in Raja Bejoy Singh Dudhuria vs Commissioner of Income tax, Bengal (1) and observed that by the overriding obligation imposed on the assessee by the persons who paid the money, the sum of Rs. 32,500/ never became the income of the assessee; and the amount became trust property as soon as it was paid, there being no ques tion of the application of part of his income by the assessee. On behalf of the appellant it has been contended that the inference which the Tribunal and the High Court drew is not the proper legal inference which flows from the facts found, and according to the learned Attorney General who appeared for the appellant the proper legal inference is that the amount was received by the assessee as his professional income in respect of which he later created a trust by the deed of trust dated August 6, 1945. He has submitted that there was no trust nor any legal obligation imposed on the assessee by the persons who paid the money, at the time when the money was received, which prevented the amount from becoming the professional income of the assessee. He has also contended that even the existence of a trust will make no difference, unless it can be held that the money was diverted to that trust before it could become professional income in the hands of the assessee. We think that the question raised in this case can be decided by a very short answer, and that answer is that from the facts found by the Tribunal the proper legal inference is that the sum of Rs. 32,500/ paid to the assessee was his professional income at the time when it was paid and no trust or obligation in the nature of a trust was created at that time, and when the assessee created a trust by the trust deed of August 6, 1945, he applied part of his professional income as trust property. If that is the true conclusion as we hold it to be, then the principle laid down (1) 80 by the Privy Council in Bejoy Singh Dudhuria 's case (1) has no application. It is indeed true, as has been observed by the High Court, that a trust may be created by any language sufficient to show the intention and no technical words are necessary. A trust may even be created by the use of words which are primarily words of condition, but such words will constitute a trust only " where the requisites of a trust are present, namely, where there are purposes independent of the donee to which the subject matter of the gift is required to be applied and an obligation on the donee to satisfy those purposes. " The findings of the Tribunal show clearly enough that the persons who paid the sum of Rs. 32,500/ did not use any words of an imperative nature creating a trust or an obligation. They were anxious to have the services of the assessee in the Farrukhnagar case; the assessee was at first unwilling to give his services and later he agreed proposing that he would himself create a charitable trust out of the money paid to him for defending the accused persons in the Farrukhnagar case. The position is clarified beyond any doubt by the statements made in the trust deed of August 6, 1945. The assessee said therein that he was reserving his professional income as an advocate accruing after June, 1944 for payments of taxes and charity and, accordingly, when he received his professional income in the Farrukhnagar case he created a charitable trust out of the money so received. The clear statement in the trust deed, a statement accepted as correct by the Tribunal, is that the assessee created a trust on certain conditions etc. It is not stated anywhere that the persons who paid the money created a trust or imposed a legally enforceable obligation on the assessee. Even in his affidavit the assessee had stated that " it was agreed that the accused would provide Rs. 40,000/ for a charitable trust which I would create in case I defend them, on an absolutely clear and express understanding that the money would not be used for any private and personal purposes. " Even in this affidavit there is no suggestion that the persons who paid the money created the (1) 81 trust or imposed any obligation on the assessee. It was the assessee 's own voluntary desire that he would create a trust out of the fees paid to him for defending the accused persons in the Farrukhnagar case. Such a voluntary desire on the part of the assessee created no trust, nor did it give rise to any legally enforceable obligation. In the circumstances the Appellate Assistant Commissioner rightly pointed out that " if the accused persons had themselves resolved to create a charitable trust in memory of the professional aid rendered to them by the appellant and had made the assessee trustee for the money so paid to him for that purpose, it could, perhaps, be argued that the money paid was earmarked for charity ab initio but of this there was no indication anywhere". In our opinion the view taken by the Appellate Assistant Commissioner was the correct view. The money when it was received by the assessee was his professional income, though the assessee had expressed a desire earlier to create a charitable trust out of the money when received by him. Once it is held that the amount was received as his professional income, the assessee is clearly liable to pay tax thereon. In our opinion the correct answer to the question referred to the High Court is that the amount of Rs. 32,500/ received by the assessee was professional income taxable in his hands. Learned Counsel for the respondent has referred us to a number of decisions where the principle laid down in Bejoy Singh Dudhuria 's Case (1) was applied, and has contended that where there is an allocation of a sum out of revenue as a result of an overriding title or obligation before it becomes income in the hands of the assessee, the allocation may be the result of a decree of a court, an arbitration award or even the provisions of a will or deed. In view of the conclusion at which we have arrived, the decisions relied upon can hardly help and it is unnecessary to consider them. Our conclusion is that there was no overriding obligation imposed on the assessee at the time when the sum of Rs. 32,500/ was received by him. (1) 82 Accordingly, we allow this appeal and set aside the judgment and order of the High Court. The answer to the question is in favour of the appellant, namely, that the sum of Rs. 32,500/ received by the assessee was his professional income taxable in his hands. The appellant will be entitled to his costs throughout. Appeal allowed. [/INST] The assessee, an advocate, accepted a case on condition that the clients would provide him with Rs. 40,000 for charitable purposes and that he would create a public charitable trust with the money. The clients gave the assessee Rs. 32,500 and he created a trust therewith. The assessee claimed that the said amount of Rs. 32,500 was not his professional income as the amount had been given to him in trust for charity. Held, that the said amount was the professional income of the assessee and was liable to income tax. At the time when this money was paid to the assessee no trust or obligation in the nature of trust was created. The clients who paid the money did not create any trust nor imposed any legally enforceable obligation on the assessee. The money when it was received by the assessee was his professional income though he had expressed a desire earlier to create a charitable trust out of the money when received. The assessee 's own voluntary desire to create a trust out of the fees paid to him did not create a trust or a legally enforceable obligation. Raja Bejoy Singh Dudhuria vs Commissioner of Income Tax, Bengal, , referred to. </s>

<s>[INST] Summarize the following judgement: Appeal No. 304 of 1958. Appeal from the judgment and order dated September 7, 1956, of the Bombay High Court in Income tax Reference No. 19 of 1956. C. K. Daphtary,Solicitor General of India,K. N. Rajagopal Sastri and D. Gupta, for the appellant. N. A. Palkhivala and section N. Andley, for the respondent. April 28. The Judgment of the Court was delivered by S.K. DAS, J. This is an appeal on a certificate of fitness granted by the High Court of Bombay, and the short question for decision is the true scope and effect of the third proviso to section 5 of the Business Profits Tax Act, 1947 (Act No. XXI of 1947), hereinafter referred to as the Act. The appellant is the Commissioner of Income tax, Ahmedabad, and the respondent is a private limited company under the name and style of Karamchand Premchand Ltd., Ahmedabad, to be called hereafter as the assesses. 729 The relevant facts are these : the assessee held the managing agency of the Ahmedabad Manufacturing and Calico Printing Co. Ltd. It also had a pharmaceutical business in the Baroda State, which was at the relevant time an Indian State run in the name and style of Sarabhai Chemicals. The assessee 's business in India (we shall use the expression India in this judgment to mean British India as it was then called in contra distinction to an Indian State) showed business profits assessable under the provisions of the Act; but the business carried on in the name and style of Sarabhai Chemicals in Baroda showed a loss in the relevant chargeable accounting periods which were four in number, namely: (1) April 1, 1946, to December 31, 1946; (2) January 1, 1947, to December 31, 1947; (3) January 1, 1948, to December 31, 1948 ; and (4) January 1, 1949, to March 31, 1949. The assessee claimed that its assessable income in India should be reduced by the loss suffered by it in its business in Baroda. The Income tax Officer rejected the claim of the assessee and held that the Act did not apply to the business carried on in an Indian State unless profits and gains of that business were received or deemed to have been received in or brought into India. On appeal the Appellate Assistant Commissioner upheld the contention of the assessee and allowed the appeal. The Department went up in appeal to the Appellate Tribunal, which held that under the relevant proviso to section 5 of the Act, profits and losses of a business in an Indian State were not to be taken into consideration unless they were received or deemed to have been received in or brought into India. In that view of the matter the Tribunal set aside the order of the Appellate Assistant Commissioner and restored that of the Income tax Officer. The assessee then moved four applications in respect of the four relevant chargeable accounting periods, and by these applications the assessee required the Tribunal to state a case to the High Court of Bombay on the question of law which arose out of its order. These four applications were consolidated. The Tribunal on being satisfied that a question of law arose out of its order in the four cases numbered as 85, 86, 87 730 and 88 of 1953 54, referred that question to the Bombay High Court in the following terms: " Whether on the facts and in the circumstances of the case the loss suffered by the assessee in the business of Sarabhai Chemicals should be deducted in computing the business income of the assessee company liable to business profits tax ?" The High Court answered the question in the affirmative and came to the conclusion that the assessee was entitled to deduct the losses incurred by it in its Baroda business and set them off against the profits made in the taxable territories. The appellant then moved the High Court and obtained a certificate of fitness. On that certificate the present appeal has come to us. The main contention on behalf of the appellant is that the High Court came to an erroneous conclusion with regard to the true scope and effect of the third proviso to section 5 of the Act. It is necessary here to refer to some of the provisions of the Act to understand its general scheme. In 1940 the Central Legislature passed the Excess Profits Tax Act, 1940 (Act No. XV of 1940), to impose a tax on excess profits arising out of certain businesses. We shall have occasion to refer to some of the provisions of that Act, in due course. For the purposes of that Act, the expression " chargeable accounting period " meant (a) any accounting period falling wholly within the term beginning on September 1, 1939, and ending on March 31, 1946, and (b) where any accounting period fell partly within and partly without the said term, such part of that accounting period as fell within the said term. It may be here stated that originally the term was from September 1, 1939, to March 31, 1941, but by several annual Finance Acts the term was extended up to March 31, 1946. In 1947 came the Act in which " chargeable accounting period" means: (a) any accounting period falling wholly within the term beginning on April 1, 1946, and ending on March 31, 1949, and (b) where any accounting period falls partly within and partly without the said term, such part 731 of that accounting period as falls within the said term. The Act extended to the whole of India. The word business" is defined in section 2(3) of the Act as including any trade, commerce or manufacture, etc., the profits of which are chargeable according to the provisions of section 10 of the Indian Income tax Act, 1922. There are two provisoes to this definition clause, and the second. proviso states that all businesses to which the Act applies carried on by the same person shall be treated as one business for the purposes of the Act. The expression " taxable profits" is defined under section 2(17) of the Act and it means the amount by which the profits during a chargeable accounting period exceed the abatement in respect of that period. What is meant by " abatement" is defined in section 2(1) of the Act. The charging section is section 4 and we may read that section here, so far as it is relevant for our purpose, in order to understand the general scheme, of the tax imposed under the Act. " section 4. Charge of tax Subject to the provisions of this Act, there ;hall in respect of any business to which this Act applies, be charged, levied and paid on the amount of taxable profits during any chargeable accounting period, a tax (in this Act referred to as " business profits tax") which shall, in respect of any chargeable accounting period ending on or before the 31st day of March, 1947, be equal to sixteen and two third per cent, of the taxable profits, and in respect of any chargeable accounting period beginning after that date be equal to such percentage of the taxable profits as may be fixed by the annual Finance Act. " Shortly stated, the scheme is that in respect of any business to which the Act applies, there shall be charged, levied and paid a tax called "business profits tax" on the amount of the taxable profits, which means the amount exceeding the abatement, during any chargeable accounting period; the tax shall be equal to sixteen and two third per cent. of the taxable profits in respect of the chargeable accounting period ending on or before March 31, 1947, and in respect of any charge. able accounting period after that date, the tax shall 732 be equal to such percentage of the taxable profits as may be fixed by the annual Finance Act. Then comes section 5 which is the section dealing with the application of the Act and it is in these terms: section 5. Application of Act This Act shall apply to every business of which any part of the profits made during the chargeable accounting period is chargeable to income tax by virtue of the provisions of sub clause (i) or sub clause (ii) of clause (b) of subsection (1) of section 4 of the Indian Income tax Act, 1922, or of clause (c) of that sub section: Provided that this Act shall Dot apply to any business the whole of the profits of which accrue or arise without the taxable territories where such business is carried on by or on behalf of a person who is resident but not ordinarily resident in the taxable territories unless the business is controlled in India: Provided further that where the profits of a part only of a business carried on by a person who is not resident in the taxable territories or not ordinarily so resident accrue or arise in the taxable territories or are deemed under the Indian Income tax Act, 1922, so to accrue or arise, then except where the business being the business of a person who is resident but not ordinarily resident, in the taxable territories is controlled in India, this Act shall apply only to such part of the business and such part shall for all the purposes of this Act be deemed to be a separate business : Provided further that this Act shall not apply to any income, profits or gains of business accruing or arising within any part of India to which this Act does not extend unless such income, profits or gains are received in or are brought into the taxable territories in any chargeable accounting period, or are assessable under section 42 of that Act. " We have read the section as it stands to day. The expression " taxable territories " in the provisoes was substituted for " British India " by the Adaptation of Laws Order, 1950, and the third proviso originally referred to any income, profits or gains of business accruing or %rising within "an Indian State"; then 733 the expression " a Part B State " was substituted, but this was again changed by the Adaptation of Laws (No. 3) Order, 1956, and the present expression " any part of India to which this Act does not extend " was introduced. For the purposes of this appeal nothing turns upon these changes, and we may read the third proviso as referring to any income, profits or gains of a business accruing or arising in an Indian State. Section 6 deals with relief on occurrence of " deficiency of profits " an expression which is defined in section 2(7) of the Act. The rest of the Act deals with matters, such as issue of notice for assessment, assessments, profits escaping assessment, penalties, appeal, etc., with which we are not directly concerned in this appeal. Now, sections 4 and 5 of the Act make it quite clear that the unit of taxation is the business, that is, any busi. ness to which the Act applies; and if a person carries on more than one business to all of which the Act applies, all the businesses carried on by the same person shall be treated as one business for the purposes of the Act. Section 5, in its substantive part, states to which business the Act applies and says that the Act applies to every business of which any part of the profits made during the chargeable accounting period is chargeable to income tax by virtue of the provisions of sub cl. (i) or sub cl. (ii) of cl. (b) of sub section (1) of section 4 of the Indian Income tax Act, 1922, or el. (c) of that sub section. A reference to the aforesaid provisions of the Indian Income tax Act, 1922, shows at once that in so far as they concern the present assessee section 5 in its substantive part makes the Act applicable to his business whether the profits of the business accrued or arose in India or Baroda ; and this is so in spite of the fact that the Act extended only to India. Indeed, learned counsel for the appellant has conceded that bad section 5 stood by itself without any of the provisoes, the Baroda business of the assessee would have come within the wide ambit of section 5 and the Act would be applicable to that business. His contention, however, is that the third proviso has the effect of excluding the Baroda business from the pur. view of the Act, except in so far as the income, profits or gains of that business are received or deemed to 95 734 be received in or brought into India. On behalf of the assessee the argument is that in its true scope and effect the third proviso has merely the effect of exempting the income, profits or gains of the Baroda business except when they are received or brought into India, but the business itself is not excluded from the purview of the Act; the business is still one to which the Act applies under the substantive part of section 5 and as the third proviso exempts income, profits or gains only, the losses of the Baroda business can be set off against the profits of the business in India. These are the two main rival contentions which we have to consider in this appeal. Now, let us examine a little more closely sections 4 and 5 of the Act. We have stated earlier that section 4 is the charging section, which levies a tax on the amount of taxable profits during any chargeable accounting period, in respect of any business to which the Act applies. The corresponding section in the Excess Profits Tax Act, 1940, was also section 4 thereof, which levied a tax on the amount by which the profits during any chargeable accounting period exceeded the standard profits inrespect of any business to which that Act applied. Under the Excess Profits Tax Act, 1940, as also under the Act under our consideration, the unit is the business business to which the Act applies. For the application of the Act we have to go to section 5. We have pointed out that section 5 in its substantive part makes the Act applicable to every business of which any part of the profits is chargeable to income tax by virtue of the provisions of sub cl. (1) or sub cl. (ii) of el. (b) of sub section (1) of section 4 of the Indian Income tax Act, 1922, and, thus makes the Act applicable to the Baroda business of the assessee. The question then is does the third proviso to section 5 exclude that business except in so far as the income, profits or gains of that business are received or deemed to be received in or are brought into the taxable territories in any chargeable accounting period ? If that is the true scope and effect of the third proviso, then the appellant is entitled to succeed. If, on the contrary, the third proviso merely makes the Act inapplicable to income, profits or gains of the Baroda business unless such income, profits or gains are 3 received or deemed to be received in or are brought into the taxable territories, but does not exclude the business from the purview of sections 4 and 5, then the answer given by the High Court is correct. The High Court has stated that whichever view is taken the third proviso leads to certain difficulties, and in a case where much can be said on both sides, the benefit of any ambiguity of language must be given to the assessee. We agree with the High Court that the question is not quite free from difficulty; but on the language of the proviso as it stands, the answer given by the High Court appears to us to be the correct answer. It is not the case of the appellant that the first and the second provisoes to section 5 apply to the facts of this case. But it is significant to note the phraseology of these two provisoes and contrast them with the third proviso. The first proviso says: " Provided that the Act shall not apply to any business the whole of the profits of which accrue or arise without the taxable territories, etc. " The language is clear enough to exclude the business referred to therein from the purview of the Act. Similarly, the second proviso excludes under certain circumstances part of a business and uses appropriate language to give effect to that exclusion. By a legal fiction as it were, it divides a business into two parts, one separate from the other, and makes the Act applicable to one of them only. Unlike the other two provisoes, the third proviso does not use the language of exclusion in respect of any business. What it takes out of the ambit of the Act is merely the " income, profits and gains " of a particular business. The language is thus more apt to effectuate an exemption from tax of ,income, profits or gains" rather than an exclusion of the business from the purview of the Act. On behalf of the appellant it is contended that such a construction results in this anomaly that if the income, profits or gains are not brought into India, they escape tax and yet the losses of a business which is outside India are taken into consideration in computing the profits, etc., in India. This, it is argued, could not have been the object of the legislature in 736 enacting the third proviso to section 5 of the Act. It is contended that the object was to exclude the business in an Indian State as also the income, profits or gains thereof, unless such profits, etc., were received in or brought into India. This argument is not devoid of plausibility and requires careful consideration. We may here refer to the relevant provisions of the Excess Profits Tax Act, 1940. Section 5 of that Act in its substantive part and the first and second provisoes thereto were worded in identical language, but the third proviso to section 5 of the Excess Profits Tax Act, 1940, was worded quite differently from the third proviso to section 5 of the Act. The third proviso to section 5 of the Excess Profits Tax Act, 1940, stated: " Provided further that this Act shall not apply to any business the whole of the profits of which accrue or arise in a Part B State, and where the profits of a part of a business accrue or arise in a Part B State, such part shall, for the purposes of this provision, be deemed to be a separate business the whole of the profits of which accrue or arise in a Part B State, and the other part of the business shall, for all the purposes of this Act, be deemed to be a separate business." The language used was clearly one of exclusion, and it said that the Excess Profits Tax Act was not applicable to a business the profits of which accrued or arose in a Part B State. Why then did the legislature use different language in the third proviso to section 5 of the Act? On behalf of the appellant it has been submitted that the change in language is deliberate and the reason for the change is to make the income, profits or gains of a business accruing in an Indian or Part B State liable to tax when such income, profits or gains are brought in India while under the third proviso to a. 5 of the Excess Profits Tax Act, they were not liable to tax even when they were brought into India. On behalf of the assessee, however, it has been submitted that the change in language is due to a different reason altogether. The third proviso to section 5 of the Excess Profits Tax Act, 1940, and section 14(2) (c) (now deleted) of the Indian Income tax Act, 1922, were enacted at about the same time, and the broad object of both the 737 provisions was to exclude profits of a business in an Indian or Part B State from charge of tax; but under the Excess Profits Tax Act, 1940, such profits were not chargeable even if received in or brought into India whereas under section 14(2) (c) of the Indian Income tax Act such profits became chargeable to tax if received in or brought into India. This difference, learned counsel for the assessee states, was no doubt done away with by the change in language of the third proviso to section 5 of the Act; but the change in language did something more, because it assimilated the position under the proviso to that under section 14(2) (c) of the Indian Income tax Act, namely, that though profits of a business in an Indian State cannot be taxed unless they are brought into the taxable territories, yet the losses incurred can be adjusted in computing the profits of the business as a whole. Learned counsel for the assessee has relied on the decision of this Court in Commissioner of Income tax, Mysore, Travancore Cochin and Coorg vs Indo Mercantile Bank Ltd. (1) and the decisions of the Bombay High Court in Commissioner of Income tax, Bombay City vs Murlidhar Mathurawalla Mahajan Association (2 ) and Commissioner of Excess Profits Tax, Bombay City vs Bhogilal H. Patel, Bombay (3 ). The first two decisions cited above considered the effect of section 24 (1), Indian Income tax Act, 1922, with special reference to the first proviso thereto (as it stood at the time relevant therein) and its impact on section 10 of the said Act. It was held that sub section (1) of section 24 dealt only with set off of loss under one head against profits under any other head, and therefore the old first proviso to sub section (1) of section 24 applied and barred the right of set off only where a loss in the Indian State was sought to be set off against Indian profits under any other head; where, however, the assessee sought to set off his loss in the Indian State against his Indian profits under the same head, e. g., set off of loss incurred in a business carried on in an Indian State against the profits of the same or another business carried on in India, the proviso did not apply and the assessee was entitled to such set off under section 10 (1) [1959] Supp. 2 S.C.R. 256. (2) (3) 738 of the Indian Income tax Act. Learned counsel for the assessee has submitted that the same principle applies with regard to the third proviso to section 5 of the Act. Learned counsel has submitted that as under section 10 of the Indian Income tax Act, different businesses constitute one head and in order to determine what are the profits and gains of a business under section 10 an assessee is entitled to show all his profits and set off against those profits losses incurred by him, in the same head; so also under section 5 of the Act, the Baroda business of the assessee is within the ambit of the Act, though the income, profits or gains thereof are excluded by the third proviso unless they are received or brought into India. He has pointed out that the position under the Excess Profits Tax Act was different, as was explained in Bhogilal Patel 's case (1) where the learned Chief Justice said: " This contention of Mr. Kolah is based on the language used in the proviso, namely, that 'this Act shall not apply to any business the whole of the profits of which accrue or arise in an Indian State '. Now, this contention is obviously fallacious, because the proviso does not say that the Act shall not apply to the profits of a business which accrue or arise in an Indian State. What the proviso says is that the Act shall not apply to any business the whole of the profits of which accrue or arise in an Indian State. The expression "the whole of the profits of which accrue or arise in an Indian State ' is an expression which indicates the nature of the business which is excluded from the purview or ambit of the Act". Now, the third proviso to section 5 of the Act uses not the phraseology of the Excess Profits Tax Act, but the very phraseology which according to the learned Chief Justice would have made all the difference. Learned counsel for the assessee has argued, and we think it has considerable force, that the legislature had before it the language used in section 14 (2) (e) of the Indian Income tax Act and it knew the effect of those provisions and it used the same language in the third proviso to section 5 of the Act. If the object of the legislature was to exclude the business itself from the ambit (1) 739 of the Act while taxing the profits which were brought into the taxable territories, then it used language which failed to achieve that object. On behalf of the appellant it has been pointed out that the expression used in the third proviso to section 5 is "Provided further that the Act shall not apply to any income, profits or gains of a business, etc. " It is argued that this language, (namely, that the Act shall not apply) is apt to exclude from the purview of the Act business the profits of which accrue or arise in an Indian State, except in so far as such profits are brought into the taxable territories. In support of this argument a reference has been made to section 4 (3) of the Indian Income tax Act as it stood prior to 1939 and reliance is placed on the decisions in Commissioner of Income tax, Madras vs M. P. T.K. M. M. section M. A. B. Somasundaram Chettiar (1) and" Commissioner of Income tax, Bombay vs The Provident Investment Co. Ltd.(2). It is true that section 4(3) of the Indian Income tax Act, as it stood prior to 1939, said that this Act (meaning the Indian Income tax Act, 1922) shall not apply to certain classes of income ", and in the two decisions cited it was held that the word " business " meant a business whose profits were being assessed in the year under consideration and there was no justification for deduction of the expenses of a foreign business. We do not, however, think that the use of the expression, " the Act shall not apply ", is decisive in this case. We have to read the third proviso as a whole and in the context in which it occurs, in order to find out what it means. So read it is difficult to hold that it has the effect of excluding the Baroda business except in so far as the profits thereof are brought into the taxable territories. What it says in express terms is that the Act shall not apply to any income, profits or gains of business accruing or arising in an Indian State, etc. It does not say that the business itself is excluded from the purview of the Act. We have to read and construe the third proviso in the context of the substantive part of section 5 which takes in the Baroda business and the phraseology of the first and second provisoes thereto, which clearly uses the (1) A. I. R. (2) (1931) 1 L. R. 740 language of excluding the business referred to therein. The third proviso does not use that language and what learned counsel for the appellant is seeking to do is to alter the language of the proviso so as to make it read as though it excluded business the income ' profits or gains of which accrue or arise in an Indian State. The difficulty is that the third proviso does not say so ; on the contrary, it uses language which merely exempts from tax the income, profits or gains unless such income, profits or gains are received in or brought into India. Next, we have to consider what the expression income, profits or gains " means. In the context of the third proviso, it cannot include losses because the latter part of the proviso says " unless such income, profits or gains are received, etc., into the taxable territories ". Obviously, losses cannot be brought into the taxable territories except in an accounting sense, and the expression " income, profits or gains " in the context cannot include losses. The expression must have the same meaning throughout the proviso, and cannot have one meaning in the first part and a different meaning in the latter part of the proviso. The appellant cannot therefore say that the third proviso excludes the business altogether, because it takes away from the ambit of the Act not only income, profits or gains but also losses of the business referred to therein. On behalf of the appellant it has been argued that though the language of the third proviso to section 5 of the Act is similar to that of section 14(2)(c) of the Indian Income tax Act, the language of the two provisions is not identical and it is not correct to say that their effect is substantially the same. It is pointed out that the language of section 14(2)(c) was one of exemption only in respect of any income, profits or gains accruing or arising in an Indian State, though for purposes of " total income " the Income tax Act applied thereto, and therefore the normal process of aggregating profits and losses wherever they occurred could be adopted. But says learned counsel for the appellant, the position is otherwise under the third proviso to section 5 of the Act, because, firstly, it uses the expression, " the Act 741 shall not apply " and secondly, there is no question of exempting the profits from tax while including them for the purposes of " total income ". We agree that the complication of excluding the profits from tax while including them for determining " total income " does not arise under the third proviso to section 5 of the Act; but the argument presented is the same as we have dealt with earlier. The argument merely takes us back to the question does the third proviso to B. 5 of the Act merely exempt the income, profits or gains or does it exclude the business? If it excludes the business, the appellant is right in saying that the position under the proviso is not the same as under section 14(2)(c) of the Indian Income tax Act. If, on the contrary, the proviso merely exempts the income, profits or gains of the business to which the Act otherwise applies, then the position is the same as under section 14(2)(c). It is perhaps repetition, but we may emphasize again that exclusion, if any, must be done with reference to business, which is the unit of taxation. The first and second provisoes to section 5 do that, but the third proviso does not. Lastly it has been contended that the construction adopted by the High Court is likely to lead to consequences which the legislature manifestly could not have intended. This contention has been pressed in respect of two matters: (a) computation of capital under the rules in Schedule 11 of the Act in a case where the assessee company sustains a loss in an Indian State; and (b) relief for deficiency of profits where the assessee makes profits in an Indian State but sustains a loss in India. As to the first matter, it has been fully dealt with by the High Court with reference to r. 2A of the Rules in Schedule 11 and it has been rightly pointed out that no difficulty really arise,% by reason of r. 2A. Nor are we satisfied that any real difficulty arises with regard to relief for deficiency of profits when the assessee makes profits in an Indian State but sustains a loss in India. The Act will not apply to such profits unless they are brought into India, and if they are brought into India. , a. 6 will apply with regard to relief on the ground of deficiency of profits. 96 742 It is unnecessary to consider here any hypothetical difficulty which may arise in the application of section 6. The appellant relies on the third proviso to section 5 of the Act in support of the contention that it excludes the Baroda business of the assessee and the losses of that business cannot be set off against the profits of the business in India, and the appellant can succeed only on establishing that the proviso clearly and without any ambiguity excludes the Baroda business. We agree with the High Court that if there is any ambiguity of language, the benefit of that ambiguity must be given to the assessee. However, the conclusion at which we have arrived is that on the language of the proviso as it stands, it does not exclude the Baroda business of the assessee but exempts only. the income, profits or gains thereof unless they are received or deemed to be received in or brought into India. Accordingly, the High Court correctly answered the question of law referred to it. The appeal falls and is dismissed with costs. Appeal dismissed. [/INST] The assesses held the managing agency of a limited company in what was then called " British India and had also a pharma 728 ceutical business in the Baroda State which was at the relevant time an Indian State. The business in British India showed profits assessable under the provisions of the Business Profits Tax Act, 1947, but the business carried on in Baroda resulted in a loss, in the relevant chargeable accounting periods between 1946 and 1949. Before the Income tax authorities the assessee claimed that the loss suffered by it in its business in Baroda should be deducted in computing its business income liable to business profits tax, but this claim was rejected on the ground that though under section 5 Of the Act, if it stood by itself without any of the provisos, the Act would be applicable to the Baroda business, the third proviso had the effect of excluding that business from the purview of the Act, except in so far as the income, profits or gains of the business were received or deemed to be received in or brought into British India: Held, that the effect of the third proviso to section 5 of the Business Profits Tax Act 1947, was merely to exempt the income, profits and gains of the Baroda business except when they were received or brought into British India, but the business itself was one to which the Act was applicable under the substantive part Of section 5. Consequently, the losses of the business could be set off against the profits of the business in British India. The relevant provisions of the Act are set out in the judg ment. </s>

<s>[INST] Summarize the following judgement: Appeal No.123 of 1957. Appeal from the judgment and order dated May 12, 1955, of the Punjab High Court in Civil Reference No. 17/1953. A. V. Viswanatha Sastri, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellants. C.K. Daphtary, Solicitor General of India, R. Ganapathy Iyer and D. Gupta, for the respondent. April 26. The Judgment of the Court was delivered by KAPUR, J. This is an appeal against the judgment and order of the High Court of Punjab made on a reference under section 66(1) of the Indian Income tax Act which was answered in favour of the Commissioner of Income tax. The appellant is the assessee a Hindu undivided family with Sheel Chandra as its Karta and the respondent is the Commissioner of Income tax. The appeal relates to the assessment year 1951 52. The appellant, a Hindu undivided family, consisted of Sheel Chandra and his Younger brother. Their father, Adishwar La], upto his death on April 16, 1950, was the Treasurer of several branches of the Central Bank of India (which in the judgment will be referred to as the Bank). During his father 's lifetime Sheel Chandra was employed as an Overseer in the Bank on a salary of Rs. 400 a month. Sheel Chandra was appointed Treasurer of the Bank at Delhi and sixteen 671 other branches of the Bank. As Treasurer he furnished security to the Bank of certain properties of the Hindu undivided family, which consisted of title deeds of immovable properties in Chandni Chowk, Delhi, and Government of India securities of the value of Rs. 75,000. The Hindu undivided family owns considerable property. Its income from house property alone is Rs. 50,000 per annum and it owns stocks, shares and Government securities also of considerable value. As Treasurer Sheel Chandra received in the year of account from the Bank a sum of Rs. 23,286 and the question for decision is whether this sum is the individual income of Sheel Chandra as salary or it is part of the income of the Hindu undivided family. The Income tax Authorities held this sum to be the latter and taxed it as such. The Income tax Appellate Tribunal in upholding this view held that on a proper construction of the written agreement between Sheel Chandra and the Bank, the emoluments received by the Treasurer were profits and gains of business and it further held that as the security furnished by Sheel Chandra came out of the joint family proper. ties, the emoluments could not be said to have been earned without detriment to the family property and therefore were part of the income of the Hindu undivided family. At the instance of the appellant the Tribunal referred under section 66(1) the following two questions to the High Court: (1)" Whether in the facts and circumstances of the case and on a true construction of the agreement between the Central Bank of India and Sheel Chandra the salary and other emoluments received by Sheel Chandra as Treasurer of the said Bank are assessable under the head ' salary ' or under the head 'Profits and gains of business '." (2)" Whether in the facts and circumstances of the case, Sheel Chandra 's emoluments as Treasurer of the Central Bank of India Ltd. were rightly assessed in the hands of the Hindu undivided family of which he is the Karta". Both questions were answered against the appellant. On a consideration of the various clauses of the agreement between Sheel Chandra and the Bank, the 672 High Court held that the relationship between them was not one of master and servant but that of an employer and independent contractor and therefore the emoluments received by Sheel Chandra as Treasurer were not salary but profits and gains of business. As to the second question the High Court was of the opinion that the emoluments were the income of the Hindu undivided family because Sheel Chandra was :not appointed Treasurer on account of any personal qualification but he was appointed because (a) his father was a Treasurer of the Bank before him and (b) he had furnished substantial security which was part of the property of the Hindu undivided family. Against this judgment and order the appellant has come in appeal to this Court. The nature of the employment of Sheel Chandra has to be gathered from the agreement dated September 19, 1950, between him and the Bank. It shows that on his application for appointment as a Treasurer at Delhi and sixteen other branches of the Bank, the Bank appointed him Treasurer for those branches and he could ' by mutual agreement, be appointed at other branches in the Punjab, U. P. and Rajasthan. The appointment took effect from April 16, 1950. Sheel Chandra undertook to perform the duties and be responsible as Treasurer of the various branches of the Bank and was required to engage and employ subordinate staff called the Cash Department Staff such as Head Cashiers, Potdars, Guaranteed Peons, Godown Keepers, Assistant Godown Keepers, Chowkidars and Clerks and other persons necessary for the efficient working of the said offices. He had the power to " control, dismiss and change" this Staff at his pleasure but he could not engage or transfer any member of the Staff except with the approval of the Bank and had to dismiss any such member if so required by the Managing Director of the Bank or Agent of the Office. The Treasurer and the Cash Department Staff were to do and be responsible for all work in connection with receipts and payments of monies and bad to do ouch other work as was customarily done by cashiers 673 and shroffs of Banks. The Treasurer was also responsible for the correctness and genuineness of all hundies and cheques bearing signatures and endorsements in vernacular and for genuineness of all signatures and writings in any language or character or any securities, voucher deeds, documents and writings which the Treasurer or the Cash Department Staff dealt with and in case of any loss or damage arising out of any forged signatures and endorsements on any document accepted or dealt with by the Cash Department Staff as correct and genuine, the Treasurer was responsible to make good the loss. He was also required, when asked by the Bank, to engage the necessary staff, to look after the goods pledged with the Bank and he was responsible for the good conduct of such staff. It was also his duty to make enquiries and report upon the identity, credit and solvency of persons dealing with the Bank and was liable for any loss arising out of any wilful misrepresentation or negligence in the enquiry or report made by him or his representative in any matter arising in the course of employment. He or his representative were also required, when asked, to give reliable information in regard to hundi business but he was not responsible for any damage or loss arising therefrom. He also undertook when required by the Officers of the Bank to value and give correct certificate in regard to the genuineness, fineness and weight of bullion and gold ornaments and other valuables pledged with the Bank. He was responsible for any loss to the Bank in case of any wilful misrepresentation or negligence in regard to this branch of his duty. He further undertook to supply to the Bank as many persons as were required at the various branches of the Bank which the Bank opened in future. He undertook responsibility for the safe custody of the monies and ornaments and other valuables kept with or pledged with the Bank as also for the bills of exchange, promissory notes, hundies or other securities. Besides this he was required to satisfy the Agent or the Manager of the branch that all the monies of the Bank and other valuable securities which had not been duly 674 used and accounted for were intact and in their proper places. Sheel Chandra was paid a salary of Rs. 1,750 per mensem for all the branches he was employed in. Besides this he was paid certain sums of money for guaranteeing the conduct of Godown Keepers, Assistant Godown Keepers and Chowkidars supplied by him. If the branches or out agencies were increased he was to receive such increase in salary as might mutually be agreed upon. On the closing of any branch there was to be a corresponding reduction in the remuneration. The members of the Cash Department Staff were to be paid travelling allowance according to the rules of the Bank. In addition to the remuneration above mentioned the Treasurer or his authorised representative when visiting different branches were to get actual railway fare. The various members of the Cash Department Staff were to be paid their salary directly by the Bank but the Bank was not bound to pay more than the scale laid down by it. The permanent members of the Cash Department Staff were to get the usual increments and benefit of Provident Fund and travelling allowance in accordance with the rules of the Bank. The Treasurer was required to engage members of the Cash Staff on salaries laid down by the Bank and if he paid anything more than the usual Bank scale he had to pay it himself. The Treasurer was also entitled to nominate and appoint a representative to carry on the duties undertaken by him at the various offices of the Bank but these appointments were Subject to the approval of the Bank. The Treasurer was responsible for the acts of omission and commission and for neglect and default of his representatives and for each and every member of the Cash Department Staff. There are various clauses in the agreement requiring the Treasurer or his representative to perform their duties efficiently, honestly and in a proper manner. The Treasurer and the Cash Department Staff were under the control of the Bank. They were required to make entries in the books of account which were furnished by the Bank giving full particulars of all monies received and paid 675 by them and in such manner as the Agent of the Bank might from time to time direct in writing. The Treasurer had to carry out his duties faithfully and any communication made by the Bank to any member of the Cash Department Staff was to be considered as a communication made to the Treasurer himself and he was bound to take notice of it. The agreement could be terminated by three calendar months ' notice in writing by either side but in the event of any breach of any condition of the agreement by the Treasurer his services could be terminated forthwith; but his liability was to continue. There was also an arbitration clause. Counsel for the appellant contended that the various provisions of the agreement showed that Sheel Chandra was a servant of the Bank and not an independent contractor. He laid particular emphasis on the fact that he was appointed a Treasurer on a monthly salary and his services could be terminated forthwith in certain circumstances. Besides this he was to carry out his duties as directed by the Bank and was to discharge his duties faithfully and if in the discharge of his duties he caused any loss to the Bank he was liable to make good the loss. These factors, according to him, showed that he was not an independent contractor or an agent of the Bank but was a salaried servant. The contention on behalf of the respondent on the other hand was that the agreement showed that Sheel Chandra was carrying on a business in that he was supplying cashiers and other members of the Cash Department Staff for a monetary con sideration. He guaranteed their fidelity which was an insurance undertaken by him. He was to get certain sums of money for supplying each member of certain classes of servants to the Bank and the agreement between the Bank and Sheel Chandra could be terminated by notice and there was an arbitration clause and he was not required to serve personally. Undoubtedly there are some terms in the agreement which are unusual as ordinary agreements of service go but in the case of an agreement between a Bank and a Treasurer they are riot so Unusual. There was 676 an agreement with very similar clauses in Shivanandan Sharma vs The Punjab National Bank Ltd. (1) and it was held to be an agreement of service and not of agency. Now, the duties of Sheel Chandra under the agreement are such as are peculiar to the employment of Treasurers. It is true that as Treasurer, Sheel Chandra had also undertaken to indemnify the Bank not only for his own default but also for the default of the members of the Cash Department Staff. But Banks have to deal with monies, valuable securities, gold and other valuables and must necessarily employ servants whose honesty is guaranteed and it is necessary for the Bank to have some one in its employment who can perform these duties in a responsible manner and be answerable to the Bank for negligence and default in the performance of this class of work. In the very nature of things one man cannot do all this work, not even at one branch, what to say of several branches; other people have therefore to be employed and although the persons employed in the Cash Department are servants of the Bank they do the work which Treasurers ordinarily and customarily do and consequently the Treasurer is made responsible for any damage which the Bank suffers due to the default of the Treasurer or of those employed to do the work of the Cash Department. It is difficult to lay down any one test to distinguish the relationship of master and servant from that of art employer and independent contractor. In many cases the test laid down is that in the case of master and servant the master can order or require what is to be done and how it is to be done but in the case of an independent contractor an employer can only say what is to be done but not how it shall be done. But this test also does not apply to all cases, e.g., in the case of Ship 's master, a chauffeur or a reporter of a newspaper. It was pointed out in Cassidy vs Ministry of Health (2) that in the case of contract of service " a man is employed as part of the business, and his work is done as an integral part of the business whereas under a contract for services the contractor is not (1) ; (2) , 352 3. 677 integrated into the business but is only accessory to it". In certain cases it has been laid down that the indicia of a contract of service are (a) the master 's power of selection of the servant; (b) the payment of wages or other remunerations; (c) the master 's right to control the method of doing the work and (d) the master 's right of suspension or dismissal: Short vs J. and Henderson Ltd. (1). Bhagwati, J., in Dharangadhara Chemical Works Ltd. vs State of Saurashtra (2) said that in all cases the correct method of approach is whether having regard to the nature of work there was due control and supervision by the employer. We have given above the duties of the Treasurer in the present case, his obligations and the manner of control exercised over him and the staff employed by him to carry out the work of the Cash Department of the Bank. It is no doubt true that the Treasurer guaranteed his fidelity, good faith and honesty of the persons who were employed in the Cash Department of the Bank but that was a part of the duty that he undertook and that is peculiar to the very nature of his employment. Applying the test which was laid down by Bhagwati, J., in Dharangadhara Chemical Works Ltd. vs State of Saurashtra (2) that having regard to the nature of the work whether there was due control and supervision of the Bank over the Treasurer, the Treasurer in the instant case must be held to be a servant of the Bank. What we have to see is the effect of the agreement as a whole and taking the various clauses together it must be held that Sheel Chandra, the Treasurer, was a servant of the Bank. In view of this it is not necessary to discuss in detail the various cases that were cited at the bar. K. P. Bhargava vs The Commissioner of Income Tax, U. P. (3) was the case of a Treasurer of the Central Bank of India at Agra. There he was paid a salary of Rs. 100 and a commission for his work as a Guarantee Commission Agent but the terms of the contract were different and that was clearly a case of a Guarantee Commission Agency. (1) , 429. (2) ; , 160. (3) [1954] 26 88 678 Lala Jeewan Lal vs Commissioner of Income tax(1) was also a case of commission agency and in the peculiar circumstances of that case it was held to be business within section 2(5) of the Excess Profits Tax Act. The assessee there was paid a commission of 4 annas per cent. on the value of the contracts secured by him. Subsequently the commission was increased to Re.1 per cent. and for this extra commission he agreed to reimburse the mill in case of failure of a person purchasing through him to pay the price. Counsel for the respondent also relied on Commissioner of Income tax V. Kalu Babu Lal Chand (2) where the Managing Director 's remuneration was held to be the income of a joint family to be assessed as such in its hands. That case is distinguishable. There the karta of a Hindu undivided family took over a business as a going concern and carried on the business till the company was incorporated. The shares in the name of karta and his brother were acquired with the funds of the joint family. The company was floated with the funds of the joint family and was financed by it and the remuneration received was credited in the books of the family. The office of the Managing Director itself was assignable. The Articles of Association provided that the karta or his assigns or successors in business " whether under his name or any other style or firm " would be the Managing Director of the Company and he was to continue for life until removed because of fraud or dishonesty. Thus the acquisition of business, the flotation of the Company and the appointment of the Managing Director were inseparably linked together. The facts of that case were quite different from that of the present case which are akin to the facts in Shivanandan Sharma vs Punjab National Bank Ltd. (3). The next question for decision is whether the salary of Sheel Chandra as Treasurer of the Bank is assessable as part of the income of Hindu undivided family of which he is the karta or as his separate income. Both the Appellate Tribunal and the High Court were of the opinion that the emoluments as Treasurer were not acquired without any detriment and risk to the (1) (2) ; (3) ; 679 family property and therefore formed part of the income of the Hindu undivided family. Treasurership is an employment of responsibility, trust and fidelity and personal integrity and ability and mere ability to furnish a substantial security is not the sole or even the main reason for being appointed to such a responsible post in a Bank like the Central Bank of India. On the other hand his previous experience as an Overseer of the Bank and his being appointed on his applying for the post are indicative of personal fitness for it. There is nothing to show that Sheel Chandra had received any particular training at the expense of the family funds or his appointment was the result of any outlay or expenditure of or detriment to the family property. But it was argued on behalf of the respondent that because he had lodged joint family property by way of security his earnings as Treasurer became a part of the income of the Hindu undivided family for the reason that the acquisition was not without risk to the family estate. He relied on Gokul Chand vs Firm Hukum Chand Nath Mal (1) and Commissioner of Income tax vs Kalu Babu Lal Chand (2). In the former case a member of the joint family entered the Civil Service and that was made possible by the expenditure of family funds which enabled him to acquire the necessary qualifications and it was that fact which made his earnings part of the family income. The following passage in that judgment at p. 168 was emphasised: " It may be said to be direct in the one case and remote in the other, but if risk of or detriment to family property is the point in both cases, there appears to be no such merit in "science", recognised by the sages of the Hindu law, as would warrant the exclusion of gains of science as such from the category of partible acquisitions". Counsel particularly relied on the words 'risk of and contended that by reason of the family property being given in security, the risk as understood in that judgment hadarisen, because it became liable for any loss that might be incurred during the course of employment of Sheel Chandra. The word 'risk ' in that (1) (1921) 48 I.A. 162. (2) ; , 680 judgment must be read in the context in which it was used. Family estate was used and expenditure was incurred for equipping one of its members to join the Indian Civil Service. It was in that connection that the words 'risk of ' or 'detriment to ' family property were used. The latter case, Kalu Babu Lai Chand 's case(1), has already been discussed. The facts and circumstances of that case were different. The cases which the Privy Council relied upon in Gokul Chand 's case (2) were all cases where joint family funds had been expended to fit a member of the joint family for the particular profession or avocation the income of which was the subject matter of dispute but the respondents were not able to refer to any decision in which it was held that the mere fact of giving joint family property in security for the good conduct of a member of the family employed in a post of trust was sufficient to make the emoluments of the post joint family property because of any detriment to family property or risk of loss. It has not been shown that in this case there was any detriment to the family property within the meaning of the term as used in decided cases. In our opinion the judgment of the High Court was erroneous on both questions which were referred to it and they should both have been decided in favour of the appellant. The emoluments received by Sheel Chandra were in the nature of salary and therefore assessable under section 7 of the Income tax Act and not under section 10 of the Act as profits and gains of business and the salary was the income of the individual, i.e., Sheel Chandra and not the income of the Hindu undivided family. We therefore allow this appeal and set aside the judgment and order of the High Court. The appellant will have its costs in this Court as well as in the High Court. (1) ; Appeal allowed. (2) (1921) 48 I.A. 162. [/INST] S was the karta of the Hindu undivided family, consisting of himself and his younger brother. Their father was the Treasurer of a Bank till his death in 1950. During his father 's lifetime S was employed as an overseer in the Bank on a salary of Rs. 400 a month, and, subsequently, after his father 's death he was appointed Treasurer of the Bank at Delhi and sixteen other branches of the Bank. As Treasurer he furnished security to the Bank of certain properties of the Hindu undivided family. The agreement dated September 19, 1950, between him and the Bank, showed that he was appointed Treasurer on a monthly salary of Rs. 1,75o and he was also paid certain sums of money for guaranteeing the conduct of the cashiers and other members of the Cash Department Staff which he was required to employ with the approval of the Bank. He was to carry out his duties as directed by the Bank and if in the discharge of his duties he caused any loss to the Bank he was liable to make good the loss. He was not required to serve personally, but his services could be terminated by notice. In the year of account 1950 51 he received from the Bank a sum of RS. 23,286 as Treasurer. The Income tax authorities considered that this sum was not the individual income of S as salary but was part of the income of the Hindu undivided family and taxed if as such on the grounds (1) that the agreement between S and the Bank showed that the relationship between them was not one of master and servant but that of an employer and independent contractor and that the emoluments received by the Treasurer were profits and gains of business, (2) that S was appointed Treasurer not on account of any personal qualification but because his father was a Treasurer of the Bank before him, and (3) that as the security furnished by S came out of the joint family properties, the emoluments could not be said to have been earned without detriment to the family property and therefore were part of the Hindu undivided family: Held, (1) That on the true construction of the agreement dated September 19, 1950 the Treasurer was a servant of the Bank. Shivanandan Sharma vs The Punjab National Bank Ltd. ; and Dhayangadhara Chemical Works Ltd. vs State Of Saurashtra, , relied on. (2) That in view of the fact that there was nothing to show that S had received any particular training at the expense of the 87 670 family funds or that his appointment as Treasurer was the result of any outlay or expenditure of or detriment to the family property, but on the other hand his previous experience as an overseer of the Bank was indicative of personal fitness for his appointment as Treasurer, the mere fact he had lodged joint family property by way of security would not make his earnings as Treasurer part of the income of the Hindu undivided family. The use of the words " risk of " and " detriment to " in Gokul Chand vs Firm Hukum Chand Nath Mal, (1921) L.R. 48 I.A. 162, explained. Commissioner of Income tax vs Kalu Babu Lal Chand, [1960] 1 S.C.R. 32o, distinguished. Accordingly, the emoluments received by S were in the nature of salary and therefore assessable under section 7 of the Indian Income tax Act, 1922, and not under section 10 of the Act as profits and gains of business, and the salary was the income of the individual, S, and not the income of the Hindu undivided family. </s>

<s>[INST] Summarize the following judgement: 176 of 1959. Petition under Article 32 of the Constitution of India for enforcement of Fundamental Rights. Basudeva Prasad, M. K. Ramamurthi, K. N. Keshwa and R. Mahalingier, for the petitioner. Lal Narain Sinha, B. K. P. Sinha, L. section Sinha and section P. Varma, for the respondents. M. C. Setalvad, Attorney General for India, C. K. Daphtary, Solicitor General of India, H. J. Umrigar and T. M. Sen, for the Attorney General of India. August 1. The Judgment of the Court was delivered by SINHA C. J. By this petition under article 32 of the Constitution the petitioner raises almost the same 13 98 controversy as had been done in Writ Petition No. 122 of 1958, which was heard and determined by this Court by its judgment dated December 12, 1958, and by Writ Petition No. 106 of 1959, which was heard by this Court on November 10, 11 and 12, 1959, but which did not reach the stage of judgment by this Court, inasmuch as the petitioner 's Advocate requested the Court to permit him to withdraw the petition and the Court allowed the prayer and permitted the petitioner to withdraw the petition. In each of these petitions the petitioner, who is a journalist by profession and is functioning as the Editor of " the Searchlight ", an English daily newspaper published from Patna in the State of Bihar, impugned the validity of the proceedings before the Committee of Privileges and prayed for restraining the opposite party, namely, the Chief Minister of Bihar as Chairman of the Committee of Privileges, Bihar Legislative Assembly, Committee of Privileges and the Secretary of the Bihar Legislative Assembly, from proceeding against the petitioner for the publication in its issue dated May 31, 1957, of the Searchlight an account of the debate in the Legislative Assembly, Bihar, on May 30, 1957. The facts of the case have been stated in great detail in the majority judgment of this Court delivered by section R. Das, C. J., in M. section M. Sharma vs Sri Krishna Sinha (1). In the opening paragraph of this Court 's judgment aforesaid, the parties before the Court have been enumerated and the anomaly pointed out. This Court held in effect that under article 194(3) of the Constitution a House of a Legislature of a State has the same powers, privileges and immunities as the House of Commons of the Parliament of the United Kingdom had at the commencement of the Constitution. The House of Commons at the relevant date had the power or privilege of prohibiting the publication of even a true and faithful report of proceedings of the House and had a fortiori the power or privilege of prohibiting the publication of an inaccurate or garbled version of such debate or proceedings. The powers or privileges of a House of State Legislature are the same as (1) [1959] SUPP.1 S.C.R. 806. 99 those of the House of Commons in those matters until Parliament or a State Legislature, as the case may be, may by law define those powers or privileges. Until that event has happened the powers, privileges and immunities of a House of legislature of, a State or of its members and committees are the same as those of the House of Commons at the date of commencement of our Constitution. This Court also expressed the view that Legislatures in this country like the House of Commons will no doubt appreciate the benefit of publicity and will not exercise those powers, privileges and immunities, except in gross cases. The minority judgment delivered by Subba Rao, J., on the other hand, expressed the view that at the relevant date the House of Commons, even as the Legislatures in this country, had no privilege to prevent the publication of a correct and faithful report of the proceedings of those legislatures, except those of secret sessions, and bad only a limited privilege to prevent mala fide publication of garbled, unfaithful or expunged reports of the proceedings. He also held that the petitioner had the fundamental right to publish the report of the proceedings of the Legislature. In the result, this Court, in view of the judgment of the majority, dismissed the petition, but made no order as to costs. This Court further held that the Assembly of Bihar was entitled to take proceedings for breach of its privileges and it was for the House itself to determine whether there had in fact been any breach of any of its privileges. After Writ Petition No. 122 of 1958 had thus ended, the petitioner again moved this Court under article 32 of the Constitution. That case was registered as Writ Petition No. 106 of 1959. On January 5, 1959, the petitioner received a notice that the case of breach of privilege against him would be considered by the Committee of Privileges of the Assembly on February 3, 1959. That hearing was postponed from date to date, until in August, 1959, the petitioner filed his petition under article 32 of the Constitution. He contended in that petition that, as a citizen of India, the petitioner had the fundamental right under article 19(1)(a) of the 100 Constitution to freedom of speech and expression which included the freedom of publication and circulation and that the Legislature of the State of Bihar could not claim any privilege contrary to the right thus claimed. In effect, it was contended that the privilege conferred on the Legislature of a State by article 194(3) of the Constitution was subject to the fundamental right of a citizen contained in article 19(1)(a). It was also contended that the first respondent, the Chief Minister of Bihar, who, it was alleged, had control over the majority of the members of the Bihar Legislative Assembly and of the Committee of Privi leges, was proceeding mala fide in getting the proceedings instituted against the petitioner for alleged breach of the privilege of the House. Though not in terms, but in effect, the points raised in this petition were a reiteration of those already determined by this Court in its judgment aforesaid of December 12, 1958. The prayer made in the petition was that the proceedings of the Committee of Privileges at its meeting held on August 10, 1958, might be quashed and the respondents restrained by a writ in the nature of a writ of prohibition from proceeding against the petitioner in respect of publication aforesaid of the proceedings of the Bihar Legislative Assembly of May 30, 1957. After the petitioner had made his writ application to this Court as aforesaid, the Bihar Legislative Assembly reconstituted the Committee of Privileges of the Assembly, and on that very date a member of the Legislative Assembly sought to move a motion in that Assembly for revival and re reference of the matter of the alleged breach of privilege by the petitioner. Some members of the Bihar Legislative Assembly objected to the motion being moved and the Speaker of the Assembly deferred giving his ruling on that objection. At the instance of some of the members of the Assembly, the Speaker of the Assembly referred two questions to the Advocate General of Bihar for his opinion on the floor of the House on October 20, 1959, namely, (1) whether it was open to the Assembly to debate on an issue which might be sub judice in view of the writ petition aforesaid filed by the 101 petitioner in the Supreme Court under article 32; and (2) whether the matter which was dead by reason of prorogation of the House several times could be, legally revived and restored. On October 20, 1959, the Advocate General of Bihar attended the House and gave his opinion, which it is not relevant to ' state here. The Writ Petition, 106 of 1959, was heard in part and allowed to be withdrawn, as indicated above, on November 12, 1959. On November 24, 1959, the petitioner received a fresh notice from the Secretary of the Legislative Assembly, opposite party No. 3, calling upon the petitioner to show cause on or before December 1, 1959, why appropriate action should not be recommended against him for a breach of the privilege of the Speaker and the Assembly. The petitioner again instituted proceedings under article 32 of the Constitution complaining that the motion adopted by the Committee of Privileges of the Bihar Legislative Assembly at its meeting held on November 23, 1959, amounted to an abridgement of his fundamental right of speech and expression guaranteed under article 19(1) (a) of the Constitution and was an " illegal and mala fide threat to the petitioner 's personal liberty in violation of article 21 of the Constitution of India and that the Committee of Privileges, respondent No. 2 had no jurisdiction or authority to proceed against the petitioner as threatened by the notice aforesaid ". The grounds of attack raise substantially the same questions that were agitated on the previous occasions in this Court. It was contended before us that the petitioner, as a citizen of India, had the fundamental right of freedom of speech and expression which included the freedom of obtaining the earliest and most correct intelligence of the events of the time including the proceedings of a Legislature and publishing the same and that no Legislature of a State could claim a privilege so as to curtail that right. It was, therefore, contended that the majority decision of this Court in Pt. M. section M. Sharma vs Shri Sri Krishna Sinha (1) was wrong. In this connection it was also contended that (1) [1959] SUPP. 1 S.C.R. 806. 102 the rule of construction adopted by this Court in its pre vious decision had been wrongly applied. It was further contended that even if the House of a State Legislature had the same powers, privileges and immunities as those of the House of Commons, those will be only such as were being actually exercised at the date of the commencement of the Constitution and the right to prevent publication of its proceedings was not one of those powers, privileges or immunities. An appeal was also made to article 21 of the Constitution and it was contended that no citizen could be deprived of his personal liberty, except in accordance with the procedure established by law. Hence, it was further contended that the malafide act of respondents 1 and 2 calling upon the petitioner to show cause was a threat to his fundamental right, and, finally, it was contended that after several prorogations, the previous proceedings for breach of privilege were dead and the House of the Assembly had, therefore, no power or jurisdiction to issue the fresh notice in accordance with the motion of November 23, 1959, reviving the proceedings. It will thus appear that in the present proceedings also the very same questions which were discussed and decided in Writ Petition No. 122 of 1958 are sought to be raised once again. In effect, it is sought to be argued that the previous decision of this Court has proceeded on a wrong appreciation of the legal position. In short, it is insisted that the petitioner has the fundamental right of publishing the proceedings of the Bihar Legislature and that the Legislature has no power to restrict or control the publication of its proceedings. The Government Advocate of Bihar, on behalf of the opposite party, has contended, in the first instance, that the present writ petition against the parties, namely, the Chairman and the Members of the Committee of Privileges, respondents 1 and 2, is barred by the principle of res judicata and, therefore, not maintainable. His contention also is that the writ cannot issue either against an individual member or against the House of the Legislature as a whole in 103 respect of what has been done by it in exercise of its privilege of prohibiting or, at any rate, controlling the publication of its proceedings. On behalf of the petitioner it was contended by Mr. Basudeva Prasad that respondent No. 2, the, Committee of Privileges, has been reconstituted as aforesaid after the first decision of this Court which is sought to be availed of as res judicata and that therefore the rule of res judicata is inapplicable. In this connection it may be pointed out that in Writ Petition No. 122 of 1958, Sri Krishna Sinha, Chief Minister of Bihar, was impleaded as opposite party No. 1 in his capacity as the Chairman of the Committee of Privileges of the Bihar Legislative Assembly and opposite party No. 2 was cited as Committee of Privileges, Bihar Legislative Assembly, without any names being given. In the present writ petition, opposite party No. 1 is the same. Opposite party No. 2 is impleaded as the (New) Committee of Privi leges of Bihar Legislative Assembly and then a number of names are given including that of Dr. Sri Krishna Sinha, the Chief Minister, as Chairman. Would it make any difference that though opposite party No. 2 is the Committee of Privileges, its personnel is different from that of the Committee of Privileges constituted as it was in 1958 ? In our opinion, it does not make any difference. So long as the Assembly remains the same it is open to the Assembly to reconstitute its Committees according to the exigencies of the business of the Assembly. The Committee of Privileges is one of the agencies through which the Assembly has to transact its business. It is really the Assembly as a whole which is proceeding against the petitioner in purported exercise of its powers, privileges and immunities as held by this Court in its judgment in Writ Petition No. 122 of 1958. This Court has laid it down in the case of Raj Lakshmi Dasi vs Banamali Sen (1) that the principle underlying res judicata is applicable in respect of a question which has been raised and decided after full contest, even though the first Tribunal which decided (1) ; 104 the matter may have no jurisdiction to try the subsequent suit and even though the subject matter of the dispute was not exactly the same in the two proceedings. In that case the rule of res judicata was ,applied to litigation in land acquisition proceedings. In that case the general principles of law bearing on the rule of res judicata, and not the provisions of section 1 1 of the Code of Civil Procedure, were applied to the case. The rule of res judicata is meant to give finality to a decision arrived at after due contest and after hearing the parties interested in the controversy. There cannot be the least doubt that, though eo nomine opposite party No. 2 were not the same, but there is no escape from the conclusion that the Committee of Privileges is the same Committee irrespective of its personnel at a given time so long as it was a Committee constituted by the same Legislative Assembly. The question decided by this Court on the previous occasion was substantially a question affecting the whole Legislature of the State of Bihar and was of general importance and did not depend upon the particular constitution of the Committee of Privileges. It cannot, therefore, be said that the question decided by this Court on the previous occasion had not been fully debated and had not been decided after due deliberation. That there was difference of opinion and one of the Judges constituting the Court held another view only shows that there was room for difference of opinion. It was a judgment of this Court which binds the petitioner as also the Legislative Assembly of Bihar. For the application of the general principles of res judicata, it is not necessary to go into the question whether the previous decision was right or wrong. In our opinion, therefore, the questions determined by the previous decision of this Court cannot be reopened in the present case and must govern the rights and obligations of the parties which, as indicated above, are substantially the same. It is manifest, therefore, that the petitioner has no fundamental right which is being threatened to be infringed by the proceedings taken by the opposite party. It now remains to consider the other subsidiary 105 questions raised on behalf of the petitioner. It was contended that the procedure adopted inside the House of the Legislature was not regular and not strictly in accordance with law. There are two answers to this contention, firstly, that according to the previous decision of this Court, the petitioner has not the fundamental right claimed by him. He is, therefore, out of Court. Secondly, the validity of the proceedings inside the Legislature of a State cannot be called in question on the allegation that the procedure laid down by the law had not been strictly followed. Article 212 of the Constitution is a complete answer to this part of the contention raised on behalf of the petitioner. No Court can go into those questions which are within the special jurisdiction of the Legislature itself, which has the power to conduct its own business. Possibly, a third answer to this part of the contention raised on behalf of the petitioner is that it is yet premature to consider the question of procedure as the Committee is yet to conclude its proceedings. It must also be observed that once it has been held that the Legislature has the jurisdiction to control the publication of its pro ceedings and to go into the question whether there has been any breach of its privileges, the Legislature is vested with complete jurisdiction to carry on its proceedings in accordance with its rules of business. Even though it may not have strictly complied with the requirements of the procedural law laid down for conducting its business, that cannot be a ground for interference by this Court under article 32 of the Constitution. Courts have always recognised the basic difference between complete want of jurisdiction and improper or irregular exercise of jurisdiction. Mere non compliance with rules of procedure cannot be a ground for issuing a writ under article 32 of the Constitution vide Janardan Reddy vs The State of Hyderabad (1). It was also sought to be argued that the subjectmatter of the proceedings in contempt, whatever it was, took place more than three years ago, and that, therefore, it has become much too stale for proceeding (3) ; 14 106 against the petitioner in contempt. In our opinion, this is also a matter within the jurisdiction of the legislature which must decide whether or not it was recent enough to be taken serious notice of, or whether any punishment in the event of the petitioner being found guilty is called for. These are matters with which this Court is in no way concerned. Mr. Lal Narain Sinha, the Government Advocate of Bihar, who appeared on behalf of the respondents, informed the Court that the Legislature was interested more in the vindication of its constitutional rights than in inflicting any punishment on the petitioner. Hence, no more need be said on this aspect of the matter. It remains to consider one other point sought to be made on behalf of the petitioner that the Assembly had no power to proceed against the petitioner for breach of privilege in May, 1957 when we know as a fact that the Assembly was prorogued several times between May 31, 1957 and November 23, 1959. In our opinion, there is no substance in this contention, for the simple reason that the prorogation of the Assembly does not mean its dissolution. The House remains the same; only its sessions are interrupted by prorogation of the House according to the exigencies of public demands on the time and attention of the members of the Assembly and the volume of business of the Assembly itself. In this connection reliance was placed on the following passage in May 's Parliamentary Practice, 16th Edition, p. 279 " The effect of a prorogation is at once to suspend all business until Parliament shall be summoned again. Not only are the sittings of Parliament at an end, but all proceedings pending at the time are quashed, except impeachments by the Commons and appeals before the House of Lords. Every bill must therefore be renewed after a prorogation, as if it were introduced for the first time. " The observations quoted above do not support the extreme contention raised on behalf of the petitioner that the proceedings in contempt are dead for all time. The effect of the prorogation only is to interrupt the proceedings which are revived on a fresh motion to 107 carry on or renew the proceedings. In this case, it is not necessary to pronounce upon the question whether dissolution of the House necessarily has the effect, of 2 completely wiping out the contempt or the proceedings relating thereto. In our opinion, for the reasons given above, no grounds have been made out for the exercise by this Court of its powers under article 32 of the Constitution. The petition is accordingly dismissed. There will be no order as to costs. Petition dismissed. [/INST] The petitioner, the Editor of the Searchlight, an English daily newspaper published from Patna, was called upon to show cause before the Committee of Privileges of the Bihar Legislative Assembly why he should not be proceeded against for the breach of privilege of the Speaker and the Assembly for publishing an inaccurate account of the proceedings of the Legislative Assembly. He moved this Court under article 32 of the Constitution for quashing the said proceeding and the question for decision in substance was whether the said privilege conferred by article 194(3) of the Constitution was subject to the fundamental 97 rights of a citizen under article 19(1)(a) of the Constitution. This Court by a majority found against the petitioner. Thereafter the Assembly was prorogued several times, the Committee of Privileges reconstituted and a fresh notice was issued to the petitioner. By the present petition the petitioner in substance sought to reopen the decision, raise the same controversy once again and contend that the majority decision was wrong. The question was whether he could be allowed to do so. Held, that the general principles of res judicata applied and the judgment of this Court could not be allowed to be reopened and must bind the petitioner and the Legislative Assembly of Bihar and the reconstitution of the Committee of Privileges in the meantime could make no difference. Raj Lakshmi Dasi vs Banamali Sen, ; , applied. Since this Court had held that the Legislature bad the power to control the publication of its proceedings and punish any breach of its privilege, there could be no doubt that it had complete jurisdiction to carry on its proceedings in accordance with its rules of business and a mere non compliance with rules of procedure could be no ground for interference by this Court under article 32 of the Constitution. Janardan Reddy vs The State of Hyderabad, ; , referred to. Prorogation of the Assembly does not mean its dissolution and the only effect it has is to interrupt its proceedings which can be revived on a fresh motion to carry on or renew them. It was, therefore, not correct to contend that since the Assembly was prorogued several times since after the alleged breach of privilege, the proceeding must be deemed to be dead. </s>

<s>[INST] Summarize the following judgement: ew Petition No. 37 of 1959. Petition for Review of this Court 's judgment and order dated October 29, 1959, in Civil Appeal No. 38 of 1958. C. K. Daphtary, Solicitor General of India, B. Sen, J. B. Mehta and J. B. Dadachanji, for the petitioner. N. C. Chatterjee and section section Shukla, for respondents. J. B. Mehta and J. B. Dadachanji, for interveners Nos. 1 to 13. J. B. Dadachanji, for interveners Nos. 14 to 19. 1960. August 3. The Judgment of the Court was delivered by WANCHOO J. This is an application for review of the judgment delivered by this Court, to which three of us were party, on October 29, 1959. The ground on which review is sought is that there are mistakes and/ or errors apparent on the face of the record and therefore the judgment in question should be reviewed. The petitioner contends further that the judgment under review had dealt with the matter of issue of writs by High Courts under article 226 of the Constitution and this involved a question which could only have been dealt by a bench of not less than five judges and that is why the review application has been placed before a bench of five judges. Lastly it is contended that this Court should have decided the question of jurisdiction as various. other parties had agreed to be governed by the decision in this case and that would have saved multiplicity of proceedings. 115 Before we deal with the points urged in support of the petition we should like to state what exactly has been decided by the judgment under review. The appeal in which the judgment under review was given came up before the Court on special leave granted under article 136 of the Constitution from a decision of the Bombay High Court in a writ petition filed there under article 226 against an order of the Payment of Wages Authority. The question of jurisdiction of the Payment of Wages Authority was raised before this Court and reliance in that connection was placed on the decision in A. V. D 'Costa vs B. C. Patel and another(1). It was remarked in the judgment under review that there appeared to be some force in the contention relating to the jurisdiction of the Payment of Wages Authority; but this Court did not go further and decide that question on the view that as there had been no failure of justice this Court would not interfere under its powers under article 136 of the Constitution, particularly as the matter came before it from a decision of the Bombay High Court and not directly from the Authority. In that connection reference was made to the case of A. M. Allison vs B. L. Sen (2), in which in similar circumstances this Court had refused to decide the question of jurisdiction, because it was satisfied that there had been no failure of justice. All that therefore the judgment under review decided was that where this Court is of the view that there is no failure of justice it is not bound to interfere under its powers under article 136 of the Constitution. Reference to Allisons ' Case (2) was made only to show that in almost similar circumstances (except that Allison 's Case came to this Court on a certificate granted under article 133(1) (c) of the Constitution), this Court had refused to decide the question of jurisdiction as there was no failure of justice. The judgment under review did not deal with the powers of the High Court under article 226 of the Constitution and nowhere laid down anything in conflict with the previous decision of this Court in H. V. Kamath vs Syed Ahmad Ishaque and others(3). (1) ; (2) ; (3) ; 116 Thus the narrow point decided by the judgment under review was that when dealing with an appeal under article 136 of the Constitution this Court comes to the conclusion %that there is no failure of justice, it is not bound to decide and interfere even when a question of jurisdiction of the original court or tribunal is raised in a case where the matter had been considered by a higher tribunal, which undoubtedly had jurisdiction, and the appeal to this Court is from the decision of the higher tribunal. This being the decision of this Court in the judgment under review, let us see if there is any reason to review that judgment on the grounds urged in the petition. Before we consider the main ground in support of the review we should like to observe that the fact that other parties had agreed to be governed by the decision in the judgment under review can be no ground for review. Are there then such mistakes and/ or errors apparent on the face of record which would justify a review? It is said that in dealing with whether there has been failure of justice in this case, this Court omitted to consider certain provisions of the Bombay Industrial Relations Act, 1946. Assuming this to be correct, the question still is whether even after a consideration of those provisions the decision of this Court on the question of failure of justice would have been different. On a further consideration of the reasons given in the judgment under review for holding that there was no failure of justice we feel that the decision on this point would have been still the same even if the provisions referred to had been considered. In the circumstances we are of opinion that there is no ground for review of the judgment even if it be assumed that certain provisions of the Bombay Industrial Relations Act, 1946, were relevant and had not been considered. The main plank however of the petitioner is that this Court was bound to consider the question of jurisdiction and the question whether there was failure of justice or not was bound up with the question of jurisdiction and a decision on that question was necessary to arrive at the conclusion that there was no 117 failure of justice. This contention also must in our opinion be rejected, specially in the context of the narrow point which, as we have already indicated, was decided in the judgment under review. Besides it is not unknown to law that decisions of original courts and tribunals may be allowed to stand even though there may be some doubt as to the jurisdiction of such courts or tribunals. There are provisions in the revenue laws where in case of doubt whether the civil court or the revenue court has jurisdiction the decision of the original court is allowed to stand in certain circumstances if there has been no failure of justice : (see, for example, sections 290 and 291 of the U. P. Tenancy Act, 1939). Therefore when the judgment under review left the question of jurisdiction open on the ground that there was no failure of justice and in consequence this Court refused to exercise its jurisdiction under article 136, it cannot be said that something was done which was unknown to law. It is necessary to remember that wide as are our powers under article 136, their exercise is discretionary; and if it is conceded, as it was in the course of the arguments, that this Court could have dismissed the appellant 's application for special leave summarily on the ground that the order under appeal had done substantial justice, it is difficult to appreciate the argument that because leave has been granted this Court must always and in every case deal with the merits even though it is satisfied that ends of justice do not justify its interference in a given case. In the circumstances we are of opinion that this Court was not bound to decide the question of jurisdiction on the facts and circumstances of this case when it had come to the conclusion in dealing with an appeal Under article 136 of the Constitution that there was no failure of justice. The review application therefore fails and is hereby dismissed with costs. Review application dismissed. [/INST] Where at the hearing of an appeal filed by special leave from a decision of the High Court in a Writ Petition filed there under article 226 of the Constitution of India against an order of the Payment of Wages Authority, the Court considered that there was some force in the contention relating to the jurisdiction of the Authority concerned but did not decide that question on the view that as there had been no failure of justice the Court would not interfere under its powers under article 136, and the appellant applied for a review of the judgment 15 114 Held, that wide as are the powers of the Supreme Court under article 136 of the Constitution, its powers are discretionary and though special leave had been granted the Court was not bound to decide the question of jurisdiction of the inferior tribunal or court where the decision of the inferior tribunal or court had been taken to a higher tribunal which undoubtedly had jurisdiction and from the decision of which the special leave was granted if on the facts and circumstances of the case it came to the conclusion in dealing with the appeal under that Article that there was no failure of justice. A. M. Allison vs B. L. Sen, ; , relied on. </s>

<s>[INST] Summarize the following judgement: Appeal No. 261 of 1958. Appeal by special leave from the judgment and order dated November 6, 1956, of the Mysore High Court in Writ Petition No. 215 of 1956. section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellants. K. N. Rajagopal Sastri and D. Gupta, for the respondent. July 22. The Judgment of the Court was delivered by HIDAYATULLAH J. This appeal has been filed with the special leave of this Court against a decision of the High Court of Mysore, by which it dismissed in limine an application by the appellants under article 226 of the Constitution for a writ of prohibition or some other appropriate writ against the Income tax Officer, Bellary, Special Circle, Bangalore. The facts of the case are as follows. For the assessment year 1948 49, the appellants failed to file a return within the prescribed time and the Income tax Officer, acting under section 28(1)(a) of the Indian Incometax Act, issued a notice to them to show cause why penalty should not be imposed. In answer to this notice, the appellants filed a written reply and the Income tax Officer proceeded to levy a penalty of Rs. 16,000, without affording a hearing to them as required by the third sub section of section 28 of the Income tax 73 Act. The matter was taken up in appeal before the Appellate Assistant Commissioner of Income tax, who, pointing out that an opportunity of being heard was not granted to the appellants, held that the order was defective. He therefore set aside that order and directed the refund of the penalty if it had been recovered. On receipt of the order, the Income tax Officer issued a further notice calling upon the appellants to appear before him, so that they might be given an opportunity of being heard. He also intimated that if no appearance was made, then he would proceed to determine the question of penalty, taking into consideration only the written statement which had been filed earlier. Before, however, the Income tax Officer could decide the case, the appellants filed a petition under article 226 of the Constitution for the issuance of the writs mentioned above. This petition was dismissed in limine by the High Court holding that the contention raised by the appellants may perhaps be raised before the Income tax authorities. The appellants thereupon applied for special leave to this Court and leave having been granted, this matter comes up before us. There is no question here that the requirements of section 28(1)(a) of the Income tax Act were not completely fulfilled. If the appellants had not filed their return, as they were required by law to do, the omission would attract cl. (a) of sub section (1) of section 28. We say nothing as to that. Sub section (3) of section 28, however, requires that the penalty shall not be imposed without affording to the assessee a reasonable opportunity of being heard. This opportunity was denied to the appellants and therefore the order of the Income tax Officer was vitiated by an illegality which supervened, ,not at the initial stage of the proceedings, but during the course of it. The order of the learned Appellate Assistant Commissioner pointed out the ground on which the illegality proceeded and his order directing the refund of the penalty, if recovered, connot but be interpreted as correcting the error and leaving it open to the Income tax Officer to continue his proceedings from the stage at which the illegality occurred. 10 74 No express remand for this purpose, as is contended, was necessary. Our attention was drawn to a decision of a learned Single Judge of the Kerala High Court reported in Jos Chacko Poothokaran vs I. T. O., Ernakulam Circle(1), in which, in similar circumstances, it has been held that since an appeal was not taken by the Commissioner of Income tax to the Appellate Tribunal under sub section (2) of section 33, the order of the Appellate Assistant Commissioner became final and the Incometax Officer could no longer proceed to reassess the penalty. The reason given is, in our opinion, beside the point. What the Appellate Assistant Commissioner did was to vacate the order and direct refund of the penalty in view of an illegality which had occurred during the course of the assessment proceedings. On receipt of the record it was open to the Incometax Officer to take up the matter from the point at which the illegality supervened and to correct his proceedings. It was pointed out in the course of the statement of the case by the appellants that such proceedings could only be taken during the course of assessment proceedings and those proceedings are concluded. In our opinion, the notice issued to the appellants to show cause why penalty should not be imposed on them did not cease to be operative, because the Appellate Assistant Commissioner pointed out an illegality which vitiated the proceeding after it was lawfully initiated. That notice having remained still to be disposed of, the proceedings now started can be described as during the course of the assessment proceedings, because the action will relate back to the time when the first notice was issued. In our opinion, the Income tax Officer is well within his jurisdiction to continue the proceedings from the stage at which the illegality has occurred and to assess the appellants to a penalty, if any, which the circumstances of the case may require. The appeal is accordingly dismissed with costs. Appeal dismissed. [/INST] The appellants failed to file their return within the prescribed time and on a notice issued under section 28(1)(a) of the Indian Income tax Act, 1922, to show cause why penalty should not be imposed on them, they filed a written reply. Without affording them an opportunity of being heard as required by section 28(3) of the Act the Income tax Officer imposed a penalty on them. On appeal the Appellate Assistant Commissioner set aside the order and directed refund of the penalty. Thereafter the Income tax Officer issued a further notice giving an opportunity to the appel lants of being heard. The appellants objected to this notice and 72 contended that the Income tax Officer could no longer proceed to re assess the penalty in the absence of an express order of remand by the Appellate Assistant Commissioner whose order had become final. Held, that where an order of imposition of penalty made by the Income tax Officer under section 28(1)(a) of the Indian Incometax Act was vitiated, not by any initial illegality but by one which supervened during the course of the proceedings and the said order was vacated on appeal, the Income tax Officer was well within his jurisdiction in continuing the proceedings from the stage at which the illegality had occurred and could re assess the penalty though no express order of remand was made. Jos Chacko Poothokaran vs Income tax Officer, Ernakulam Cir cle, , not applied. </s>

<s>[INST] Summarize the following judgement: Appeal No. 235 of 1958. 12 90 Appeal from the judgment and decree dated October 18,1956, of the former PEPSU High Court in Regular First Appeal No. 11 of 1954, arising out of the judgment and decree dated November 21, 1953, of the Additional District Judge, Patiala. Gopal Singh and K. B. Krishnaswamy, for the appellant. N. section Bindra and D. Gupta, for the respondent. July 28. The Judgment of the Court was delivered by DAS GUPTA J. The appellant Dalip Singh entered the service of the Patiala State in 1916 and rose to the rank of Inspector General of Police of the State in June 1946. After the formation of the State of Pepsu he was absorbed in the Police Service of the newly formed State and was appointed and confirmed as Inspector General of Police thereof. While holding that post he proceeded on leave from October 18, 1949, till August 17, 1950. On August 18, 1950, an order was made by the Rajpramukh of the State in these words: " His Highness the Rajpramukh is pleased to retire from service Sardar Dalip Singh, Inspector General of Police, Pepsu (on leave) for administrative reasons with effect from the 18th August, 1950. " A copy of this order was forwarded to the appellant. Thereupon on August 19, 1950, the appellant wrote to the Chief Secretary of the State stating that by his retirement he would be put to heavy loss, i.e., about Rs. 50,000 which he would have earned as his pay and allowances etc., during this period and that his pension was also being affected and that this decision of the Government tantamounts to his removal from service. He requested that the Government should let him know the grounds which had impelled the Government to take this decision about his removal. Ultimately on March 30, 1951, the Government mentioned the charges against him on the basis of which the Government had decided to retire him on administrative grounds. After service of notice under 91 s.80 of the Code of Civil Procedure the appellant brought a suit in the Court of the District Judge, Patiala, against the State of Pepsu asking for a declaration that the orders of August 16, 1950, and August 18, 1950, whereby " the plaintiff has been removed from the post of Inspector General of Police, Pepsu, are unconstitutional, illegal, void, ultra vires and inoperative and that the plaintiff still continues to be in the service of the defendant as Inspector General of Police and is entitled to the arrears of his pay and allowances from August 18, 1950, and is also entitled to continue to draw his pay and allowances till his retirement at the age of superannuation ; and a decree for the recovery of Rs. 26,699 130 and full costs of this suit and future interest. " The main plea on which the suit was based was that the order of August 18, 1950, amounted to his removal from service within the meaning of article 311(2) of the Constitution and the provisions of that article not having been complied with the termination of his service was void and inoperative in law. The respondent State contended that the plaintiff had been retired from service and had not been removed from service and so article 311 of the Constitution had no application. On this question the trial Court came to the conclusion that the order compulsorily retiring the plaintiff amounted to his removal within the meaning of article 311 of the Constitution and as the requirement of that Article had not been complied with it held that the termination of service effected by that order was void in law. The Court accordingly decreed the suit in favour of the plaintiff declaring that the orders of the Government dated August 18, 1950, whereby the plaintiff had been remo ved from the post of Inspector General of Police, Pepsu, are unconstitutional, illegal, void and ultra vires and inoperative and that the plaintiff still continued to be in the service of the defendant as Inspector General of Police and he his entitled to the arrears of his pay and allowances from August 18, 1950 and is also entitled to continue to draw his pay and allowance 92 till his retirement at the age of superannuation and a decree for the recovery of Rs. 26,699 13 0. On appeal by the State the Pepsu High Court disagreeing with the Trial Court held that the order of compulsory retirement did not amount to removal from service within the meaning of article 311 of the Constitution and accordingly allowed the appeal and dismissed the plaintiffs suit. The main contention of the plaintiff before us was that the order of retirement did amount to his removal from service within the meaning of article 311 of the Constitution. The learned counsel also wanted to argue that Rule 278 of the Patiala State Regulations under which the Government apparently made the order of compulsory retirement was no longer operative. It appears that the Patiala State Regulations which continued to govern the members of the services of that State after they became integrated into the Pepsu State Services were revised from time to time. It was suggested by the learned counsel that the revised rules do not contain any rules similar to Rule 278. Rule 278 of the Patiala State Regulations was in the following words: " 278. For all classes of pensions the pet son who desires to obtain the pension is required to submit his application before any pension is granted to him. The State reserves to itself the right to retire any of its employees on pension on political or on other reasons. " The learned counsel though wanting to persuade us that the Rule about the State reserving to itself the right to retire any of its employees on pension on political or on other reasons was not present in the new rules was unable to show us however that before August 18, 1950, there had been any revision of Rule 278. It appears that revised rules for Travelling Allowance were published in 1946 as Vol. II of the new ruler,; and Rules relating to pay and allowances were published as Vol. I in 1947. Thereafter in 1952 we find that the first volume of the Pepsu Service Regulations as regards pay and leave rules was published. In the same year the third volume of the Pepsu State 93 Regulations containing rules relating to pensions was published. In the preface to this volume we find this statement : " The Revised Edition of the Patiala State Regulations relating to pay, allowances, leave, pension and travelling allowance was published in the year 1931. Subsequently the travelling allowance rules were revised and issued as Patiala Service Regulations, Vol. II, in the year 1946. Similarly the pay, allowances and leave rules were taken out from the Revised Edition (1931) and printed as Patiala Services Regulations, Volume 1, in the year 1947. The other rules relating to pensions continued to remain in the Revis ed Edition (1931) and kept upto date by the issue of correction slips. On the formation of the Patiala & East Punjab States Union on 20 8 48, these rules were made applicable to the entire territories of the Union by Ordinance No. 1 of 2005. The number of copies of this publication available for official use had run out of stock and great difficulty has been experienced in Government offices for want of it for reference. It was. therefore found necessary to revise and reprint this publication to make it available to all offices. " This makes it clear that upto the publication in 1952 of Volume III of the Pepsu Service Regulations the pension rules appearing in the 1931 edition of the Patiala State Regulations continued to be applicable to Pepsu. On August 18, 1950, therefore it is reasonable to hold that Rule 278 in its entirety remained in force and was applicable to Pepsu. It is interesting to mention that in this 1952 edition also this reservation by the Government of the " right to retire any of its employees on pension on political or on other reasons " has been maintained (Vide Chapter V, Rule 10). The contention of the learned counsel that Rule 278 was not applicable to the case of the appellant on August 18, 1950, is therefore totally without foundation. This brings us to the main contention in the case. viz., that the compulsory retirement of the appellant under Rule 278 of the Patiala State Regulations was a removal from service within the meaning of article 311 of the Constitution. The question whether the 94 termination of service by compulsory retirement in accordance with Service Rules amount to removal from service was considered by 'his Court in Shyamlal vs The State of U. P. and the Union of India (1) and again recently in State of Bombay V. Subhagchand D08hi (2). The Court decided in Shyam Lal 's Case (1) that two tests had to be applied for ascertaining whether a termination of service by compulsory retirement amounted to removal or dismissal so as to attract the provisions of article 311 of the Constitution. The first is whether the action is by way of punishment and to find that out the Court said that it was necessary that a charge or imputation against the officer is made the condition of the exercise of the power; the second is whether by compulsory retirement the officer is losing the benefit he has already. earned as he does by dismissal or removal. In that case in fact a charge sheet was drawn up against the officer and an enquiry held but ultimately the order of compulsory retirement was not based on the result of the enquiry. The Court pointed out that the enquiry was merely to help the Government to make up its mind as to whether it was in the public interest to dispense with his services so that the imputation made in the charge sheet was not being made the condition of the exercise of the power. These tests were applied in Doshi 's Case (2) and it was held that the provisions of compulsory retirement under Rule 165.A of the Saurashtra Civil Service Rules under which the order of retirement was made there was not violative of article 311(2). It was pointed out that " while misconduct and inefficiency are factors that enter into the account where the order is one of dismissal or removal or of retirement, there is this difference that while in the case of retirement they merely furnish the background and the enquiry, if held and there is no duty to hold an enquiry is only for the satisfaction of the authorities who have to take action, in the case of dismissal or removal, they form the very basis on which the order is made and the enquiry thereon must be formal, and must satisfy (1) ; (2) ; 95 the rules of natural justice and the requirements of article 311(2) ". In the case before us the order of the Rajpramukh does not purport to be passed on any charge of misconduct or inefficiency. All it states is that the compulsory retirement is for " administrative reasons. " It was only after the appellant 's own insistence to be supplied with the grounds which led to the decision that certain charges were communicated to him. There is therefore no basis for saying that the order of retirement contained any imputation or charge against the officer. The fact that considerations of misconduct or inefficiency weighed with the Government in coming to its conclusion whether any action should be taken under Rule 278 does not amount to any imputation or charge against the officer. Applying the other test, viz., whether the officer has lost the benefit he has earned, we find that the officer has been allowed full pension. There is no question of his having lost a benefit earned. It may be pointed out that Rule 278 itself provides for retirement on pension. If the provision had been for retirement without pension in accordance with the rules there might have been some reason to hold that the retirement was by way of punishment. As however the retirement can only be on pension in accordance with the rules in the present case full pension has been granted to the officer the order of retirement is clearly not by way of punishment. In Doshi 's Case (1) there is at p. 579 an observation which might at first sight seem to suggest that in the opinion of this Court compulsory retirement not amounting to dismissal or removal could only take place under a rule fixing an age for compulsory retirement. We do not think that was what the Court intended to say in Doshi 's Case(2). In Doshi 's Case(3) there was in fact a rule fixing an age for compulsory retirement, at the age of 55, and in addition another rule for compulsory retirement after an officer had completed the age of 50 or 25 years of service. It was in that context that the Court made the above (1) ; 96 observation. It had not in that case to deal with a rule which did provide for compulsory retirement, at any age whatsoever irrespective of the length of service put in. It will not be proper to read the observations in D08hi 's Case referred to above as laying down the law that retirement under the rule we are considering must necessarily be regarded as dismissal or removal within the meaning of article 311. We are therefore of opinion that the High Court was right in holding that the order of compulsory retirement made against the appellant was not removal from service so as to attract the provisions of article 311 of the Constitution and that the suit was rightly dismissed. The appeal is accordingly dismissed with costs. Appeal dismissed. [/INST] The appellant was compulsorily retired from service by the Rajpramukh of Pepsu by an order dated August 18, 1950, which was as follows: His Highness the Rajpramukh is pleased to retire from 89 service Sardar Dalip Singh, Inspector General of Police, Pepsu (on leave) for administrative reasons with effect from the 18th August, 1950." No charges Were framed against him and it was on his insist ence that certain charges were communicated to him. Rule 278 of the Patiala State Regulations, 1931 which was then in force, provided as follows : " 278. For all classes of pensions of person who desires to obtain the pension is required to submit his application before any pension is granted to him. The State reserves to itself the right to retire any of its employees on pension on political or on other reasons. " The question for determination in the appeal was whether the compulsory retirement of the appellant amounted to removal or dismissal from service within the meaning of article 311(2) of the Constitution. The trial Court held in favour of the appellant and the High Court against him, Held, that the two tests laid down by this Court for deter mining whether an order of compulsory retirement amounted to removal or dismissal from service were (1) whether it was by way of punishment, a charge or imputation against the officer, being made the basis of the exercise of the power, and (2) whether the officer was deprived of any benefit already earned as in a case of dismissal or removal. Shyamlal vs State of U. P., ; and State of Bombay vs Subhagchand Doshi, ; , referred to. So judged, the order passed against the appellant could not amount to dismissal or removal from service within the meaning of article 311(2) of the Constitution. The order was not one purported to have been made on any charge of misconduct or inefficient and the fact that any such considerations might have weighed with the Government in passing the order under Rule 278 did not amount to any imputation or charge against the officer, and there could be no question of losing any benefit earned since the Rule itself provided for retirement on pension and the officer had in fact been allowed full pension. It would not be correct to say that since the Rule did not fix any age for compulsory retirement, an order of compulsory retirement passed under it must necessarily be regarded as dismissal or removal within the meaning of article 311(2) of the Constitution. State of Bombay vs Subhagchand Doshi, ; , ex plained. </s>

<s>[INST] Summarize the following judgement: Appeal No. 306 of 1957. Appeal from the judgment and order dated April 28, 1955, of the Allahabad High Court (Lucknow Bench), Lucknow, in Civil Misc. Application No. 59 of 1954. C. B. Agarwala, C. P. Lal and G. N. Dikshit, for the appellants. section P. Sinha and B. R. L. Iyengar, for the respondent. July 28. The Judgment of the Court was delivered by 84 SHAH ' J. Raja Syed Mohammad Saadat Ali Khan, who will hereinafter be referred to as " the assessee ", is the owner of Taluqa Nanpura in district Bahraich and Taluqa Mohammadi in district Kheri, in the State of Uttar Pradesh. The legislature of the United Provinces enacted the United Provinces Agricultural Income tax Act, Act III of 1949, authorising imposition of a tax on agricultural income within the State. By section 3 of the Act, the liability to pay agricultural income tax and super tax at rates specified in the schedule therein was charged on the total agricultural income of the previous year of every person. By section 14, the Collector and the Assistant Collector were for the purposes of the Act declared to be the assessing authorities within their respective revenue jurisdictions. As originally enacted, by section 2(4), the expression " Collector " was to have the same meaning as in the United Provinces Land Revenue Act, 1901. By section 44, the Provincial Government was empowered to make rules for carrying out the purposes of the Act, and in particular, amongst others, " to prescribe the authority by whom and the place at which assessment shall be made in the case of assessee having agricultural income in the jurisdiction of more than one assessing authority " By r. 18, el. 1(a), framed by the Government, in exercise of the powers under section 44, it was provided, in so far as it is material, that subject to sub section 2 of section 14, an assessee shall ordinarily be assessed by. the Collector of the district in which he permanently resides. The State Government of Uttar Pradesh (the former United Provinces) by Notification dated June 8, 1953, appointed one K. C. Chaudhry under sub section 1 of section 14(A) of the United Provinces Land Revenue Act III of 1901 to be the Additional Collector in district Bahraich and authorised him to exercise all the powers and perform all the duties of a Collector " in all classes of cases ". Claiming to exercise the authority of the Collector tinder section 14 of Act III of 1949, the Additional Collector by order dated February 25, 1954, assessed the assessee 's net agricultural income at Rs. 2,81,110 10 3 and ordered him to pay Rs. 1,36,390 2 0 as agricultural income tax and super tax. 85 The validity of this order was challenged by the assessee by an application under article 226 of the Constitution presented before the High Court of Judicature at Allahabad. The contention of the assessee that the Additional Collector of Bahraich was not an authority competent bylaw to assess the agricultural income tax under Act III of 1949 was upheld by the High Court. The High Court issued a writ of certiorari quashing the order of the Additional Collector, because in its opinion, where property of an assessee is situate in several districts, the Collector as the assessing authority under Act III of 1949 exercises "extra territorial" jurisdiction, but as K. C. Chaudury, the Additional Collector was not invested with that extraterrestrial jurisdiction, the impugned proceeding assessing agricultural income tax was unauthorised. The State of Uttar Pradesh obtained from the High Court leave to appeal to this court against the order quashing the assessment. On behalf of the State of Uttar Pradesh, it is urged that an Additional Collector by virtue of section 14(A) of the United Provinces Land Revenue Act III of 1901, is competent to exercise all such powers and perform all such duties of a Collector in cases or classes of oases as the State Government may direct, and the State Government having invested Mr. Chaudhri the Additional Collector with authority to exercise all the powers and to perform all the duties of a Collector " in all classes of cases ", that officer could exercise the powers of the Collector under Act III of 1901, including, what the High Court called the " extraterritorial " powers. It is unnecessary to express any opinion on this argument, because the legislature of the State of Uttar Pradesh, has, since the judgment delivered by the High Court in this group of cases, amended the United Provinces Agricultural Incometax Act (U. P. Act III of 1949) by Act XIV of 1956, giving retrospective operation to the amending provisions. By the amendment, cl. 4 of section 2 of the original Act, has been substituted by two clauses, cl. 4 and cl. 4 a, and el. 4 a enacts that the expression " Collector " shall have and shall be deemed always to have 86 the meaning as in the U. P. Land Revenue Act, 1901 and will include an Additional Collector appointed under the said Act. By section 10(1)(b), all orders made, actions or proceedings taken, directions issued or jurisdictions exercised under or in accordance with the provisions of the Principal Act or of any rule an framed thereunder prior to the amendment of that Act are to be deemed always to be as good and valid in law as if the amending Act had been in force at all material dates. By section 10, sub section 1(a), of the amending Act, it is provided that in r. IS of the U. P. Agricultural Income Tax Rules, 1949, the expression " Collector " shall be deemed to have included an Additional Collector: and it is enacted by sub section 2 of that section that where any question arose as to the validity or legality of any assessment made by an Additional Collector in purported exercise of the powers under section 14 or of the rules framed under cl. (o) of sub section 2 of section 44 of Act III of 1949, the same shall be determined as if the provisions of this amending Act had been in force at all material dates. By the amending Act, the legislature has enacted in language which is clear and explicit that assessment proceedings held by an Additional Collector who is invested with the powers of a Collector under Act III of 1901 shall be deemed always to have been properly taken. This court is seized of an appeal from the order of the High Court quashing the assessment on the ground that the Additional Collector had no extra territorial authority to assess agricultural income tax. It is true that Act III of 1949 was amended after the High Court delivered its judgment; but in dealing with this appeal, we are bound to consider the amended law as it stands today (and which must be deemed to have so stood at all material times) and to give effect to it, having regard to the clearly expressed intention of the legislature in the amended provisions. Accordingly we hold that the Additional Collector was competent to assess the liability of the assessee to pay agricultural income tax and super tax under the United Pro vinces Agricultural Income tax Act III of 1949. For the assessee, it is contended that before the 87 High Court an application for review of judgment was submitted by the State Government under section 11 of the amending Act, and the High Court having rejected that application and no further proceeding having been initiated in this court challenging the correctness of that decision, it is not open to us to set aside the judgment under appeal. In support of this plea, it is urged that an application for review of judgment is the only remedy available to a person aggrieved by a decision of a court or authority for rectification of an order inconsistent with the provisions of the amending Act, and if, for any reason, that application for review is not filed or is filed and rejected, it is not open to a court or authority exercising appellate powers against that decision to adjudicate the dispute in the light of the amending Act. Section 11 in so far as it is material, provides: " Where before the commencement of this Act, any court or authority has, in any proceedings under the Principal Act, set aside any assessment made by an Additional Collector merely on the ground that the assessing authority had no jurisdiction to make the assessment, any party to the proceedings may, at any time, within ninety days from the commencement of the Act apply to the court or authority for a review of the proceedings in the light of the provisions of this Act, and the court or authority to which the application is made, shall review the proceedings accordingly ". Relying on section 11, the State of Uttar Pradesh, it is true did submit an application for review of the judgment of the High Court and the High Court rejected that application observing, "That section (section 1 1) applies however only to cases in which the assessment has been set aside in any proceedings under the Principal Act. In the cases before us, the assessment has not been set aside in any proceedings under the Principal Act but in exercise of the jurisdiction vested in this court under article 226 of the Constitution. These three petitions are therefore not maintainable. . . " We need express no opinion on the correctness of 88 this view, because in our judgment, the contention of the assessee that for setting aside an adverse order inconsistent with the provisions of the amending Act of 1956, a proceeding for review under section 11 is the only remedy which is open to an aggrieved party, is without force. A court of appeal,, in an appeal properly before it, must give effect to the law as it stands if the law has at some stage anterior to the hearing of the appeal been amended retrospectively with the object of conferring upon the authority or tribunal of first instance from the order whereof the appeal is filed jurisdiction which it originally lacked: and a provision for review like the one contained in section 11 of the amending Act does not affect the power of the appellate court to deal with the appeal in the light of the amended law. In the view expressed by us, this appeal must be allowed. As the appellant succeeds relying on a statute which was enacted after the date of the judgment of the High Court, we direct that there shall be no order as to costs. Appeal allowed. [/INST] The United Provinces Agricultural Income tax Act, 1949, authorised imposition of a tax on agricultural income within the State, and the agricultural income tax and super tax were charged on the total agricultural income of the previous year of the assessee. For the purposes of the Act the Collector and the Assistant Collector were declared to be the assessing authorities within their respective revenue jurisdiction and the expression " Collector " was to have the same meaning as in the United Provinces Land Revenue Act, 1901. Under the rules framed by the government under section 44 of the Act an assessee having agricultural income in the jurisdiction of more than one assessing authority was to be assessed by the Collector of the district in which he permanently resided. The State Government of Uttar Pradesh appointed Mr. K. C. Chaudhry under subS. 1 of section 14(A) of the United Provinces Land Revenue Act, 1901 to be the Additional Collector in District Bahraich and authorised him to exercise all the powers and perform all the duties of a Collector in all classes of cases ". Claiming to exercise the 83 powers of a Collector under section 14 of the United Provinces Agricultural Income tax Act of 1949 he assessed the net agricultural income of the assessee who owned landed property in two districts, namely, Bahraich and Kheri in the State of Uttar Pradesh, at 12,81,110 10 0 and ordered him to pay Rs. 1,36,390 2 0 as agricultural income tax and super tax. The validity of this order was challenged by the assessee in the High Court by an application under article 226 of the Constitution and the High Court quashed the order of the Additional Collector holding that he had no " extra territorial " jurisdiction which was exercised by the Collector as the assessing authority in cases where the property of the assessee was situate in several districts and as such the proceeding taken by him for assessing agricultural income tax was unauthorised. After the judgment of the High Court was delivered the State Legislature amended the United Provinces Agricultural Income tax Act, 1949, by Act XIV of 1956, giving retrospective operation to the amending provisions. The Amendment Act enacted that the assessment proceedings held by an Additional Collector who was invested with the powers of a Collector under Act III of 1901 should be deemed always to have been properly taken. The State Government submitted before the High Court an application under section 11 of the amending Act for review of its judgment but it was dismiss ed. On appeal by the State Government by special leave, Held, that the Additional Collector was competent to assess the liability of the assessee to pay agricultural income .tax and super tax under the United Provinces Agricultural Income tax Act, 1949. A Court of appeal must give effect to the law as it stood at the time of hearing of the appeal if at any stage anterior to the hearing the law had been amended with retrospective effect conferring on an authority or tribunal from the order whereof the appeal is filed, jurisdiction which it originally lacked. The power of the appellate court to deal with the appeal in accordance of the amended law is not affected by a provision for review as contained in section 11 of the Amending Act. </s>

<s>[INST] Summarize the following judgement: Appeal No. 216 of 1954. Appeal from the judgment and decree dated September 26,1946, of the former Chief Court of Avadh at Lucknow, in First Appeal No. 7 of 1940. Naunit Lal, for the appellant. section N. Andley, Rameshwar Nath, J. B. Dadachanji and P. L. Vohra, for respondent No. 1. 1960. August 5. The Judgment of the Court was delivered by DAS GUPTA J. This appeal raises the question of interpretation of section 15 of the United Provinces Encumbered Estates Act, 1934. On March 1, 1924, Sardar Nihal Singh, the predecessor of the appellant before us, borrowed a sum of rupees one lakh from Raja Durga Narain Singh, predecessor of the respondents, on mortgage of a house in Butlergunj, Lucknow and also the entire Zamindari interest in a village Parsera. Interest was 8 per cent. per annum compound with six monthly rests. In 1932 Raja Durga Narain Singh brought a suit for recovery of Rs. 1,83,791 5 9 on account of principal and interest due on the mortgage, by sale of the mortgaged property. In this suit the Subordinate Judge, Lucknow, made a preliminary decree declaring the amount due to the plaintiff on the mortgage calculated up to March 29, 1935, to be Rs. 1,83,791 5 9 up to the date of the suit, Rs. 49,280 2 6 as the amount due on account of interest thereupon from March 19, 1932, the date of the suit to March 29, 1935, the date fixed for payment. A sum of Rs. 4,314 2 9 was awarded as the cost of the suit. The defendant was ordered to pay this total sum of Rs. 2,37,385 11 0 before the 29th day of March, 1935, with future interest at 6 per cent. per annum simple on the principal sum of rupees one lakh. The amount not having been paid on that date, the Court on an application made by the mortgagee decree. holder made a final decree on May 9, 1935, directing sale of the property for recovery of the sum of Rs. 2,37,503 5 6 with future interest as in the preliminary decree,(this sum being the total of Rs. 2,37,305 11 0 120 of the preliminary decree, Rs. 116 10 1 the interest from March 30, 1935, and rupee one the cost of the final decree). An application for revision under section 115 of the Code of Civil Procedure in connection with this decree was rejected by the Chief Court of Oudh on April 20,1937. Before this, on October 26, 1936, an application had been made by Sardar Nihal Singh under section 4 of the U. P. Encumbered Estates Act, requesting the provisions of the Act to be applied to him. After this application came before the Special Judge in accordance with the provisions of section 6, the mortgagee decreeholder Raja Durga Narain Singh filed a written state ment of his claim on September 30,1937, and stated that the amount due to him on the basis of his decree was Rs. 2,51,904 8 6 including Rs. 14,300 as interest subsequent to the final decree till September 30, 1937, and a sum of Rs. 51 3 0 the decree for costs in his favour by the Oudh Chief Court when rejecting the mortgagor 's application for revision. He prayed that a decree for Rs. 2,51,904 8 6 be passed in his favour against the applicant Sardar Nihal Singh and his property. The applicant contested this claim pleading that the principal amount borrowed from the claimant being rupees one lakh the claimant was not entitled to recover any sum as interest thereupon in excess of the principal amount under section 14 of the Encumbered Estates Act. This plea was rejected by the Special Judge who held that the claimant was entitled to Rs. 2,37,503 5 6 for which the final decree was passed, and also Rs. 51 3 0 as costs in the matter of revision application and further to 6 per cent. per annum interest on rupees one lakh from May 29, 1935, the date of the final decree till the date of the application under the Encumbered Estates Act, i.e., October 26, 1936. Accordingly he gave the claimant a simple money decree for Rs. 2,46,338 8 6 with proportionate costs and future interest at the rate of 4 per cent. per annum simple from the date of application till realisation. On appeal, the Cheief Court of Oudh rejected the appellant 's contention that the Special Judge was bound by section 14 of the Act to limit the decree to a sum 121 of rupees two lakhs only and held that in so far as the preliminary decree found Rs. 1,83,791 5 9 as the amount due on the mortgage on March 29, 1932, it was not inconsistent with section 14 of the Encumbered Estates Act, and so the Special Judge was bound to accept this finding under section 15. It held however that in so far as this decree allowed interest pendente lite on the above amount from March 19, 1932, to March 29, 1935, at 8% per annum, it was inconsistent with sub section 7 of section 14. The Chief Court accordingly held that this interest pendente lite must be reduced to 4 1/4% simple. After saying that a sum of Rs. 4,314 2 9 would be added on account of costs, rupee one should be added on account of the costs of the final decree and Rs. 51 3 0 as costs of a revision application, the Court held that the principal amount of Rs. 1,00,000 shall carry interest from March 29, 1935, till the date of application under section 4 of the Encumbered Estates Act, viz., October 26, 1936, and that the aggregate of these figures shall carry interest from October 27, 1936, till realisation at 4 per cent. per annum. It directed a decree for the sum thus found to be substi tuted for that passed by the Subordinate Judge. An application for leave to appeal to the Privy Council against this decree was made on January 13, 1947. This application was disposed of on April 14, 1953. Holding that the valuation of the suit was well over Rs. 20,000 and the value of the appeal to the Supreme Court was Rs. 41,971 2 9 the Chief Court gave, in view of the modification made by it in the lower court 's decree, a certificate that the case fulfils the requirements of section 110 of the Code of Civil Procedure and that the applicant had a right to appeal to the Supreme Court. On the strength of that certificate the present appeal was filed When the appeal came up for hearing before a Bench of four judges of this Court Mr. Andley, on behalf of the respondents stated that in this case he was raising a constitutional point. Thereupon the Court directed that the matter be posted before the Constitution Bench. That is how the appeal has come up for hearing and final disposal before us. 16 122 Mr. Andley stated before us that the Constitutional point which he had wanted to raise was whether the judgment of the Chief Court was one of affirmance under article 133(1) of the Constitution but that be did not wish to pursue this point. As Mr. Andley does not press his constitutional point, no further discussion of this is necessary. The real controversy in the case between the parties is, as already indicated, as regards the interpretation of section 15 of the Encumbered Estates Act. The relevant portion of section 15 is in these words: "In determining the amount due on the basis of a loan which has been the subject of a decree the Special Judge shall accept the findings of the Court which passed the decree except in so far as they are inconsistent with the provisions of section 14. " A later amendment by which after the words and figures " section 14 ", the words " or section 4 of the U. P. Zamindars Debts Reduction Act, 1952 " were added is not relevant for our purpose. Section 14 runs as follows: " 14. (1) The Special Judge shall, by an order in writing, fix a date for enquiring into the claims made in pursuance of the notice published in accordance with section 9 and give notice of such date to all the claimants and the person who made the application under section 4. (2) The Special Judge shall examine each claim and after hearing such parties as desired to be heard and considering the evidence, if any, produced by them shall determine the amount, if any, due from the landlord to the claimant on the date of the application under section 4. (3) All evidence recorded in any suit or proceeding which is stayed under sub section (1) of section 7 may be taken by the Special Judge as evidence recorded before himself. (4) In examining each claim the Special Judge shall have and exercise all the powers of the Court in which a suit for the recovery of the money due would lie and shall decide the questions in issue on the principles as those on which such court would decide them, subject to the following provisions, namely: 123 (a) the amount of interest held to be due on the date of the application shall not exceed that portion of the principal which may still be found to be due on the date of the application: (b) the provisions of the United Provinces Agriculturists Relief Act, 1934, shall not be applicable to proceedings tinder this Act. (5) For the purpose of ascertaining the principal under clause (a) of subsection (4) the Special Judge shall treat as principal any accumulated interest which has been converted into principal at any statement or settlement of account or by any contract made in the course of the transaction on or before December 31, 1916. Explanation: Interest which on or before December 31, 1916, became part of the principal under the express terms of original contract shall, for the purposes of this section, be deemed to be principal. (6) For the purposes of ascertaining the principal under clause (a) of sub section (4) the Special Judge shall not treat as principal any accumulated interest which has been converted into principal at any statement or settlement of accounts or by any contract made in the course of the transactions after December 31, 1916. (7) If the Special Judge finds that any amount is due to the claimant he shall pass a simple money decree for such amount, together with any costs which he may allow in respect of proceedings in his court and of proceedings in any civil court stayed under the provisions of this Act, together with pendente lite and future interest at a rate not greater than the rate specified in section 27, and if he finds that no amount is due he may pass a decree for costs in favour of the landlord. Such decree shall be deemed to be a decree of a civil court of competent jurisdiction but no decree against the landlord shall be executable within Uttar Pradesh except under the provisions of the Act: Provided that no pendente lite interest shall be allowed in the case of any debt where the creditor was in possession of any portion of the debtor 's property in lieu of interest payable on such debt. " 124 Obviously there can be no question of any inconsistency in a finding of a court which has passed a decree on the basis of a loan, with the provisions mentioned in sub sections 1, 2 & 3 of section 14; nor is there any question of any inconsistency with the provisions of sub section 7 of section 14, as those provisions apply only after the Special Judge has found the amount due to the claimant and the question of inconsistency of any finding in the decree with the provisions of section 14 arise under section 15 at the stage when the amount due is being determined. Sub sections 4, 5 and 6 of section 14 however require careful consideration of the Special Judge, when examining a decree of a Civil Court, to ' find whether any of the findings of the court is inconsistent with those provisions. If they are inconsistent with any of those provisions he has to reject the findings to the extent of such inconsistency. Thus, if for example, the provisions of the , would be beneficial to the applicant landlord and have not been taken into consideration by the court which passed the decree the Special Judge will have to give effect to section 14(4)(b) of the Act to modify the finding of the Court as regards the amount due, after applying the provisions of the Usurious Loans Act. On the other hand, if the provisions of the U. P. Agriculturists Relief Act, 1934, have been applied by the Civil Court, the finding as regards the amount due in so far as the same was based on those provisions cannot, in view of its inconsistency with sub section 4(c) of section 14 be accepted by the Civil Court and he will have to modify the same, leaving out the provisions of the U. P. Agriculturists Relief Act. Similarly if in arriving at the amount due, the Court which passed the decree has acted inconsistently with sub sections 5 and 6 of section 14, the finding will have to be modified by the Special Judge by applying the provisions of sub sections 5 and 6. So, also if the finding of the Court which passed the decree is " inconsistent with " the provisions of sub section 4(a) of section 14 of the Encumbered Estates Act the finding will have to be rejected in so far as it is inconsistent. The question that has arisen in this case and may as well arise in other cases, is whether when in ascertaining 125 the amount due on the basis of a loan, at the date of the suit, the Court which passed the decree did not allow interest exceeding the portion of the principal which was still due at the date of the suit, the finding as regards the amount due is inconsistent with section 14(4) (a) because the consequence of that finding as regards the amount due, together with interest allowed thereupon, is that on the date of the application the amount of interest due exceeds the portion of the principal remaining unpaid on the date of the application. On behalf of the decree holder claimant it is contended that all that is necessary to save inconsistency with sub section 14(4)(a) is that the principle that the amount of interest shall not exceed the amount of the unpaid principal has been followed, in passing the decree and the fact that the result of the finding would be that on the date of the application section 4 of the Act the interest due would exceed the portion of the principal unpaid on such date is of no consequence. This contention cannot in our opinion be accepted. The requirement of sub section 4(a) of section 14 is that " the amount of interest held to be due on the date of the application shall not exceed that portion of the principal which may still be found to be due on the date of the application. " The words " on the date of the application " cannot be ignored. There can be no doubt that these words " on the date of the application " were deliberately used in the sub section for the purpose of benefiting the landlord applicant to this extent that whatever interest due on the contract may amount to, it will be limited to the amount of the principal found still remaining due, on the date of the application. When the Legislature goes further and provides that if prior to the application a decree has been made on the basis of the loan the findings of the Court which passed the decree shall be accepted but forbids such acceptance if such finding is inconsistent with the provisions of section 14, the intention clearly is that the fact that there has been a decree will not make any difference as regards the duty of the Special Judge to give the applicant the benefit of the provisions of section 14. When the Court passed the decree, there was 126 no application under the Encumbered Estates Act, and so, there could be no question of the Court then complying with the provisions of section 14(4)(a). Even so, when the Special Judge has to reject such of the findings as are " inconsistent " with section 14, he must find out the effect of the several findings of the court to ascertain whether there is such inconsistency. Where the consequence of the finding of the court which passed the decree is that the provisions of section 14(4)(a) about the amount of interest due on the date of the application not exceeding the unpaid principal on that date are contravened, the finding should be held to be inconsistent with these provisions. In saying that if in the decree the court did not allow interest as on the date of the suit to exceed the principal then remaining due there is no inconsistency with section 14(4)(a), the respondent 's counsel is in effect asking us to read for the words " in so far as they are inconsistent with the provisions of section 14 " the words " in so far as they would have been inconsistent with the provisions of section 14, if the date of the institution of the suit be deemed to be the date of the application under section 4. " For this we cannot find any justification. Not only would this defeat the beneficial purpose of the legislation under section 14(4)(a); but this will also not be the natural meaning of the words " in so far as they are inconsistent with the provisions of section 14." The Chief Court 's view that the Special Judge has merely to see whether the Civil Court that passed the decree could have passed the decree which it did pass if that court had had to apply the provisions of section 14, treating the date of the institution of the suit as the date of the application cannot therefore be accepted as correct. The same view had been taken by the Chief Court of Oudh in an earlier decision, of Pandit Ramsagar Prasad vs Mst. Shayama (1). A Full Bench of the Allahabad High Court had in Rukun uddin vs Lachhmi Narain (2) to consider the question whether a finding in a decree made by a civil court that the creditor is entitled to interest only at the rates specified in U. P. Agriculturists Relief Act was inconsistent with the (1) A.I.R. 1939 Oudh 75. (2) I.L.R. [1945] All. 307. 127 provisions of section 14 of the U. P. Encumbered Estates Act and was therefore not binding on the Special Judge hearing an application under the U. P. Encumbered. Estates Act. They held that such a finding must be held to be inconsistent with the provisions of section 14 and could therefore not be binding on the Special Judge. There can be no doubt about the correctness of this view, for, as has been pointed out above section 14(4)(c) provides that the provisions of the U. P. Agriculturists Relief Act shall not be applicable to proceedings under the Encumbered Estates Act. One of the learned judges Mr. Justice Verma referred with approval in the course of his judgment to the view taken in Ramsagar Prasad 's Case (1). For the reasons mentioned earlier how ever we are of opinion that the view in Ramsagar Prasad 's Case (1) which has been followed by the Chief Court in the present case is wrong. Our conclusion therefore is that the Special Judge is even where there has been a decree by a civil court in respect of a loan bound to follow the provisions of section 14(4)(a) of the Act so that the amount of interest which he can hold to be due on the date of the application must not exceed the portion of the principal found to be due on the date of the application. Accordingly in the present case the Special Judge should have held the amount of interest due oil the date of the application, i.e., October 26, 1936, to amount to rupees one lakh only, that being the principal which was still due on that date. Under the provisions of sub section 7 of section 14 the Special Judge has to "pass a simple money decree for such amount, together with any costs which he may allow in respect of proceedings in his court and of proceedings in any civil court stayed under the provisions of this Act, together with pendente lite and future interest at a rate not greater than the rate specified in section 27. " It was in view of this provision that the special Judge and the High Court allowed interest at the rate of 4% per annum. The proper decree the Special Judge should have passed therefore was one for rupees two lakhs for the loan with permissible interest, plus Rs. 4,314 2 9, Rs. 51 3 0 and rupee (1) A.I.R. 1939 Oudh 75. 128 one on account of costs, that is, for a total sum of Rs. 2,04,366 5 9 with proportionate costs with interest pendente lite and future interest at the rate of 4 per cent per annum simple from the date of the application, i.e., October 26, 1936, till realisation. Accordingly, we allow the appeal, set aside the decree passed by the courts below and order that in place of the decree made by the Trial Court be substituted a money decree in the terms as mentioned above. The appellant will get his costs in the appeal. Appeal allowed. [/INST] N borrowed rupees one lakh from D on mortgage of a house and Zamindari interest on March 1, 1924. Interest was 8% per annum compoundable with six monthly rests. In 1932 the mortgagee filed a suit on the mortgage and a decree was passed for the recovery of Rs. 1,83,781/5/9 principal and interest upto the date of the suit and Rs. 49,280/ 2/6 interest from date of the suit upto the date fixed for payment, with future interest at 6% per annum simple on the principal sum. On the failure of the mortgagor to pay by the date fixed a final decree was passed on May 9, 1935 for sale of the property for recovery of a sum of Rs. 2,37,503/5/6 which had become due. On October 26, 1936, N made an application under section 4 of the U. P. Encumbered Estates Act, 1934, requesting that the provisions of the Act be applied to him. Section 14(4)(a) of the Act provided that " the amount of interest held to be due on the date of application shall not exceed that portion of the principal which may still be found to be due on the date of the application ". N contended that in view of section 14(4)(a), D was not entitled to recover any sum as interest in excess of the principal sum of rupees one lakh. D contended that it was not necessary to reopen the decree as the principle of section 14(4)(a) had not been violated in passing the decree. Held, that the proper decree that should have been passed on the application was for rupees two lakhs for the principal and interest plus costs and interest pendente lite and future interest at 4% per annum. The words " on the date of the application " in section 14(4)(a) of the Act had been deliberately used to benefit the applicant by reducing the interest to the amount of the principal found still due on the date of the application, whatever amount of interest may be due under the contract. The fact that there had been a decree did not make any difference in giving the benefit of the section to the applicant. Pandit Ramsagar Prasad vs Mst. Shayama, A.I.R. 1939 Oudh 75, disapproved. Rukun uddin vs Lachhmi Narain, I.L.R. 1945 All. 307, referred to. 119 </s>

<s>[INST] Summarize the following judgement: 30 of 1950. Appeal under article 132 (1) of the Constitution of India from the Judgment and Order dated 24th October, 1950, of the High Court of Judicature at Bombay (Bavdekar and Vyas JJ.) in Criminal Application No. 1003 of 1950. M.C. Setalvad (Attorney General for India) and C.K. Daphtary (Solicitor General for India), with G.N. Joshi for the appellant. Respondent ex parte. 676 1952. May 26. This is an appeal from an order of the Bombay High Court directing the release of the respondent who had been detained under section 3 of the Preventive Detention Act of 1950. 'The learned Attorney General states at the outset that Government does not want to re arrest the respondent but merely desires to test the High Court 's decision on certain points which will have far reaching effects on preventive detentions in the State of Bombay. Following the precedent of their Lordships of the Privy Council in King Emperor vs Vimlabai Deshpande(1) we proceed to decide the appeal but direct that the respondent shall not in any event be re arrested in respect of the matters to which the appeal relates. The respondent was originally arrested under an order of the District Magistrate, Belgaum, dated the 26th February, 1950, though he was then beyond the jurisdiction of that authority. On the 11th of .July, 1950, the Bombay High Court held that a detention of that kind was invalid. The decision was given in the case of In re GhateC (2). This necessitated a review of 57 cases, among them the respond ent 'section Orders were passed in all those cases on the 17th of July, 1950. About 52 of the detenus were released and in the remaining cases fresh orders of detention were passed by the Government of Bombay. In the respondent 's case the order was in these terms: "Whereas the Government of Bombay is satisfied with respect to the person known as Shri Purushottam Jog Naik of Ulga Village, Taluka Karwar, District Kanara, that with a view to preventing him from acting in a manner prejudicial to the maintenance of public order, it is necessary to make the following order: Now, therefore, in exercise of the powers conferred by sub section (1.) of section 3 of the Preventive (1) I.L.R. at 655. (2) 677 Detention Act, 1950 (No. IV of 1950), the Government of Bombay is pleased to direct that the said Shri Purushottam Jog Naik be detained. By order of the Governor of Bombay, Sd/ V. T. Dehejia, Secretary to the Government of Bombay, Home Department. Dated at Bombay Castle, this 17th day of July, 1950. " He was served with the grounds of detention on the 26th of July, 1950, and with a fuller set on the 9th of August. The original grounds were as follows: "In furtherance of your campaign for non payment of rent, you were instigating the people in the Belgaum Dis trict to commit acts of violence against landlords. ``In all probability, you will continue to do so. " The second set gave the following additional particulars: "The people in Belgaum District, whom you were instigat ing to commit acts of violence against landlords in further ance of your campaign for non payment of rent, were the tenants in Hadalge and round about villages in the Khanapur Taluka of Belgaum District, and the said instigation was carried on by you for some months till your arrest in April, 1949. " On the 24th of August, 1950, the respondent applied to the Bombay High Court under section 491 of the Criminal Proce dure Code for an order of release. He succeeded, and the appeal is against that order. The first ground on which the learned High Court Judges proceeded was that the detention order of the 17th July was defective as it was not expressed inproper legal form. The basis of their reasoning is this. Article 166(1) of the Constitution requires that " All executive action of the Government of a State shall be expressed to be taken in the name of the Governor. " It will be seen that the order of detention states in the preamble 678 `` Whereas the Government of Bombay is satisfied. " and the operative part of the order runs " Now, therefore . the Government of Bombay is pleased to direct etc. " It does not say that the Governor of Bombay is pleased to direct. The learned Judges held that this is not an order expressed to be made in the name of the Governor and accord ingly is not protected by clause (2) of article 166. They conceded that the State could prove by other means that a valid order had been passed by the proper authority, but they held that the writing, (Record No. 3), which purports to embody the order, cannot be used to prove that a valid order was made because the formula set out in article 166(1) was not employed. We are unable to agree. Now we do not wish to encourage laxity of expression, nor do we mean to suggest that ingenious experiments regard ing the permissible limits of departure from the language of a Statute or of the Constitution will be worthwhile, but when all is said and done we must look to the substance of article 166 and of the Order. The short answer in this case is that the order under consideration is "expressed" to be made in the name of the Governor because it says "By order of the Governor. " One of the meanings of "expressed" is to make known the opinions or the feelings of a particular person and when a Secretary to Government apprehends a man and tells him in the order that this is being done under the orders of the Governor, he is in substance saying that he is acting in the name of the Governor and, on his behalf, is making known to the detenu the opinion and feelings and orders of the Governor. In our opinion, the Constitution does not require a magic incanta tion which can only be expressed in a set formula of words. What we have to see is whether the substance of the require ments is there. It has to be remembered that this order was made under the , and therefore had to conform to its terms. Section 3 of the Act provides that the State Government may, if satisfied, 679 "make an order directing that such person be detained. " It is true that under section 3 [(43 a) (a)] of the General Clauses Act the words "the State Government" mean the Governor, but if that be so, then the expression must be given the same meaning in the order which merely reproduces the language of section 3, not indeed because the General Clauses Act applies to the order (it does not) but because the order is reproducing the language of the Act and must therefore be taken to have the same meaning as in the Act itself, particularly as the order concludes with the words, " By order of the Governor of Bombay. " It will be noticed that section 3 of the enables certain authorities specified by it to make orders of detention. These include, not only State Governments but also the Central Government, any District Magistrate or Sub Divisional Magistrate and certain Commis sioners of Police. The list does not include the Governor of a State. Now, though the term "State Government" appearing in an enactment means the Governor of the State, there is no provision of law which equates the term Governor with the State Government of which he happens to be the head. On the contrary, the Constitution invests him with certain func tions and powers which are separate from those of his Gov ernment. It was therefore appropriate that the order in this case should have set out that the Government of Bombay was satisfied and not some other authority not contemplated by the Act and that that Government directed the detention. It was also proper that the order should have been executed under the orders of the Governor authenticated, under the rules, by the signature of the Secretary. It is true that addition of the words "and in his name" to the words "By order of the Governor of Bombay" would have placed the matter beyond controversy but we are unable to see how an order which purports to be an order 680 of the Governor of 'BombaY can fail to be otherwise than in his name. If A signs his name to a communication that commu nication goes out in his name. Equally, if he employs an agent to sign on his behalf and the agent states that he is signing under the orders of A, the document still goes forth in the name of A. In our opinion, the High Court was wrong on this Point The next step in the High Court 's reasoning was this. The learned Judges held that the writing produced as the order did not prove itself because of the defect we have just considered but that nevertheless it was open to the State Government to prove by other means that such an order had been validly made. The learned Judges therefore called upon Government to make an affidavit setting out the facts. An affidavit was made by the Home Secretary but the learned Judges were not satisfied and asked for a further affidavit. The Home Secretary thereupon made a second one but the learned Judges were i still not satisfied and considered that the Minister in charge should have made an affidavit himself. We do not intend to discuss this matter because once an order of this kind is unable to prove itself and has to be proved by other means it becomes impossible to lay down any rule regarding either the quantum of evidence necessary to satisfy the Court which is called upon to decide the question or the nature of the evidence required. This is a question of fact which must be different in each case. Of course, sitting as a court of appeal, it would have been necessary for us to decide this had we reached a different conclusion on the first point and had the State Government desired the re.arrest of the respondent. But as we are only asked to deal with general principles, all we need say as regards this is that it is not necessary in every case to call the Minister in charge. if the Secre tary. or any other person, has the requisite means of knowledge and his affidavit is believed, that will be enough. 681 We wish, however, to observe that the verification of the affidavits produced here is defective. 'The body of the affidavit discloses that certain matters were known to the Secretary who made the affidavit personally. The verifica tion however states that everything was true to the best of his information and belief. We point this out as slipshod verifications of this type might well in a given case lead to a rejection of the affidavit. Verifications should invar iably be modelled on the lines of Order XIX, rule 3, of the Civil Procedure Code, whether the Code applies in terms or not. And when the matter deposed to is not based on person al knowledge the sources of information should be clearly disclosed. We draw attention to the remarks of Jenkins C.J. and Woodroffe J. in Padmabati Dasi vs Rasik Lal Dhar(1) and endorse the learned Judges ' observations. In fairness to the Home Secretary we deem it right to say that his veracity was neither doubted nor impugned by the High Court, but only his means of knowledge. He was speaking of the "satisfaction" of the Minister and the High Court was not satisfied regarding his knowledge of the state of the Minister 's mind. The learned Judges considered that the Minister himself would have been a more satisfactory source of information, but as we say, this is not a question of law. As a matter of abstract law, of course, the state of man 's mind can be proved by evidence other than that of the man himself, and if the Home Secretary has the requisite means of knowledge, for example, if the Minister had told him that he was satisfied or he had indicated satisfaction by his conduct and acts, and the Home Secretary 's affidavit was regarded as sufficient in the particular case, then that would constitute legally sufficient proof. But whether that would be enough in any given case. or whether the ' 'best evidence rule" should be applied in strictness in that particular case, must necessarily depend upon its facts. In the present case, there was the element that 57 cases were dealt with in the course of 6 days (1) Cal. 682 and orders passed in all on one day. But we do not intend to enter into the merits. All we desire to say is that if the learned Judges of the High Court intended to lay down as a proposition of law that an affidavit from the Minister in charge of the department is indispensable in all such cases, then they went too far. The learned Attorney General contended that the Minis ter in charge could not be asked to divulge these matters because of article 163 (3) of the Constitution. We donor decide this question and leave it open. Another point which was argued related to the privilege which the Home Secretary claimed on behalf of the State Government under article 22 (6) of the Constitution. Govern ment disclosed certain facts in the grounds furnished to the detenu and claimed privilege regarding the rest of the facts in its possession. In our opinion, the grounds supplied were sufficiently specific and they could form a proper basis for the "satisfaction" of the Government. As regards the rest, Government has claimed privilege in the affidavit of the Home Secretary on the ground of public interest. This raises further questions which we do not intend to examine as the respondent is not to be re arrested. The order of release was, in our opinion, wrong, but in view of Government 's undertaking not to re arrest the re spondent, we direct that he be not re arrested in respect of the matters to which this appeal relates. Order of High Court set aside. [/INST] The material portion of an order of detention made under 3 of the preventive Detention Act 1950, ran as fol lows: 675 "Whereas the Government of Bombay is satisfied with respect to the person known as J. N . . that with a view to preventing him from acting in a manner prejudicial to the maintenance of public order it is necessary to make the following order: Now, therefore, . . the Gov ernment of Bombay is pleased to direct that the said J.N. be detained. By order of the Governor of Bombay (Sd.) V.T.D. Secretary to the Government of Bombay, Home Department". The High Court of Bombay held that the order was defec tive as it was not "expressed to be in the name of the Governor" within the meaning of article 166 (1) and was not accordingly protected by article 166 (2): Held, that the order was not defective merely because it stated that the Government of Bombay was satisfied and that the Government of Bombay was pleased to direct that J.N. be detained, and, though the addition of the words "and in his name" to the words "By order of the Governor of Bombay" would have placed the matter beyond controversy, the order was really one expressed to be taken in the name of the Governor of Bombay within article 166. Held further, that, assuming that the order was defec tive it was open to the State Government to prove by other means that such an order has been validly made. It is not absolutely necessary in every case to call the Minister in charge; if the Secretary or any other person has the requi site means of knowledge and his affidavit is believed, that will be enough. Verification should invariably be modelled on the lines of O. XIX, r. 3, of the Civil Procedure Code, whether the Code applied in terms or not, and when the matter deposed to is not based on personal knowledge the sources of informa tion must be clearly disclosed. </s>

<s>[INST] Summarize the following judgement: Appeal No. 9 of 1958. Appeal by special leave from the judgment and order dated February 24, 1955, of the former Bombay High Court in Income tax Reference No. 50/X of 1954. K. N. Rajagopal Sastri and D. Gupta, for the appellant. R. J. Kolah, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the respondent. August 10. The Judgment of the Court was delivered by SHAH, J. Aktiebolaget Svenska Kullakerfabriken of Gothenburg is a company incorporated under the laws of Sweden, and is engaged in the manufacture of ball bearing equipment. section K. F. Ball Bearing Co., Ltd., which will hereinafter be referred to as " the section K. F." is a company registered under the Indian Companies Act, 1913. By an agreement dated January 1, 1939, the section K. F. was appointed by the Swedish company as its sole selling agent in India. On account ,of the commencement of hostilities in the second world war, a corporation known as the Panrope Corporation was incorporated in the Republic of Panama in 1940, to take over as a war time arrangement the assets and business of that Swedish company. With effect from July 1, 1947, the Panrope Corporation conveyed the property and business to the Swedish company. In the years 1947, 1948, 1949 and 1950 the section K. F. sold in India as the agent 'of the Swedish and Panamian companies which will hereinafter be collectively referred to as the " foreign corporations " the goods manufactured by them. A small quantity of goods was bought by the section K. F. 143 and sold by it in India, but no question arises in this appeal about the liability to pay income tax in respect, of sale of those goods and no reference is made herein in respect of those sales. The Income tax Officer, Companies Circle 11(3), Bombay, exercising powers vested in him by section 43 of the Indian Income tax Act, 1922, having appointed the section K. F. as the statutory agent of the foreign corporations for the assessment year 1948 49, and of the Swedish company for the assessment years 1949 50, 1950 51 and 1951 52, the section K. F. submitted returns of income for these years in the taxable territory on behalf of the foreign corporations. Clauses 13, 22 and 23 of the agreement dated January 1, 1939, between the section K. F. and the Swedish company which are material for the purpose of this appeal are as follows: Clause 13: The Agent shall render before the tenth day of each month a true and detailed statement of the said Products that have been sold by him or his Sub Agents during the preceding month. This statement is to be prepared in accordance with instructions that are to be given by section K. F. and it shall contain the names and addresses of the parties to whom the said Products have been supplied, together with a description of the Products and the prices at which they have been sold. Clause 22: The Agent shall sell the said Products either for cash or on credit. Notwithstanding the fact that permission is hereby granted by section K. F. to the Agent to sell on credit any credit given by the Agent to the buyer of the said Products shall be deemed to have been given by the Agent for his own account and on his own responsibility. If the buyer has not paid the Agent the amount that is owing by the date on which the Agent is to render a statement and make payment to section K. F. for such sales that have been made on credit, the Agent shall nevertheless be liable to effect payment to section K. F. in accordance with the terms and conditions that are defined in this Agreement. Clause 23: The Agent shall pay to section K. F. the 144 net sales value of the said Products that are sold each month, after deduction of the commission that has been agreed upon (cf 20) and the import expenses that have been paid (of. 21). Payment shall be made in Sweden thirty (30) days, at the latest, following the last day of the month in which the sales have been effected. The Income tax Appellate Tribunal has found that for rendering accounts of the net sales and also for making payments according to the terms of el. 13 of the agreement, the section K. F. maintained for the relevant periods a current account in the names of the foreign corporations in respect of goods " received on consignment ". When goods were sold by the section K. F., the account of the principal was credited with the price and the account of the buyers to whom the goods were sold on credit was debited. In a majority of cases of sales, remittances of "sale value" after deducting commission were made after sale of the goods to the buyers but before the sale proceeds were recovered. In a few cases, remittances were made even before the goods were sold, and in the remaining, remittances were made after the sale proceeds were realized from the buyers. The Income tax Officer assessed the foreign corporations under section 4(1)(a) of the Indian Income tax Act for payment of tax on the profits included in the price realized by the section K. F. by sale of goods " received on consignment " without making any distinction between sales in respect of which the remittances were made after recovery of sale proceeds and sales in respect of which remittances were made before reco very of the sale proceeds. The order passed by the Income tax Officer was confirmed by the Appellate Assistant Commissioner and also by the Income tax Appellate Tribunal. At the instance of the section K. F., the following questions were referred to the High Court of Judicature at Bombay under section 66(1) of the Indian Income tax Act, 1922: (1) Whether there was evidence on which the Tribunal could have held that the Panrope Corporation and the non resident company had a business 145 connection in the taxable territories in the years of account ? (2) Whether the profits of the Panrope Corporation and the non resident company in respect of the consignment goods were received in the taxable territories on their behalf ? At the hearing of the reference before the High, Court, counsel for the assessee having conceded that the section K. F. was not a purchaser of the goods " received on consignment " from the foreign corporations, but was their agent for sale of the goods, an answer in the affirmative was recorded on the first question. On the second question, the High Court opined that as the remittances by the section K. F. pursuant to the terms of cl. 23 of the agreement before the sale pro ceeds were realized from the buyers were received by the foreign corporations outside the taxable territory, the same could not be taken into account under section 4(1)(a) of the Indian Income tax Act in assessing the taxable income of the foreign corporations. The High Court observed that the section K. F. was liable to pay tax on behalf of the foreign corporations under section 4(1)(a) only if the taxing authority established that the foreign corporations had received the sale proceeds within the taxable territories; that the sale proceeds were received by the foreign corporations when the section K. F. made remittances under cl. 23 of the agreement, but somewhat inconsistently the High Court observed that the remittances made by the section K. F. before the sale proceeds were realized, were remittances not of sale proceeds, but in discharge of its obligation under el. 23 of the agreement; and that the realizations by the section K. F. from the buyers of the goods subsequent to the remittances were not of sale proceeds on behalf of the foreign corporations but were receipts on its own behalf and in its own right, and in recoupment of the amounts remitted to the foreign corporations. The High Court accordingly answered the second question in the affirmative " to the extent that the remittances were made after the sale proceeds were received by the assessee company". 19 146 We are unable to agree with the reasoning and the ,,conclusion of the High Court. The terms of the agreement make it abundantly clear that the goods " received on consignment " from the foreign corporations were received by the section K. F. as their selling agent and not as purchaser. The goods, it is true, were sold by the section K. F. in its own name and not in the name of the foreign corporations, but the goods were still sold for and on behalf of the foreign corporations and the sale proceeds received by the section K. F. were received not on its own behalf but for and on behalf of its principals. Clauses 9, 12, 13, 14, 17, 18 and 20 of the agreement clearly show that the goods received by the section K. F. continued to remain the property of the foreign cor porations till they were sold to the buyers. In the price received for sale of the goods, the profit of the owner was in truth embedded and that profit was liable to be taxed under section 4(1)(a) of the Indian Income. tax Act if it was received in the taxable territory. It is not disputed that the sale proceeds realized by the section K. F. in the taxable territory as agent of the foreign corporations before remittances under the terms of the agreement were liable to be taxed. Does the circumstance that the section K. F. had in discharge of an obligation undertaken by it made remittances under the terms of the agreement before it realized the price of the goods sold alter the nature of the realizations ? The remittances made by the section K. F. indisputably reached the foreign corporations in respect of all sales outside the taxable territory. But the section K. F. was their agent for sale of the goods, and for receiving the price in the taxable territory. The relation between the section K. F. and the foreign corporations was not altered because before realizing the price from the buyers remittances were made to the foreign corporations. The price of goods sold by the section K. F. whether before or after remittance was realized as the agent of the foreign corporations. If remittance in respect of a sale was made before the price was realized, the section K. F. became entitled to adjust the account and to take credit for the amount paid out of the realization. What the foreign corporations received under remittances 147 made before or after realization of the price was not the sale proceeds in respect of sales, but amounts. due by the section K. F. under an obligation expressly undertaken by it under cl. 23 of the agreement. The price of goods sold by the section K. F. were in all cases received by it within the taxable territory ; and the section K. F. being the agent for sale, and for receiving the price, the income embedded in the sale proceeds must be deemed to be received by the foreign corporations also within the taxable territory. It is the receipt of income which gives rise under section 4(1)(a) of the Indian Income tax Act to liability to pay tax: and the place where the price is received is determinative of the question whether the income is received in the taxable territory. The price for the goods sold was received only when the buyer paid it and not before, and when the price was received by the section K. F., the income was received. The remittances by the section K. F. to the foreign corporations before the price was received did not include income, because income in fact was never received till the price was realized. Again we are unable to agree with the contention of counsel for the section K. F. that there was a contract of suretyship between the foreign corporations and the section K. F. and the receipt by the former of the remittances amounted to receipt of the price of the goods. It is not pretended that there was a tripartite contract and the foreign corporations sold the goods directly to the purchasers in India, the section K. F. having guaranteed payment of the price by the buyers to whom the goods had been sold. The price received by the section K. F. being received within the taxable territory for and on behalf of the foreign corporations in respect of goods sold, we are unable to hold that the realization of the price in which is embedded the profit is not liable to tax under section 4(1)(a) as income received, merely because under an independent obligation, the section K. F. has rendered itself liable to pay the amount equivalent to the price (less commission) even before the price has been realized and has discharged that obligation. In the view taken by us, the second question will be 148 answered in the affirmative in respect of sale of all ,goods where the price has been received by the S.K.F. in the taxable territory, and irrespective of whether the remittance has been made in respect of the goods sold before or after the price was received. The appeal is accordingly allowed to the extent indicated. The appellant will be entitled to his costs in this court and also the costs of the reference in the High Court. Appeal partly allowed. [/INST] A Swedish company manufacturing ball bearing equipment entered into an agreement with the respondent, section K. F. Ball Bearing Co. Ltd. registered under the Indian Companies Act, 1913, appointing the latter as its sole selling agent in India. The material portion of the Agreement ran thus: " Clause 23: The Agent shall pay to section K. F. net sales value of the said products that are sold each month, after deduction of the Commission that has been agreed upon and the import expenses that have been paid. Payment shall be made in Sweden thirty days at the latest following the last day of the month in which the sales have been effected." During the second world war a corporation known as the Pan rope Corporation was incorporated in the Republic of Panama to take over the assets and business of the Swedish company and the said Panrope Corporation in its turn conveyed the property and business to the Swedish company. Thereafter the respondent company sold in India as the agent of the foreign Corporations goods manufactured by them, and in a majority of the sales the respondent company remitted the " sale value " to the foreign corporations after the goods were sold but before the sale proceeds were recovered from the buyers. In some cases remittances were made even before the goods were sold and in others remittances were made after the sale proceeds were realised from the buyers. The Income tax Officer assessed the foreign corporations under section 4(1)(a) of the Indian Income tax Act for payment of tax on the profit included in the price realised by the respondent company without making any distinction between remittances made before recovery of the sale proceeds and remittances made after recovery of the sale proceeds. This order was confirmed by the higher income tax authorities. On a reference made at the instance of the respondent company the High Court came to the conclusion that the foreign corporations had a business connection in the taxable territories in the years of account and the respondent company was liable to pay tax on their behalf only with regard to remittances made after the sale proceeds were recovered. On appeal by the Commissioner of Income tax by special leave, 142 Held, that the liability to pay income tax finder s, 4(1)(a) arose on the receipt of the income and the question whether the income was received in the taxable territory was determined by the place where the price was received. Profits were received by the respondent company on behalf of the foreign corporations in the taxable territory in respect of all sales of consigned goods irrespective of whether the remittances were made either before or after the price was received. </s>

<s>[INST] Summarize the following judgement: Appeal No. 38 of 1959. Appeal by special leave from the judgment and order dated April 2, 1956, of the Madras High Court in Writ Petition No. 313 of 1954. R. Ganapathy Iyer and T. M. Sen, for the appellants. C. K. Daphtary, Solicitor General of India and S.Venkatakrishnan, for the respondents. A. V. Viswanatha Sastri and section Venkatakrishnan for Intervener No. 1 (Ambur Tanners Association). R. Gopalakrishnan, for Interveners Nos. 2 and 3 (R. Chennappa and P. Abdul Wahab). August 12. The Judgment of the Court was delivered by KAPUR J. This is an appeal by special leave against the judgment and order of the High Court of Madras allowing a petition under Article 226 of the Constitution. The question there raised was the legality of the assessment of Sales Tax by appellant No. 2, the Deputy Commercial Sales Tax Officer, Saidapet, under the Madras General Sales Tax Act, 1939 (Act IX of 1939), hereinafter termed the Act. The respondent was a partnership firm carrying on tannery business at Chromepet near the city of Madras. Before the year of assessment, i. e., 1952 53, it was taking out licences under the relevant provisions of 150 the Act but it did not renew the licence for the assessment year. When called upon to make a return it did not do so nor did it raise any objection to the notice served on it on February 28, 1954. It was assessed to sales tax of Rs. 10,584 on a turnover of Rs. 6,77,374 4 4. It filed a petition under article 226 to quash the assessment order on the ground that the order was illegal and not supported by the authority of law. This contention was accepted by the High Court and the petition was allowed with costs. The consequence of the judgment is that the respondent firm which is not a licensed dealer under the Act is not liable to any sales tax in respect of its dealings in hides and skins. Against this judgment and order the appellants have come to this court by special leave. The contention of the respondent firm in the High Court was that under section 5, cl. (vi) of the Act, the liability to pay sales tax in respect of hides and skins could only be at a single point; that the rule limiting the operation of this mode of taxation to licensed dealers was ultra vires and therefore r. 16(5) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, hereinafter called the Turnover and Assessment Rules, was void and inoperative and had been. so held by the Supreme Court in V. M. Syed Mohammed & Co. vs The State of Madras(1) ; that accepting this interpretation the State of Madras had deleted cl. (5) of r. 16 by G. 0. 450, Revenue, dated February 26, 1954, i.e., two days before the making of the assessment order under dispute; that r. 16(5) of the Turnover and Assessment Rules was the only provision imposing a multiple tax in respect of sales of hides and skins by unlicensed dealers and that the imposition of the sales tax after the repeal of that rule was illegal and the tax was without the authority of law. It was also contended that in the taxation scheme under the Act, hides and skins, because of their importance in the international market, were excluded from the direct operation of section 3(1) of the Act which was the general charging section and were given special protection of the single point taxation under section 5(vi). The (1) ; 151 argument, therefore, was that in the case of sales of hides and skins the general provision was inapplicable and a special rule for taxation was laid down by section 5(vi) of the Act. The High Court held that in the case of hides and it skins " the charge levied by section 3 is subject to the pro. visions of section 5 and in the case of licensed dealers in hides and skins, the charging provision is r. 16 of the Turnover and Assessment Rules ". The High Court further held that r. 16(5) of the Turnover and Assessment Rules which restricted the benefit of single point taxation to licensed dealers was ultra vires as it contravened section 5(vi) of the Act and section 6 A was not applicable to the case of a dealer who did not take out a licence for dealing in hides and skins and further that if r. 16(5) was ultra vires as being in contravention of section 5(vi), r. 5, of the Madras General Sales Tax Rules (hereinafter called the Sales Tax Rules) which requires the taking out of the licence in order to be able to get the benefit of single point taxation would also be ultra vires. Thus on a true construction of section 3(1) and section 5(vi) it was of the opinion that r. 5 of the Sales Tax Rules and r. 16(5) of the Turnover and Assessment Rules were ultra vires and section 6A was inapplicable to a person who had not taken out a licence. As a consequence it quashed the order of assessment of the respondent firm. In order to decide this appeal it is necessary to refer to and consider the relevant provisions of the Act and the two sets of Rules made thereunder. They are as follows: section 3(1) " Subject to the provisions of this Act, (a) every dealer shall pay for each year a tax on his total turnover for such year; and . . . . . . . . . . . (3) A dealer whose total turnover in any year is less than ten thousand rupees shall not be liable to pay any tax for that year under sub section (1) or sub section (2). (4) For the purposes of this section and the other provisions of this Act, turnover shall be determined in accordance with such rules as may be prescribed 152 (5) The taxes under sub sections (1) and (2) shall be assessed, levied and collected in such manner and in such instalments, if any, as may be prescribed; section 5. Subject to such restrictions and conditions as may be prescribed, including conditions as to licences and licence fees. . . . . . . . . . (vi) the sale of hides and skins, whether tanned or untanned shall be liable to tax under section 3, subsection (1), only at such single point in the series of sales by successive dealers as may be prescribed. section 6A. If any restrictions or conditions prescribed under section 5 or notified under section 6 are contravened or are not observed by a dealer, or in case a condition so prescribed or notified requires that a licence shall be taken out or renewed, if a licence is not taken out or renewed, by the dealer or if any of the conditions of a licence taken out or renewed by him are contravened or are not observed, the sales of the dealer, with effect from the commencement of the year in which such contravention or non observance took place, may be assessed to tax or taxes under section 3, as if the provisions of section 5 or of the notification under section 6, as the case may be, did not apply to such sales and notwithstanding that a licence, if any, taken out or renewed by the dealer continued or continues to be in force during the year ". MADRAS GENERAL SALES TAX (TURNOVER AND ASSESSMENT) RULES. Rule 4(1). " Save as provided in sub rule (2) the gross turnover of a dealer for the purposes of these rules shall be the amount for which goods are sold by the dealer. (2) In the case of the undermentioned goods turnover of a dealer for the purposes of these rules shall be the amount for which the goods are bought by the dealer. . . . . . . . . . (c) untanned hides and skins bought by a licensed tanner in the State, and 153 (d) untanned hides and skins exported outside the State by a licensed dealer in hides or skins. Rule 15(1). Rules 6 to 13 shall not apply to licensed tanners and other licensed dealers in hides or skins in respect of their dealings in hides or skins; but the provisions of this and the following rule shall apply to them in respect of such dealings. Rule 16(1). In the case of hides and skins, the tax payable under section 3(1) shall be levied in accordance with the provisions of this rule. (2) No tax shall be levied on the sale of untanned hides or skins by a licensed dealer in hides or skins except at the stage at which such hides or skins are sold to a tanner in the State or are sold for export outside the State ; (i) in the case of all untanned hides or skins sold to a tanner in the State, the tax shall be levied from the tanner on the amount for which the hides or skins are bought by him; (ii) In the case of all untanned hides or skins which are not sold to a tanner in the State but are exported outside the State, the tax shall be levied from the dealer who was the last dealer not exempt from taxation under section 3(3), who buys them in the State on the amount for which they were bought by him. . . . . . . . . . . (5) Sale of hides or skins by dealers other than licensed dealers in hides or skins shall,subject to the provisions of section 3, be liable to taxation on each occasion of sale. " Rule 5(1) of the ax Rules provides : "Every person who . . . . . . . (d) deals in hides and/or skins whether as a tanner, or otherwise, or . . . . . . . . . . shall, if he desires to avail himself of the exemption provided in sections 5 and 8 or of the concession of single point taxation provided in section 6, submit an 20 154 application in Form 1 for a licence in respect of each of his places of business to the authority specified in sub rule (2) so as to reach him not later than the 15th day of October, 1939 ". The scheme of taxation under the Act is this. Section 3 is the general charging section under which tax is levied in the manner prescribed in the turnover of a dealer, except that a dealer whose turnover is less than Rs. 10,000/ is exempted from sales tax. Section 3 envisages multipoint taxation on the total turnover of a dealer. In the case of the sale transactions of certain specified goods set out in section 5 of the Act an exception is made. That section provides for single point taxation subject to certain prescribed restrictions and conditions. By sub section (vi) of that section sales of hides and skins are liable to tax under s.3, sub section (1), at one single point in the series of sales by successive dealers. The language of the section (s.5) shows however that this exemption applies subject to certain restrictions and conditions which include conditions as to licences. The rule, which deals with licences is r. 5 of the Sales Tax Rules, the relevant portion of which has already been set out It lays down that if a dealer desires to avail himself of the exemption provided in sections 5 and 8 or of the concession as to taxation in section 5 only at a single point, then he must obtain a licence as prescribed in that rule. If the restrictions and conditions contemplated by section 5 read with the rules are not complied with, certain consequences follow as a result of section 6 A of the Act which specifically states that where a condition prescribed or notified requires the taking out or the renewal of a licence, then in the case of contravention of such conditions or restrictions the tax is to be levied under section 3 as if the provisions of section 5 did not apply to such sales. This, therefore, is a clear provision which makes the single point imposition of sales tax on hides and skins to be conditional on observing the condition of taking a licence. The argument of inconsistency between r. 16(5) of the Turnover and Assessment Rules and section 5(vi) of the Act which was accepted in the High Court receives 155 no support from the language of that section which is a concessional provision for making the sales of hides and skins liable to taxation at a single point; but that, as the opening words of the section show, is subject to restrictions and conditions prescribed in the rules and one of these conditions is the taking of a licence. All that r. 16(5) does is to emphasise the consequences of non observance of the conditions which sections 5(vi) & 6 A have in clear terms prescribed. We find no inconsistency between the rule and the sections of the Act. But it was submitted that this Court on appeal from a judgment of the Madras High Court had sId r. 16(5) to be ultra vires the Act. That contention is based on the judgment of the Madras High Court in V. M. Syed Mohammed & Company vs The State of Madras (1) which on appeal was affirmed by this Court (2). This contention is not well founded. In that case, when it was in the Madras High Court, it was contended that the rules did not properly carry out the policy underlying the Act, which was to keep the price of hides and skins at a competitive level for the world market. It was there argued that hides and skins were articles much in demand in the foreign markets and their export was one of the main items of the foreign trade of the State of Madras which enjoyed considerable natural advantage in tanning because of the plentiful supply of " Avaram bark " which was specially suited for the purpose. It was also argued that untanned hides and skins were acquired locally or by import from other States and were either tanned in the State or exported and therefore the scheme of taxation was to levy the tax at a single point, i.e., at the stage when articles were tanned in the State or exported to foreign countries for tanning. For this reason multiple taxation was violative of section 5(vi) of the Act. This, it appears, was not disputed by the Government and it was therefore held that r. 16(5) of the Turnover and Assessment Rules was ultra vires. But the question was really (1) (1952) 3 S.T.C. 367. (2) V. M. Syed Mohammed and Company vs The State of Andhra, ; 156 not relevant to the issue as was pointed out by Venkatarama Ayyar, J., at p. 394, where he said: " Now the contention of the petitioners is that where there are sales by unlicensed dealers to unlicensed tanners or unlicensed dealers, there is the possibility of multiple taxation and that would be in violation of section 5(vi). It is not disputed on behalf of the Government that Rule 16(5) is repugnant to section 5(vi). It must therefore be held to be ultra vires. But this can bring no relief to the petitioners, as they are all licensed tanners and are in no manner hurt by the operation of r. 16(5). This was conceded by the learned Advocate for the petitioners ". This case was then brought in appeal to this Court and section R. Das, J. (as he then was), observed at p. 1121: " Lastly, the learned advocate urges that rule 16 (5) clearly contravenes the provisions of section 5(vi) of the Act. This sub rule has been held to be ultra vires by the High Court, and indeed, the learned Advocate General of Madras did not in the High Court, as before us, dispute that rule 16(5) was repugnant to ,section 5(vi). That sub rule, however affects only unlicensed dealers and the appellants who are admittedly licensed dealers are not affected by that sub rule ". This judgment does not show that the repugnancy of the rule was in controversy or the court pronounced its opinion upon the merits or it was necessary to do so. The learned Solicitor General then contended before us that in their counter affidavit filed in the High Court the appellants had accepted the position that r. 16(5) of the Turnover and Assessment Rules was ultra vires. But that will not carry the matter any further, because on a construction of the provisions of the Act this argument of repugnancy is not sustainable. The Andhra Pradesh High Court rightly did not accept the view that r. 16(5) was ultra vires of the rule making authority: Syed Mohamed & Company vs State of Andhra (1). The same view was taken by the (1) [1956] 7 S.T.C. 465. 157 Mysore High Court in the State of Mysore vs Sarvatula & Co. (1). A consideration of the relevant provisions of the Act and the rules made thereunder shows that the charging section is section 3(1) and the general rule is taxation i at multiple points on the total turnover of the dealer, but in the case of sale of certain specified articles a departure has been made and tax at single point is leviable provided certain conditions and restrictions as to licences which are envisaged in section 5 and laid down in the rules are complied with and that r. 16(5) of the Turnover and Assessment Rules is not ultra vires. It was then contended that the provision as to licensing and taxation in the case of licensed dealers and tanners at a single point and a taxation at multiple point in the case of unlicensed dealers were violative of article 14 of the Constitution. But we did not allow this point to be taken because it was not raised in the High Court and was raised for the first time in this Court. In our opinion the judgment of the High Court in regard to the ultra vires nature of r. 16(5) and the inapplicability of section 6 A of the Act was erroneous and the appeal must, therefore, be allowed, the judgment and order of the High Court set aside and the respondent 's petition dismissed. The respondent will pay the costs of the appellants in this Court and in the courts below. Appeal allowed. (1) [1957] 9 S.T.C. 593. [/INST] The respondent, a firm carrying on tannery business, used to take out licences under the provisions of the Madras General Sales Tax Act, 1939, but did not renew the licence for the assessment year, 952 1953, and was assessed to sales tax on the sale value of tanned hides and skins during the year. It challenged the validity of the order of assessment by filing a petition before the High Court under article 226 of the Constitution of India, on the grounds that under section 5(vi) of the Act the liability to pay sales tax in respect of hides and skins could only be at a single point, that r. 16(5) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, which limited the operation of this mode of taxation to licensed dealers was ultra vires as it contravened section 5(vi) and had been so held in V. M. Syed Mohammed & Co. vs The State of Madras, ; , and that section 6A was not applicable to the case of a dealer which did not take out a licence. Held, that section 3 of the Madras General Sales Tax Act, 1939, envisages multipoint taxation on the total turnover of a dealer, 149 but under section 5 an exception is made in the case of sale transactions of certain specified goods, providing for single point taxation subject to certain restrictions and conditions which include conditions as to licences, and if the conditions and restrictions are not complied with, under section 6A the tax is to be levied under section 3 as if the provisions of section 5 did not apply to such sales. Accor dingly, r. 16 (5) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, is not ultra vires. Syed Mohamed & Company vs State of Andhra, [1956] 7 S.T.C. 465 and State of Mysore vs Sarvatula & Co., [1957] 9 S.T.C. 593, approved. V. M. Syed Mohammed & Company vs The State of Madras, , explained. </s>

<s>[INST] Summarize the following judgement: Appeal No. 231 of 1956. Appeal from the judgment and order dated September 11, 1953, of the Rajasthan High Court (Jaipur Bench) at Jaipur in Writ Application No. 141 of 1952. M. section K. Sastri and T. M. Sen, for the appellants. The respondent did not appear. August 18. The Judgment of the Court was delivered by RAJAGOPALA AYYANGAR, J. This appeal raises for consideration the constitutional validity of one paragraph of a notification issued by the State of Rajasthan under section 15 of the (V of 1861), under which " the Harijan " and " Muslim " inhabitants of the villages, in which an additional police force was stationed, were exempted from the obligation to bear any portion of the cost of that force. It is stated that the inhabitants of certain villages 223 in the district of Jhunjhunu in the State of Rajasthan, harboured dacoits and receivers of stolen property, and were besides creating trouble between landlords and tenants as a result of which there were serious riots in the locality in the course of which some persons lost their lives. The State Government therefore took action under section 15 of the . This Section provides : " Quartering of additional police in disturbed or dangerous districts (1) It shall be lawful for the State Government, by proclamation to be notified in the official Gazette, and in such other manner as the State Government shall direct, to declare that any area subject to its authority has been found to be in a disturbed or dangerous state, or that, from the conduct of the inhabitants of such area, or of any class or section of them, it is expedient to increase the number of police. (2) It shall thereupon be lawful for the Inspector General of Police, or other officer authorised by the State Government in this behalf, with the sanction of the State Government, to employ any police force in addition to the ordinary fixed complement to be quartered in the areas specified in such proclamation as aforesaid. (3) Subject to the provisions of sub section (5) of this section, the cost of such additional police force shall be borne by the inhabitants of such area described in the proclamation. (4) The Magistrate of the district, after such enquiry as he may deem necessary, shall apportion such cost among the inhabitants who are, as aforesaid, liable to bear the same and who shall not have been exempted under the next succeeding sub section. Such apportionment shall be made according to the Magistrate 's judgment of the respective means within such area of such inhabitants. (5) It shall be lawful for the State Government by order to exempt any persons or class or section of such inhabitants from liability to bear any portion of such cost. " Sub section (6) is omitted as not relevant. 224 The notification by which these provisions were invoked and which is impugned in these proceedings was in these terms: " Whereas the Rajpramukh is satisfied that the area shown in the schedule annexed hereto has been found to be in a disturbed and dangerous state; Now, therefore, in the exercise of the authority vested in him under Section 15(1) of the (V of 1861), the Rajpramukh is pleased to declare that the 24 villages included in the said schedule shall be deemed to be disturbed area for a period of six months from the date of this notification. Under sub section 2 of the said section 15 of the (V of 1861), the Rajpramukh is pleased to authorise the Inspector General of Police to employ, at the cost of the inhabitants of the said area any Police force in addition to the ordinary fixed complement quartered therein. Under sub section 5 of section 15 of the said Act the Rajpramukh is further pleased to exempt the Harijan and Muslim inhabitants of these villages from liability to bear any portion of the cost on account of the posting of the additional Police force. " Then followed the names of the 24 villages. The respondent Thakur Pratap Singh being an inhabitant of Baragaon one of these 24 villages, moved the High Court of Rajasthan for the issue of a writ or direction under Act. 226 of the Constitution impugning the validity of section 15 of the and in particular of sub section 5 thereof and of the notification and praying for appropriate reliefs. The High Court repelled the wider contentions urged regarding the invalidity of section 15 of the in general as also of the powers conferred on the State Government to order the exemption of " any person or classes or sections of such inhabitants " from liability to bear the cost of the additional police force. But the learned Judges hold that Para 4 of the notification which exempted " Harijan and Muslim inhabitants of the villages " from the levy, was violative of the guarantee in article 15(1) of the Constitution against discrimination on the ground of caste or religion etc. which reads. 225 " The State shall not discriminate against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them." and struck it down as unconstitutional. The State of Rajasthan who felt aggrieved by this order applied to the High Court for a certificate under article 132(1) to enable it to file an appeal to this court and this having been granted, the appeal is now before us. Learned Counsel for the State made a strenuous effort to show that the exemption of the Harijan & Muslim inhabitants of the villages, was, in the impugned notification, not based " only " on the ground of 'caste or religion ' or the other criteria set out in article 15(1), but on the ground that persons belonging to these two communities were found by the State not to have been guilty of the conduct which necessitated the stationing of the additional police force. It was the same argument as was addressed to the High Court and was rejected by the learned Judges who observed : " Now this is a very strange argument that only persons of a certain community or caste were law abiding citizens, while the members of other communities were not. Disturbing elements may be found among members of any community or religion just as much as there may be saner elements among members of that community or religion. " The view here expressed by the learned Judges is, in our opinion, correct. Even if it be that the bulk of the members of the communities exempted or even all of them were law abiding, it was not contended on behalf of the State that there were no peaceful and law abiding persons in these 24 villages belonging to the other communities on whom the punitive levy had been directed to be made. In para 5(f) of the petition filed before the High Court the respondent had averred : " That the aforesaid Notification is ultra vires of the Constitution of India as it discriminates amongst the Citizens of a village on the basis of religion, race or caste, in as much as it makes a distinction between 29 226 persons professing the Mohammadan religion and others and also between persons who are Muslims and Harijans by caste and the rest. It, therefore, contravenes the provisions of Article 15 of the Constitution of India. " The answer to this by the State was in these terms: " The Harijan and Muslim inhabitants of these villages have been exempted from liability to bear any portion of the cost of the additional force not because of their religion, race or caste but because they were found to be peace loving and law abiding citizens, in the 24 villages additional force has been posted. " It would be seen that it is not the case of the State, even at the stage of the petition before the High Court that there were no persons belonging to the other communities who were peace loving and law abiding, though it might very well be, that according to the State, a great majority of these other communities were inclined the other way. If so, it follows that the notification has discriminated against the law abiding members of the other communities and in favour of the Muslim and Harijan communities, (assuming that every one of them was "peace loving and law abiding") on the basis only of " caste " or "religion ". If there were other grounds they ought to have been stated in the notification. It is plain that the notification is directly contrary to the terms of article 15(1) and that para 4 of the notification has incurred condemnation as violating a specific constitu tional prohibition. In our opinion, the learned Judges of the High Court were clearly right in striking down this paragraph of the notification. The appeal fails and is dismissed. As the respondent has not appeared there will be no order as to costs. Appeal dismissed. [/INST] By para 4 of a notification issued under section 15 of the Police Act the Rajasthan Government exempted the Harijan and Muslim inhabitants of certain villages from payment of the cost of additional police force stationed therein. The notification was challenged as being violative of the guarantee contained in article 15(i) of the Constitution of India. Held, that since para 4 of the notification had discriminated against the law abiding members of other communities and in favour of the Muslims and Harijans on the grounds of caste and religion, it was directly hit by the provision of article 15(i) of the Constitution and as such must be declared to be invalid. </s>

<s>[INST] Summarize the following judgement: No. 136 of 1957. Writ Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights. 193 Purshottam Tricumdas, Mukund R. Mody, Anil B. Divan, Ramesh A. Shroff and I. N. Shroff, for the petitioner. C. K. Daphtary, Solicitor General of India, R. Ganapathy Iyer and R. H. Dhebar, for respondent. August 17. The Judgment of the Court was delivered by SUBBA RAO J. This is a petition under article 32 of the Constitution for the issue of a writ of mandamus or a writ in the nature of mandamus or any other appropriate direction, order or writ to direct the respondent, the Union of India, to withdraw or cancel the notification dated August 31, 1957, recognising " the Stock Exchange, Bombay " under section 4 of the (XLII of 1956), (hereinafter referred to as"the Act "). At the outset it is necessary to notice briefly how a Stock Exchange is worked and how it is controlled or regulated by the State. " Stock Exchange " means, " any body of individuals, whether incorporated or not, constituted for the purpose of assisting or con. trolling the business of buying, selling or dealing in securities ". The history of stock exchanges in foreign countries as well as in India shows that the development of joint stock enterprise would never have reached its present stage but for the facilities which the stock exchanges provided for dealing in securities. They have a very important function to fulfil in the country 's economy. Their main function, in the words of an eminent writer, is " to liquify capital by enabling a person who has invested money in, say, a factory or a railway, to convert it into cash by disposing of his share in the enterprise to someone else ". Without the stock exchange, capital would become immobilized. The proper working of a stock exchange depends upon not only the moral stature of the members but also on their calibre. It is a trite saying that a jobber or dealer is born and not made. In the words of the same author, a jobber must be a man of good nerve, cool judgment, and ready to deal 25 194 under any ordinary conditions, and he must be a man of financial standing, considerable experience, with an understanding of market psychology. There are three modes of dealing in shares and stores, namely, (1) spot delivery contract, i.e., a contract which provides for the actual delivery of securities on the payment of a price thereof either on the day of the contract or the next day, excluding perhaps the period taken for the despatch of the securities or the remittance of money from one place to another; (2) ready delivery contract, which means a contract for the purchase or sale of securities for the performance of which no time is specified and which is to be performed immediately or within a reasonable time; (3) forward contracts, i.e., contracts whereunder the parties agree for their performance at a future date. If the stock exchange is in the hands of unscrupulous members, the second and third categories of contracts to buy or sell shares may degenerate into highly speculative transactions or, what is worse, purely gambling ones. Where the parties do not intend while entering into a contract of sale or purchase of securities that only difference in prices should be paid, the transaction, even though speculative, is valid and not void, for " there is no law against speculation as there is against gambling ". But, if the parties do not intend that there should be any delivery of the shares but only the difference in prices should be accounted for, the contract, being a wager, is void. More often than not it is difficult for a court to distinguish one from the other, as a wagering transaction may be so cleverly camouflaged as to pass off as a speculative transaction. These mischievous potentialities inherent in the transactions, if left uncontrolled, would tend to subvert the main object of the institution of stock exchange and convert it into a den of gambling which would ultimately upset the industrial economy of the country. For that reason, in Bombay as early as 1925, the Bombay Securities Contracts Control Act was passed to regulate and control contracts for the purchase and sale of securities in the City of Bombay and elsewhere in the Bombay Presidency. Under section 6 of that Act, 195 " Every contract for the purchase or sale of securities, other than a ready delivery contract, entered into after a date to be notified in this behalf by the Provincial Government shall be void, unless the same is made subject to and in accordance with the rules duly sanctioned under section 5 and every such contract shall be void unless the same is made between members or through a member of a recognised stock exchange; and no claim shall be allowed in any Civil Court for the recovery of any commission, brokerage, fee or reward in respect of any such contract ". But this Act defined " ready delivery contract " to mean " a contract for the purchase or sale of securities for performance of which no time is specified and which is to be performed immediately or within a reasonable time ". It was also stated therein by way of explanation that what was reasonable time was in each particular case a question of fact. This Act did not achieve its purpose, for under section 6 thereof contracts entered into in contravention of the provisions of that section were not made illegal but only void, with the result that even members of a stock exchange not recognised under that Act were able to do business in that line. What is more, the explanation to the definition of " ready delivery contract " which is excluded from the operation of the Act was so elastic that in the name of ready delivery contracts unrecognised stock exchanges. and individuals were able to carry on business in forward contracts. ( ,ambling in shares went on unchecked in Bombay as elsewhere. After the Second World War, the post war boom gave an unhealthy impetus to the stock exchange transactions. Various expert committees appointed by the Government from time to time considered the question of regulation of stock exchanges and the latest of those committees was the Gorwalla Committee. The report of that Committee was circulated to the principal stock exchanges, Chambers of Commerce, and other interested associations and individuals. After considering the reports of the committees and the comments made thereon by the various bodies, the Government introduced a bill in the Parliament, which became law on 196 September 4, 1956. The Act was passed to prevent undesirable transactions in securities by regulating the business therein by prohibiting auction and by providing for certain other matters connected therewith. The Act mainly provides for the recognition of stock exchanges and for controlling the rule making of the said exchanges. Section 4 of the Act empowers the Central Government to recognise stock exchanges subject to two conditions. Section 13 enables it to issue a notification that in a particular State or area every contract which is entered into after the date of the notification otherwise than between members of a recognised stock exchange in such State or area or through or with such member shall be illegal. Without resorting to such drastic procedure the Government is also given power to prohibit contracts in certain securities in certain areas from doing business without obtaining a licence. Spot delivery contracts are excluded from the operation of sections 13, 14, 15 and 17 of the Act, unless the Central Government by notification thinks fit to extend the operation of section 17 of the Act to such contracts. Section 19 prohibits formation of stock exchanges other than recognised ones except with the permission of the Central Government. It declares all auctions in securities entered into after the commencement of the Act illegal. It also provides penalties for the infringements of the provisions of the Act. In short, the Act confers an effective controlling power on the Central Government over the stock exchanges. In exercise of the power conferred upon the Central Government to make rules, the Central Government made rules described as the Securities Contracts (Regulation) Rules, 1957, providing, inter alia, for the qualification for membership of a stock exchange seeking recognition, the procedure for recognition, the manner of keeping accounts, the submission of annual reports, the constitution of governing bodies and for taking disciplinary action against any member of such bodies and other similar matters. In Greater Bombay there were two stock exchanges, 197 one called the Native Share & Stock Brokers ' Association, and the other the Indian Stock Exchange Limited. The former was in existence for more than., 80 years and it was registered under the Bombay Securities Contracts Control Act, 1925. Its rules and bye laws were approved by the Government of Bombay and it was doing business in both forward as well as ready transactions. It has a clearing house and was doing extensive business in different kinds of securities. The other, namely, the Indian Stock Exchange Limited, was a company incorporated under the Indian Companies Act, 1913, as a company limited by guarantee without any share capital. The said Company had been functioning since 1937, but was not registered under the Bombay Securities Contracts Control Act, 1925. It was mainly doing business in Tata Ordinary and Bombay Dyeing shares and had hardly any investment business. Not being registered under the Bombay Securities Contracts Control Act, 1925, it could only deal in ready delivery contracts; and as the definition of " ready delivery contract " under that Act was elastic and as forward contracts were not made illegal thereunder, this Exchange was also doing speculative business mainly in the said two shares. After the Act came into force, both the Exchanges applied for recognition under the Act. The Government, after considering the relative merits and the relevant circumstances, issued a notification dated August 31, 1957, recognising the Native Share and Stock Brokers ' Association under the name " The Stock Exchange, Bombay " subject to the conditions mentioned therein. One of the conditions imposed was that the members of the Indian Stock Exchange Limited would be entitled to apply for membership of the Stock Exchange, Bombay, provided they were active members of the Indian Stock Exchange Limited for 12 months immediately preceding August 6, 1957, and they were also eligible under r. 8(1) of the Securities Contracts (Regulation) Rules, 1957, to be members of a recognised stock exchange. The notification 198 further gave some concessions to such active members in the matter of payment of the membership fee. They had to apply for membership before October 15, 1957, or before such period as the Board of the recognised Stock Exchange might think fit to extend. It appears that within the extended time a number of active members of the Indian Stock Exchange Limited as defined by the notification applied for membership and were admitted as members of the recognised Stock Exchange. Though three years have passed by, no member other than the petitioner has so far thought fit to question the validity of the notification, that is, the validity of the notification has been accepted and the recognised Stock Exchange has become stabilised on that basis. Subsequent to the filing of. the petition on November 30, 1957, the Central Government issued another notification applying section 13 of the Act to Greater Bombay; with the result that thereafter every contract in shares between the members of any unrecognised stock exchange in that City would be illegal. The petitioner had become a member of the Indian Stock Exchange Limited on February 27, 1956, but he had not been transacting any business on the floor of the said Stock Exchange either on his own account or on account of his clients. He avers in the affidavit filed in support of the petition that he has been doing considerable business on his own account or on account of his clients through other members of the Stock Exchange and that he intends to commence business directly in ready delivery contracts. As the impugned notifications affect his right to do business, he seeks for the issue of a writ of mandamus for the aforesaid reliefs. Shri Purshottam Trikumdas, learned counsel for the petitioner, raised before us the following contentions: (1) under article 19(1)(g) of the Constitution the petitioner has a fundamental right to carry on the business in shares and the notification dated August 31, 1957, and the subsequent notification dated November 30, 1957, imposed unreasonable restrictions on his said right; (2) the notification dated August 31, 199 1957, is void inasmuch as it is not sanctioned by the provisions of section 4 of the Act; and (3) the condition 2(i)(a) of the said notification classifying members of A the Indian Stock Exchange Limited as active members and members who were not active infringes the fundamental right enshrined in article 14 of the Constitution and that as the said condition is not severable the entire notification is bad. Learned Solicitor General in addition to controverting the said contentions pressed on us to hold that as the vires of the Act was not questioned, the notification issued thereunder could not be questioned by the petitioner on the ground that it contravened one or other of the said fundamental rights. It would be convenient to take first the contention of the learned Solicitor General as it is in the nature of a preliminary point. He says that as the validity of the Act was not questioned the notification issued in the exercise of the power conferred thereunder cannot also be questioned. There is a fallacy underlying this contention. Under article 13(2) of the Constitution, the State shall not make any law which takes away or abridges the rights conferred by Part III thereof; and " law " is defined under article 3(a) to include a notification. Therefore, the validity of a notification issued by the State, it being law, is as much vulnerable to attack as that of the Act itself on the ground that it infringes any of the fundamental rights. If an Act is a self contained one and the notification issued there under only restates the provisions of the Act, the validity of the notification cannot obviously be questioned as the validity of its contents were accepted. But if the Act confers a power on the State in general terms and the notification issued thereunder infringes one or other of the fundamental rights, the validity of the Act cannot equally obviously prevent an attack on the notification. In the former case the notification only reflects the provisions of a valid Act and in the latter it is the notification and not the Act that infringes the fundamental rights. Take an example of an Act imposing restrictions on the freedom of speech. The Act authorizes the State to impose conditions on 200 the said freedom in the interests of security of State. The Act is constitutionally valid. But, if a notification issued under that Act imposes unreasonable restrictions infringing the said rights, it is liable to be challenged on the ground of unconstitutionality. So too, in the instant case section 4 of the Act empowers the Central Government to issue a notification recognising a stock exchange subject to certain conditions expressed in general terms. The general terms can comprehend both reasonable and unreasonable restrictions. If the notification imposes unreasonable restrictions if the contention of the learned counsel for the petitioner be accepted, the restrictions imposed would certainly be unreasonable it is liable to be set aside. We cannot, therefore, accept this contention. (1): Article 19(1)(g) of the Constitution states that every citizen shall have the right to carry on any business; but the State in empowered under el. (6) of the said Article to make any law imposing in the interest of the general public reasonable restrictions on the exercise of the said right. Briefly stated, the argument is that the combined effect of the two notifications is that the petitioner is driven out of his business of stock exchange in as much as, it is said, they confer a monopoly on the Stock Exchange, Bombay, and the rules of the said Stock Exchange exclude any outsider from becoming its member without obtaining a nomination and that too only in the place of an existing member. To put it differently, the argument proceeds that under the rules of the Stock Exchange, Bombay, membership is not thrown open to the public. This leads us to the consideration of the relevant provisions of the Stock Exchange Rules, Bye laws and Regulations, 1957. Under r. 3 the membership of the Exchange shall consist of such number of members as the Exchange in general meeting may from time to time determine. It is common case that the membership of the Exchange is not limited. Under the heading " Election of New Members ", the Rules prescribe the conditions of eligibility for election as a member of the Exchange. These Rules adopt the provisions of r. 8 of the Securities 201 Contracts (Regulation) Rules, 1957. The Rules do not contain any limitation on the eligibility of a person to be elected as a member such as that the person, should be nominated in the manner provided by the Rules or that he should come only in the vacancy caused by another member ceasing to be one in one of the ways mentioned thereunder. The words " no person " in r. 17 are comprehensive enough to take in any outsider seeking for election as a, member. Rule 22 provides for an application for admission in the form prescribed in Appendix A to the Rules. This rule also does not impose any such limitation. The admission application form in Appendix A is also general in terms and enables any person of India to apply for membership provided he agrees to abide by the conditions imposed therein. In the form also there is no such limitation. But it is contended that a fair reading of the provisions of rr. 20 and 21 makes it clear that a candidate for admission is confined only to two categories, viz., (1) a candidate nominated by a member or a legal representative of a deceased member seeking admission to membership in the place of ' the deceased; and (2) a person recommended for admission to membership in the place of a member who has forfeited his right to membership. A careful scrutiny of the Rules does not bear out the contention; nor do they enable us to cut down the wide amplitude of rr. 17 to 22. Rule 10 says: " When a right of membership is forfeited to or vests in the Exchange under any Rule, Bye law, or Regulation of the Exchange for the time being in force it shall belong absolutely to the Exchange free of all rights, claims or interest of such member or any person claiming through such member and the Governing Body shall be entitled to deal with or dispose of such right of membership as it may think fit." Rule 54 is to the following effect: " A member 's right of membership shall lapse to and vest in the Exchange immediately be is declared a defaulter." Rule 11 is as follows. 26 202 "(a) A member of not less than seven years ' standing who desires to resign may nominate a person eligible under these Rules for admission to membership of the Exchange as a candidate for admission in his place (b) The legal representatives of a deceased member or his heirs or the persons mentioned in Appendix C to these Rules may with the sanction of the Governing Board nominate any person eligible under these Rules for admission to membership of the Exchange as a candidate for admission in the place of the deceased member. In considering such nomination the Governing Board shall be guided so far as practicable by the instructions set out in Appendix C to these Rules. " Appendix B gives the nomination forms Nos. 1 and 2 to be filled by a member or a legal representative, as the case may be, under r. 11 (a) and (b). Now it would be convenient to read rr. 20 and 21. They are as follows: Rule 20: " A candidate for admission except ' a candidate applying for a membership vesting in the Exchange must obtain a nomination in the manner provided in these Rules. " Rule 21: " A candidate for admission must be recommended by two members none of whom should be a member of the Governing Board. The recommenders must have such personal knowledge of the candidate and of his past and present circumstances as shall satisfy the Governing Board. " The argument is that under r. 20 a candidate for ad. mission falls under two categories, namely, (1) a candidate who must obtain a nomination in the manner provided in the Rules, i.e., r. 11 (a) and (b); and (2) a candidate applying for a membership vesting in the Exchange; and, therefore, these two categories exhaust the candidates for admission and that when under r. 21 the same words, " a candidate for admission ", are used they must carry the same meaning as in r. 20, that is, they must be confined only to the two categories comprehended by r. 20. This argument appears to be plausible and even incontrovertible, if 203 rr. 20 and 21 are taken out of their setting and construed independently of other rules. But in the setting in which they appear they can bear only one meaning, namely, that r. 20 provides for nomination only in the case of a candidate for admission who requires a nomination in the manner provided by the rule and r. 21 provides, for all the candidates for admission, that they should be recommended by two members who have personal knowledge of the candidates. To put it in other words, under the Rules candidates for admission fall under three groups, viz., (1) candidates falling under r. 11, (a) and (b); (2) candidates applying for membership vesting in the Exchange; and (3) other candidates. All the three categories of candidates must be recommended by two members. But the candidates belonging to the first category shall in addition be nominated in the manner provided by the Rules. We, therefore, hold that the Stock Exchange Rules do not operate as a bar against the petitioner becoming a member of the Stock Exchange subject to the rules governing such application. The petitioner has the right to do business in shares: in spite of the notifications he can still do business in spot delivery contracts. He can apply to become a member of the Stock Exchange subject to the conditions laid down by the Rules. The Act the validity of which he has not chosen to question, enables the State to give or refuse recognition to any Stock Exchange and it has chosen to give recognition to the Stock Exchange, Bombay, subject to the conditions prescribed. The restrictions, in our view, are not unreasonable, having regard to the importance of the business of a stock exchange in the country 's national economy and having regard to the magnitude of the mischief sought to be remedied in the interest of the general public. At another place we have already dealt with the necessity for stringent rules governing this type of business For the reasons Mentioned we reject the first contention. (2): The second contention also has no merits. The criticism is that condition 2(i) (a) annexed to the notification cannot be supported on the basis of any 204 of the provisions of section 4 of the Act. Condition 2 (i) reads as follows: " The Members of the Indian Stock Exchange Limited, Bombay, will be entitled to apply for Membership of the Stock Exchange, Bombay, provided they fulfil or comply with the following terms and conditions: (a) they have been active members of the Indian Stock Exchange Limited, for twelve months immediately preceding the 6th August, 1957. Explanation:" Active Members " for purpose of this condition means members who have themselves transacted business regularly on the floor of the Indian Stock Exchange Limited either on their own account or on account of their clients. To appreciate the argument it is also necessary to read the material provisions of section 4 of the Act. Section 4: " (1) If the Central Government is satisfied, after making such inquiry as may be necessary in this behalf and after obtaining such further information, if any, as it may require, (a) that the rules and bye laws of a stock exchange applying for registration are in conformity with such conditions as may be prescribed with a view to ensure fair dealing and to protect investors; (b) that the stock exchange is willing to comply with any other conditions (including conditions as to the number of members) which the Central Government after consultation with the governing body of the stock exchange and having regard to the area served by the stock exchange and its standing and the nature of the securities dealt with by it, may impose for the purpose of carrying, out the objects of this Act; and (c) that it would be in the interest of the trade and also in the public interest to grant recognition to the stock exchange; It may grant recognition to the stock exchange subject to the conditions imposed upon it as aforesaid and in such form as may be prescribed. (2) The conditions which the Central Government 205 may prescribe under clause (a) of sub section (1) for the grant of recognition to the stock exchanges may include, among other matters, conditions relating. to, (i) the qualifications for membership of stock exchanges; (ii) the manner in which contracts shall be entered into and enforced as between members; (iii) the representation of the Central Government on each of the stock exchanges by such number of persons not exceeding three as the Central Government may nominate in this behalf; and (iv) the maintenance of accounts of members and their audit by chartered accountants whenever such audit is required by the Central Government. " The argument proceeds that condition 2(i)(a) enables only the active members of the Indian Stock Exchange Limited to apply for membership of the Stock Exchange, Bombay and that such a condition can be imposed only if it amounts to a qualification of membership within the meaning of sub section (2) of section 4, as the other conditions in that sub section are obviously inapplicable. It is further pointed out that sub section (2) refers back to sub section (i)(a) and under that clause the condition imposed must only be that prescribed by the Rules made under the Act and that the condition imposed by the notification is not a condition so prescribed. There is force in this argument; but, the acceptance of this contention does not advance the case of the petitioner, for, if the condition is not covered by cl. (a) of section 4(1), it falls under cl. (b) thereof. Under that clause, the Central Government may grant recognition to a stock exchange if the said stock exchange is willing to comply with " any other conditions ". It is said that the other conditions in section 4 (1) (b) must only be conditions relating to the area served by the stock exchange, its standing and the nature of the securities dealt with by it. This is not what cl. (b) of section 4(1) says. The conditions under cl. (b) of section 4(1) no doubt shall be such as may be imposed by the Government, having regard to the aforesaid three considerations, but they need not necessarily be 206 confined only to the said considerations. The Government may impose any conditions, no doubt germane to the recognition of a stock exchange, after consultation with its governing board, and having regard to the said considerations. It cannot be said that condition 2(i)(a) imposed on the Stock Exchange is not a condition germane to its recognition. The record discloses that the Central Government in recognising the Stock Exchange sought to avoid the consequential hardship on the members of the rival stock exchange and therefore imposed the said condition on the Stock Exchange, Bombay, as a condition for its recognition. The condition is germane to recognition of the Stock Exchange and is, therefore, a condition within the meaning of " any other conditions " in cl. (b) of sub section (1) of section 4 of the Act. (3): Learned counsel for the petitioner advanced a forcible argument questioning the validity of condition 2(i)(a) of the notification on the ground that it infringed article 14 of the Constitution. Elaborating his argument, the learned counsel stated that the said condition classified members of the Indian Stock Exchange Limited into two groups, one active members and the other who were not active members, and that that classification was arbitrary and had no reasonable relation to the object sought to be achieved by the notification. He further pointed out that the defining of active members as those who had themselves transacted business regularly on the floor of the Indian Stock Exchange Limited either on their own account or on account of their clients for 12 months immediately preceding August 6, 1957, was not only arbitrary and vague but also, if analysed, would lead to anomalies destructive of any standard of reasonableness. It is alleged in the affidavit filed by the petitioner that from the inception of the Indian Stock Exchange Limited, 199 members of the said Stock Exchange were actually trading on the floor of the said Exchange from time to time but for some reason or the other were not trading during the period of 12 months immediately preceding August 6, 1957; that there were 34 members of the said Stock Exchange who were regularly 207 transacting business on the floor of the said Stock Exchange prior to August 6, 1956, and for some time after August 6, 1956, but not during the entire period of 12 months from August 6, 1956 to August 6, 1957; and that there were 24 members of the said Stock Exchange who started transacting business regularly on the floor of the said Stock Exchange some time after August 6, 1956 and continued to transact business right upto and after August 6, 1957. It was asked what was the reasonable basis for confining the definition of active members to those who were carrying on business during the period of 12 months from August 6, 1956 to August 6, 1957, while excluding the aforesaid three categories who were equally active members and indeed more active than those included in the definition. It was further asked what was the justification for excluding a member who was an active member for years before the crucial year and irregularly conducted business on the floor of the Stock Exchange during the crucial year while including a member who might have been a newcomer or who might have been earlier a nominal member but began to do business regularly only during the said year. Emphasis was also laid upon the alleged elastic and indefinite content of the word " regular " and it was suggested that the said word could not possibly afford a precise standard. These are all weighty con siderations and we must confess that there is force in them. But there is the other side of the picture. It is well settled that a classification must have reasonable relation to the object sought to be achieved. The standard of reasonableness is inextricably conditioned by the extent and nature of the evil and the urgency for eradicating the same. The object of the notification is twofold. The main object is to carry out the purpose of the Act, namely, to prevent undesirable transactions in securities by regulating the business in them. The subsidiary object is to assuage the hardship that recognition of only one stock exchange would cause to the members of the other association. To achieve this twin object the classification is made between active members and inactive members. While 208 on the one hand the Government found it necessary to exclude the nominal members who would add their deadweight to the recognised association and bring down its efficiency and affect its disciplined conduct of business, on the other hand it gave opportunity to persons who were actively interested in the business to become regular members of the Stock Exchange, Bombay. There is every justification for excluding members who had not been taking active interest in the business, for, as we have already pointed out, the efficient carrying out of the business of the Stock Exchange depends upon the moral stature, high caliber, and genuine and active interest evinced by the members. The active members justified themselves to the preferential treatment by their sustained interest in the business whereas the members who were not active showed their continued indifference to that line of business. But the crux of the question is, what is the justification for fixing twelve months immediately preceding August 6, 1957, as the standard for active membership ? The Under Secretary to the Govern ment of India, Ministry of Finance, filed an affidavit describing the circumstances whereunder this classification was made. It discloses that the notification was issued after taking into consideration the representations made on behalf of both the Stock Exchanges and also the facts pertaining to the course of business conducted by the Indian Stock Exchange Limited. It also gives the vicissitudes through which the said Stock Exchange passed from the date of its formation and the circumstances under which the membership of that Exchange was divided into full members and associate members. It points out that the Indian Stock Exchange Limited became moribund in a few years and to revive its activities it allowed the members of the East India Chamber of Commerce, by relaxing its entrance fee and security deposit requirements in 1950 51 and created a new class of Associate Members, which facilitated the enrollment of hundreds of Associate Members on payment of a nominal entrance fee of Rs. 100. The Government on a consideration of the necessary data and presumably 209 having regard to the record of the activities of the various members fixed the activities in the crucial year 1956 57 as the standard of activity for membership. There is a presumption in favour of the State that there is a reasonable basis for the classification. Except the mere allegations in the affidavit which are not admitted, the petitioner has not placed before us any materials to ascertain that any other members, who were regularly doing business on the floor of the Indian Stock Exchange Limited before August 6,1956, temporarily suspended their business for one reason or other over which they had no control. No statement from the accounts has been produced to enable us to evaluate the activities of the members before the crucial date so as to enable us to form a view that really active members were excluded by the fixing of this period. Nor are we in a position to verify whether any of the members excluded were regularly doing business during a part of the year in continuation of their business in the earlier period. We cannot also say that the words "carrying on business regularly " are so vague that the parties did not understand their connotation, for it is admitted that some of the regular members applied for membership of the Stock Exchange, Bombay and most of them were admitted. There is also the fact that though three years have elapsed since the date of the notification no other member of the Indian Stock Exchange Limited thought fit to question the notification on the ground that the period fixed was unreasonable and that really active members were excluded from membership of the Stock Exchange, Bombay. So far as the petitioner is concerned, he was admittedly not an active member, though lie now pretends that he was doing business through other members. There is also no material placed before us to support the said assertion. If the classification, between active members and others who were not, is justifiable we hold it is the Government has to draw a line somewhere and to fix a period of activity reasonable in its opinion as a 27 210 standard to satisfy the test of " active member ". The burden which lies upon the petitioner who impeaches the validity of the classification to show that it violates the guarantee of equal protection has not been discharged. On the material placed before us we cannot say that the period fixed by the Government as the standard for ascertaining the active membership is arbitrary or unreasonable. We must make it clear that this finding must be confined only to the validity of the impugned notification dated August 31, 1956. The petition accordingly fails and is dismissed with costs. Petition dismissed. [/INST] The , was enacted with the object of preventing undesirable transactions in securities by regulating the stock exchange business, and the Act conferred an effective controlling power on the Central Government over the stock exchange. In exercise of the power conferred on the Central Government to make rules the Central Government made rules described as the Securities Contracts (Regulation) Rules, 1957, providing, inter alia, for the qualification for membership of a stock exchange seeking recognition etc. After the Act came into force two Companies, namely, the Native Share and Stock Brokers ' Association and the Indian Stock Exchange Limited doing stock exchange business in Greater Bombay applied for recognition under the Act. The Government after considering the merits of the companies and the relevant circumstances issued a notification dated August 31, 1957, recognising the Native Share and Stock Brokers ' Association under the name " The Stock Exchange, Bombay " subject to certain conditions. One of the conditions was that the members of the other com pany, India Stock Exchange Limited, would be entitled to apply for membership of the Stock Exchange, Bombay, provided they were active members of the Indian Stock Exchange Limited for 12 months immediately preceding August 6, 1957, and they were also eligible under r. 8(i) of the Securities Contracts (Regulation) Rules, 1957, to be members of a recognised stock exchange. Within the time granted for applying for membership a number 'of active members of the Indian Stock Exchange Limited applied for membership and were admitted as members of the recognised Stock Exchange. Though three years had elapsed after this no member other than the petitioner questioned the validity of the notification which was accepted and the recognised Stock Exchange became established. The petitioner, however, filed a petition under article 32 Of the Constitution praying that the Union be directed to withdraw or cancel the notification dated August 31, 1957, recognising the Stock Exchange, Bombay, under section 4 Of the . Subsequently on November 30, 1957, the Central Government 192 issued another notification applying section 13 Of the Act to Greater Bombay with the result that thereafter every contract in shares between the members of any unrecognised stock exchange in that city would be illegal. The contentions of the petitioner in the petition for the issue of a writ of mandamus were that under article 19(i)(g) of the Constitution he had a fundamental right to carry on business in shares and the two notifications in question imposed unreasonable restrictions on his right, that the notification dated August 31, 1957, was void as it was not sanctioned by the provisions Of section 4 Of the ' Act, that the condition 2(i)(a) of the said notification classifying members of the Indian Stock Exchange Limited as active members and members who were not active infringed fundamental right granted under article 14 Of the Constitution and as the said condition was not severable the entire notification was bad. The respondent besides controverting the said contentions further contended that as the petitioner had not questioned the validity of the Act itself the notification issued thereunder could not be questioned. Held, that the validity of a notification could not be ques tioned if it was issued under a self contained Act and restated the provisions of the Act the validity of which was accepted. If, however, the Act conferred a power on the State in general terms and the notification issued thereunder infringed any of the fundamental rights it could be attacked even though the Act was valid. The Stock Exchange Rules did not operate as a bar against the petitioner becoming a member of the Stock Exchange sub ject to the rules governing such application. The restrictions and conditions imposed under the notifica tion in question were not unreasonable. The condition restricting membership to active members only is germane to the recognition of the Stock Exchange and is therefore, a condition within the meaning of " any other conditions " in cl. (b) of sub section (1) Of section 4 Of the Act. The classification between active members and others was justifiable and the period fixed by the Government as the standard for ascertaining the active membership was neither arbitrary nor unreasonable. There was a presumption in favour of the State that there was a reasonable basis for the classification and the burden to prove that it violated the guarantee of equal protection lay on the petitioner who impeached it. </s>

<s>[INST] Summarize the following judgement: Appeal No. 131 of 1956. Appeal from the judgment and decree dated February 4, 1954, of the Allahabad High Court in Civil Misc. Writ No. 7976 of 1951. H. N. Sanyal, Additional Solicitor General of India and C. P. Lal, for the appellants. 363 V. M. Limaye, Mrs. E. Udayaratnam and section section Shukla, for the respondent. August 26. The Judgment of the Court was delivered by KAPUR J. This is an appeal against the judgment and order of the High Court of Allahabad on a certificate granted under articles 132 and 133(1)(c) of, the Constitution. The respondent herein was the petitioner in the High Court in one of the petitions which were filed in that Court covering the question which has been raised before us. The appellants before us were the respondents in the High Court. The respondent was the Ruler of the State of Bharatpur, now a part of Rajasthan, and is the owner of the property in dispute known as 'Kothi Kandhari Jadid ' in Agra. On January 28, 1950, the Agra Improvement Trust hereinafter called the Trust passed a resolution under section 5 of the U.P. Land Acqui sition (Rehabilitation of Refugees) Act, 1948, (U.P. XXVI of 1948) hereinafter called the Act for the acquisition of the property in dispute and expressed its willingness to act as " builder " within the meaning of the provisions of the Act. The Government declared the Trust as the " builder " on May 6, 1950, and an agreement was entered into on November 6, 1950, in terms of the Act, which was published on January 6, 1951. The Trust deposited a sum of Its. 57,800 being the estimated cost of the acquisition on February 27, 1951, and a notification under section 7 of the Act was published in the U.P. Gazette on July 21, 1951. By sub section (2) of section 7, upon the publication of the notification, the land acquired was to vest absolutely in the State. After the respondent was served with a notice calling upon him to appear before the Compensation Officer at Agra, he filed certain objections challenging the propriety of the acquisition and the vires of the Act. It was also alleged that the Collector, without deciding the matter, proceeded to take possession. The respondent, thereupon, filed a petition under article 226 of the Constitution in the 47 364 Allahabad High Court for a writ prohibiting the appellants from acquiring his land or interfering with his rights. This petition was dismissed by the High Court on February 2, 1954. But certain findings were given to which the appellants have taken objection. In its judgment the High Court observed : " In these petitions the prayer is that the Court may be pleased to grant a writ, direction or other suitable order prohibiting the State Government from acquiring the petitioners ' land or interfering with their rights in any other manner, and to grant such other suitable relief as the Court may deem fit. At the hearing, however, learned counsel for the petitioners stated more Specifically that the relief which the petitioners sought was a writ in the nature of certiorari to quash the State Government 's Notification under section 7 of the Act made on 11th July, 1951, or, in the alternative, the issue of a writ of mandamus directing the Compensation Officer in calculating the compensation payable to them under the Act to disregard the two provisos of sub section (1) of Section 11 of the Act The respondent submitted in the High Court that the Act contravened the provisions of article 31(2) and was not saved by the provisions of article 31(5) of the Constitution and that the Act infringed article 14 of the Constitution and several other contentions were also raised. The relevant provision of the Act which requires consideration is section 11 which runs as follows: 11. (1) Whenever any land is acquired under section 7 or 9 there shall be paid compensation the amount of which shall be determined by the Compensation Officer, in accordance with the principles set out in clauses first, second and third of sub section (1) and sub section (2) of section 23 of the Land Acquisition Act, 1894: Provided that the market value referred to in clause first of the said sub section shall be deemed to be the market value of such land on the date of publication of the notice under section 7 or 9, as the case may be, or on the first day of September, 1939, whichever is less: 365 Provided further that where such land has been held by the owner thereof under a purchase made before the first day of April, 1948, but after the first day of September, 1939, by a registered document, or a decree for pre emption between the aforesaid dates, the compensation shall be the price actually paid by the purchaser or the amount on payment of which he may have acquired the land in the decree for pre emption, as the case may be. " The High Court held that these two provisos were invalid and that devoid of these offending provisos, section 11(1) of the Act was not invalid and consequently the order of the appellants was a valid order and thus the writ for certiorari was refused. In regard to the prayer for a writ of mandamus, the High Court observed: " Nor do we think that we should order the issue of mandamus directing the Compensation Officer in determining the compensation payable to the petitioners to ignore the provisos to section 11(1). We have held those provisos to be invalid. The Compensation Officer, for some reason of which we are not aware, has not yet embarked on the task of determining the compensation, but when he does so we assume that he will be guided by the opinion we have expressed; we cannot assume that he will act otherwise ". The petition was therefore dismissed but the appellants were ordered to pay costs. It is against this judgment that the appellants have appealed to this Court on a certificate. No objection was taken by the respondent to the competency of the appeal on the ground that the petition had been dismissed and the legality of the certificate has not been challenged before us. The only question for decision is whether the two provisos to section 11(1) of the Act are unconstitutional because of the provisions of section 299(2) of the Government of India Act, 1935. The Constitution was amended by the Constitution (First Amendment) Act, 1951, and article 31 B was inserted in the Constitution which is as follows: 366 " Without prejudice to the generality of the provisions contained in article 31A, none of the Acts and Regulations specified in the Ninth Schedule nor any of the provisions thereof shall be deemed to be void, or ever to have become void, on the ground that such Act, Regulation or provision is inconsistent with, or takes away or abridges any of the rights conferred by, any provisions of this Part, and notwithstanding any judgment, decree or order of any court or tribunal to the contrary, each of the said Acts and Regulations shall, subject to the power of any competent Legislature to repeal or amend it, continue in force ". By section 5 of the Constitution (Fourth Amendment) Act of 1955, which was published on April 27, 1955, the Act was included in the Schedule and is item 15. It was argued on behalf of the appellants that by the inclusion of the Act in the Ninth Schedule, the ground of unconstitutionality of the Act because of section 299(2) of the Government of India Act is no longer available to the respondent and that what was provided as safeguard in section 299(2) of the Government of India Act has been incorporated in the Constitution and therefore any unconstitutionality arising as a result of contravention of section 299(2) of the Government of India Act is cared by article 31 B of the Constitution. This question was raised and decided in Dhirubha Devisingh Gohil vs The State of Bombay(1). It was held that section 299(2) of the Government of India Act was in substance a fundamental right which was lifted bodily as it were from the Government of India Act into Part III of the Constitution. Therefore the protection under article 31 B against the violation of the fundamental rights mentioned therein must extend to the rights under section 299 of the Government of India Act also. The following passage from that judgment at page 695 is important and applicable to the facts of the present case : " What article 31 B protects is not a mere 'contravention of the provisions ' of Part III of the Constitution but an attack on the grounds that the impugned Act is ' inconsistent with or takes away or (1) ; , 695. 367 abridges any of the rights conferred by any provisions of this Part: One of the rights secured to a person by Part III of the Constitution is a right that his property shall be acquired only for public purposes and under a law authorising such acquisition and providing for compensation which is either fixed by the law itself or regulated by principles specified by the law That is also the very right which was previously secured to the person under section 299 of the Government of India Act ". In view of the judgment of this Court in Dhirubha Devisingh Gohil 's case (1) the ground of unconstitutionality based on the contravention of section 299 of the Government of India Act would not be available to the respondent. But it was argued on behalf of the respondent that the amendment of the Constitution which came after the decision of the Allahabad High Court cannot validate the earlier legislation which, at the time it was passed was unconstitutional and reliance was placed upon the judgment of this Court in Saghir Ahmad vs The State of U. P. (2). But in the present case the provisions of the Act have been ' specifically saved from any attack on their constitutionality as a consequence of article 31 B read with the Ninth Schedule, the effect of which is that the Act cannot be deemed to be void or ever to have become void on the ground of its being hit by the operation of the Government of India Act. In the result, this appeal is allowed and that portion of the judgment of the High Court which declared the two provisos of s.11(1) of the Act to be void, is set aside. The High Court awarded costs against the appellant. That order is also set aside. But in view of the fact that the appeal has succeeded because of a subsequent event, i.e., the incorporation of the Act in the Ninth Schedule, we order that the parties do bear their own costs in this Court. Appeal allowed. [/INST] The property of the respondent was acquired under the U. P. Land Acquisition (Rehabilitation of Refugees) Act, 1948. The respondent challenged the constitutionality of the Act by way of a writ petition and though the High Court dismissed the petition it held that the two provisos to s.11 of the Act were invalid as they offended section 299(2) of the Government of India Act. Subsequently the Constitution (Fourth Amendment) Act, 1955, included the U. P. Act in the Ninth Schedule as item NO. 15. The appellant contended that the inclusion of the Act in the Ninth Schedule protected it under article 31 B of the Constitution from any challenge under section 299(2) of the Government of India Act. Held, that the U. P. Act could not be assailed on the ground of unconstitutionality based on a contravention of section 299 of the Government of India Act. The provisions of the Act having been specifically saved by article 31 B read with the Ninth Schedule, the Act could not be deemed to be void or to ever have become void on the ground of its having contravened the provisions of the Government of India Act. Dhirubha Devisingh Gohil vs The State of Bombay, ; , relied on. Saghir Ahmad vs The State of U. P., ; , not applicable. </s>

<s>[INST] Summarize the following judgement: os. 246 of 1956 and 2 of 1959 (Under Article 32 of the Constitution of India for enforcement of Fundamental Rights) with C. As. 126 to 128 of 1958. August 16, 17. N. C. Chatterjee, with N. C. Chakravarti, Dipti Bose and section C. Mazumdar for the petitioners in Petition No. 246 of 1956 and with P. Chaudhuri, D. N. Mukherji and B. N. Ghose, for the appellants in C. As. 126 128 of Taxation (on goods carried by road and inland waterways) Act, contravenes article 301 of the Constitution. Article 301 means freedom from all restrictions including tax laws. Articles 245 and 246 are subject to article 301. It is wrong to say that taxation is outside the scope of article 301. Article 304(a) itself contemplates 'the imposition of tax. Article 304(b) may also refer to tax in certain circumstances, in cases other than those covered by article 304(a). In enacting article 301 the Constituent Assembly rejected section 297 of the Government of India Act, 1935, and deliberately adopted the Australian section 92. Movement is an essential ingredient of trade and commerce and there must be no fetter on it; any taxation would be a fetter. Taxation is not outside the ambit of article Bom. 680, 683. What is commerce is brought out in the following decisions : ; , 68; ; , 578 ; ; ; 1936 A.C. 573, 627 A.I.R. 1954 Raj. 217. B. Sen and section N. Mukherjee, for the petitioners in Petn. No. 2/59. Article 301 sets out the general freedom and article 302 the restrictions that can be placed on this freedom. Non discrimination is one of the aspects of the freedom in article 301. Article 306 as it stood before its deletion, spoke of taxation or duty on import or export of goods between States. It postulated 'taxes ' in article 301 ; but for the non obstante clause it would have been affected by article 301. The Supreme Court has discussed the scope of article 301 in ; , 1079, 1081, 1088. The decision Of Chagla, C. J., in I.L.R. regarding scope of article 301 was not reversed by the Supreme Court. B. K. P. Sinha and A. G. Ratnaparkhi. With regard to the scope of article 301 reference is invited to the decision in A.I.R. 1954 Hyd. 207, A.I.R. 1958 M.P. 33, A.I.R. 1956 M.B. Mad. 933; , , 56 and regarding the meaning of export to the decision in I.L.R. 1955 Tr. Co. 123. M. C. Setalvad, Attorney General of India, with section M. Lahiri, Advocate General of Assam and Naunit 812 Lal, for the respondents in Petition No. 246 of 1956 and Civil Appeals Nos. 126 128 of 1958 and Petition No. 2 of 1959, and with T. M. Sen, for the Intervener, Attorney General of India. Power to tax is an incident of sovereignty. The Power is divided between the Union and the States. Part XII of the Constitution deals with taxation several aspects of it. All restrictions on the powers to tax are contained in Part XII which is self contained. Part XII1 deals with something else. article 301 deals with freedom of inter State as well as intra state trade and is different from section 92 of the Australian Constitution. In Article 301 freedom of trade only means freedom from trade barriers it does not mean freedom from taxation. Taxation simpliciter was not within the terms of article 301. Taxation is not a restriction within the meaning of Part XIII. Article 302 uses the words " in the public interest ". If the restrictions contemplated therein included tax, then every tax will have to be justified to be in the public interest. Restrictions do not include taxing measures, otherwise there will be a power of judicial review in respect of all such taxing measures. Cooley 's Consti tutional Limitations, 8th Edition, Vol. II, p. 986 988. Taxation is a peculiarly legislative activity. It is likely that if the Constitution makers wanted to put a bar on the taxation power, it would have been placed 'in Part XII and not left to be inferred from article 301 ; ; , 136 137: The word " restriction " is very inapt to describe taxation. Apart from Part III all restrictions must be found in Part XIII so far as taxation is concerned. Article 301 does not start with the words " notwithstanding anything in this Constitution " because it is concerned only with a small sphere of freedom of trade and commerce and not with taxation. Restriction in these Articles means restriction on movement. The result of holding otherwise would be that even for intrastate taxes the States will have to go to the President and the legislation will be subject to judicial review. If Part III as well as article 301 apply to taxing measures, the question will arise which test would 813 the Court apply " reasonable in the interest of the general public " as envisaged by Part III or " in the interest of the public " envisaged by article 302. This indicates that neither Part III nor article 301 applies to taxing measures. Article 303 deals with preference and discrimination between one State and another. It is restricted to legislation with respect to the entries regarding trade and commerce within the State, like entry 26, list II and the entries 33 and 42 of list 111. Nothing in article 303 indicates that the freedom there includes freedom from taxation. Article 304(a) deals with discrimination and not with taxation simpliciter. It lays no restriction on the State taxing goods in its own territory: Article 304(a) cannot be interpreted as throwing any light on the scope of article 301. Section 297 of the Government of India Act, 1935, was the predecessor of article 304. Article 304(a) assumes that there is an existing tax on goods which is not levied under 304(a). There is an intermediate position also. Article 301 should be restricted to legislation which is directly with respect to trade and commerce and not to legislation, which is in pith and substance not with respect to trade but only incidentally or indirectly affects trade and commerce. The Assam Act passed under entry 56 is not a legislation with respect to trade and commerce. Mahabir Prasad, Advocate General for the State of Bihar, B. K. Saran and K. L. Mehta for the Intervener, State of Bihar. Article 301 merely concerns itself with the restrictions on the free flow of trade and commerce. It deals with policy of protection. Article 302 also contemplates movement and passage of goods. Restriction does not as a rule imply taxation. If taxation is imposed with a view to restrict goods passing from one State to another, it will become a restriction under article 301. Article 304(a) permits tax on entry of goods equal to the tax on such goods which are in the State. Octroi may be hit by article 301 if it is not saved by other provisions. It 104 814 is a restriction within article 301 when it obstructs the movement of trade. section M. Sikri, Advocate General for the State of Punjab, N. section Bindra and T. M. Sen for the Intervener, the State of Punjab. It is impossible to determine whether a particular tax places reasonable restrictions and whether it is in the public interest. Article 301 is concerned with the right of passage generally with respect to trade and commerce and article 19(1)(g) with the right of an individual: 1955 P.L.R. Raj. 794; A.I.R. 1960 Andhra 234. Article 302 assumes legislation of Parliament under the entries relating to trade and commerce. R. Ganapathi Iyer and T. M. Sen, for Intervener No. 3, the State of Madras adopted the submissions made by the Attorney General. G. C. Kasliwal, Advocate General for the State of Rajasthan and T. M. Sen for the Intervener, the State of Rajasthan adopted the submissions made by the Attorney General. G. C. Mathur and C. P. Lal, for the Intervener No. 6, the State of Uttar Pradesh, adopted the submissions made by the Attorney General. N. C. Chatterjee in reply. Article 301 is an over. riding provision over all other provisions. It is much wider than section 297 of the Government of India Act. It applies to all pecuniary burdens and commands that trade shall be free from all pecuniary burdens: 22 C.L.R. 566; 1936 A.C. 573, 629 630. 1960. September 26. The Judgment of Sinha, C. J., was delivered by Sinha, C. J. The judgment of Gajendragadkar, Wanchoo and Das Gupta, JJ., was delivered by Gajendragadkar, J. and Shah, J., delivered his own judgment. SINHA C. J. These appeals on certificates granted under article 132 of the Constitution by the High Court of Judicature in Assam and Writ Petitions under article 32 of the Constitution impugn the constitutionality of the Assam Taxation (on Goods Carried by Roads or Inland Waterways) Act, (Assam Act XIII 815 of 1954), which hereinafter will be referred to as the Act. The appellants moved the High Court under article 226 of the Constitution challenging the validity of the Act. The High Court by its judgment and order dated June 6, 1955, dismissed the writ petitions. Thereupon, the appellants obtained the certificates that the cases involved substantial questions of law as to the interpretation of the Constitution. The petitions under article 32 of the Constitution were moved in this Court for the same purpose of challenging the vires of the Act. The appellants and the petitioners will , in the course of this judgment, be referred to, for the sake of convenience, as the appellants. The State of Assam, the Commissioner of Taxes, appointed under section 6 of the Act, and the Superintendent of Taxes are the respondents to the appeals and the writ petitions. It appears that the appellants are growers of tea in West Bengal or in Assam and carry their tea to the market in Calcutta from where the tea is sold for consumption in the country or is exported for sale out of the country. The sale of tea inside Assam bears a very small proportion to the tea produced and manufactured by the appellants. Thus the bulk of tea produced and manufactured is carried out of Assam, either for internal consumption in India or for export abroad. Besides the tea carried by rail, a large quantity of tea is carried by road or by inland waterways from Assam to Bengal and in some of these cases, from one part of West Bengal to another part of the same State through inland waterways, only a few miles of which pass through the territory of the State of Assam. The Assam Legislature passed the Act which received the assent of the Governor of Assam on April 9, 1954, and came into force on and from June 1, 1954. The purpose of the Act is to levy taxes on certain goods carried by road or inland waterways in the State of Assam. On June 30, 1954, the second respondent, the Commissioner of Taxes, Assam, in exercise of the powers conferred upon him by subs. (3) of section 7 of the Act,, published a notification in the Assam Government Gazette bearing date June 21, 816 1954, by which he notified for general information that the return under the aforesaid Act and the rules made thereunder for the period commencing June 1, 1954 to September 30, 1954, should be furnished by October 30, 1954. The said notification also demanded the furnishing of quarterly returns before January 30, 1955 and April 36, 1955, for the quarters ending December 31, 1954 and March 31, 1955, respectively. The appellants in some of the cases, in pursuance of demand notices, submitted returns to the third respondent, the Superintendent of Taxes, in the prescribed form in respect of tea despatched and carried up to September 30, 1954, under protest. They also paid the tax demanded under protest. The appellants moved the High Court of Judicature in Assam under article 226 of the Constitution challenging the validity of the said Act and praying for the issue of a writ of mandamus directing the respondents to forbear from giving effect to the provisions of the Act and the notification issued under the Act and/or a writ of prohibition or any other appropriate writ restraining them from taking steps under the provisions of the Act. The appellants challenged the validity of the Act mainly on the grounds that (1) the Act, rules and the notifications under the Act were ultra vires the Constitution, because the Act was repugnant to the provisions of article 301 of the Constitution as the tax on carriage of tea through the State of Assam had the effect of interfering with the freedom of trade, commerce and intercourse; (2) that tea being a controlled industry under the provisions of the Tea Act XXIX of 1953, the Union Government alone had the power to regulate the manufacture, production, distribution or transport of tea and the jurisdiction of the Assam Legislature was thus completely ousted; (3) that the tax under the Act was nothing but a duty of excise, in substance, though not in form, and was thus an encroachment on the Central legislative field within the meaning of entry 84 of the Union List. The impugned Act was also challenged on the ground that it was discriminatory and thus void under article 14 of 817 the Constitution. The competence of the Assam Legislature to legislate on the subject was also questioned. The respondents opposed those petitions under article 226 of the Constitution in the High Court. It was denied by the State that the Act or the rules made thereunder or the notifications issued thereunder were ultra vires the Constitution or that the Act contravened the provisions of article 301 of the Constitution or that it was an encroachment on the sphere of the Union Legislature or was in any way in conflict with the provisions of the Tea Act XXIX of 1953. The case of the respondents was that the Act was in pith and substance, a legislation to levy tax on certain classes and types of goods carried by road or inland waterways, strictly within entry No. 56 of the State List. It was also asserted that the Act was within the legislative competence of the Assam Legislature and was not within the terms of the prohibition contained in article 301 of the Constitution. These petitions were heard by a Special Bench of the Assam High Court, which, by its judgment and order dated June 6, 1955, dismissed them holding that the Act was not unconstitutional. Two separate, but concurring judgments, were delivered by Sarjoo Prasad, C. J. and Ram Labbaya, J. The learned Chief Justice, in the course of his judgment, held that the Act contemplated imposition of a tax on transport or carriage of goods within the Meaning of entry 56 of List II and did not amount to interference with the freedom of trade and commerce within the meaning of article 301 of the Constitution ; that the pith and substance of the impugned Act was that it was a taxing legislation which was not directly concerned with trade and commerce, though it might indirectly entrench on the field of trade and commerce and that article 301 was not directly concerned with taxing laws. He also held that the impost levied by the Act was not in the nature of an excise duty and that there was no substance in the contention that it encroached upon entry 84 of the Union List 1. It was also held that the impugned Act did not, in any way, come in conflict with the control of the tea industry 818 introduced by the Central Legislation, namely, the Tea Act XXIX of 1953. Ram Labhaya, J., examined the provisions of the impugned Act in great detail and came to the conclusion that the element of carriage was expressly made a condition of liability to tax under the impugned Act and it was, therefore, distinguishable from a duty of excise and came directly under entry 56 of List 11. On the crucial question arising in this case, his conclusion was that taxation per se has not the effect of abridging or curtailing the freedom contemplated by article 301 ; that articles 302 and 304 restrict the powers of Parliament and the State Legislatures in the matter of legislation under entries 42 of List 1, 26 of List 11 and 33 of List III and that restrictions properly so called on the movement of goods and traffic must find their justification from the provisions of Part XIII of the Constitution ; that the impugned Act made provision for taxation which did not directly impinge upon the freedom of trade, commerce and intercourse within the meaning of article 301. His view also was that in some cases taxation may have the effect of placing restrictions on movement of goods and traffic, and if it has that effect, it comes within the mischief of article 301. In the result, his conclusion was that the impugned Act in its pith and substance fell within the ambit of entry 56 of List 11. He also examined the terms of the Union legislation, Tea Act No. XXIX of 1953, and came to the conclusion that the impugned Act did not trespass upon the field of the controlled industry of tea. His conclusion with reference to the argument of discrimination based on article 14 was that there was no proof forthcoming of any real discrimination between persons and things. With these conclusions Deka, J., the third Judge, entirely agreed. From the judgment of the High Court the appellants have come up in appeal on certificates granted by the High Court. The two petitions under article 32 of the Constitution were filed on behalf of two other producers of tea. They raise the same questions as arise for determination in the three appeals from the decision of the Assam High Court. They have all been 819 heard together And will be dealt with by a common judgment. Mr. Chatterjee, on behalf of the appellants, contended that the impugned Act imposed fetters on the free flow of trade and commerce in respect of tea and jute, the two commodities dealt with by the Act and, A therefore,, contravened the provisions of article 301 of the Constitution; that the legislation was beyond the legislative competence of the Assam Legislature and was not authorised by entry 56 in List II ; that the tea industry was a controlled industry as declared by Parliament and directly came under entry 52 of List 1 ; that it was a colourable piece of legislation which, in its true effect, was a levy of a duty of excise which could only be done by the Union Legislature, and finally, that it contravened article 14 of the Constitution. The learned Attorney General on behalf of the State of Assam as also of the Union contended, on the other hand, that taxation simpliciter was not within the terms of article 301. Taxation as such is not a restriction within the meaning of Part XIII. It is an attribute of sovereignty, which is not justiciable. The power to tax is a peculiar legislative function with which the courts are not directly concerned and that, therefore, the freedom contemplated by article 301 does not mean freedom from taxation and that taxation is not included within the connotation of the term. " Restriction " in the context of Part XIII meant legislation which had the effect of impeding the free flow of goods and traffic by erection of tariff walls, for example, a tariff wall, if erected by a Legislature, may be justiciable, but not legislation simply imposing a tax for purposes of revenue. He further contended that Part XII of the Constitution is a self contained part dealing with finance etc., even as Part XIII is a selfcontained part dealing with trade, commerce and intercourse within the territory of India. He emphasis ed that the American and Australian decisions are no guide to the decision of the points in controversy in the present case, as the framework of their respective constitutions was entirely different from the Indian 820 Constitution. Particularly, the Australian Constitution did not contain anything corresponding to Parts III and XII of our Constitution. According to his contention " freedom " in Part XIII meant freedom from discriminatory taxation and freedom from trade barriers. The Advocate General of the several States who appeared in this case supported the viewpoint stressed by the learned Attorney General. The most important question that falls to be determined in this batch of cases is whether the impugned Act infringes the provisions of Part XIII of the Constitution, with particular reference 'to article 301. Part XIII is headed "Trade Commerce and Intercourse within the Territory of India". Article 301, which is the opening Article in this Part is in very general terms, which are as under: " Subject to the other provisions of this part, trade, commerce and intercourse throughout the territory of India shall be free ". It is clear that this Part is not subject to the other provisions of the Constitution and the generality of the words used in article 301 is cut down only by the provisions of the other Articles of this Part ending with article 307. It has not been and it could not be contended that the generality of the expressions used in article 301 admit of any Exceptions or explanations not occurring in this Part itself, nor has it been contended that trade, commerce and intercourse are subject to any other fetters. All parties are agreed that trade, commerce and intercourse throughout the territory of India have been emphatically declared by the Constitution to be free, but there is a wide divergence of views on the answer to the question " free from what ?" It has been contended on behalf of the appellants that the answer to this question must be that trade, commerce and intercourse throughout India, shall be free from everything including taxation. On the other hand, the contention on behalf of the Union Government and the State Government is that the freedom envisaged by article 301 does not include immunity from taxation and that freedom means that there shall be no trade barriers or tariff 821 walls shutting out commodities, traffic and intercourse between individuals, and no shutting in. In order fully to appreciate the implications of the provisions of Part XIII of the Constitution, it is necessary to bear in mind the history and background of those provisions. The Constitution Act of 1935 (Government of India Act, 26 ( 'Teo. 5, Ch. 2) which envisaged a federal constitution for the whole of India, including what was then Indian India in contradistinction to British India, which could not be fully implemented and which also introduced full provincial autonomy enacted section 297 prohibiting certain restrictions on internal trade in these terms: " 297. (1) No Provincial Legislature or Government shall (a) by virtue of the entry in the Provincial Legislative List relating to trade and commerce within the Province, or the entry in that list relating to the production, supply, and distribution of commodities, have power to pass any law or take any executive action prohibiting or restricting the entry into, or export from the Province of goods of any class or description ; or (b) by virtue of anything in this Act have power to impose any tax, cess, toll or due which, as between goods manufactured or produced in the Province and similar goods not so 'manufactured or produced, discriminates in favour of the former, or which, in the case of goods manufactured or produced outside the Province, discriminates between goods manufactured or produced in one locality and similar goods manufactured or produced in another locality. (2) Any law passed in contravention of this section shall, to the extent of the contravention, be invalid. " It will be noticed that the prohibition contained in the section quoted above applied only to Provincial Governments and Provincial Legislatures with reference to entries in the Provincial Legislative List relating to trade and commerce within the Province and to production, supply and distribution of commodities. That section dealt with prohibitions or 105 822 restrictions in respect of import into or export from a Province, of goods generally. It also dealt with the power to impose taxes etc. and prohibited discrimination against goods manufactured or produced outside a Province or goods produced in different localities. Part XIII of the Constitution has introduced all those prohibitions, not only in respect of State Legislatures, but of Parliament also. In other words, Part XIII enlarges the scope of the inhibitions and lays down the limits within which the Union Parliament or a State Legislature may legislate with reference to trade, commerce and intercourse inter State, intrastate and throughout the territory of India. In this connection it has got to be remembered that before the commencement of the Constitution about two thirds of India was directly under British rule and was called ' British India ' and the remaining about one third was being directly ruled by the Princes and was known as Native States. There were a large number of them with varying degrees of sovereignty vested in them. Those rulers had, broadly speaking, the trappings of a Sovereign State with power to impose taxes and to regulate the flow of trade, commerce and intercourse. It is a notorious fact that many of them had erected trade barriers seriously impeding the free flow of trade, commerce and intercourse, not only shutting out but also shutting in commodities meant for mass consumption. Between the years 1947 and 1950 almost all the Indian States entered into engagements with the Government of India and ultimately merged their individualities into India as one political unit, with the result that what was called British India, broadly speaking, became, under the Constitution, Part A States, and subject to certain exceptions not relevant to our purpose, the Native States became Part B States. We also know that before the Consti tution introduced the categories of Part A States, Part B States and Part C States (excluding Part D relating to other territories), Part B States themselves, before their being constituted into so many units, contained many small States, which formed themselves into 823 Unions of a number of States, and had such trade barriers and custom posts, even inter se. But even after the merger, the Constitution had to take notice of the existence of trade barriers and therefore had to make transitional provisions with the ultimate objective of abolishing them all. Most of those Native States, big or small, had their own taxes, cesses, tolls and other imposts and duties meant not only for raising revenue, but also as trade barriers and tariff walls. It was in the background of these facts and circumstances that the Constitution by article 301 provided for the abolition of all those trade barriers and tariff walls. When for the first time in the history of India the entire territory within the geographical boundaries of India, minus what became Pakistan, was knit into one political unit, it was necessary to abolish all those trade barriers and custom posts in the interest of national solidarity, economic and cultural unity as also of freedom of trade, commerce and intercourse. It is in the background of these facts and circumstances that we have to determine the ambit of the freedom contemplated by article 301. That Article envisages freedom of trade and commerce with reference to different parts of India as also freedom of movement of individuals in relation to their trade and other activities. Hence, article 301 has reference not only to trade and commerce, as ordinarily understood in common parlance, but also in relation to individuals who have to move with their goods and commodities throughout the length and breadth of the country. Movement of traffic in goods and commodities as also of persons can be by railway or airways, by road or by inland waterways etc., etc. Carriage of goods and passengers by railway, by sea or by air or by national waterways is covered by entry 30 of List 1 and taxes on railway fares and freights and terminal taxes on goods or passengers carried by railway, sea or air come under the purview of entry 89 in the same List. On the other hand, taxes on goods and passengers carried by road or inland waterways come under entry 56 of List II (State List). It will thus be seen that the Constitution makers contemplated taxes 824 on goods and passengers to be imposed by the Parliament on journeys covered by railway or by sea or by air; and by State Legislatures on journeys by road or inland waterways. The power to tax is inherent in sovereignty. The sovereign State, in some cases the Union, in other cases the State, has the inherent power to impose taxes in order to raise revenue for purposes of State. Such a sovereign power ordinarily is not justiciable, simply because the State in its legislative department has to determine the policy and incidence of taxation. It is the St ate which determines, through the Legislature, what taxes to impose, on whom and to what extent. The judicial department of the State is not expected to deal with such matters, because it is not for the courts to determine the policy and incidence of taxation. This power of the State to raise finances for Government purposes has been dealt with by Part XII of the Constitution, which contains the total prohibition of levy or collection of tax, except by authority of law (article 265). This Part also deals with the distribution of revenue between the Union and the States. It does not clearly demarcate the taxing authority as between the Union and the States and therefore had to indicate in great detail what taxes shall be levied for the benefit of the Union or for the benefit of the States and what taxes may be levied and collected by the Union for the benefit of the States and the principle according to which those revenues have to be distributed amongst the constituent States of the Union. In short, Part XII is a self contained series of provisions relating to the finances of the Union and of the States and their interrelation and adjustments (ignoring the provisions in Chapter 2 of that Part relating to borrowing and Chapter 3 relating to property contracts etc.). Like Part XIII, Part XII also is not expressed to be subject to the other provisions of the Constitution. Hence, both Parts XII and XIII are meant to be self contained in their respective fields. It cannot, therefore, be said that the one is subject. to the other. But it has been argued on behalf of the appellants that the pro. visions of article 304 indicate that taxation is within 825 the purview of the overriding provisions, as they have been characterised, of article 301. But a close examination of the provisions of article 304 would show that it is divided into two parts, viz., (1) dealing with imposition of discriminatory taxes by a State Legislature; and (2) relating to imposition of reasonable restrictions, thus showing that imposition of taxes, discriminatory or otherwise, is a class apart from imposition of reasonable restrictions on freedom of trade, commerce and intercourse. The second part of article 304 dealing with imposition of reasonable restrictions on freedom of trade, commerce and intercourse by a State Legislature is on a line with the imposition by Parliament of such restrictions between one State and another or within any part of the territory of India in public interest, contained in article 302. The provisions of article 303 further make it clear that the giving Of preference to one State over another or discrimination between one State and another are clearly within the purview of Part XIII, that is to say, they are calculated to impede the freedom of trade, commerce and intercourse. There is a prohibition against Parliament as also against the Legislature of a State making any law giving preference to one State over another or making or authorising the making of any discrimination between one State and another. But the most significant words in connection with giving preference or making discrimination as envisaged in article 303 are with reference to " any entry relating to trade and commerce in any of the Lists in the Seventh Schedule", that is to say, entry 42 in List 1, entry 26 in List II and entry 33 in List III of the Seventh Schedule. Hence, any legislation under those entries which has the effect of directly interfering with trade, commerce and intercourse being free throughout the territory of India has to be struck down as infringing the provisions of article 301. But in this matter also the Constitution makers had before them situations of emergency, say for example, created by drought or overflooding resulting in scarcity of commodities like foodgrains etc. In such a situation, Parliament has been armed with the power to grant preference to one State over 826 another or to make a discrimination as between two and more States if the Law dealing with such a situation declares that it is necessary to do so in order to deal with an emergency like the one referred to above. In this connection it may not be emphasised that article 303 has not been very accurately worded inasmuch as the non obstante clause, with which the Article opens, has reference only to article 302, which empowers Parliament to impose by law restrictions on the freedom of trade, commerce or intercourse, inter State or intraState, in public interest. But the non obstante clause is immediately followed by reference not only to Parliament but also to the Legislature of a State which are armed with the power of giving preference or making discrimination as aforesaid in respect of the entries relating to trade and commerce in any of the lists in the Seventh Schedule. Here, no reference is made to intercourse. But as the present controversy is not concerned with the freedom of intercourse, as distinguished from the freedom of trade and commerce, no more need be said about that omission. Learned counsel for the appellants vehemently argued that the freedom contemplated by article 301 Must be construed in its most comprehensive sense of freedom from all kinds of impediments, restraints and trade barriers, including freedom from all taxation. In my opinion, there is no warrant for such an extreme position. It has to be remembered that trade, commerce and intercourse include individual freedom of movement of every citizen of India from State to State, which is also guaranteed by article 19(1)(d) of the Constitution. The three terms used in article 301 include not only free buying and selling, but also the freedom of bargain and contract and transmission of informa tion relating to such bargains and contracts as also transport of goods and commodities for the purposes of production, distribution and consumption in all their aspects, that is to say, transportation by land, air or water. They must also include commerce not only in goods and commodities, but also transportation of men and animals by all means of transportation. Commerce would thus include dealings over the telegraph, 827 telephone or wireless and every kind of contract relating to sale, purchase, exchange etc. of goods and commodities. Viewed in this all comprehensive sense taxation on trade, commerce and intercourse would have many ramifications and would cover almost the entire field of public taxation, both in the Union and in the State Lists. It is almost impossible to think that the makers of the Constitution intended to make trade, commerce and intercourse free from taxation in that comprehensive sense. If that were so, all laws of taxation relating to sale and purchase of goods on carriage of goods and commodities, men and animals, from one place to another, both inter State and intraState, would come within the purview of article 301 and the proviso to article 304 (b) would make it necessary that all Bills or Amendments of pre existing laws shall have to go through the gamut prescribed by that proviso. That will be putting too great an impedi ment to the power of taxation vested in the States and reduce the States ' limited sovereignty under the Constitution to a mere fiction. That extreme position has, therefore, to be rejected as unsound. In this connection, it is also pertinent to bear in mind that all taxation is not necessarily an impediment or a restraint in the matter of trade, commerce and intercourse. Instead of being such impediments or restraints, they may, on the other hand, provide the wherewithal; to improve different kinds of means of transport, for example, in cane growing areas, unless there are good roads, facility for transport of sugarcane from sugarcane fields to sugar mills may be wholly lacking or insufficient. In order to make new roads as also to improve old ones, cess on the grower of cane or others interested in the transport of this commodity has to be imposed, and has been known in some parts of India to have been imposed at a certain rate per maund or ton of sugarcane transported to sugar factories. Such an imposition is a tax on transport of sugarcane from one place to another, either intrastate or inter State. It is the tax thus realised that makes it feasible for opening new means of 828 communication or for improving old ones. It cannot, therefore, be said that taxation in every case must mean an impediment or restraint against free flow of trade and commerce. Similarly, for the facility of passengers and goods by motor transport or by railway, a surcharge on usual fares or freights is levied, or may be levied in future. But for such a surcharge, improvement in the means of communication may not be available at all. Hence, in my opinion, it is not correct to characterise a tax on movement of goods or passengers as necessarily connoting an impediment, or a restraint, in the matter of trade and commerce. That is another good reason in support of the conclusion that taxation is not ordinarily included within the terms of article 301 of the Constitution. In my opinion, another very cogent reason for holding that taxation simpliciter is not within the terms of article 301 of the Constitution is that the very connotation of taxation is the power of the State to raise money for public purposes by compelling the payment by persons, both natural and juristic, of monies earned or possessed by them, by virtue of the facilities and protection afforded by the State. Stich burdens or imposts, either direct or indirect, are in the ultimate analysis meant as a contribution by the citizens or persons residing in the State or dealing with the citizens of the State, for the support of the Govern ment, with particular reference to their respective abilities to make such contributions. Thus public purpose is implicit in every taxation, as such. There. fore, when Part XIII of the Constitution speaks of imposition of reasonable restrictions in public interest, it could not have intended to include taxation within the generic term " reasonable restrictions ". This Court has laid it down in the case of Ramjilal vs Income Tax Officer, Mohindargarh (1) that imposition and collection of taxes by authority of law envisaged by article 265 is outside the scope of the expression " deprivation of property " in article 31(1) of the Constitution. Reasonable restrictions as used in Part III or Part XIII of the Constitution would in most cases be less (1) ; ,136. 829 than total deprivation of property rights. Hence, Part XII dealing with finance etc. as already indicated, has been treated as a Part dealing with the sovereign power of the State to impose taxes, which must always mean imposing burdens on citizens and others, in public interest. If a law is passed by, the Legislature imposing a tax which in its true nature and effect is meant to impose an impediment to the free flow of trade, commerce and intercourse, for example, by imposing a high tariff wall, or by preventing imports into or exports out of a State, such a law is outside the significance of taxation, as such, but assumes the character of a trade barrier which it was the intention of the Constitution makers to abolish by Part XIII. The objections against the contention that taxation was included within the prohibition contained in Part XIII may thus be summarised: (1) Taxation, as such, always implies that it is in public interest. Hence, it would be outside particular restrictions, which may be characterised by the courts as reasonable and in public interest. (2) The power is vested in a sovereign State to carry on Government. Our Constitution has laid the foundations of a welfare State, which means very much expanding the scope of the activities of Government and administration, thus making it necessary for the State to impose taxes on a much larger scale and in much wider fields. The legislative entries in the three Lists referred to above empowering the Union Government and the State Governments to impose certain taxations with refe rence to movement of goods and passengers would be rendered ineffective, if not otiose, if it were held that taxation simpliciter is within the terms of article 301. (3) If the argument on behalf of the appellants were accepted, many taxes, for example, sales tax by the Union and by the States, would have to go through the gamut prescribed in articles 303 and 304, thus very much detracting from the limited sovereignty of the States, as envisaged by the Constitution. (4) Laws relating to taxation, which is essentially a legislative function of the State, will become justiciable and every 106 830 time a taxation law is challenged as unconstitutional, the State will have to satisfy the courts a course which will seriously affect the division of powers on which modern constitutions, including ours, are based. (5) Taxation on movement of goods and passengers is not necessarily an impediment. That conclusion leads to a discussion of the other extreme position that taxation is wholly out of the purview of article 301. That extreme position is equally untenable in view of the fact that article 304 contains, and article 306, before it was repealed in 1956, contained, reference to taxation for certain purposes mentioned in those Articles. But article 306, which now stands repealed, contained references to tax or duty on the import of goods into one State from another or on the exports of goods from one State to another. Such imposts were really in the nature of impediments to the free flow of goods and commodities on account of customs barriers, which it was the intention of article 301 to abolish. Similarly, article 304 while recognising the power of a State Legislature to tax goods imported inter State, insists that a similar tax is imposed on goods manufactured or produced within the State. The Article thus brings out the clear distinction between taxation as such for the purpose of revenue and taxation for purposes of making discrimination or giving preference, both of which are treated by the Constitution as impediments to free trade and commerce. In other words, so long as the impost was not in the nature of an impediment to the free flow of goods and commodities between one State and another, including in this expression Union territories also, its legality was not subject to an attack based on the provisions of Part XIII. But that does not mean that State Legislatures derive their power of taxation by virtue of what is contained in article 304. Article 304 only left intact such power of taxation, but contained the inhibition that such taxes shall not be permitted to have the effect of impeding the free flow of goods and commodities. Article 301, with which Part XIII commences, contains the crucial words " shall be free " and provides 831 the key to the solution of the problems posed by the whole Part. The freedom declared by this Article is not an absolute freedom from all legislation. As already indicated, the several entries in the three Lists would suggest that both Parliament and State Legislatures have been given the power to legislate in respect of trade, commerce and intercourse, but it is equally clear that legislation should not have the effect of putting impediments in the way of free flow of trade and commerce. In my opinion, it is equally clear that the freedom envisaged by the Article is not an absolute freedom from the incidence of taxation in respect of trade, commerce and intercourse, as shown by entries 89 and 92 A in List 1, entries 52, 54 and 56 to 60 in List II and entry 35 in List 111. All these entries in terms speak of taxation in relation to different aspects of trade, commerce and intercourse. The Union and State Legislature, therefore, have the power to legislate by way of taxation in respect of trade, commerce and intercourse, so as not to erect trade barriers, tariff walls or imposts, which have a deleterious effect on the free flow of trade, commerce and intercourse. That freedom has further been circumscribed by the power vested in Parliament or in the Legislature of a State to impose restrictions in the public interest. Parliament has further been authorised to legislate in the way of giving preference or making discrimination in certain strictly limited circumstances indicated in el. (2) of article 303. Thus, on a fair construction of the provisions of Part XIII, the following propositions emerge: (1) trade, commerce, and intercourse throughout the territory of India are not absolutely free, but are subject to certain powers of legislation by Parliament or the Legislature of a State; (2) the freedom declared by article 301 does not mean freedom from taxation simpliciter, but does mean freedom from taxation which has the effect of directly impeding the free flow of trade, commerce and intercourse; (3) the freedom envisaged in article 301 is subject to non discriminatory restrictions imposed by Parliament in public interest (article 302); (4) even discriminatory or preferential legisla 832 tion may be made by Parliament for the purpose of dealing with an emergency like a scarcity of goods in any part of India (article 303(2)); (5) reasonable restrictions may be imposed by the Legislature of a State in the public interest (article 304(b)); (6) non discriminatory taxes may be imposed by the Legislature of a State on goods imported from another State or other States, if similar taxes are imposed on goods produced or manufactured in that State (article 304(a)); and lastly (7) restrictions imposed by existing laws have been continued, except in so far as the President may by order otherwise direct (article 305). After having discussed the arguments for and against the proposition that article 301 includes within its large sweep taxation simpliciter, I now proceed to discuss the terms of the impugned Act in order to find out whether in the light of the discussion above, any of its provisions are liable to be struck down as unconstitutional, because they infringe article 301, as contended on behalf of the appellants. The Act, as the preamble shows, is intended to " impose a tax on certain goods carried by road or inland waterways Dealer " has been defined in section 2(4) as under: "Dealer ' means a person who owns jute in bales before it is carried by motor vehicle, cart, trolley, boat, animal and human agency or any other means except railways or airways and includes his agent. " Producer has been defined by cl. '(12) of section 2 as follows: " 'Producer ' means a producer of tea and includes the person in charge of the garden where tea is produced ". Section 3, which is the charging section, provides that manufactured tea in chests carried by motor vehicle, etc., except railways and airways, shall be liable to a tax at a certain rate per pound of such tea and that this tax shall be realised from the producer. It also provides that jute carried in bales by motor vehicle, etc., except railways and airways, shall be liable to a tax at a certain rate per maund on such jute, which shall be realised from the dealer. It is not necessary 833 to set out the rate of taxes aforesaid, because 'no argument was advanced to the effect that they were oppressive or excessive. The tax on manufactured tea in chests is to be paid by the producer, which term includes the person in charge of the garden where tea is produced. This provision has occasioned the argument that it is an excise duty in the garb of a tax and will be dealt with later in the course of this judgment. The tax on jute carried in bales is made realisable from the dealer which means a person who owns the jute in bales. Section 6 lays down the taxing authorities. Section 7 requires every producer and dealer to furnish returns of such tea or such jute as have been made liable to tax under section 3, as aforesaid. Section 8 makes provision for licensing of balers, which means persons who own or possess a pressing machine for the compression of jute into bales. Section 9 lays down the procedure of assessment and section 10 the procedure for cancellation of assessment in certain cir cumstances. Section 11 lays down the procedure for assessment in such cases as have escaped assessment or there has been an evasion of the tax. It is not necessary to refer to the other provisions of the Act, because they are not relevant to the arguments advanced at the Bar. It will be seen from the bare summary of the relevant provisions of the statute that it is a taxing statute simpliciter without the least suggestion even of any attempt at discrimination against dealers and producers outside the State of Assam or of preference in favour of those inside the State. On the face of it, therefore, the Act does not suffer from any of the vices against which Part XIII of the Constitution was intended. It has not been suggested that the Act imposes a heavy burden on the dealer or the producer as the case may be. On the terms of the Statute, it cannot be said that it is intended to put obstacles or impediments in the way of free flow of traffic in respect of jute and tea. On the face of it, it would not be in the interest of the State of Assam to put any such impediments, because Assam is a large producer of those commodities and the market for those commodities is mainly in Calcutta. 834 In those I circumstances, it is difficult, if not impossible, to come to the conclusion that the Act comes within the purview of article 301 of the Constitution. If that is so, no further consideration arising out of the other provisions of Part XIII of the Constitution calls for any decision. Having thus disposed of the main ground of attack against the constitutionality of the Act based on article 301 of the Constitution, it is necessary to advert to the other contentions raised on behalf of the appellants. It has been contended that the Act is beyond the legislative competence of the Assam Legislature. We have, therefore, to address ourselves to the question whether or not it is covered by any of the entries in List 11 of the Seventh Schedule. Entry 56, in its very terms, " Taxes on goods and passengers carried by rail or in inland waterways ", completely covers the impugned Act. There is no occasion in this case to take recourse to the doctrine of pith and substance, inasmuch as the Act is a simple piece of taxing statute meant to tax transport of goods, in this case jute and tea, by road or on inland waterways. In my opinion, it is a very simple case of taxation completely covered by entry 56, but the argument against the competence of the Assam Legislature has been sought to be supported by the subsidiary contention that though in form it is a tax on the transport of goods within the terms of entry 56, in substance it is an imposition of excise duty within the meaning of entry 84 in List 1 of the Seventh Schedule, but, in my opinion, there is no substance in this contention for the simple reason that so long as jute or tea is not sought to be transported from one place to another, within the State or outside the State, no tax is sought to be levied by the Act. It is only when those goods are put on a motor truck or a boat or a steamer or other modes of transport contemplated by the Act, that the occa sion for the payment of tax arises. A similar argument was advanced in the case of The Tata Iron & Steel Co. Ltd. vs The State of Bihar (2), and Das, C. J., delivering the majority judgment of the Court, disposed of the argument that the tax in that case was not (2) ; 835 on sale of goods, but was, in substance, a duty of excise, in these terms: " This argument, however, overlooks the fact that under el. (ii) the producer or manufacturer became liable to pay the tax not because he produced or manufactured the goods, but because he sold the goods. In other words the tax was laid on the producer or manufacturer only qua seller and not qua manufacturer or producer as pointed out in Boddu Paidanna 's case In the words of their Lordships of the Judicial Committee in Governor General vs Province of Madras, 72 I.A. 91 at p. 103, ' a duty of excise is primarily a duty levied on a manufacturer or producer in respect of the commodity manufactured or produced. It is a tax on goods not on sales or the proceeds of sale of goods '. If the goods produced or manufactured in Bihar were destroyed by fire before sale the manufacturer or producer would not have been liable to pay any tax under section 4(1) read with section 2(g), second proviso. As Gwyer, C. J., said in Boddu Paidanna 's case, supra, at p. 102, the manufacturer or producer would be liable, if at all, to a sales tax because he sells and not because he manufactures or produces; and he would be free from liability if he chose to give away everything which came from his factory '. " (See p. 1369 of the Report). The observations quoted above completely cover the present controversy. The Legislature has chosen the dealer or the producer as the convenient agency for collection of the tax imposed by section 3, but the occasion for the imposition of the tax is not the production or the dealing, but the transport of those goods. It must, therefore, be held that the Act does what it sets out to do, namely to impose a tax on goods carried by road or on inland waterways. Another line of argument directed to the same end, namely, of attacking the competence of the Assam Legislature was that it impinged on the provisions of the Tea Act, XXIX of 1953. It was argued that the tea industry was a controlled one within the competence the Union Legislature. The Tea Act declared that it was expedient in the public interest that the 836 Union should take the tea industry under its control. With a view to controlling the industry in public interest the Act established the Tea Board (section 4) whose function it was, inter alia, to regulate the production and extent of cultivation of tea, of improving the quality of tea, of promoting co operative effort among growers and manufacturers of tea, etc., etc. (section 10). With the objectives aforesaid, Chapter III lays down provisions for the control over the extension of tea cultivation and Chapter IV deals with provisions for control over the export of tea and tea seed. Chapter V lays down provisions for the imposition of duty of customs on export of tea outside India and the proceeds of the cess thus levied have to be credited to the Consolidated Fund of India. Out of that Fund, called the Tea Fund, the expenses of the establishment created by the Tea Act have to be met. The rest of the provisions of the Act are meant to implement the main provisions of the Act. There are no provisions of the Tea Act which can be said to come into conflict with the provisions of the impugned Act. In our opinion, therefore, this ground of attack also fails. A third line of argument against the constitutionality of the Act was that it is extra territorial in its operation in so far as it purports to tax producers and dealers who may not be residents of the State of Assam. This argument has been advanced in the interest of the appellants and petitioners from West Bengal, who have to carry their goods by road or on waterways passing through the territory of Assam, from one part of West Bengal to another. So far as this group of cases is concerned, the main grievance of the appellants is that no doubt their goods have to pass through a portion of the territory of Assam, but the goods have been produced, packed and transported as merchandise from one part of West Bengal to another part of the same State. It is not denied that there is some real and substantial nexus to support the taxing statute, but it is contended that relatively to the whole journey to be covered by the merchandise, the portion of the territory of Assam covered in 837 that journey is very small. But in judging the validity of a legislation with reference to the contention based on extra territoriality it is not relevant to consider the question of the proportion between the extent of territorial nexus to the whole length of the journey. If goods belonging to or carried by the appellants traverse any of the territory of Assam the taxation cannot be successfully assailed on this ground, once it is held that it was within the legislative competence of the Legislature imposing the tax in question. See in this connection the observations of this Court in The Tata Iron and Steel Co. Ltd. vs The State of Bihar (1) at pp. 1369 to 1371, where Das, C. J., speaking for the majority of the Court, has examined the theory of nexus with reference to a large body of case law bearing on the question. I respectfully adopt that line of reasoning and hold that the Act does not suffer from the vice of extra territoriality. It is true that the incidence of the taxation may fall upon per.sons not ordinarily residing in the State of Assam or upon goods not produced in Assam, but, in this connection, it is enough to point out that what has been said above in respect of the tax being in the nature of a duty of excise applies which equal force to this part of the argument also. The tax is leviable from such goods as traverse in their journey any part of the territory of Assam, not because the owners or the producers are residents of Assam, but because the waterway or the roadway situate in the territory of Assam has been utilised for a portion of the journey. It is clear, therefore, that there is no infirmity attaching to the Act on the ground that it is extra territorial in its operation. It only remains to consider the last ground of attack, namely, that the Act is discriminatory in character and thus infringes article 14 of the Constitution. In this connection, it has been argued that only tea in chests and jute in bales have been selected for taxation, leaving the same commodities in other hands or in other forms, or in other receptacles (1) 107 838 free from the incidence of the taxation in question. The Legislature has chosen to tax the transport over land or over waterways of those commodities, in chests or in bales, apparently because those are the most convenient and usually employed methods of packing for carriage of those goods to long distances. Hence, it is not a case of choosing for the purposes of taxation one class of goods in preference to another class of the same variety. The Legislature was out to tax the transport of those commodities and must be presumed to have selected the most convenient way of doing it. It has not been suggested that any large amount of such commodities is transported over long distances, otherwise than in chests or bales. Furthermore, if the Legislature has to tax something, it is not bound to tax that thing in all its forms and varieties. It may pick and choose with a view to raising such amount of revenue as it sets out to do. It is not for the courts to say that there were other ways of doing the thing or that all forms and varities should have been brought under the scope of the taxation. It is open to the Legislature to impose a tax in a form and in a way which it deems most convenient for the purposes of collection and calculation of the tax. As all the grounds of attack raised against the con stitutionality of the Act fail, the appeals and the petitions, in my opinion, should be dismissed with costs. I have deliberately refrained from making references to or relying upon decisions from other countries like the U. section A. or Australia, because the cases decided in those countries cannot be any guide for the solution of the problems raised in this case inasmuch as the framework of the Constitution in those countries is not in pari materia with ours. Any precedents deciding cases on the construction of statutes, which are worded differently from ours, cannot, in my opinion, be a safe guide for the decision of controversies raised in terms of our Constitution. I regret to have to differ from the majority of the Court, but my only justification for taking a different view is that my reading of Part XIII of the 839 Constitution does not justify the inference that taxation simpliciter is within the terms of article 301 of the Con stitution. GAJENDRAGADKAR J. The vexed question posed by the construction of the provisions of Part XIII Of A the Constitution which has been incidentally discussed in some reported decisions of this Court falls to be Ga considered in the present group of cases. This group consists of three appeals brought to this Court with a certificate issued by the Assam High Court under article 132 and two petitions filed under article 32. The three appellants are tea companies, two of which (Civil Appeal No. 126 of 1958 and Civil Appeal No. 128 of 1958) carry on their trade of growing tea in the District of Sibsagar in Assam while the third (Civil Appeal No. 127 of 1958) carries on its trade in Jalpaiguri in West Bengal. All the three companies which would be described hereafter as the appellants carry their tea to Calcutta in order that it may be sold in the Calcutta market for home consumption or export outside India. Tea produced in Jalpaiguri has also to pass through a few miles of territory in the State of Assam, while the tea produced in Assam has to go all the way through Assam to reach Calcutta. It appears that a very small pro portion of tea produced and manufactured in Assam finds a market in Assam itself; bulk of it finds its custom in the market at Calcutta. Besides the tea which is carried by rail a substantial quantity has to go by road or by inland waterways and as such it becomes liable to pay the tax leviable under the Assam Taxation (on goods carried by Roads or Inland Waterways) Act, 1954 (Act XIII of 1954) (hereafter called the Act). The Act has been passed by the Assam Legislature in order to provide for the levy of a tax on certain goods carried by road or inland waterways in the State of Assam and it has received the assent of the Governor on April 9,1954. On behalf of the State of Assam, which will be described hereafter as respondent, its officers required the appellants to comply with the several requirements imposed by the Act, and made tax 840 demands on them in respect of the tea carried by them. The tax thus demanded was paid by the appellants under protest, and soon thereafter petitions were filed in the Assam High Court under article 226 challenging the validity of the Act as well as the tax demands made by the officers of the respondent. By J. their respective petitions the appellants prayed that a writ of mandamus should issue directing the respondent and its officers to forbear from giving effect to the provisions of the Act and from otherwise enforcing it against the appellants. The petitioners also claimed alternatively a writ of prohibition or any other appropriate writ restraining the respondent and its officers from enforcing the Act against the appellants. That is how the validity of the Act came before the Assam High Court for judicial scrutiny. The appellants challenged the vires of the Act on several grounds. The principal ground, however, was that the Act had violated the provisions of article 301 of the Constitution, and since it did not comply with the provisions of article 304(b) it was ultra vires. It was also urged that tea was a controlled industry under the provisions of Act 29 of 1953, and so it was the Union Government alone which was competent to regulate the manufacture, production, distribution or transport of the said commodity ; that being so the Assam Legislature was not competent to pass the Act. The validity of the Act was further challenged on the, ground that, though the Act purported to have been passed under Entry 56 of List 11, in substance and in reality it was a duty of excise and as such it could be enacted only under Entry 84 of List 1. According to the appellants the Act also suffered from the vice that it was violative of the fundamental right of equality before the law guaranteed by article 14. The correctness of these contentions was disputed by the respondent. It urged that the Act was perfectly within the competence of the Assam Legislature under Entry 56 of List II and that the provisions of Part XIII were wholly inapplicable to it. The respondent further pleaded that article 14 had not been violated and that there was no substance in the 841 argument that as controlled industry it is only the Union Government which could deal with it or that in reality the Act bad imposed a duty of excise. The petitions filed by the appellants were heard by a Special Bench of the Assam High Court. All the pleas raised by the appellants were rejected by Sarjoo Prasad, C. J. and Ram Labhaya, J., who delivered,, separate but concurring judgments. The appellants ' then applied for and obtained a certificate from the High Court under article 132 ; that is how the three appeals have come to this Court, and they raise for our decision all the points which were argued before the High Court. Naturally the principal contention which has been urged before us at length centres round the applicability of Part XIII. The two petitions filed under article 32 raise substantially the same question. The petitioners are tea companies which carry on the trade of growing and manufacturing tea in Jalpaiguri in West Bengal. The respondent has attempted to subject the petitioners to the provisions of the Act, and the petitioners have challenged the authority of the respondent to levy a tax against them under the Act on the ground that the Act is ultra vires. Since the principal question raised in these appeals appeared to be of considerable importance in which other States may also be interested we directed that notice should be issued to the Attorney General of India and the Advocates General in all the States of India. Accordingly the Attorney. General appeared before us and the States of Bihar, Madras, Punjab, Rajasthan and Uttar Pradesh have also been heard. The challenge to the vires of the Act on the ground that it contravenes article 301 necessarily raises the question about the construction of the relevant provisions in the said Part. article 301 with which Part XIII begins provides that " subject to the other provisions of this Part trade, commerce and intercourse through. out the territory of India shall be free ". The appellants contend that this provision imposes a limitation on the legislative power of the State Legislatures as well as the Parliament, and the vires of the Act will 842 have to be judged on that basis. The words used in article 301 are wide and unambiguous and it would be unreasonable to exclude from their ambit a taxing law which restricts trade, commerce or intercourse either directly or indirectly. On the other band, the respondent the Attorney General, and the other States have urged that taxing laws stand by themselves; 'they are governed by the provisions of Part XII and no provision of Part XIII can be extended to them. In the alternative it has been suggested that the provisions of Part XIII should be applied only to such legislative entries in the Seventh Schedule which deal with trade, commerce and intercourse. This alternative argument would bring within the purview of Part XIII Entry 42 in List I which refers to interState trade and commerce, Entry 26 in List II which deals with trade and commerce, within the State subject to the provisions of Entry 33 in List III, and Entry 33 in List III which deals with trade and commerce as therein specified. The arguments thus presented by both the parties appear prima facie to be logical and can claim the merit of attractive simplicity. The question which we have to decide is which of the contentions correctly represents the true position in law. Does truth lie in one or the other contention raised by the parties, or does it lie midway between those contentions ? This problem has to be resolved primarily by adopting a fair and reasonable construction of the relevant Articles in Part XIII; but before we attempt that task it would be relevant to deal with some general considerations. Let us first recall the political and constitutional background of Part XIII. It is a matter of common knowledge that, before the Constitution was adopted, nearly two thirds of the territory of India was subject to British Rule and was then known as British India, while the remaining part of the territory of India was governed by Indian Princes and it consisted of several Indian States. A large number of these States claimed sovereign rights within the limitations imposed by the paramount power in that behalf, and they pur ported to exercise their legislative power of imposing 843 taxes in respect of trade and commerce which inevitably led to the erection of customs barriers between themselves and the rest of India. In the matter of such barriers British India was governed by the provisions of section 297 of the Constitution Act, 1935. To the provisions of this section we will have occasion later to refer during the course of this judgment. Thus, prior to 1950 the flow of trade and commerce was impeded at several points which constituted the boundaries of Indian States. After India attained political freedom in 1947 and before the Constitution was adopted the historical process of the merger and integration of the several Indian States with the rest of the country was speedily accomplished with the result that when the Constitution was first passed the territories of India consisted of Part A States which broadly stated represented the Provinces in British India, and Part B States which were made up of Indian States. This merger or integration of Indian States with the Union of India was preceded by the merger and consolidation of some of the States interse between themselves. It is with the knowledge of the trade barriers which had been raised by the Indian States in exercise of their legislative powers that the Constitution makers framed the Articles in Part XIII. The main object of article 301 obviously was to allow the free flow of the stream of trade, commerce and intercourse throughout the territory of India. In drafting the relevant Articles of Part XIII the makers of the Constitution were fully conscious that economic unity was absolutely essential for the stability and progress of the federal policy which had been adopted by the Constitution for the governance of the country. Political freedom which had been won, and political unity which had been accomplished by the Constitution, had to be sustained and strengthened by the bond of economic unity. It was realised that in course of time different political parties believing in different economic theories or ideologies may come in power in the several constituent units of the Union, and that may conceivably give rise to local and 844 regional pulls and pressures in economic matters. Local or regional fears or apprehensions raised by local or regional problems may persuade the State Legislatures to adopt remedial measures intended solely for the protection of regional interests without due regard to their effect on the economy of the nation as a whole. The object of Part XIII was to avoid such a possibility. Free movement and exchange of goods throughout the territory of India is essential for the economy of the nation and for sustaining and improving living standards of the country. The provision contained in article 301 guaranteeing the freedom of trade, commerce and intercourse is not a declaration of a mere platitude, or the expression of a pious hope of a declaratory character; it is not also a mere statement of a directive principle of State policy ; it embodies and enshrines a principle of paramount importance that the economic unity of the country will provide the main sustaining force for the stability and progress of the political and cultural unity of the country. In appreciating the significance of these general consi derations we may profitably refer to the observations made by Cardozo, J., in C.A.F. Seelig, Inc. vs Charles H. Baldwin(1) while he was dealing with the commerce clause contained in article 1, section 8, cl. 3 of the American Constitution. " This part of the Constitution ", observed Cardozo J., " was framed under the dominion of a political philosophy less parochial in range. It was framed upon the theory that the peoples of the several states must sink or swim together and that in the long run prosperity and salvation are in union and not division ". There is another general consideration which has been pressed before us by the learned Attorney General and the States to which reference must be made. It is argued that in determining the scope and reach of the freedom embodied in article 301 we should bear in mind the fact that to the extent to which the frontiers of this freedom are widened to that extent is the legislative power of the States curtailed or limited. The Legislatures of the States have plenary powers to (1) ; , 523; , 1038. 845 legislate in respect of topics covered by the legislative entries in Parts II and III. If the words used in article 301 receive the widest interpretation as contended by the appellants it would obviously mean that the State Legislatures would not be able to legislate on several entries in the said Lists without adopting the procedure prescribed by article 304(b). In fact it would be unreasonable to impose such a limitation on the legislative power of the State Legislatures and thereby affect their freedom of action. Whilst appreciating this argument it may be pertinent to observe that what appears as a curtailment of, or limitation on, the powers of the State Legislatures prescribed by article 304(b) day, from the point of view of national economy, be characterised as a safeguard deliberately evolved to protect the economic unity of the country ; even so it may be assumed that in interpreting the provisions of article 301 and determining the scope and effect of Part XIII we should bear in mind the effect of our decision on the legislative power of the States and also of Parliament. Having thus referred to some general considerations let us now proceed to examine the question as to whether tax laws are wholly outside the purview of Part XIII. In support of the argument that Part XIII does not apply to tax laws the learned Attorney General has emphasised the fact that the power to levy a tax is an essential part of sovereignty itself, and he has suggested that this power is not subject to judicial review and never has been held to be so. In this connection he has invited our attention to the observa tions made in Cooley 's " Constitutional Limitations " on the power of taxation. 'The power to impose taxes ", says the author, " is one so unlimited in force and so searching in extent, that the courts scarcely venture to declare that it is subject to any restriction whatever, except such as rest in the discretion of the authority which exercises it " (1). The author then has cited the observations of Marshall, C. J., in McCulloch vs Maryland (2) where the learned Chief Justice has (1) Cooley 's " Constitutional Limitations ", Vol. 2, 8th Ed., p. 986. (2) ; , 428: ; , 607. 108 846 stated that " the power of taxing the people and their property is essential to the very existence of the government, and may be legitimately exercised on the objects to which it is applicable to the utmost extent to which the government may choose to carry it. The only security against the abuse of this power is found in the structure of the government itself ". Basing himself on this character of the taxing power of the State the learned Attorney General has asked us to hold that Part XIII can have no application to any statute imposing a tax. In our opinion this contention is not wellfounded. The statement of the law on which reliance has been placed is itself expressed to be subject to the relevant provisions of the Constitution; for instance, the same author has observed " It is also believed that that provision in the Constitution of the United States which declares that the citizens of each state shall be entitled to all the privileges and immunities of the citizens of the several states will preclude any state from imposing upon the property which citizens of other states may own, or the business which they may carry on within its limits, any higher burdens by way of taxation than are imposed upon corresponding property or business of its own citizens" (p. 1016). Putting the same propositions in terms of our Constitution it cannot be suggested that the power of taxation can, for instance, violate the equality before the law guaranteed by article 14 of the Constitution. Therefore the true position appears to be that, though the power of levying tax is essential for the very existence of the government, its exercise must inevitably be controlled by the constitutional provisions made in that behalf. It cannot be said that the power of taxation per se is outside the purview of any constitutional limitations. It is true that in Ramjilal vs Income tax Officer, Mohindargarh (1) it has been held that " since there is a special provision in article 265 of the Constitution that no tax shall be levied or collected except by authority of law, el. (1) of article 31 must be regarded as concerned with deprivation of property otherwise than by the (1) [1051] S.C.R. 127. 847 imposition or collection of tax, and inasmuch as the right conferred by article 265 is not a right conferred by Part III of the Constitution, it could not be enforced under article 32". It is clear that the effect of this decision is no more than this that the protection against the imposition and collection of taxes, save by the authority of law, directly comes under article 265 and cannot be said to be covered by cl. (1) of article 31. It would be unsafe to assume that this decision is, or was intended to be, an authority for the proposition that the levy of a tax by taxing statute can, for instance, violate article 14 of the Constitution. The next question which needs examination is whether tax laws are governed only by Part XII of the Constitution and not by Part XIII. The argument is that Part XII is a self contained code; it makes all necessary provisions, and so the validity of any taxing statute can be judged only by reference to the provisions of the said Part. Article 265 provides that "no tax shall be levied or collected except by authority of law". It is emphasised that this Article does not contemplate that its provision is subject to the other provisions of the Constitution, and so there would be no justification for applying Part XIII to the taxing statutes. It is also pointed out that restrictions and other exceptions which the Constitution wanted to prescribe in respect of taxation have been provided for by articles 274, 276, 285, 287 and 288, and so we need not look beyond the provisions of this Part in dealing with tax laws. In our opinion this argument fails to take notice of the fact that article 265 itself inevitably takes in article 245 of the Constitution when in substance it says that a tax shall be levied by authority of law. The authority of law to which it refers and under which alone a tax can be levied is to be found in article 245 read with the corresponding legislative entries in Schedule VII. Now, if we look at article 245 which deals with the extent of laws made by Parliament and by the Legislatures of States it begins with the words " subject to the provisions of this Constitution "; in other words, the power of Parliament and the Legislatures of the States to make laws including 848 laws imposing taxes is subject to the provisions of this Constitution and that must bring in the application of the provisions of Part XIII. Therefore the argument based on the theory that tax laws are governed by the provisions of Part XII alone cannot be accepted. The power to levy taxes is ultimately based on article 245, and the said power in terms is subject to the provisions of the Constitution. On the other hand, the opening words of article 301 are very significant. The doctrine of the freedom of trade, commerce and intercourse enunciated by article 301 is not subject to the other provisions of the Constitution but is made subject only to the other provisions of Part XIII; that means that once the width and amplitude of the freedom enshrined in article 301 are determined they cannot be controlled by any provision outside Part Xlll. This position incidentally brings out in bold relief the important part, which the Constitution makers wanted the doctrine of freedom of trade to play in the future of the country. It is obvious that whatever may be the content of the said freedom it is not intended to be an absolute freedom; absolute freedom in matters of trade, commerce and intercourse would lead to economic confusion, if not chaos and anarchy; and so the freedom guaranteed by article 301 is made subject to the exceptions provided by the other Articles in Part XIII. The freedom guaranteed is limited in the manner specified by the said Articles but it is not limited by any other provisions of the Constitution outside Part XIII. That is why it seems to us that article 301, read in its proper context and subject to the limitations prescribed by the other relevant Articles in Part XIII, must be regarded as imposing a constitutional limitation on the legislative power of Parliament and the Legislatures of the States. What entries in the legislative lists will attract the provisions of article 301 is another matter; that will depend upon the content of the freedom guaranteed; but wherever it is held that article 301 applies the legislative competence of the Legislature in question will have to be judged in the light of the relevant Articles 849 of Part XIII; this position appears to us to be inescapable. On behalf of the respondent it was suggested before us that the scope and extent of the application of article 301 can well be determined in the light of section 297 of the Constitution Act of 1935. Section 297 reads thus: " 297(1). No Provincial Legislature or Government shall (a) by virtue of the entry in the Provincial Legislative List relating to trade and commerce within the Province, or the entry in that List relating to the production, supply, and distribution of commodities, have power to pass any law or take any executive action prohibiting or restricting the entry into, or export from the Province of goods of any class or description ; or (b) by virtue of anything in this Act have power to impose any tax, cess, toll, or due which, as between goods manufactured or produced in the Province and similar goods not so manufactured or produced, discriminates in favour of the former, or which, in the case of goods manufactured or produced outside the Province, discriminates between goods manufactured or produced in one locality and similar goods manufactured or produced in another locality. (2) Any law passed in contravention of this section shall, to the extent of the contravention, be invalid. There is no doubt that the prohibition prescribed by this section was confined to the Provincial Governments and Provincial Legislatures and did not apply to the Central Government or Central Legislature. It is also true that the said prohibition had reference to the entries in the Provincial Legislative List relating to trade and commerce, and to production, supply and distribution of commodities. The section also deals with prohibitions and restrictions in respect of import of goods into, or their export from, a Province. Likewise discrimination against goods manufactured or produced outside the Province or goods produced in other localities is also prohibited. The argument 850 is that when the Constitution adopted article 301 it had section 297 in view and the only substantial change which it intended to make was to extend the application of the principles enunciated in the said section to the Union Government and the Union Parliament, and to apply it to the territory which had subsequently become a part of India as indicated by the relevant 'Articles; the essential content of freedom of trade and commerce as prescribed by the said section, however, continues to be the same. In support of this argument, reliance has been placed on the observations made by Venkatarama Aiyar, J., in the case of M. P. V. Sundararamier & Co. vs The State of Andhra Pradesh (1). In that case the vires of some of the provisions of the Sales Tax Laws Validation Act, 1956 (7 of 1956), were challenged on several grounds. In dealing with one of the points raised in support of the said challenge Venkatarama Aiyar, J., who delivered the majority judgment, considered the content of Entry 42 in List 1. It had been urged before the Court that the said entry should be liberally construed and should be held to include the power to tax, and in support of this contention reliance was placed on certain American and Australian decisions. This argument was repelled and it was held that Entry 42 in List I is not to be interpreted as including taxation. In coming to this conclusion the learned judge made certain general observations pointing out that it would not be always safe to rely upon American or Australian decisions in interpreting the provisions of our Constitution. Said the learned judge, " the threads of our Constitution were no doubt taken from other Federal Constitutions but when they were woven into the fabric of our Constitution their reach and their complexion underwent changes. Therefore, valuable as the American decisions are as showing how the question is dealt with in sister Federal Constitution great care should be taken in applying them in the interpretation of our Constitution ". He made a similar comment about section 92 of the Commonwealth of Australia Constitution Act and (1) ; , 1483 84. 851 the decisions thereunder, and in that connection he observed: ', We should also add that article 304(a) of the Constitution cannot be interpreted as throwing any light on the scope of article 301 with reference to the question of taxation as it merely reproduces section 297(1)(b) of the Government of India Act, and as there was no provision therein corresponding to article 301 section 297(1)(b) could not have implied what is now sought to be inferred from article 304(a) ". The learned Attorney General has relied on these observations. It would be noticed that, incidental as these observations are, what the learned judge was considering was the scope and effect of section 297(1)(b) of the Government of India Act, 1935, and he held that the content of the said section cannot be enlarged in the light of the provisions of article 304(a). No doubt the observations would seem to show that the learned judge thought that article 304(a) cannot throw any light on the scope of article 301 with reference to the question of taxation ; but it is clear that the question of construing the said Articles did not fall to be considered, and was not obviously argued before the Court. With respect, it may be pointed out that in the happy phraseology adopted by the learned judge himself, in the setting of Part XIII and particularly in the light of the wide words used in article 301, the reach and complexion of article 304(a) is wider than section 297(1)(b) and does include reference to taxation. Then as to the merits of the argument that section 297 of the Constitution Act of 1935 should virtually determine the scope of article 301, we are reluctant to accept the assumption that the only change which the Constitution makers intended to make by adopting article 301 was to extend the application of section 297 to the Union Government and the Parliament. Just as the Constitution makers had before them the said section they were also familiar with corresponding clauses included in the Federal Constitutions of other countries. The history of judicial decisions interpreting section 92 of the Australian Constitution must have been present to their minds as also the history of the growth and development of the American Law under 852 the commerce clause in the American Constitution. Besides, we feel considerable hesitation in accepting the view that the makers of the Constitution did not want to enrich and widen the content of freedom guaranteed by section 297. They knew that the Constitution would herald a new and inspiring era in the history of India and they, were fully conscious of the importance of maintaining the economic unity of the Union of India in order that the federal form of government adopted by the Constitution should progress in a smooth and harmonious manner. That is why we are inclined to hold that the broad and unambiguous words used in article 301 are intended to emphasise that the freedom of trade, commerce and intercourse guaranteed was richer and wider in content than was the case under section 297; how much wider and how much richer can be determined only on a fair and reasonable construction of article 301 read along with the rest of the Articles in Part XIII. In our opinion, therefore, the argument that tax laws are outside Part XIII cannot be accepted. That takes us to the question as to whether article 301 operates only in respect of the entries relating to trade and commerce already specified. Before answering this question it would be necessary to examine the scheme of Part XIII, and construe the relevant Articles in it. It is clear that article 301 applies not only to inter State trade, commerce and intercourse but also intrastate trade, commerce and intercourse. The words " throughout the territory of India " clearly indicate that trade and commerce whose free dom is guaranteed has to move freely also from one place to another in the same State. This conclusion is further supported by articles 302 and 304(b) as we will presently point out. There is no doubt that the sweep of the concept of trade, commerce and intercourse is very wide; but in the present case we are concerned with trade, and so we will leave out of consideration commerce and intercourse. Even as to trade it is really not necessary to discuss or determine what trade exactly means; for it is common ground that the activity carried on by the appellants 853 amounts to trade, and it is not disputed that transport of goods or merchandise from one place to another is so essential to trade that it can be regarded as its integral part. Stated briefly trade even in a narrow sense would include all activities in relation to buying and selling, or the interchange or exchange of commodities and that movement from place to place is the very soul of such trading activities. When article 301 refers to the freedom of trade it is necessary to enquire what freedom means. Freedom from what? is the obvious question which falls to be determined in the context. At this stage we would content ourselves with the statement that the freedom of trade guaranteed by article 301 is freedom from all restrictions except those which are provided by the other Articles in Part XIII. What these restrictions denote may raise a larger issue, but in the present case we will confine our decision to that aspect of the matter which arises from the provisions of the Act under scrutiny. It is hardly necessary to emphasise that in dealing with constitutional questions courts should be slow to embark upon an unnecessarily wide or general enquiry and should confine their decision as far as may be reasonably practicable within the narrow limits of the controversy arising between the parties in the particular case. We will come back again to article 301 after examining the other Articles in Part XIII. article 302 confers on the Parliament power to impose restrictions on trade, commerce and intercourse. It provides that Parliament may by law impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest. It would be immediately noticed that the reference made to a restriction on the freedom of trade within any part of the territory of India as distinct from freedom of trade between one State and another clearly indicates that the freedom in question covers not only inter State trade but also intrastate trade. Thus the effect of article 302 is to 109 854 provide for an exception to the general rule prescribed, by article 301. Restrictions on the freedom of trade can be imposed by Parliament if they are required in the public interest so that the generality of freedom guaranteed by article 301 is subject to the exception s provided by article 302. That takes us to article 303. It reads thus: " 303. (1) Notwithstanding anything in article 302, neither Parliament nor the Legislature of a State shall have power to make any law giving, or authorising the giving of, any preference to one State over another, or making, or authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule. (2) Nothing in clause (1) shall prevent Parliament from making any law giving, or authorising the giving of, any preference or making, or authorising the making of, any discrimination if it is declared by such law that it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India. " The first part of this Article is in terms an exception or a proviso to article 302 as is indicated by the nonobstante clause. This clause prohibits Parliament from making any law which would give any preference to one State over another or would make any discrimination between one State and another by virtue of the relevant entries specified in it. In other words, in regard to the entries there specified, the power to impose restrictions cannot be used for the purpose of giving any preference to one State over another or making any discrimination in that manner. It is obvious that the reference to the Legislature of the State in this clause cannot be reconciled with the non obstante clause; but the object of including the Legislature of a State appears to be to emphasise that like Parliament even the Legislature of a State cannot give any preference or make any discrimination. Sub Article (2) is an exception to sub article (1) of article 303. It empowers the Parliament to make a law giving or authorising to give any preference or making 855 any discrimination, but this power can be exercised only if it is declared by law made by the Parliament that it is necessary so to do for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India ; in other words, it is only when Parliament is faced with the task of meeting an emergency created by the scarcity of goods in any particular part of India that it is authorised to make a law making a discrimination, or giving preference, in favour of the part thus affected. On behalf of the States strong reliance is placed on the fact that article 303(1) expressly refers to the entries relating to trade and commerce in any of the Lists in the Seventh Schedule, and it is urged tbat this gives a clear indication as to the scope of the provisions of article 301 itself There is some force in this contention ; but on the whole we are not prepared to hold that the reference to the said entries should govern the construction of article 301. The setting in which the said entries are referred to would of course determine the scope and extent of the prohibition prescribed by article 303 (1); but that cannot be pressed into service in determining the scope of article 301 itself. It is significant that article 303(1) does not refer to intercourse and in that sense intercourse is outside its sphere. It is likely that having authorised Parliament to impose restrictions by article 302 it was thought expedient to prohibit expressly the said power of imposing restrictions from being used for the purpose of giving any preference in so far as the relevant entries are concerned. It may also be that the primary object of confining the operation of article 303(1) to the said entries was to introduce a corresponding limitation on the power of Parliament to discriminate under article 302. However that may be, in our opinion the limitation thus introduced in article 303(1) cannot circumscribe the scope of article 301 or otherwise affect its construction. Besides, as we will presently point out, there are other Articles in this Part which indicate that tax laws are included within article 301, and if that be so, the reference to the said entries in article 303(1) cannot 856 limit the application of article 301 to the said entries alone. Article 304 reads thus: "Notwithstanding anything in article 301 or article 303, the Legislature of a State may by law (a) impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; and (b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest: Provided that no Bill or amendment for the purposes of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President. " The effect of article 304(a) is to treat imported goods on the same basis as goods manufactured or produced in any State; and it authorises tax to be levied on such imported goods in the same manner and to the same extent as may be levied on goods manufactured or produced inside the State. We ought to add that this sub Article assumes that taxation can be levied by the State Legislature on goods manufactured or produced within its territory and it provides that outside goods cannot be treated any worse. How a tax can be levied on internal goods is, however, provided by article 304(b). The non obstante clause referring to article 301 would go with article 304(a), and that indicates that tax on goods would not have been permissible but for article 304(a) with the non obstante clause. This incidentally helps to determine the scope and width of the freedom guaranteed under article 301 ; in other words article 304(a) is another exception to article 301. Article 304(b) empowers the State Legislature to impose reasonable restrictions on the freedom of trade with other States or within its own territory. Again, the reference to the territory within the State supports the conclusion that article 301 covers the movement of 857 trade both inter State and intrastate. Article 304(b) is to be read with the non obstante clause relating to article 301 as well as article 303, and in substance it gives power to the State Legislature somewhat similar to the power conferred on the Parliament by article 302. The reference to article 303 in the non obstante clause has presumably been made as a matter of abundant( caution since the Legislature of a State has been included in article 303(1). There are, however, obvious differences in the powers of the Parliament and State Legislatures. In regard to an act which the State Legislature intends to pass under article 304(b) no bill can be introduced without the previous sanction of the President, and this requirement has obviously been inserted in order that regional economic pressures which may inspire legislation under the said clause should be duly examined in the light of the interest of national economy; such legislation must also be in the public interest which feature is common with the provision contained in article 302; such legislation must also satisfy the 'further test that the restrictions imposed by it are reasonable. That is another additional restriction imposed on the powers of the State Legislatures. Thus there are three conditions which must be satisfied in passing an Act under article 304(b),the previous sanction of the President must be obtained, the legislation must be in the public interest, and it must impose restrictions which are reasonable. It is of course true that if the previous sanction of the President is not obtained that infirmity may be cured by adopting the course authorised by article 255. The result of reading article 304(a) and (b) together appears to be that a tax can be levied by a State Legislature on goods manufactured or produced or imported in the State and thereby reasonable restrictions can be placed on the freedom of trade either with another State or between different areas of the same State. Tax legislation thus authorised must therefore be deemed to have been included in article 301, for that is the obvious inference from the use of the non obstante clause. Article 305 saves existing laws and laws providing 858 for State monopolies. It is unnecessary to deal with this Article. Its object clearly was not to interrupt or to Affect the operation of the existing laws except in so far as the President may by order otherwise direct. Article 306 is relevant. It reads thus: " Notwithstanding anything in the foregoing provisions of this Part or in any other provisions of this Constitution, any State specified in Part B of the First Schedule which before the commencement of this Constitution was levying any tax or duty on the import of goods into the State from other States or on the export of goods from the State to other States may, if an agreement in that behalf has been entered into between the Government of India and the Government of that State, continue to levy and collect such tax or duty subject to the terms of such agreement and for such period not exceeding ten years from the commencement of this Constitution as may be specified in the agreement: Provided that the President may at any time after the expiration of five years from such commencement terminate or modify any such agreement if, after consideration of the report of the Finance Commission constituted under article 280, he thinks it necessary to do so." This Article has been subsequently deleted by section 29 and Schedule to the Constitution (Seventh Amendment) Act, 1956, but its initial inclusion in Part XIII throws some light on the scope of article 301. Laws made by any State specified in Part B of the First Schedule levying any tax or duty on the import of goods into the State from other States or the export of goods from the State to other States were expressly saved by a article 306 because it was realised that they would otherwise be hit by article 301. In other words, taxing statutes or statutes imposing duties on goods would, but for article 306, have attracted the application of article 301. Let us now revert to article 301 and ascertain the width and amplitude of its scope. On a careful examination of the relevant provisions of Part XIII as a whole as well as the principle of economic unity 859 which it is intended to safeguard by making the said provisions, the conclusion appears to us to be inevitable that the content of freedom provided for by article 301 was larger than the freedom contemplated by section 297 of the Constitution Act of 1935, and whatever else it may or may not include, it certainly includes movement of trade which is of the very essence of all trade and is its integral part. If the transport or the( movement of goods is taxed solely on the basis that the goods are thus carried or transported that, in our opinion, directly affects the freedom of trade as contemplated by article 301. If the movement, transport or the carrying of goods is allowed to be impeded, obstructed or hampered by taxation without satisfying the requirements of Part XIII the freedom of trade on which so much emphasis is laid by article 301 would turn to be illusory. When article 301 provides that trade shall be free throughout the territory of India primarily it is the movement part of the trade that it has in mind and the movement or the transport part of trade must be free subject of course to the limitations and exceptions provided by the other Articles of Part XIII. That we think is the result of article 301 read with the other Articles in Part XIII. Thus the intrinsic evidence furnished by some of the Articles of Part XIII shows that taxing laws are not excluded from the operation of article 301 ; which means that tax laws can and do amount to restrictions freedom from which is guaranteed to trade under the said Part. Does that mean that all tax laws attract the provisions of Part XIII whether their impact on trade or its movement is direct and immediate or indirect and remote ? It is precisely because the words used in article 301 are very woe, and in a sense vague and indefinite that the problem of construing them and determining their exact width and scope becomes complex and difficult. However, in interpreting the provisions of the Constitution we must always bear in mind that the relevant provision " has to be read not in vacuo but as occurring in a single complex instrument in which one part may 860 throw light on another ". (Vide: James V. Commonwealth of Australia (1)). In construing article 301 we must, therefore, have regard to the general scheme of our Constitution as well as the particular provisions in regard to taxing laws. The construction of article 301 should not be determined on a purely academic or doctrinnaire considerations ; in construing the said 'Article we must adopt a realistic approach and bear in mind the essential features of the separation of powers on which our Constitution rests. It is a federal constitution which we are interpreting, and so the impact of article 301 must be judged accordingly. Besides, it is not irrelevant to remember in this connection that the Article we are construing imposes a constitutional limitation on the power of the Parliament and State Legislatures to levy taxes, and generally, but for such limitation, the power of taxation would be presumed to be for public good and would not be subject to judicial review or scrutiny. Thus considered we think it would be reasonable and proper to hold that restrictions freedom from which is guaranteed by article 301, would be such restrictions as directly and immediately restrict or impede the free flow or movement of trade. Taxes may and do amount to restrictions ; but it is only such taxes as directly and immediately restrict trade that would fall within the purview of article 301. The argument that all taxes should be governed by article 301 whether or not their impact on trade is immediate or mediate, direct or remote, adopts, in our opinion, an extreme approach which cannot be upheld. If the said argument is accepted it would mean, for instance, that even a legislative enactment prescribing the minimum wages to industrial employees may fall under Part XIII because in an economic sense an additional wage bill may indirectly affect trade or commerce. We are, therefore, satisfied that in determining the limits of the width and amplitude of the freedom guaranteed by article 301 a rational and workable test to apply would be: Does the impugned restriction operate directly or immediately on trade or its (1) ,613. 861 movement? It is in the light of this test that we propose to examine the validity of the Act under scrutiny in the present proceedings. We do not think it necessary or expedient to consider what other laws would be affected by the interpretation we are placing on article 301 and what other legislative entries would fall under Part XIII. We propose to confine our decision to the Act with which ' we are concerned. If any other laws are similarly challenged the validity of the challenge will have to be examined in the light of the provisions of those laws. Our conclusion, therefore, is that when article 301 provides that trade shall be free throughout the territory of India it means that the flow of trade shall run smooth and unhampered by any restriction either at the boundaries of the States or at any other points inside the States themselves. It is the free movement or the transport of goods from one part of the country to the other that is intended to be saved, and if any Act imposes any direct restrictions on the very movement of such goods it attracts the provisions of article 301, and its validity can be sustained only if it satisfies the requirements of article 302 or article 304 of Part XIII. At this stage we think it is necessary to repeat that when it is said that the freedom of the movement of trade cannot be subject to any restrictions in the form of taxes imposed on the carriage of goods or their movement all that is meant is that the said restrictions can be imposed by the State Legislatures only after satisfying the requirements of article 304(b). It is not as if no restrictions at all can be imposed on the free movement of trade. Incidentally we may observe that the difference in the provisions contained in article 302 and article 304(b) would prima facie seem to suggest that where Parliament exercises its power under article 302 and passes a law imposing restrictions on the freedom of trade in the public interest, whether or not the given law is in the public interest may not be justiciable, and in that sense Parliament is given the sole power to decide what restrictions can be imposed in public interest as 110 862 authorised by article 302. On the other hand article 304(b) requires not only that the law should be in the public interest and should have received the previous sanction of the President but that the restrictions imposed by it should also be reasonable. Prima facie the requirement of public interest can be said to be not justiciable and may be deemed to be satisfied by the sanction of the President; but whether or not the restrictions imposed are reasonable would be justiciable and in that sense laws passed by the State Legislatures may on occasions have to face judicial scrutiny. However this point does not fall to be considered in the present proceedings and we wish to express no definite opinion on it. Let us then examine the material provisions of the Act. As we have already pointed out the Act has been passed providing for the levy of tax on certain goods carried by roads or inland waterways in the State of Assam. Section 2(11) defines a producer as meaning a producer of tea and including the person in charge of the garden where it is produced. Section 3 is the charging section. It provides that manufactured tea in chests carried by motor vehicles etc., except railways and airways shall be liable to tax at the specified rate per lb. of such tea and this tax shall be realised from the producer. It also makes similar provisions for jute with which we are not concerned in the present proceedings. Section 6 provides for taxing authorities and their powers. Section 7 provides, inter alia, that every producer shall furnish returns of the manufactured tea carried in tea chests ,in such form and to such authority as may be prescribed. Section 8 makes a provision for licensing of balers who are persons owning or possessing pressing machines for the compression of jute into bales. Section 9 prescribes the procedure for levying the assessment ; and section 10 provides for the cancellation of assessment in the cases specified. Section 11 deals with the assessment in cases of evasion and escape; section 12 with rectification, and section 13 with penalty for non submission of returns and evasion of taxes. Section 19 provides for notice of demand, and is. 20 lays down when 863 tax becomes payable. This Act has been passed by the Assam Legislature under Entry 56 in List 11 and naturally it purports to be a tax on goods carried by roads or by inland waterways. It is thus obvious that the purpose and object of the Act is to collect taxes on goods solely on the ground that they are carried by road or by inland waterways within the area of the, State. That being so the restriction placed by the Act on the free movement of the goods is writ large on its face. It may be that one of the objects in passing the Act was to enable the State Government to raise money to keep its roads and waterways in repairs; but that object may and can be effectively achieved by adopting another course of legislation ; if the said object is intended to be achieved by levying a tax on the carriage of goods it can be so done only by satisfying the requirements of article 304(b). It is common ground that before the bill was introduced or moved in the State Legislature the previous sanction of the President has not been obtained ; nor has the said infirmity been cured by recourse to article 255 of the Constitution. Therefore we do not see how the validity of the tax can be sustained. In our opinion the High Court was in error in putting an unduly restricted meaning on the relevant words in article 301. It is clear that in putting that narrow construction on article 301 the High Court was partly, if not substantially, influenced by what it thought would be the inevitable consequence of a wider construction of article 301. As we have made it clear during the course of this judgment we do not propose to express any Opinion as to the possible consequence of the view which we are taking in the present proceedings. We are dealing in the present case with an Act passed by the State Legislature which imposes a restriction in the form of taxation on the carriage or movement of goods, and we hold that such a restriction can be imposed by the State Legislature only if the relevant Act is passed in the manner prescribed by article 304(b). This question can be considered from another point of view. When a State Legislature passes an Act under Entry 56 of List II its initial legislative 864 competence is not in dispute. What is in dispute is whether or not such legislative competence is subject to the limitations prescribed by Part XIII. Now what does an act passed under the said Entry purport to do ? It purports to put a restraint in the form of taxation on the movement of trade, and if the movement of trade is regarded as an integral part of trade itself, the Act in substance puts a restriction on trade itself. The effect of the Act on the movement of trade is direct and immediate; it is not indirect or remote; and so legislation under the said Entry must be held to fall directly under article 301 as legislation in respect of trade and commerce. In some of the decisions of this Court, in examining the validity of legislation it has been considered whether the impugned legislation is not directly in respect of the subject matter covered by a particular Article of the Constitution. This test was applied, for instance by Kania, C. J., in the case of A. K. Gopalan vs The State of Madras (1). It was also adopted by this Court in the case of Ram Singh vs The State of Delhi (2). It is no doubt true that the points which arose for decision in those cases had reference to the fundamental rights guaranteed by articles 19, 21 or 22 ; but we are referring to those decisions in order to emphasise that the test there adopted would in the present case lead to the conclusion that the Act with which we are concerned is invalid. The true approach according to Kania, C.J., is only to consider the directness of the legislation. Now, if the directness of legislation has to be considered it is clear that the Act imposes a tax on the carriage of goods and that immediately takes it within the purview of Part XIII. In the course of arguments the learned Attorney General invited us to apply the test of pith and substance, and he contended that if the said test is applied the validity of the Act can be sustained. In support of his argument he has relied on the observations made by Das, C. J., in the case of The State of Bombay vs R.M.D. Chamarbaugwala (3). In that case the Court (1) (1950] S.C.R. 88. (2) ; (3) ; 865 was called upon to consider the validity of the Bombay Lotteries and Prize Competitions Control and Tax (Amendment) Act, 1952. The challenge to the Act proceeded on two grounds, (1) that it violated the fundamental right guaranteed under article 19(1)(g) and (2) that it offended against the provisions of article 301. The challenge on the first ground was repelled because it was held that gambling cannot be treated as trade or business under article 19(1)(g). This conclusion was sufficient to repel also the other ground on which the, validity of the Act was challenged because, if gambling was not trade or business under article 19(1)(g), it was also not trade or commerce under article 301. On the conclusion reached by this Court that gambling is not a trade this position would be obvious. Even so, the learned Chief Justice incidentally applied the test of pith and substance, and observed that the impugned act was in pith and substance an act in respect of betting and gambling, and since betting or gambling was not trade, commerce or business " the validity of the Act had not to be decided by the yardstick of reasonableness and public interest laid down in articles 19(6) and 304 ". In this connection it may, with respect, be pointed out that what purports to be a quotation from Lord Porter 's judgment in Commonwealth of Australia & Ors. vs Bank of New South Wales(1) has not been accurately reproduced. In fact, referring to phrases such as 'pith and substance ' Lord Porter has observed that " they no doubt raise in convenient form an appropriate question in cases where the real issue is one of subject matter, as when the point is whether a particular piece of legislation is a law in respect of some subject within the permitted field. They may also serve useful purpose in the process of deciding whether an enactment which works some interference, with trade, commerce and intercourse among the States is nevertheless untouched by section 92 as being essentially regulatory in character " (pp. 312, 313). These observations would indicate that the test of pith and substance is generally and more appropriately applied when a dispute arises as to the 866 legislative competence of the legislature, and it has to be resolved by reference to the entries to which the impugned legislation is relatable. When there is a conflict between two entries in the legislative lists, and legislation by reference to one entry would be competent but not by reference to the other, the doctrine of pith and substance is invoked for the purpose of determining the true nature and character of the legislation in question (Vide: Prafulla Kumar Mukherjee vs Bank of Commerce Ltd., Khulna (1) and Subrahmanyan Chettiar vs Muttuswami Goundan (2) . But even the application of the test of pith and substance yields the same result in the present proceedings. The pith and substance of the legislation is taxation on the carriage of goods and that clearly falls within the terms of article 301. At the commencement of this judgment we have stated that the complexity of the problem which we are called upon to decide in the present proceedings has been incidentally mentioned or considered in some of the reported decisions of this Court. We may in that connection refer to two of such decisions at this stage. In The State of Bombay vs The United Motors (India) Ltd. (3), Patanjali Sastri, C. J., observed that the freedom of inter State trade and commerce declared in article 301 is expressly subordinated to the State power of taxing goods imported from sister States provided only no discrimination is made in favour of similar goods of local origin. According to the learned Chief Justice the commercial unity of India is made to give way before the State power of imposing any non discriminatory tax on goods imported from sister States. This observation would suggest that article 304(a) and (b) deal with taxes and to that extent it is inconsistent with the argument that tax laws are outside Part XIII. The next case in which this question has been incidentally discussed is in Saghir Ahmed vs The State of U. P. (4). In that case the impugned provisions of the U. P. Road Transport Act, 1951 (U. P. Act II of (1) (1947) L.R. 74 I.A. 23. (2) (3) ; (4) ; 867 1951), were declared to be unconstitutional on two other grounds which had no direct connection with the challenge under Part XIII of the Constitution. Even so, Mukherjea, J., as he then was, who spoke for the Court, has referred to the problem raised by Part XIII as " not quite free from difficulty " and has indicated its pros and cons which were urged before the Court. One of the points thus urged was that article 301 provides safeguards for carrying on trade as a whole as distinct from the rights of an individual to carry it on. In other words the said Article was concerned with the passage of commodities or persons either within or without the State frontiers but not directly with individuals carrying on the trade or commerce. The right of individuals, it was said, was dealt with under article 19(1)(g) so that the two Articles had been framed in order to secure two different objects. To the same effect are some of the observations made by Das, C. J., in the case of R. M. D. Chamarbaugwala (1). It is unnecessary on the present occasion to consider whether the fields covered by article 19(1)(g) and article 301 can be distinguished in the manner suggested in the said observations. It may be possible to urge that trade as a whole moves inevitably with the aid of human agency, and so protection granted to trade may involve protection even to the individuals carrying on the said trade. In that sense the two freedoms may overlap. However, it is unnecessary to pursue this point any further in the present proceedings. Before we conclude we would like to refer to two decisions in which the scope and effect of the provisions of section 92 of the Australian Constitution came to be considered. We have deliberately not referred to these decisions earlier because we thought it would be unreasonable to refer to or rely on the said section or the decisions thereon for the purpose of construing the relevant Articles of Part XIII of our Constitution. It is commonplace to say that the political and historical background of the federal polity adopted by the Australian Commonwealth, the setting of the Constitution itself, the distribution of powers and the general scheme of the Constitution are different, and so it (1) ; 868 would not be safe to seek for guidance or assistance from the Australian decisions when we are called upon to construe the provisions of our Constitution. In this connection we have already referred to the note of warning struck by Venkatarama Aiyar, J., against indiscriminate reliance being placed on Australian and American decisions in interpreting our Constitution in the case of M. P. V. Sundararamier & Co. (1). The same caution was expressed by Gwyer, C. J., as early as 1939 when he observed in The Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938 (2) " there are few subjects on which the decisions of other Courts require to be treated with greater caution than that of federal and provincial powers, for in the last analysis the decision must depend upon the words of the Constitution which the Court is interpreting; and since no two Constitutions are in identical terms it is extremely unsafe to assume that a decision on one of them can be applied without qualification to another. This may be so even where the words or expressions used are the same in both cases, for a word or a phrase may take a colour from its context and bear different senses accordingly ". Even so the reported decisions of this Court show that in dealing with constitutional problems reference has not infrequently been made to Australian and American decisions; and that, we think, brings out the characteristic feature of the working of the judicial process. When you are dealing with the problem of construing a constitutional provision which is none too clear or lucid you feel inclined to inquire how other judicial minds have responded to the challenge presented by similar provisions in other sister Constitutions. It is in that spirit that we propose to refer to two Privy Council decisions which dealt with the construction of section 92 of the Australian Constitution. The first paragraph of section 92 of the Australian Constitution, around which has grown, in the words of Lord Porter a " labyrinth where there is no golden thread ", reads thus: " On the imposition of uniform (1) ; 1483 84. (2) , 5. 869 duties of customs, trade, commerce, and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free ". The part played by Frederick Alexander James, who carried on the trade of growing and processing dried fruits, in securing judicial pronouncements on the true scope and effect of the said section is wellknown. He fought three valiant legal battles in which he successfully asserted his right as a trader against legislative encroachment. In James V. State of South Australia (1) section 20 of the Dried Fruits Export Control Act, 1924, was struck down. In James V. Cowan (2) section 28 was challenged, whereas in the last case of James V. Commonwealth of Australia (3) James had claimed a declaration that the Dried Fruits Act 11 of 1928 and 5 of 1935 and the regulations framed thereunder were invalid as offending against section 92 of the Constitution. It is to the observations made by the Privy Council in the last case to which we wish to refer. Referring to the word " free " used in the said section Lord Wright observed that the said word in itself is vague and indeterminate; it must take its colour from the context. Then he referred to the fact that " 'free trade ' ordinarily means freedom from tariffs ", but he immediately added that " free " in section 92 cannot be limited to freedom in the last mentioned sense. According to this judgment, every step in the series of operations which constitute the particular transaction is an act of trade, and control under the State law of any of these steps must be an interference with its freedom as trade. In this connection it was also observed that not much help is to be got by reflecting that trade may still be free though the trader has to pay for the different operations such as tolls, railway rates and so forth; it would thus appear that the result of this decision is that imposition of tolls, railway rates and so forth might impede the freedom of trade contemplated by section 92, which in other words supports our conclusion that a tax may amount to a restriction under article 301. (1) ; (3) ,613. (2) III 870 In the case of Commonwealth of Australia vs Bank of New South Wales (1) to which reference has already been made in connection with the test of pith and substance the Privy Council was examining the validity of section 46 of Banking Act (Commonwealth) (No. 57 of 1947) in the light of the provisions of section 92 of the Australian Constitution. In deciding the said question one of the tests which was applied by Lord Porter was : " Does the act not remotely or incidentally (as to which they will say something later) but directly restrict the inter State business of banking ", and he concluded that " two general propositions may be accepted, (1) that regulation of trade, commerce and intercourse among the States is compatible with its absolute freedom, and (2) that section 92 is violated Only when a, legislative or executive act operates to restrict such trade, commerce and intercourse directly and immediately as distinct from creating Some indirect or consequential impediment which may fairly be regarded as remote ". This decision thus justifies the conclusion we have reached about the scope and effect of article 301. In the result we hold that the Act has put a direct restriction on the freedom of trade, and since in doing so it has not complied with the provisions of article 304(b) it must be declared to be void. In view of this conclusion it is unnecessary to consider the other points urged in support of the challenge against the validity of the Act. The three appeals and the two petitions are accordingly allowed and writs or orders directed to be issued as prayed. The appellants and the petitioners will be entitled to their costs from the respondent. The validity of the Assam Taxation (on Goods carried by Roads or lnland Waterways) Act, 1954 hereinafter referred to as the, Act, is challenged by certain producers of tea in the States of West Bengal and Assam. The Act was passed by the Assam Legislature and received the assent of the Governor of Assam on April 9, 1954. To the introduc tion of the Bill (which was enacted into the Act) in 871 the State Legislature, the previous sanction of the President was not obtained : nor did the President assent to the Act. By section 3 of the Act,, it is provided inter alia that " manufactured tea in chests carried by motor vehicles, cart, trolly, boat, animal and human agency or any other means except, railways and airways shall be liable to a tax of one anna per pound of such tea and this tax shall be realised from the producer". " Producer " is defined by section 2 cl. (2) as meaning a producer of tea and included a person in charge of the garden where tea is produced. By section 4, tax is charged on the total net weight carried during the return period. Section 7 provides that every producer and dealer shall furnish a return of manufactured tea carried in chests. By section 23, cl. (3), the Commissioner of Taxes is authorised to recover taxes and penalties due under the Act as arrears of land revenue. Sections 27 and 28 impose a duty upon the producers to maintain accounts in the forms prescribed under the Act and to preserve the same and to producer them whenever called upon, to the Commissioner or other persons as may be appointed by the Government in that behalf The rules framed under the Act make it obligatory upon the producers to submit quarterly returns to the Superintendent of Taxes and to maintain the registers in the forms prescribed and failure to maintain registers is penalised. In exercise of the powers conferred by section 7, sub section (3), the Commissioner of Taxes issued a notification in the Assam Government Gazette notifying for general information that returns under the Act and the Rules thereunder for the period between June 1, 1954 and September 30, 1954, shall be furnished on or before October 30, 1954, and for the subsequent quarters on or before the dates specified therein. Three producers who transported their tea by road or by inland waterways to Calcutta in the State of West Bengal challenged by petitions under article 226 of the Constitution filed in the High Court of Assam, tile authority of the Legislature of the State of Assam to enact the Act on the plea that the Act violated the guarantee of freedom of trade, commerce and intercourse under 872 article 301 of the Constitution. The High Court rejected the plea raised by the petitioners, and against the orders passed, three appeals with certificates of fitness under article 132 of the Constitution have been preferred. Two other producers have challenged the vires of the Act by petitions under article 32 of the Constitution presented to this court. The principal question canvassed in these proceedings is about the competence of the Assam Legislature to enact the Act. The producers contend that by article 301 of the Constitution, trade, commerce and intercourse being declared free throughout the territory of India, the statute authorising imposition of restrictions or burdens on that freedom by levying tax under the authority of an Act which does not conform to the conditions prescribed by the Constitution is invalid. Item 56 of List II of the seventh schedule to the Constitution authorises the State Legislature to impose taxes on goods and passengers carried byroad or on inland waterways. In terms, the tax imposed by the Act is a tax on goods carried by road and inland waterways and is not of the nature of a duty of excise. If the vires of the Act are to be adjudged solely in the light of the power conferred by article 246 cl. (3) read with item 56 of List 11 of the seventh schedule, the tax must be regarded as within the competence of the State. But the exercise of legislative power of the Parliament and the State Legislatures conferred by the legislative lists is restricted by diverse provisions of the Constitution. By article 301, it is declared that subject to the provisions of Part XIII of the Constitution, trade, commerce and intercourse throughout the territory of India shall be free. The language of the Article is general; it admits of no implications and of no exceptions bar those expressly imposed by Part XIII. It comprehensively sets out the guarantee of freedom and defines in terms, clear and precise, that trade, commerce and intercourse throughout the territory of India subject to the provisions of Part XIII, shall be free, i.e., trade, commerce and intercourse shall not, except to the extent expressly permitted, be prohibited, controlled, burdened or impeded. Our 873 Constitution even though in form federal, has in diverse provisions thereof, emphasised the unity of India; and with a view to promote that unity appears to have guaranteed, subject to specific restrictions, freedom of trade, commerce and intercourse throughout the territory. The Article is not merely declaratory of State policy like the directive principles defined by Part IV of the Constitution which are expressly not made enforceable by any court though the principles are " fundamental in the governance of the country '. It incorporates a restriction on the exercise of power by Governmental agency legislative as well as execu tive. Besides placing an irremovable ban on the executive authority, it restricts the legislative power of the Parliament and the State legislatures conferred by articles 245, 246 and 248 and the relevant items in the legislative lists relating to trade, commerce and intercourse. On the exercise of the legislative power to tax trade, commerce and intercourse, restrictions are prescribed by certain provisions Contained in Part XII, e.g., articles 276, 286, 287, 288 and 289: but these restrictions do not exhaustively delimit the periphery of that power. The legislative power to tax is restricted also by the fundamental freedoms contained in Part III, e.g., articles 14,15(1),19(1)(g) and 31(1) and is further restricted by Part XIII. Article 245, cl. (1), of the Constitution expressly provides that the legislative powers of the Parliament and the State Legisla tures to make laws are subject to the provisions of the Constitution ; and article 301 is undoubtedly one of the provisions to which the legislative powers are subject. The power of taxation is essentially an attribute of the sovereignty of the State and is not exercised in consideration of the protection it affords or the benefit that it confers upon citizens and aliens. Its content is not measured by the apparent need of the amounts sought to be collected, and its incidence does not depend upon the ability of the citizens to meet the demand. But it is still not an unrestricted power. By article 265 of the Constitution, the power to tax can be exercised by authority of law alone and the Constitution affirmatively grants the power of taxation 874 under diverse heads under the three lists of the seventh schedule. The power of taxation has there. fore to be exercised by the Legislature strictly within the limits prescribed by the Constitution, and any alleged transgression either by Parliament or the State Legislature of the limits imposed by the Constitution is justiciable. Trade and commerce do not mean merely traffic in goods, i. e., exchange of commodities for money or other commodities. In the complexities of modern conditions, in their wide sweep are included carriage of persons and goods by road, rail, air and waterways, contracts, banking, insurance transactions in the stock exchanges and forward markets, communication of information, supply of energy, postal and telegraphic services and many more activities too numerous to be exhaustively enumerated which may be called commercial intercourse. Movement of goods from place to place may in some instance,% be an important ingredient of effective commercial intercourse, but movement is not an essential ingredient thereof Dealings in goods and other commercial activities which do not import a concept of movement are as much part of trade and commerce as transactions involving movement of goods. The guarantee of freedom of trade and commerce is not addressed merely against prohibitions, complete or partial; it is addressed to tariffs, licensing, marketing regulations, price control, nationalisation, economic or social planning, discriminatory tariffs, compulsory appropriation of goods, freezing or stand still orders and similar other impediments operating directly and immediately on the freedom of commercial intercourse as well. Every sequence in the series of operations which constitutes trade or commerce is an act of trade or commerce and burdens or impediments imposed on any such step are restrictions on the freedom of trade, commerce and inter course. What is guaranteed is freedom in its widest amplitude freedom from prohibition, control, burden or impediment in commercial intercourse. Not merely discriminative tariffs restricting movement of goods are included in the restrictions which are hit by 875 Art 301, but ball taxation on commercial intercourse, even imposed as a measure for collection of revenue is so hit. Between discriminatory tariffs and trade barriers on the one hand and taxation for raising revenue on commercial intercourse, the difference is one of purpose and not of quality. Both these forms of burden on commercial intercourse trench upon the freedom guaranteed by article 301: The guarantee of freedom is again not merely against burdens or impediments on inter State movement: nor does the language of article 301 guarantee freedom merely from restrictions on trade, commerce and intercourse as such. Articles 302, 303, 304 and 306, which I will presently advert to, make it abundantly clear that the freedom contemplated was freedom of trade, commerce and intercourse in all their varied aspects inclusive of all activities which constitute commercial intercourse and not merely from restrictions on " trade, commerce and intercourse as such ". Article 301 as has already been observed enunciates a fetter upon the exercise of legislative power under the entries in the lists of the seventh schedule concerning or relating to trade, commerce and intercourse. The basic principle underlying article 301 appears to have been adopted from the Constitution of the Australian Commonwealth. In the American Constitution, by the 8th section, article 1, power to regulate commerce is granted; but the freedom of commerce as guaranteed by our Constitution is not found enunciated in the Constitution of the United States. Section 92 of the Constitution of the Commonwealth of Australia provides by the 1st paragraph that " on the imposition of uniform duties of customs, trade, commerce and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free ". That guarantee of freedom of trade, commerce and intercourse though Dot as extensive as the guarantee enshrined in our Constitution, is of the same pattern. But our Constitution has made a sig nificant departure from the Australian Constitution, Whereas by section 92 of the Australian Constitution, 876 freedom of trade, commerce and intercourse is guaranteed among the States, i.e., at inter State level, our Constitution has made trade, commerce and intercourse free throughout the territory of India. The freedom guaranteed by our Constitution is more pervasive: it is freedom of trade, commerce and intercourse intraState as well as inter State. But this extension of the area of its operation does not alter the content of that freedom. It is freedom from tax burdens as well as other impediments. Section 92 of the Commonwealth of Australia Act does not encompass the wide freedom guaranteed by our Constitution it protects trade, commerce and intercourse from restrictions in inter State commerce; but in my judgment, the interpretation put by the Judicial Committee of the Privy Council in James vs Commonwealth of Australia (1) upon the meaning of the expression " free " in section 92 is not on that account less illuminating in the interpretation of article 301 of our Constitution which is largely based on that section of the Australian Constitution. Lord Wright in delivering the judgment of the Board in James vs Commonwealth of Australia (1) (supra) at pp. 627.628 observed : " ' Free ' in section 92 cannot be limited to freedom in the last mentioned sense (freedom from tariffs). There may at first sight appear to be some plausibility in that idea, because of the starting point in time specified in the section, because of the sections which surround, section 92, and because proviso to section 92 relates to customs duties. But it is clear that much more is included in the term; customs duties and other like matters constitute a merely pecuniary burden; there may be different and perhaps more drastic ways of interfering with freedom, as by restriction or partial or complete prohibition of passing into or out of the State. Nor does " free " necessarily connote absence of discrimination between inter State and intrastate trade. No doubt conditions restrictive of freedom of trade among the States will frequently 'involve a discrimination; but that is not essential or decisive. . (1) 877 A compulsory seizure of goods may include indifferently goods intended for intrastate trade and goods intended for trade among the States. Nor can freedom be limited to freedom from legislative control; it must equally include executive control Every step in the series of operations which constitute the particular transaction is an act of trade; and control under the State law of any of these steps must be an interference with its freedom as trade. " These observations made in the context of a guarantee against obstruction to the flow of interstate trade and commerce, involved the " conception " of " freedom from customs duties, imports, border prohibitions and restrictions of every kind : the people were to be free to trade with each other, and to pass to and fro among the States, without any burden, hindrance or restriction based merely on the fact that they were not members of the same State ". Freedom guaranteed by article 301 is however not absolute: it is subject to the provisions contained in Part XIII of the Constitution. Article 302 authorises Parliament to impose restrictions on the freedom of trade, commerce and intercourse between one State and another or within any 'part of the territory of India as may be required in the public interest. The Constitution has therefore circumscribed the guarantee under article 301 by authorising the Parliament to impose restrictions thereon. Such restrictions on trade, commerce and intercourse may be intrastate as well as inter State: the only condition which the restrictions must fulfil is that they must be imposed in the public interest. The learned Attorney General urged that the courts are incompetent to adjudge whether the quantum, and the incidence of a tax imposed by a Legislature in exercise of its powers are in the public interest, and therefore it must be inferred that articles 301 and 302 do not deal with freedom from taxation and the limits which may be placed thereon. Counsel urged that in the modern political thought, exercise of the sovereign power of taxation is not restricted to collection of revenue for governmental 112 878 purposes; it is reported to for diverse purposes, often with a view to secure a pattern of social order ensuring justice, liberty and equality amongst citizens. That the courts may not in adjudging upon the validity of a restriction imposed by a parliamentary statute, lightly enter upon an investigation whether the amount sought to be recovered and its incidence are in the public interest, is not a ground for holding that article 302 does not deal with restrictions which may be placed upon trade, commerce and intercourse by the imposition of taxes. The courts will normally rely upon the wisdom of the Parliament and presume that taxes are generally imposed in the public interest: but that does not exclude the jurisdiction of the court in a given case to enter upon an enquiry whether an impugned legislation satisfies the constitutional test. If an enquiry into the validity of a burden or impediment imposed on the freedom of trade, commerce 'and intercourse imposed otherwise than by levying a tax is within the competence of the court, the restraint which the courts put upon their own functions by raising a presumption of constitutionality in dealing with a burden imposed by a taxing statute cannot be forged into a fetter upon their jurisdiction. By el. (b) of article 304, the State Legislatures are invested with similar authority to impose restrictions on the freedom of trade, commerce and intercourse with or within the State as may be required in the public interest. The territorial extent of the operation of the laws which may be made under articles 302 and 304(b) may not from the very nature of the jurisdiction exercised by the Legislatures be co extensive, but subject thereto, the Parliament and the State Legislatures are entrusted in exercise of legislative authority with powers to restrict freedom of trade, commerce and intercourse. Why the Constitution should have enacted that the Parliamentary law may impose restrictions as may be required in the public interest and the State law may impose reasonable restrictions as may be required in the public interest, it is difficult to appreciate. It is unnecessary for the purpose of these cases to enter 879 upon a discussion whether there is any real distinction between the quality of restrictions which may be imposed by legislation by the Parliament and State Legislatures exercising authority respectively under articles 302 and 304(b) of the Constitution. The two Articles enact that to oirucmscribe effectively the freedom of trade, commerce and intercourse, the restriction must satisfy the primary test that it is " required in the public interest ". Clause (b) of article 304 is subject to a proviso that no Bill or amendment for the purpose of el. (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President. The authority of the State Legislature to enact legislation imposing restrictions on trade, commerce and intercourse is therefore subject to the condition that before the Bill or amendment of a statute is moved, the previous sanction of the President must be obtained. Legislative power of the Parliament imposing restrictions on the freedom of trade, commerce and intercourse may therefore be validly exercised if the restrictions are required in the public interest. On the exercise of authority in that behalf by the State Legislatures, there are placed two restrictions, (1) that the restriction must be reasonable and required in the public interest, (2) that the Bill or amendment imposing restriction can be moved or introduced in the Legislature only with the previous sanction of the President. In this context, I may refer to article 255 which provides, in so far as it is material, that no Act of the Legislature of a State shall be invalid by reason only that the previous sanction required by the Constitution was not given, if assent to that Act was given under el. (c) where the previous sanction required was that of the President, by the President. Even if the previous sanction of the President has not been obtained to the moving or introduction of the Bill or amendment falling within el. (b) of article 304, the Act still would not be invalid if the President has signified his assent to the Act enacted by the Legislature. Article 303(1) is an exception to article 302 as well as article 304(b). Notwithstanding the wide sweep of the 880 legislative power restored by articles 302 and 304(b) to the Parliament and the State Legislatures to make laws imposing restrictions on the freedom of trade, commerce and intercourse, prohibition is imposed on the exercise of the power in making laws giving or authorising the giving of, any preference to one State over another or making, or authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the seventh schedule. (1) of article 303 emphasises the object of the Constitution. makers to safeguard the economic unity of the nation and to prevent discrimination between the constituent States in the matter of trade and commerce. It is true that under cl. (1) of article 302, the discrimination which is prohibited is under a law made by virtue of an entry relating to trade and commerce in the seventh schedule. But thereby, discrimination which is prohibited is not limited to discrimination under laws made under items expressly relating to the trade and commerce items of the seventh schedule. The expression " relating to trade and commerce " used in article 302(1) in my judgment includes all those entries in the lists of the seventh schedule which deal with the power to legislate, directly or indirectly in respect of activities in the nature of trade and commerce. By el. (2) of article 303, the rigour of cl. (1) in the matter of laws to be enacted by Parliament is to a certain extent reduced. That clause authorises the Parliament, but not the State Legislatures, to make laws notwithstanding el. (1) when it is declared by law that it is necessary to make discrimination which is prohibited for the purpose of dealing with the situation arising from scarcity of goods in any part of the territory of India. Article 304, in so far as it is material, provides that notwithstanding anything in article 301 or article 303, the Legislature of a State may by law, (a) impose on goods imported from other States (or the Union territories) any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so 881 manufactured or produced. This clause implies that notwithstanding anything contained in article 301 or article 303, the State Legislature has the power to im. pose tax on the import of goods to which similar goods manufactured or produced in the State are subject, provided that by taxing the goods imported from another State or Union territory, no discrimination is practised. If article 301 and article 303 did not deal with restrictions or burdens in the nature of tax, the reason for incorporating the non obstante clause to which article 304, el. (1), is subject, cannot be appreciated. Undoubtedly, the provisions of Part XIII of the Constitution do not impose additional or independent powers of taxation; the powers of taxation are to be found conferred by articles 245, 246 and 248 read with the lists in the seventh schedule, and the provisions of Part XIII are limitative of the exercise of legislative power. The circumstance that the Constitution has chosen to deal with a specific field of taxation as an exception to articles 301 and 303 (which should really be article 303(1) ) strongly supports the inference that taxation was one of the restrictions from the imposition of which by the guarantee of article 301, trade, commerce and intercourse are declared free. Clause (b) of article 304 is subject to the proviso prescribing that the previous sanction of the President shall be obtained to the moving or introduction of a Bill or amendment imposing restrictions on the freedom of trade, commerce and intercourse. There is however no such condition imposed in the matter of enactment of laws imposing non discriminative tariffs under el. But on that account, the nature of the restrictions contemplated by cls. (a) arid (b) is not in any manner different. Clause (b) deals with a general restriction which includes a restriction by the imposition of a burden in the nature of tax. Clause (a) deals with a specific burden of taxation in a limited field. Article 305 protects existing laws except in so far as the President may by order or otherwise direct, and it also validates certain enactments made before the commencement of the Constitution (Fourth Amendment) Act, 1955, and authorises the Parliament 882 and the State Legislatures in future to make laws relating to matters referred to in sub cl. (2) of cl. (6) of article 19. Article 306 of the Constitution which was repealed by the Constitution (Seventh Amendment) Act, 1956, provided, in so far as it is material, that notwithstanding anything in the foregoing provisions of Part XIII or any other provisions of the Constitution, a State specified in Part B of the First Schedule which before the commencement of the Constitution was levying any tax or duty on the import of goods into the State from other States or on the export of goods from the State to other States may, if an agreement in that behalf has been entered into between the Government of India and the Government of that State continue to levy and collect such tax or duty subject to the terms of such agreement. . . The marginal note of the Article refers to the power of the States specified in Part B of the First Schedule to levy tax as a power to impose restrictions on trade and commerce, and clearly supports the view that within the meaning of article 301, freedom was to include free dom from taxation and the restrictions contemplated by articles 302 and 304 contemplated imposition of burdens of the nature of taxation. On a careful review of the various Articles, in my judgment, by Part XIII, restrictions have been imposed upon the legislative power granted by articles 245, 246 and 248 and the lists in the seventh schedule to the Parliament and the State Legislatures and those restrictions include burdens of the nature of taxation. Therefore, the power to tax commercial intercourse vested by the legislative lists in the Parliament or the State Legislatures, is circumscribed by Part XIII of the Constitution and if the exercise of that power does not conform to the requirements of Part XIII, it would be regarded as invalid. As observed hereinbefore, the previous sanction of the President was not obtained to the moving of the Bill which was enacted as the impugned Act. Even though the Assam Legislature had by item 56 of the seventh schedule legislative authority to impose this tax, the State could not exercise this authority in the absence of the previous sanction of the President and 883 the invalidity of the Act imposing the tax on goods and passengers is not cured, the President not having assented to the Act at any time after it was passed by the Assam Legislature. The argument that this view seriously restricts the " sovereignty " of the States has, in my view, little force. Even a cursory review of our constitutional provisions clearly shows that the primary object of the Constituent Assembly was to erect a governmental machinery with a strong central Government, with the object of building up a healthy economy, and unifying the various component States, consisting of the former British Indian Provinces and the merged Indian States, by subordinating local and parochial interests to the wider national interest. In any event, in adjudging the vires of a statute, the impact of the view which the interpretation placed by the court may produce on some cherished notion of sovereignty of the component States must be ignored. In that view, the Assam Taxation (on Goods carried by Roads or Inland Waters) Act, 1954, must be regarded as infringing the guarantee of freedom of trade and commerce under article 301, because the Bill moved in the Assembly had not received the assent of the President as required under article 304(b) proviso, and the Act has not been validated by the assent of the President under article 255(c). In the view expressed by me, I do not deem it necessary to enter upon certain subsidiary contentions such as the application of the " pith and substance doctrine " to the interpretation of the relevant clauses, the alleged violation by the Act of the equal protection clause of the Constitution, and the effect of Act XXIX of 1953 enacted by the Parliament, which were debated at the Bar. In the view taken, the appeals must be allowed and the Rule in the two applications made absolute, with costs. ORDER OF COURT: In view of the majority judgment, the appeals and the writ petitions are allowed with costs one set of hearing fees. [/INST] The Assam Taxation (on goods carried by Roads and Inland Waterways) Act, 1954, was passed under Entry 56 of List II of Seventh Schedule to the Constitution. The appellants contended that the Act violated the freedom of trade guaranteed by article 301 Of the Constitution and as it was not passed after obtaining the previous sanction of the President as required by article 304(b) it was ultra vires. The respondent urged that taxing laws were not governed by Part XIII (which contained articles 301 and 304) but only by Part XII and in the alternative that the provisions of Part XIII applied only to such legislative entries in the Seventh Schedule as dealt specifically with trade, commerce and intercourse. Held, (per Gajendragadkar, Wanchoo and Das Gupta, JJ.) that the Act violated article 30i and since it did not comply with the provisions of article 304(b) it was ultra vires and void. The freedom of trade, commerce and intercourse guaranteed by article 301 was wider than that contained in section 297 Of the Government of India Act, 1935, and it included freedom from tax laws also. Article 301 provides that the flow of trade shall run smooth and unhampered by any restriction either at the boundaries of the States or at any other points inside the States themselves ; and if any Act imposes any direct restrictions on the movement of goods it attracts the provisions of article 301, and its validity can be sustained only if it satisfied the requirements of article 302 or article 304. The operation of article 301 cannot be restricted to legislation under the Entries dealing with trade and commerce. The Assam Act directly affected the freedom contemplated by article 301. Ramjilal vs Income tax Officer, Mohindargarh, [1951] S.C.R. 127, M. P. V. Sundararamier & Co. vs The State of Andhra Pradesh, [1058] S.C.R. 1422, James vs Commonwealth of Australia, , The State of Bombay vs The United Motors (India) Ltd., ; , Saghir Ahmed vs The State of U.P. 810 ; , James vs State of South Australia, ; and James vs Cowan, , referred to. Per Sinha, C. J. The Assam Act did not contravene article 301 and was not ultra vires. Neither the one extreme position that article 301 included freedom from all taxation nor the other that taxation was wholly outside the purview of article 301 was correct. The freedom conferred by article 301 did not mean freedom from taxation simpliciter but only from the erection of trade barriers, tariff walls and imposts which had a deleterious effect on the free flow of trade, commerce and intercourse. The Assam Act was a taxing statute simpliciter and did not suffer from any of the vices against which Part XIII of the Constitution was intended. Ramjilal vs Income tax Officer, Mohindargarh, [1951] S.C.R. 127, referred to. Further, the impugned Act was within the competence of the State Legislature and fell directly within Entry 56 of List 11 ; it was not in conflict with the Tea Act Of 1953 enacted by Parliament; it did not contravene article 14 and it was not extra territorial in operation. The Tata Iron & Steel Co. Ltd. vs The State of Bihar, ; , followed. Per Shah, J. The Assam Act infringed the guarantee of freedom of trade and commerce under article 301 and as the Bill was not moved with the previous sanction of the President as required by article 304(b) nor was it validated by the assent of the President under article 255(c), it was ultra vires and void. Article 301 guarantees freedom in its widest amplitude, freedom from prohibition, control, burden or impediment in commercial intercourse. The freedom includes not only freedom from discriminative tariffs and trade barriers but also from all taxation on commercial intercourse. Part XIII of the Constitution places restrictions upon the legislative power granted by articles 245, 246 and 248 and the Lists and these restrictions include burdens in the nature of taxation. James vs Commonwealth of Australia, , referred to. </s>

<s>[INST] Summarize the following judgement: Appeals Nos. 147 & 148 of 1955. Appeals from the judgment and order dated September 30, 1953, of the former Bombay High Court in Special Civil Applications Nos. 1008 and 1611 of 1953. V. M. Limaye, Mrs. E. Udayaratnam and section section Shukla, for the appellants (in both the appeals). H. N. Sanyal, Additional Solicitor General of India, B. Ganapathy Iyer, K. L. Hathi and R. H. Dhebar, for the respondent. 344 1960. August 25. The Judgment of Sinha, C. J., Kapur, Gajendragadkar and Wanchoo, JJ., was delivered by Gajendragadkar, J. Subba Rao, J., delivered a separate judgment. GAJENDRAGADKAR J. The appellants in these two appeals had filed two separate petitions under article 226 of the Constitution in the Bombay High Court in which they had challenged the vires of section 6(2) of the Bombay Tenancy and Agricultural Lands Act, 1948 (LXVII of 1948) (hereafter called the Act) and the validity of the notification issued by the Government on October 17, 1952, under the provisions of the said section 6(2). It appears that on June 23, 1949, in exercise of the powers conferred by section 6(2) of the Act, the Government had issued a notification fixing " in the case of an irrigated land 1/5 and in the case of any other land 1/4 of the crops of such land or its value as determined in the prescribed manner as the maximum rent payable by the tenants of the lands situate in the areas specified in the schedule appended thereto ". Amongst the areas thus specified was the area in which the appellants ' lands are situated. Subsequently, on October 17, 1952, by virtue of the same powers and in supersession of all other earlier notifications issued in that behalf the Government purported to prescribe a rate as the lower rate of maximum rent at which the rent shall be payable by the tenants in respect of the lands situate in the areas specified in Schedule I appended to it. It is unnecessary to set out the rates thus prescribed ; it would be enough to state that the rate of maximum rent prescribed by this notification is very much lower than the rate which had been fixed by the earlier one. By their petitions filed in the Bombay High Court the appellants contended that section 6(2) was ultra vires, and that even if section 6(2) was valid the impugned notification was in valid. Accordingly they prayed for a writ of mandamus or a writ in the nature of mandamus or any other appropriate direction or order against the Government, the Mamlatdar of the area concerned and their respective tenants prohibiting them or any one of them from giving effect to the said notification. 345 They also claimed a direction or order to the opponents directing them to cancel or withdraw the impugned notification. These two petitions were heard by the High Court along with other companion matters in which the same points were raised, and in the result the High Court dismissed the petitions. It held that section 6(2) was intra vires and the impugned notification was legal and valid. The appellants then applied for and obtained a certificate from the High Court, and it is with the said certificate that they have come to this Court by their two appeals. At the outset it may be relevant to state that, subsequent to the decision under appeal, in 1956 the Act has been substantially amended and now section 8 of the new Act provides for the rent and its maximum and minimum. Shortly stated this section incorporates the provisions of the impugned notification and adds to it the further provision that in no case shall the rent be less than twice the assessment. In consequence the point raised in the present appeals has ceased to be of any importance ; at best it may affect just a few cases between landlords and tenants that may be pending in respect of the rent payable by the latter to the former for a period prior to 1956. At the time when the certificate was granted the questions raised by the appellants were undoubtedly of general importance. We would first read section 6 of the Act. Section 6(1) provides that notwithstanding any agreement, usage, decree or order of a court or any law the maximum rent payable by a tenant for the lease of any land shall not in the case of an irrigated land exceed one fourth and in the case of any other land exceed one third of the crop of such land or its value as determined in the prescribed manner. Section 6(2) provides that the Provincial Government may by notification in the official gazette fix a lower rate of the maximum rent payable by the tenants of lands situate in any particular area or may fix such rate on any other suitable basis as it thinks fit. For the appellants Mr. Limaye has contended that section 6(2) suffers from the vice of excessive delegation. His argument is that 346 the power delegated to the Provincial Government is unfettered and uncanalised and no guidance has been afforded to it for exercising the said power. He has also relied on the fact that while giving such wide powers to the delegate in fixing the lower rate of the maximum rent the Legislature has not prescribed any minimum as it should have done. The High Court has held that the delegation involved in section 6(2) is within permissible limits and as such the challenge to the vires of the said provision cannot succeed. It is now well established by the decisions of this Court that the power of delegation is a constituent element of the legislative power as a whole, and that in modern times when the Legislatures enact laws to meet the challenge of the complex socioeconomic problems, they often find it convenient and necessary to delegate subsidiary or ancillary powers to delegates of their choice for carrying out the policy laid down by their Acts. The extent to which such delegation is permissible is also now well settled. The Legislature cannot delegate its essential legislative function in any case. It must lay down the legislative policy and principle, and must afford guidance for carrying out the said policy before it delegates its subsidiary powers in that behalf. As has been observed by Mahajan, C.J., in Harishankar Bagla vs The State of Madhya Pradesh (1) "the Legislature cannot delegate its function of laying down legislative policy in respect of a measure and its formulation as a rule of conduct. The Legislature must declare the policy of the law and the legal principles which are to control any given cases, and must provide a standard to guide the officials or the body in power to execute the law ". In dealing with the challenge to the vires of any statute on the ground of excessive delegation it is, therefore, necessary to enquire whether the impugned delegation involves the delegation of an essential legislative function or power and whether the Legislature has enunciated its policy and principle and given guidance to the delegate or not. As the decision in Bagla 's case(1) shows, in applying this test this Court has taken into (1) , 388. 347 account the statements in the preamble to the Act, and if the said statements afford a satisfactory basis for holding that the legislative policy and principle has been enunciated with sufficient accuracy and clarity the preamble itself has been held to satisfy the requirements of the relevant tests. In every case it would be necessary to consider the relevant provisions of the Act in relation to the delegation made and the question as to whether the delegation is intra vires or not will have to be decided by the application of the relevant tests. In this connection we may also refer to the decision of this Court in The Edward Mills Co. Ltd., Beawar vs State of Ajmer (1), where the validity of the notification issued under the provisions of the Minimum Wages Act XI of 1948 was impeached, and the said challenge raised the question about the validity of the delegation provided for by section 27 of the said Act. The scheme of the Act was that a schedule had been attached to it which gave a list of employments to. which the provisions of the Act applied an section 7 gave power to the appropriate Government to add to either part of the schedule any employment in respect of which it was of opinion that the minimum wages shall be fixed and this the appropriate Government was authorised to do by giving notification in a broad manner, and thereupon the schedule shall, in its application to the State, be deemed to be amended accordingly. The argument was that the Act had nowhere formulated a legislative policy according to which an employment should be chosen for being included in the schedule; no principles had been prescribed and no standards laid down in that behalf, and so the delegation was unfettered and uncanalised. This argument was rejected by this Court on the broad consideration that the legislative policy was apparent on the face of the Act itself. " What the Act aims at ", observed Mukherjea, J., as he then was, " is the statutory fixation of minimum wages with a view to obviate the chance of exploitation of labour. (1) ; ,750. 45 348 The Legislature undoubtedly intended to apply this Act not to all industries but to those industries only where by reason of unorganised labour or want of proper arrangements for effective regulation of wages or for other causes the wages of labourers in a particular industry were very low ". The learned Judge then pointed out that conditions of labour vary under different circumstances and from State to State, and the expediency of including a particular trade or industry within the schedule depends upon a variety of facts which are not uniform and which can best be ascertained by the person who is placed in charge of administration of a particular State. It is with a view to carry out the particular purpose of the Act that power is delegated to the appropriate Government by section 27. That is how the challenge to the vires of section 27 was repelled. The present Act is undoubtedly a beneficent measure. It has enacted provisions for agrarian reform which the Legislature thought was overdue. The preamble shows that the object of the Act, inter alia, was to improve the economic and social condition of peasants and ensure the full and efficient use of land for agriculture. With that object the Act has made several provisions to safeguard the interests of the tenants. Let us consider some of these provisions. Section 6 which we have already set out prescribes the maximum rent payable by a tenant, and provides for the reduction of the said maximum by reference to particular areas. Section 7 lays down that the rent payable by tenants shall, subject to the maximum rate fixed under section 6, be the rent agreed between the parties, or in the absence of any agreement or usage, or where there is a dispute as regards the reasonableness of the rent payable according to the agreement or usage, the reasonable rent. It is thus clear that even in regard to an agreed rent or a rent fixed by usage, if a tenant raises a dispute about its reasonableness that dispute has to be settled in the manner prescribed by the Act and the amount of reasonable rent determined. Section 8 provides for commutation of crop share rent into cash. Section 9 prohibits a landlord from receiving from his tenant any rent in terms of service or 349 labour; and it requires him to apply to the Mamlatdar for commuting such rent into cash. Section 10 provides for refund of excess rent recovered by the landlord from his tenant. Section 11 prohibits the recovery by the landlord of any cess, rate, vero, huk or tax or service of any description from the tenant other than the rent lawfully due from such land. Section 12 provides for enquiries in regard to the fixation of reasonable rent. On an application made by the tenant or the landlord in that behalf the Mamlatdar has to determine the reasonable rent under section 12(3) having regard to the factors specified in the said sub section. These factors are (a) the rental values of lands used for similar purposes in the locality, (b) the profits of agriculture of similar lands in the locality, (c) the prices of crops and commodities in the locality, (d) the improvements made in the land by the landlord or the tenant, (e) the assessment payable in respect of the land, and (f) such other factors as may be prescribed. There is no doubt that the last clause which refers to other factors must be construed as referring to factors ejusdem generis with those that have been previously enumerated. Section 13 provides for the suspension or remission of rent, and the conditions under which the said remission or suspension can be granted. It would thus be seen that the material provisions of the Act aim at giving relief to the tenants by fixing the maximum rent payable by them and by providing for a speedy machinery to consider their complaints about the unreasonableness of the rent claimed from them by their respective landlords. It is in the light of this policy of the Act which is writ large on the face of these provisions that we have to consider the question as to whether the delegation made by section 6(2) suffers from the infirmity of excessive delegation. Broadly stated section 6(2) seeks to provide for the fixation of a lower rate of maximum rent area wise. We have already seen that individual tenants are given the right to apply for the fixation of reasonable rent by section 12, and specific factors have been specified which the Mamlatdar must consider in fixing a reasonable rent. The Legislature realised that a large number of 350 tenants in the State were poor, ignorant and in many cases helpless, and it was thought that many of them may not be able to make individual applications for the fixation of a reasonable rent under section 12. That is why it was thought necessary to confer upon the Provincial Government the power to fix a lower rate of the maximum rent payable by tenants in respect of particular areas. In a sense what could be done by the Mamlatdar in individual cases can be achieved by the Provincial Government in respect of a large number of cases covered in a particular area. If that be so, the legislative policy having been clearly expressed in the relevant provisions and the factors for determining reasonable rent also having been specified in section 12(3), it is difficult to accept the argument that the Provincial Government has been given uncanalised or unfettered powers by section 6(2) to do what it likes without any guidance. The relevant factors having been specified by section 12(3) when the Provincial Government considers the question of fixing a lower rate of the maximum rent payable in any particular area it is expected to adopt a basis which is suitable to that particular area. The relevant conditions of agriculture would not be uniform in different areas and the problem of fixing a reduced maximum rent payable in the respective areas would have to be tackled in the light of the special features and conditions of that area ; that is why a certain amount of latitude had to be left to the Government in fixing the lower rate of the maximum rent in the respective areas, and that is intended to be achieved by giving it liberty to adopt a basis which it thinks is suitable for the area in question. The word " suitable " in the context must mean I suitable to the area ' having regard to the other provisions of the Act such as section 6(1) and section 12. It is true that the power to fix a reasonable rent conferred on the Mamlatdar under section 12 is subject to the power of the Provincial Government under section 6(2). Even so we think it would be difficult to hold that the factors prescribed for the guidance of the Mamlatdar would have no relevance at all when the Provincial Government acts under 351 section 6(2). In our opinion, therefore, having regard to the legislative policy laid down by the Act in its preamble and in the other relevant sections to which we have referred, and having regard to the guidance which has been provided for fixing a reasonable rent under section 12(3), it would not be possible to hold that the power delegated to the Provincial Government by section 6(2) suffers from the infirmity of excessive delegation The fact that no minimum has been prescribed would not materially affect this position. Mr. Limaye has then contended that even if section 6(2) is valid the impugned notification is invalid because it offends against article 31 of the Constitution. He concedes that the Act itself is saved under article 31B since it is one of the Acts enumerated in the Ninth Schedule; but his argument is that the notification has in substance amended the provisions of section 6(1) and thus it amounts to a fresh legislation to which article 31B cannot apply. There is no, substance in this argument. If section 6(2) is valid then the exercise of the power validly conferred on the Provincial Government cannot be treated as fresh legislation which offends against article 31. If the Act is saved by article 31B section 6(2) is also saved, and the power must be held to be validly conferred on the Provincial Government, and a notification issued by virtue of the said powers cannot be challenged on the ground that it violates article 31. The next argument is that the notification is invalid because the power to issue a notification conferred by section 6(2) was exhausted as soon as the Government issued the first notification on June 23, 1949. This argument proceeds on the assumption that the power conferred on the Government by section 6(2) can be exercised only once, and it seeks to derive support from the fact that the words " from time to time " which were used in the corresponding section of the earlier tenancy legislation in the State have not been used in section 6(2). Reliance is also placed on the fact that the said words have been used in section 8(1) of the Act. The omission of the said words from section 6(2) as contrasted with their inclusion in section 8(1), says Mr. Limaye, indicates that the power delegated under section 6(2) was 352 intended to be used only once. This argument is fallacious. Why the Legislature did not use the words " from time to time " in section 6(2) when it used them in section 8(1) it is difficult to understand ; but in Construing section 6(2) it is obviously necessary to apply the provisions of section 14 of the Bombay General Clauses Act 1904 (1 of 1904). Section 14 provides that where by any Bombay Act made after the commencement of this Act any power is conferred on any Government then that power may be exercised from. time to time as occasion requires. Quite clearly if section 6(2) is read in the light of section 14 of the Bombay General Clauses Act it must follow that the power to issue a notification can be exercised from time to time as occasion requires. It is true that section 14 of the (X of 1897), provides that where any power is conferred by any Central Act or Regulation then, unless a different intention appears, that power may be exercised from time to time as occasion requires. Since there is a specific provision of the Bombay relevant on the point it is unnecessary to take recourse to section 14 of the Central ; but even if we were to assume that the power in question can be exercised from time to time unless a different intention appears we would feel no difficulty in holding that no such different intention can be attributed to the Legislature when it enacted section 6(2). It is obvious that having prescribed for a maximum. by section 6(1) the Legislature has deliberately provided for a modification of the said maximum rent and that itself shows that the fixation of any maximum rent was not treated as immutable. If it was necessary to issue one notification under section 6(2) it would follow by force of the same logic that circumstances may require the issue of a further notification. The fixation of agricultural rent depends upon so many uncertain factors which may vary from time to time and from place to place that it would be idle to contend that the Legislature wanted to fix the maximum only once, or, as Mr. Limaye concedes, twice. Therefore the argument that the power to issue a notification has been exhausted cannot be sustained. 353 The last argument which Mr. Limaye faintly attempted to place before us was that the expression " any particular area" would not be applicable to the areas in which the appellants ' lands are situated because, according to him, the expression should be construed in the light of the same expression used in section 298(2)(a) of the Government of India Act, 1935. This argument is far fetched and fatuous and need not be considered. In the result the appeals fail and are dismissed with costs. SUBBARAO J. I have had the advantage of perusing the judgment prepared by Gajendragadkar, J. I regret my inability to agree with my learned brother on the question of the vires of section 6(2) of the Bombay Tenancy and Agricultural Lands Act, 1948 (LXVII of 1948) (hereinafter called the Act). The facts have been fully stated in the judgment of my learned brother and I need not restate them here. It would be enough if I expressed my opinion on the said question. Learned counsel for the appellants attacks the con stitutional validity of section 6(2) on the ground that the said subsection exceeds the limits of permissible delegated legislation. Before considering the validity of section 6(2), it would be convenient to notice briefly the relevant aspects of the law of the doctrine of delegated legislation. The scope of the doctrine of delegation of legislation has been so authoritatively laid down by this Court in more than one decision that it would be pedantic to attempt to resurvey the field over again. I would, therefore, be content to collate the relevant passages from the decisions of this Court to ascertain the principle underlying the doctrine. The leading decision on this subject is In re The (1). There the Central Legislature had empowered the executive authority under its legislative control to apply at its discretion the laws to an area which was also under the legislative sway of the Centre. The validity of the laws was questioned (1) ; 354 on the ground that the legislature bad no power to delegate legislative powers to executive authorities. As many as seven Judges dealt with the question and wrote seven separate judgments considering elaborately the different aspects of the question raised. I am relieved of the duty to ascertain the core of the decision as that has been done by Bose, J., with clarity in Rajnarain Singh vs The Chairman, Patna Administration Committee, Patna (1). Bose, J., after pointing out the seven variations of the authority given to the executive in the Case (2), summarized the majority view on the relevant aspect of the question now raised at p. 301 thus: " In our opinion, the majority view was that an executive authority can be authorised to modify either existing or future laws but not in any essential feature. Exactly what constitutes an essential feature cannot be enunciated in general terms, and there was some divergence of view about this in the former case, but this much is clear from the opinions set out above: it cannot include a change of policy. " Rajnarain Singh 's Case (1) dealt with section 3(1) of the Patna Administration Act, 1915, (Bihar and Orissa Act 1 of 1915) as amended by Patna Administration (Amendment) Act, 1928 (Bihar and Orissa Act IV of 1928) and with a notification issued by the Governor of Bihar picking out section 194 out of the Bihar and Orissa Municipal Act of 1922, modifying it and extending it in its modified form to the Patna Administration and Patna Village areas. Bose, J., after pointing out the difference between Rajnarain Singh 's Case (1) and the Case (2) observed at p. 303 thus: " But even as the modification of the whole cannot be permitted to effect any essential change in the Act or an alteration in its policy, so also a modification of a part cannot be permitted to do that either." This Court again in Harishankar Bagla vs The State of Madhya Pradesh (3) considered the scope of the Case (2). Mahajan, C. J., stated at p. 388 thus. (1) ; (2) ; (3) 355 " It was settled by the majority judgment in the Case (1) that essential powers of legislation cannot be delegated. In other words, the legislature cannot delegate its function of laying down legislative policy in respect of a measure and its formulation as a rule of conduct. The Legislature must declare the policy of the law and the legal principles which are to control any given cases and must provide a standard to guide the officials or the body in power to execute the law. The essential legislative function consists in the determination or choice of the legislative policy and of formally enacting that policy into a binding rule of conduct. " In The Edward Mills Co., Ltd., Beawar vs The State of Ajmer (2), Mukherjea, J., as he then was, speaking for the Court stated the principle thus at p. 749: " A Legislature cannot certainly strip itself of its essential functions and vest the same on an extraneous authority. The primary duty of law making has to be discharged by the Legislature itself but delegation may be resorted to as a subsidiary or an ancillary measure. " The latest decision on the point is that in Hamdard Dawakhana vs Union of India (3). One of the questions raised in that case was whether section 3(d) of , exceeded the permissible limits of delegated legislation. The principle has been restated by Kapur, J., at p. 566 thus: , "This means that the legislature having laid down the broad principles of its policy in the legislation can then leave the details to be supplied by the administrative authority. In other words by delegated legislation the delegate completes the legislation by supplying details within the limits prescribed by the statute and in the case of conditional legislation the power of legislation is exercised by the legislature conditionally leaving to the discretion of an external (1) ; (2) ; (3) ; 46 356 authority the time and manner of carrying its legislation into effect as also the determination of the area to which it is to extend. " Applying the principle to the facts of that case, the learned Judge observed at p. 568 thus: " In our view the words impugned are vague. ;Parliament has established no criteria, no standards and has not prescribed any principle on which a particular disease or condition is to be specified in the Schedule. It is not stated what facts or circumstances are to be taken into consideration to include a particular condition or disease. The power of specifying diseases and conditions as given in section 3(d) must therefore be held to be going beyond permissible boundaries of valid delegation. It is not necessary to multiply decisions; nor is it necessary to point out the subtle distinction between delegates legislation and conditional legislation. The law on the subject may be briefly stated thus: The Constitution confers a power and imposes a duty on the legislature to make laws. The essential legislative function is the determination of the legislative policy and its formulation as a rule of conduct. Obviously it cannot abdicate its functions in favour of another. But in view of the multifarious activities of a welfare State, it cannot presumably work out all the details to suit the varying aspects of a complex situation. It must necessarily delegate the working out of details to the executive or any other agency. But there is a danger inherent in such a process of delegation. An overburdened legislature or one controlled by a powerful executive may unduly overstep the limits of delegation. It may not lay down any policy at all; it may declare its policy in vague and general terms; it may not set down any standard for the guidance of the executive; it may confer an arbitrary power on the executive to change or modify the ' policy laid down by it without reserving for itself any control over subordinate legislation. This self effacement of legislative power in favour of another agency either in whole or in part is beyond the permissible limits of delegation. It is for a Court to hold on a fair, generous 357 and liberal construction of an impugned statute whether the legislature exceeded such limits. But the said liberal construction should not be carried by the Courts to the extent of always trying to discover a dormant or latent legislative policy to sustain an arbitrary power conferred on executive authorities. It is the duty of this Court to strike down without any ' hesitation any arbitrary power conferred on the executive by the legislature. Bearing the aforesaid principles in mind, I shall look at the provisions of the Act to ascertain whether section 6(2) is in conformity with the law laid down by this Court. I shall for the present ignore section 6(2) and briefly and broadly notice the scheme of the Act. The preamble shows that the object of the Act was mainly to improve the economic and social conditions of peasants and to ensure the full and efficient use of land for agriculture. It also indicates that the Act was not intended to be a confiscatory one, but was enacted to regulate the relationship between land lord and tenant, particularly in respect of rent payable by the tenant to the land lord. In section 6(1) the legislature in clear terms fixes the maximum rent payable by a tenant, having regard to the nature of the land: in the case of irrigated land it fixes one fourth and in the case of other land one third of the crop of such land or its value as determined in the prescribed manner as the maximum rent. The rest of the Act is to be worked out subject to the maximum rent fixed under section 6(1). Section 7 enables the land lord and tenant to agree upon the rate of rent. Section 8 gives power to the Provincial Government to issue notifications providing for the commutation of the rent in kind into cash rent. It also, if no rate of commutation has been so fixed by the State Government, enables the Mamlatdar to fix the amount of commutation in the manner prescribed. Sub section (3) of section 6 prohibits a landlord from recovering any rent by way of crop share or in excess of the commuted cash rent. Section 9 compels the land lord to apply to the Mamlatdar, if the land lord is receiving rent from any tenant in terms of service or labour, for commuting such rent into 358 cash. Section 10 makes the landlord liable to pay compensation to the tenant if he contravenes the provisions of sections 6, 7, 8 or 9. Section 11 prohibits the land lord from collecting any cesses other than the rent lawfully payable in respect of the land. Section 12 enables the tenant to apply to the Mamlatdar for the fixation of reasonable rent in respect of the land in his possession and section 12(3) lays down the factors the Mamlatdar has to take into consideration in fixing a reasonable rent. After fixing the rent, the Mamlatdar makes an order for Payment of the rent to the land lord and the rent so fixed shall hold good for a period of five years. There is also a provision for reduction of rent, if during the said period on account of deterioration of the land by floods or other causes beyond the control of the tenant the land has been wholly or partially rendered unfit for cultivation. Section 13 enjoins on the land lord to suspend or remit the rent payable by the tenant to him if the payment of land revenue by him to the Government is suspended or remitted. A right of appeal is provided against the order of the Mamlatdar to the Collector. Shortly stated, this Act provides for the fixation of maximum rent by the Government, a reasonable rent by Mamlatdar and an agreed rent by the parties. But both the agreed rent and the reasonable rent cannot exceed the maximum rent. There are express provisions for reduction or remission of rent in appropriate circumstances. The Act does not provide for an appeal or revision to the Government and the Government has, therefore, no say in the matter of fixation of reasonable rent. The whole scheme of the Act, therefore, excluding section 6(2), is a self contained and integrated one. The legislature fixes the maximum rent linked with crop having regard to the nature of the land, and the other provisions enable the appropriate authorities to fix reasonable rent subject to that maximum. Now let us see the impact of section 6(2) on this scheme. Section 6(2) reads : " The Provincial Government may, by notification in the Official Gazette, fix a lower rate of the 359 maximum rent payable by the tenants of lands situate in any particular area or may fix such rate on any other suitable basis as it thinks fit." Under this section the Provincial Government may fix a lower rate of the maximum in any particular area or to fix such rate on any other suitable basis. Three elastic words are used in section 6(2), namely, (1) lower rate; (2) particular area ; and (3) on any other suitable basis. Prima facie in section 6(2) the legislature has not laid down any policy or any standard to enable the Provincial Government to reduce the maximum rent fixed under section 6(1). What is the limit of the lower rate the Government is empowered to fix ? What is the extent of the area with reference to which that rate can be fixed? What are the conditions prevailing in a particular area which require the reduction of the maximum rent ? Even if there are conditions justifiable for reduction of the maximum rent, what is the basis for that reduction ? The disjunctive " or " between " particular area " and " may fix" and the word ,other" qualifying " suitable basis " indicate that the situation of 'the land in a particular area may also be a basis for fixing a lower rent. The situation of a land in a particular area cannot in itself afford a basis for fixing a specified rate of maximum rent. The words " suitable basis " in the alternative clause is so vague that in effect and substance they confer absolute and arbitrary discretion on the Provincial Government. What is the standard of suitability ? The standard of suitability is only what the Government thinks suitable. In this section the legislature in clearest terms abdicated its essential functions in favour of the executive authority without laying down any standard for its guidance. In effect it permitted the Government to amend section 6(1) of the Act. To illustrate, the legislature fixes the maximum rent payable by a tenant to his landlord at X; the Mamlatdar after enquiry fixes Y as reasonable rent which is less than X; the Government in exercise of the power conferred under section 6(2) can arbitrarily fix Z which is far less than the reasonable rent; with the result that the entire scheme 360 promulgated by the legislature breaks. The Government also may select any small area containing a few landlords and reduce the maximum rent to the lowest level with the result the Act can be worked out as an expropriatory measure which is contrary to the intention of the legislature. Learned counsel for the respondents realising that arbitrariness is writ large on the face of section 6(2) attempted to evolve the legislative formula from the preamble to section 6(1) and section 12(3) of the Act. I cannot find any indication of the legislative policy in the manner of fixation of the lower rate of maximum rent in the preamble. Nor can I discover any such in section 6(1). Section 6(1) contains a clear legislative policy in fixing the maximum rent on certain identifiable basis. The legislature says in effect in section 6(2), " I have fixed the maximum rent in respect of irrigated lands and other lands on the basis of a definite share of the crop of such lands, but you can reduce that maximum rent on any basis you like ". While section 6(1) overrides other provisions of the Act, section 6(2) derogates from section 6(1) itself Section 6(2) is capable of being exercised in such a way that the object of section 6(1) is itself frustrated. Section 6(1) in effect is made subject to section 6(2). Now coming to section 12(3), it is contended that the factors mentioned in section 12(3) afford a standard for the Government for fixing the maximum rent. To put it differently the suitable basis is one or other of the factors in section 12(3). The Act does not say so, either expressly or by necessary implication. The criteria for fixing rent in section 13 are to afford a guide to Mamlatdar for fixing reasonable rent. Indeed the sub clause is subject to section 6 indicating thereby that the maximum rent fixed by the Government is not the same as the reasonable rent. Indeed if the reasonable rent determined on the basis of all or some of the factors in section 12(3) is more than the maximum rent fixed by the Government on a suitable basis, the latter prevails over the former. As the maximum rent supersedes reasonable rent, the factors governing reasonable rent need not necessarily govern the fixation of maximum rent. To attempt to read the factors in section 12(3) into 361 section 6(2) is, in my view, not permissible. On a fair reading of the provisions of the Act, I find it not possible to discover any standard laid down by the legislature to enable the Provincial Government to fix a lower rate of the maximum rent. The section conferring such arbitrary power on the Provincial Government without laying down any legislative standard is in excess of the permissible limits of delegation. The learned Additional Solicitor General broadly contended that the policy of the legislature is to prevent rackrenting and to fix a reasonable rent and, therefore, any exercise of the power under section 6(2) is guided by that policy. This is an extreme contention and, if accepted, will enable Parliament and legislatures to confer absolute and unguided powers on the executive. If a legislature can legally be permitted to lay down a broad policy in general terms and confer arbitrary powers on the executive for carrying it out, there will be an end of the doctrine of the rule of law. If the contention be correct. , the legislature in the present case could have stated in the preamble that they were making the law for fixing the maximum rent and could have conferred an absolute power on the Government to fix suitable rents having regard to the circumstances of each case. Such a law cannot obviously be valid. When the decisions say that the legislature shall lay down the legislative policy and its formulation as a rule of conduct, they do not mean vague and general declaration of policy, but a definite policy controlling and regulating the powers conferred on the executive for carrying into effect that policy. I must, therefore, hold that section 6(2) of the Act is void inasmuch as it exceeded the permissible limits of legislative delegation. In the result the appeals are allowed with costs. BY COURT: In view of the majority judgment, the appeals are dismissed with costs. [/INST] Section 6(1) of the Bombay Tenancy and Agricultural Lands Act, 1948 (Bom. LXVII of 1948), provided that the maximum rent payable by a tenant shall not in the case of irrigated land exceed one fourth and in the case of any other land exceed one third of the crop of such land or its value as determined by the prescribed manner. Section 6(2) of the Act read as follows, " The Provincial Government may, by notification in the Official Gazette, fix a lower rate of the maximum rent payable by the tenants of lands situate in any particular area or may fix such rate on any other suitable basis as it thinks fit." By a notification under that section the Government of Bombay, in supersession of all other notifications prescribed a rate of maximum rent which was very much lower than the one previously fixed. The petitioners challenged the vires of the said section and the validity of the notification under article 226 of the Constitution, but the High Court found against them. The question for determination in these appeals was whether section 6(2) conferred unguided power on the Government and was void by reason of excessive delegation of legislative power. 342 Held (per Sinha, C. J., Kapur, Gajendragadkar and Wanchoo, jj.) that although the power of delegation is a constituent element of the legislative power, it is well settled that a legislature cannot delegate its essential legislative function in any case and before it can delegate any subsidiary or ancillary powers to a delegate of its choice, it must lay down the legislative policy and principle so as to afford the delegate proper guidance in implementing the same. A statute challenged on the ground of excessive delegation must, therefore, be subjected to two tests, (1) whether it delegates essential legislative function or power and (2) whether the legislature has enunciated its policy and principle for the guidance of the delegate. It is in that light that the preamble of the statute and its provisions relating to delegation should be considered. Harishankay Bagla vs The State of Madhya Pradesh, and The Edward Mills Co. Ltd., Beawar vs State of Ajmer ; , referred to. The preamble and the material provisions of the Act show that it seeks to improve the economic and social condition of the peasants and with that end in view fixes maximum rent payable by the tenants and provides a speedy machinery for fixation of reasonable rent. This being the legislative policy and regard being had to the specific provisions laid down by section 12(3) of the Act for determining reasonable rent, it is impossible to hold that the power delegated to the Provincial Government by section 6(2) was vitiated by excessive delegation. The fact that no minimum was prescribed by the section could not alter the position. Held, further, that since the Act itself is within the protection of article 31 B of the Constitution and there can be no question as to the validity of section 6(2), the notification issued in exercise of the power conferred by that section cannot be challenged as infringing article 31 of the Constitution. Nor was it correct to say that the power delegated by section 6(2) could be used only once and no more. Per Subba Rao, J. The essential legislative function is the determination of the legislative policy and its formulation as a rule of conduct. Obviously the legislature cannot abdicate its functions in favour of another. But in view of the multifarious activities of a welfare State, it cannot presumably work out all the details to suit the varying aspects of a complex situation. It must necessarily delegate the working out of details to the executive or any other agency. But there is a danger inherent in such a process of delegation. It may not lay down any policy at all; it may declare its policy in vague and general terms; it may not set down any standard for the guidance of the executive, it may confer an arbitrary power on the executive to change or modify the policy laid down by it without reserving for itself any control over subordinate legislation. This self effacement of legislative power in favour of another agency 343 either in whole or in part is beyond the permissible limits of delegation. It is for a Court to hold on a fair, generous and liberal construction of an impugned statute whether the legislature exceeded such limits. But the said liberal construction should not be carried by the courts to the extent of always trying to discover a dormant or latent legislative policy to sustain an arbitrary power conferred on executive authorities. In re The ; , , Rajnarain, Singh vs The Chairman, Patna Administration Committee, Patna, ; , Harishankay Bagla vs The State of Madhya Pradesh, , The Edward Mills Co., Ltd., Beaway vs The State of Ajmer, ; and Hamdard Dawakhana vs Union of India, ; , referred to. The whole scheme of the Bombay Tenancy and Agricultural Lands Act, 1948 (LXVII of 1948), excluding section 6(2), is a self contained and integrated one. The legislature fixes the maximum rent linked with crop having regard to the nature of the land, and the other provisions enable the appropriate authorities to fix reasonable rent subject to that maximum. But under section 6(2) the legislature in clearest terms abdicated its essential functions in favour of the executive authority without laying down any standard for its guidance. In effect it permitted the Government to amend section 6(1) of the Act. While section 6(1) overrides other provisions of the Act, section 6(2) derogates from section 6(1) itself. Section 6(2) is capable of being exercised in such a way that the object of section 6(1) is itself frustrated. Section 6(1) in effect is made subject to section 6(2). This is clearly an abdication by the legislature of its essential legislative function and the delegation must be held void. It was not correct to say that the factors specified by section 12(3) afforded a standard 'for fixing the maximum rent. It was not permissible to read them into section 6(2) of the Act. No legislature can be legally permitted to lay down a broad policy in general terms and confer arbitrary powers on the executive for carrying it out. Such a law must obviously be contrary to the decisions of this Court and cannot be valid. </s>

<s>[INST] Summarize the following judgement: 123 to 125 of 1957 and 118 of 1959. Petitions under Article 32 of the Constitution of India for enforcement of Fundamental Rights. N. C. Chatterjee and section C. Mazumdar, for the petitioners (In Petns. Nos. 123 to 125 of 1957). A. V. Viswanatha Sastri, R. Ganapathy Iyer and G. Gopalakrishnan, for the petitioners (In Petn. No. 118 of 1959). H. J. Umrigar, B. R. L. lyengar and T. M. Sen, for the Respondents (In all the petitions). Harnam Singh and Sadhu Singh, for Intervener No. 1 (B. section and Co.) 40 308 D. B. Prem and Sadhu Singh, for Intervener No. 2 (French India Importing Corporation). August 23. The Judgment of B. P. Sinha, C. J., Imam and Subba Rao, JJ., was delivered by Subba Rao, J. Sarkar, J. and Shah, J., delivered separate Judgments. SUBBA RAO J. These four petitions are filed under article 32 of the Constitution for quashing the orders of the Assistant Controller of Imports and Exports. the Collector of Customs and Central Excise, Pondicherry, the Board of Revenue, and the Government of India, and for an appropriate direction requiring the respondents to refund the amount realised from the petitioners. Messrs. Universal Imports Agency and the proprietor of the agency are the petitioners in the first three petitions and Messrs. Victory Traders are the petitioners in the last one. The Chief Controller of Imports and Exports, Pondicherry, the Collector of Customs and Central Excise, Pondicherry, the Central Board of Revenue and the Government of India are the respondents in all the petitions. Messrs. French India Importing Corporation and Messrs. B. section & Co. intervened in the Writ Petitions. Pondicherry was a French Possession in India. On October 21, 1954, the Government of India and the Government of France entered into an agreement (hereinafter called the Indo French Agreement), whereunder there was a defacto transfer of the administration of the French Settlements to the Government of India (hereinafter called the merger) as and from November 1, 1954. The de jure transfer was postponed. Messrs. Universal Imports Agency are a proprietary concern registered with the Services Des Contribution, Pondicherry, having its principal place of business at Pondicherry. Sri Mohanlal B. Gandhi is the proprietor of the said Agency. They are established importers and general merchants dealing in ball bearings, mill stores, porcelain ware, glass marbles, beltings and various other goods. They commenced their business at Pondicherry on or about April 14, 1954, under 309 " patente " No. 70 of 1954 issued by the Controller of the Contributions Department of the French Government at Pondicherry. In the middle of August 1954, they placed 8 indents with Messrs. Shimada Trading Co., Ltd., Osaka, Japan, for importing porcelain wares, glass marbles and beltings and the total value thereof amounted to Rs. 57,418 12 0. About the end of August 1954, they opened three irrevocable Letters of Credit with Messrs. Banque De L ' Indo Chine in favour of the said suppliers. The bankers obtained authorization from the Bureau Des Affaires Econo mique, Pondicherry, for the requisite foreign exchange from the open market and sold the same to the petitioners for the amount involved in the Letters of Credit. The petitioners made full payment for the said foreign exchange and the said Bank kept the said foreign exchange and credit irrevocably available with their Overseas Agent at Japan for the benefit of the suppliers against full set of shipping documents. All the said Letters of Credit were valid for three months and under the agreement the suppliers were to ship the goods within the said time. On or about November 1, 1954, the said goods were in different stages of shipment ; in some cases they were in the course of shipment, and in others awaiting shipment in a matter of a few days and indeed a large part of the goods had already been placed on board " section section Shillong " and " section section Cambodge " and the balance of the goods were in the course of being loaded in " section section Sunda ". In January and February, 1955 and thereafter the goods arrived at the Port of Pondicherry. The Collector of Customs confiscated all the goods on the ground that they were imported without a licence and gave an option to the petitioners to pay in lieu of confiscation fine amounting to Rs. 30,390/ . The petitioners took up the matter with the Government of India without any success and finally they paid the said penalty under protest and cleared the goods. On or about September 1954 the petitioners placed several indents with their overseas suppliers, Messrs. Shimada Trading Co., Limited, Osaka, Japan, and others and the total C. I. F. value thereof amounted 310 to Rs. 40,470 14 0. They arranged for the full payment of eight cheques to the said suppliers of the value of the goods through the Banque De L ' Indo Chine. Their bankers duly obtained authorization from the Bureau Des Affairs Economique, Pondicherry, for the requisite foreign exchange and sold the same to the petitioners for the amount involved in the cheques, and the said foreign exchange was kept available to the suppliers. On or about November 1, 1954, the goods ordered were in different stages of shipment and in some cases the goods were in the course of shipment and in others awaiting shipment in a matter of a few days. In January and February, 1955, the goods arrived at the port of Pondicherry. The Collector of Customs treated the imports of the goods as unauthorized and confiscated the same and gave the petitioners an option to pay in lieu of confiscation a penalty amounting to Rs. 20,700/ The petitioners carried the matter to the Government without any success. Ultimately the petitioners paid the penalty under protest and cleared the goods. The petitioners again in the middle of August 1954 placed several indents with their overseas suppliers for importing hair belting, torches, belt fasteners, electric lighting torch bulbs and primus stoves, and the total C. I. F. value was Rs. 52,572 12 0. They opened irrevocable Letters of Credit and issued cheques against full advance remittance in favour of their suppliers through the said Banque De L ' Indo Chine. Their bankers arranged through the Bureau Des Affairs Economique, Pondicherry, for the requisite foreign exchange from the open market and sold the same to the petitioners for the amount involved in the said Letters of Credit and cheques. The petitioners made full payment for the said foreign exchange and the said bank kept the said foreign exchange and the Letters of Credit irrevocably available with their overseas agents for the benefit of the suppliers against full set of shipping documents and the cheques issued by the bank on overseas banks were sent to the suppliers as full advance remittance against the contracts. In January and February, 1955, the goods arrived at the 311 port of Pondicherry. The Collector of Customs confiscated the goods and gave the petitioners an option to pay in lieu of confiscation fine amounting to Rs. 24,210. Though the petitioners took up the matter with the Government of India, nothing came out of it. They paid the penalty under protest and cleared the goods. Messrs. Victory Traders, the petitioners in Petition No. 118 of 1959, are carrying on business of import and export and general merchandise in Pondicherry from the year 1949. The petitioners were importing into Pondicherry a number of articles from various countries under " patente " No. 126 of 1954 granted by La Controleur, Pondicherry. On August 20, 1954, they applied to the Chief Bureau Economique, Pondi cherry, requesting them to grant permits to import goods from foreign countries. The said Bureau replied that no import licence was required for goods to enter the territory. Thereafter the petitioners placed orders with foreign dealers. In the middle of August, 1954 and early in September, 1954, they placed a number of indents with their principals in foreign countries for importing fan belts, corn emery, soda water bottles, glass marbles, etc., of value pound 13,870. The orders were backed by full payments in many cases and at least half the payments in others. These payments were made by demand drafts issued by the Banque De L ' Indo Chine. In January and February, 1955 and thereafter the goods arrived at the port of Pondicherry, and they were confiscated by the Collector of Customs who gave the petitioners an option to pay in lieu of confiscation fine aggregating to Rs. 91,100. After filing appeals to the Central Board of Revenue and, thereafter, a revision to the Government of India with no success, the petitioners cleared the goods after paying the penalty under protest. It is clear from the foregoing facts that the petitioners entered into, before the merger, firm contracts of sales by import with foreign sellers, made available foreign exchange either under Letters of Credit or otherwise, and the goods were shipped either before or after the merger, though they reached their destination 312 after the merger. The said goods were confiscated by the Collector of Customs under the following circumstances. Under the Indo French Agreement, the entire administration of the French Settlements was vested with the Government of India from November 1, 1954, though de jure transfer had been postponed. In pursuance of the Indo French Agreement, the Ministry of External Affairs published a Notification No. section R. O. 3315 dated October 30, 1954, purporting to be under section 4 of the , and called the French Establishments ' (Application of Laws) Order, 1954, (hereinafter referred to as the Order). Under paragraph 3 of the said Order, the Sea Customs Act, 1879, the , the Imports & Exports Trade (Control) Act, 1947, the Foreign Exchange Regulation Act, 1947 and the Indian Tariff Act, 1934, were extended to Pondicherry. On November 1, 1954, the Government of India appointed a Controller of Imports & Exports for the French Establishments, and paragraph 4 of the same notification gave the following information and guidance to the public : " As regards orders placed outside the Establishments and finalised through the grant of licence by the competent French Authorities in accordance with the Laws and Regulations in force prior to 1st November, 1954, licence holders are advised to apply to the Controller of Imports & Exports for validation of licences held by them. No fees will be charged for these applications. The applications should be accompanied by the original licence and should give particulars about. . " Licence holders are advised not to arrange for shipments of goods until the licences held by them have been validated by the Controller of Imports and Exports at Pondicherry. " The petitioners by way of abundant caution applied to the Chief Controller of Imports & Exports for licences for clearance of goods, but they were all rejected and the petitioners were told that their goods would be treated as unauthorized imports and they were advised to approach the Collector of Customs and Central Excise 313 for conditions regarding their release. As stated supra, after the goods arrived at the port of Pondicherry, the Collector of Customs and Central Excise made the various orders confiscating the goods and giving the petitioners option to pay penalties in lieu of confiscation. , All of them paid the penalties, under protest, and cleared the goods. The appeals filed to the Central Board of Revenue were dismissed and the revisions filed against the orders of the Central Board of Revenue to the Government of India were also dismissed. The petitioners filed the petitions under article 32 of the Constitution questioning the validity of the orders of confiscation. The respondents in their counter affidavits claim that the orders made by them are valid and in accordance with law. Learned counsel for the petitioners raised many contentions in support of their petitions. It is not necessary to enumerate them as the petitions can effectively be disposed of on the basis of one of the contentions. The said contention may briefly be stated thus: The petitioners have the fundamental right to hold and to carry on their import trade and that the Notification No. section R. O. 3315 dated October 30, 1954, on the basis of which the orders of confiscation were issued has a saving clause which excludes the operation of the said Notification in respect of transactions whereunder the confiscated goods were purchased and imported. The said saving clause embodied in paragraph 6 of the Order reads: " Unless otherwise specifically provided in the Schedule, all laws in force in the French Establishments immediately before the commencement of the Order, which correspond to enactments specified in the Schedule, shall cease to have effect, save as respect things done or omitted to be done before such commencement ". Relying on this paragraph, it is contended that the transactions entered into by the petitioners with the foreign dealers were " things done " within the meaning of this paragraph and, therefore, they were saved from the operation of this Order. For the respondents 314 it is argued that as the confiscated goods were brought into India after the commencement of the Order, the goods confiscated were outside the pale of the saving clause. The question raised falls to be decided on a true interpretation of the terms of paragraph 6 of the said Order. In order to apply the said paragraph 6 to the present case, the following facts have to be ascertained : (1) What are the laws specified in the Schedule ? (2) What were the laws in force in the French Establishments before the commencement of the Order corresponding to the enactments so specified ? (3) What were the " things done " or omitted to be done under the said laws? It is not necessary to enter into any elaborate survey of the laws specified in the Schedule. Broadly stated, the Imports & Exports (Trade Control) Act enables the Central Government to make an order making provisions for prohibiting, restricting or otherwise controlling the import or export of goods of any specified description. It makes the infringement of such restrictions an offence and a person contravening the same is punishable with imprisonment for a term which may extend to one year or with fine or with both. The Act further says that the goods imported in violation of the restrictions shall be deemed to be goods the import of which has been prohibited or restricted under section 19 of the Sea Customs Act. In exercise of the powers conferred by section 3 and section 4A of the Imports & Exports (Trade Control) Act, the Central Government made an order dated December 7, 1955. Under section 3 of that order, no person shall import any goods of the description specified in Schedule 1, except and in accordance with a licence or a customs clearance permit granted by the Central Government or by any authority specified in Schedule 2 to that order. There are also provisions prescribing the procedure for obtaining licences, the conditions of the licences and for their cancellation or modification. It is, therefore, clear that under the said Act, no goods can be imported into India without a licence obtained in the prescribed manner from the prescribed 315 authorities. The Sea Customs Act provides for the levy of sea customs duty, imposes prohibitions and restrictions on imports and exports in respect of certain goods and imposes punishment for infringement of the provisions of the Act. Under section 167(8) of the said Act, read with section 3(2) of the Imports and Exports Trade (Control) Act, 1947, if any goods, the importation or exportation of which is prohibited or restricted, are imported into or exported out of India contrary to such restrictions or prohibitions, the goods concerned are liable to be confiscated and the persons involved are also liable to penalty. The Foreign Exchange Regulation Act, 1947, provides for the regulation of payments, dealings in foreign exchange and securities, and the import and export of currency and bullion. It prohibits dealings in foreign exchange except by persons authorized to deal in the same and it further provides penalties for contravention of any of the provisions of the Act. Briefly stated, the Indian law as disclosed by the aforesaid Acts is that imports into India without a licence are prohibited, the goods so imported in contravention of the restrictions imposed are liable to be confiscated and that foreign exchange cannot be obtained otherwise than under the provi sions of the Act. Persons infringing the laws are liable to prosecution in addition to confiscation of the goods involved. What was the pre existing law in Pondicherry corresponding to the enactments specified in the Schedule? Neither the Acts governing the imports nor any authoritative text books disclosing the relevant law have been placed before us. But from the affidavits filed in the case the state of law corresponding to the relevant Acts referred to in para. 3 of the Order can easily be ascertained. Pondicherry had been a free port, there being no restrictions on imports except on a few items like gold, rock salt etc. For effecting payment for the imports, the importers of Pondicherry could acquire foreign exchange either at the official rate or at the open market rate, whichever might be conveniently available, both methods being recognised 41 316 by the French Government as valid. In the counter affidavit filed by the State the manner of acquiring the foreign exchange for imports has been clearly stated. 'two kinds of permits for obtaining official exchange by importers were issued by the Chief Commissioner in Pondicherry, which were known as authorization and attestation respectively. They were signed by the Governor General of the French Indian Establishments himself or by his Secretary General. The Government of France used to make an overall allotment of foreign exchange to the French territories. Apart form that allotment, it made other currency allotments in the light of trade agreements entered into by France with other countries. Authorizations were issued in respect of goods imported from countries with which France had entered into trade agreements and attestations in respect of goods imported from France and other French colonies. Further, in respect of other transactions exchange was arranged by importers through banks dealing in foreign exchange. The Department of Affaires of Economics used to authorize the banks in respect of such transactions. Shortly stated, Pondicherry was a free port without any restrictions on imports, except on a few items, and the importers could acquire foreign exchange either at the official rate in respect of some transactions or at the open market in respect of others. What were the " things done " by the petitioners under the Pondicherry law ? The petitioners in the course of their import trade, having obtained authorization for the foreign exchange through their bankers, entered into firm contracts with foreign dealers on C. I. F. terms. In some cases irrevocable Letters of Credit were opened and in others bank drafts were sent towards the contracts. ' Under the terms of the contracts the sellers had to ship the goods from various foreign ports and the buyers were to have physical delivery of the goods after they had crossed the customs barrier in India. Pursuant to the terms of the contracts, the sellers placed the goods on board the various ships, some before and others after the merger, and the goods arrived at Pondicherry port 317 after its merger with India. The prices for the goods were paid in full to the foreign sellers and the goods were taken delivery of by the buyers after examining them on arrival. Before the merger if the Customs Authorities had imposed any restrictions not authorized by law, the affected parties could have enforced the free entry of the goods in a court of law. On the said facts a short question arises whether paragraph 6 of the Order protects the petitioners. While learned counsel for the petitioners contends that " things done " take in not only things done but also their legal consequences, learned counsel for the State contends that, as the goods were not brought into India before the merger, it was not a thing done before the merger and, therefore, would be governed by the enactments specified in the Schedule. It is not necessary to consider in this case whether the concept of import not only takes in the factual bringing of goods into India, but also the entire process of import commencing from the date of the application for permission to import and ending with the crossing of the customs barrier in India. The words " things done " in paragraph 6 must, be reasonably interpreted and, if so interpreted, they can mean not only things done but also the legal consequences flowing therefrom. If the interpretation suggested by the learned counsel for the respondents be accepted, the saving clause would become unnecessary. If what it saves is only the executed contracts, i.e., the contracts whereunder the goods have been imported and received by the buyer before the merger, no further protection is necessary as ordinarily no question of enforcement of the contracts under the pre existing law would arise. The phraseology used is not an innovation but is copied from other statutory clauses. Section 6 of the General Clauses Act (X of 1897) says that unless a different intention appears, the repeal of an Act shall not affect anything duly done or suffered thereunder. So too, the Public Health Act of 1875 (38 & 39 Vict. c. 55) which repealed the Public Health Act of 1848 contained a proviso to section 343 to the effect that the repeal " shall not affect anything duly done or suffered under the enactment 318 hereby repealed ". This proviso came under judicial scrutiny in The Queen vs Justices of the West Riding of Yorkshire(1). There notice was given by a local board of health of intention to make a rate under the Public Health Act, 1848, and amending Acts. Before the notice had expired these Acts were repealed by the Public Health Act, 1875, which contained a saving of " anything duly done " under the repealed enactments, and gave power to make a similar rate upon giving a similar notice. The board, in ignorance of the repeal, made a rate purporting to be made under the repealed Acts. It was contended that as the rate was made after the repealing Act, the notice given under the repealed Act was not valid. The learned Judges held that as the notice was given before the Act, the making of the rate was also saved by the words " anything duly done " under the repealed enactments. This case illustrates the point that it is not necessary that an impugned thing in itself should have been done before the Act was repealed, but it would be enough if it was integrally connected with and was a legal consequence of a thing done before the said repeal. Under similar circumstances Lindley, L. J., in Heston and Isleworth Urban District Council vs Grout (2) confirmed the validity of the rate made pursuant to a notice issued prior to the repeal. Adverting to the saving clause, the learned Judge tersely states the principle thus at p. 313: " That to my mind preserves that notice and the effect of it ". On that principle the Court of Appeal held that the rate which was the effect of the notice was good. It is suggested that the phraseology of the saving clause of the English Statutes and of the General Clauses Act of 1897 are of wider import than that of paragraph 6 of the Order and, therefore, the English decisions are not of any assistance in considering the scope of the saving clause of the Order. It is further stated that the English decisions apply only to a saving clause of an Act which repeals another but preserves the right created by the latter. We do not see any reason why the same construction cannot be (1) (2) 319 placed upon the wording of paragraph 6 of the Order which is practically similar in terms as those found in the relevant saving clause of the English Statute and that of the General Clauses Act. Nor can we find any justification for the second criticism. In the instant case the legal position is exactly the same. By reason of the Indo French Agreement the Government of India made the Order under the applying the Indian laws to Pondicherry. The effect of that Order was that the French laws were repealed by the application of the Indian laws in the same field occupied by the French laws subject to a saving clause. The position is analogous to that of a statute repealing another with a saving clause. If the English decisions apply to the latter situation, we do not see how they do not apply to the former. In both the cases the pre existing law continues to govern the things done before a particular date. We, therefore, hold that the words " things done " in paragraph 6 of the Order are comprehensive enough to take in a transaction effected before the merger, though some of its legal effects and consequences projected into the post merger period. Now what was the inter relation between the said things done " and the act of import or bringing of the goods into India ? The effect of the contracts under the pre existing law was that the terms thereof could have been implemented without any customs bar placed against the import. This Court had, in the context of article 286(1)(b) of the Constitution, to consider the connotation of the words " in the course of export or import " in State of Travancore Cochin vs The Bombay Co Ltd. (1). Patanjali Sastri, C. J., described the nature of export sale thus at p. 1118: "Such sales must of necessity be put through by transporting the goods by rail or ship or both out of the territory of India, that is to say, by employing the machinery of export. A sale by export thus involves a series of integrated activities commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for (1) ; 320 transport out of the country by land or sea. Such a sale cannot be dissociated from the export without which it cannot be effectuated, and the sale and resultant export form parts of a single transaction. " The same principle has been restated by the learned Chief Justice in State of Travancore. Cochin vs Shanmugha Vilas Cashew Nut Factory (1). The learned Chief Justice stated at p. 63 thus: " The phrase " integrated activities " was used in the previous decision to denote that a sale, that is, a sale which occasions the export, cannot be dissociated from the export without which it cannot be effectuated and the sale and resultant export form parts of a single transaction". Applying the said principles to an import sale it may be stated that a purchase by import involves a series of integrated activities commencing from the contract of purchase with a foreign firm and ending with the bringing of the goods into the importing country and that the purchase and resultant import form parts of a same transaction. If so, in the present case the bringing of the goods into India and the relevant contracts entered into by the petitioners with the foreign dealers form parts of a same transaction. The imports, therefore, were the effect or the legal consequence of the " things done ", i.e., the contracts entered into by the petitioners with the foreign dealers. This conclusion is also reinforced by the terms of the Indo French Agreement. It is common case that the terms of the said Agreement cannot be enforced in a municipal court in India. We are only referring to it as the terms thereof throw some light on the proper understanding of the saving clause. By article 17 of the Agreement, in so far as material for our purpose, all orders placed outside the Establishments and finalised through the grant of a licence by competent authorities in accordance with laws and regulations in force prior to the date of the de facto transfer were to be fulfilled by the Government of India and the necessary foreign exchange granted if the goods were imported (1) ; 321 within the period of validity of the relevant licences subject to payment of customs duty and other taxes normally leviable at Indian ports. That is, orders placed outside the Establishments and finalised through the grant of a licence were to be honoured by the Government of India. The word " licence " in this Article may be construed rather widely to take in a permit or an authorization ; otherwise it would lead to s the anomaly that when a licence, strictly so called, is required for a transaction and therefore obtained, the transaction is protected by the Article, whereas the transaction which requires only a permit is excluded therefrom. It may be recalled that the petitioners obtained authorizations of the Economics Department in respect of their orders. This Article indicates the intention of the two Governments that the orders so placed outside the Establishments should be honoured. If paragraph 6 of the Order is construed in the manner suggested by the State, we would be imputing to the framers of the Order a conscious breach of the terms of the Agreement between the two countries, for even the orders covered by article 17 of the Agreement would be excluded from the operation of the saving clause. We would, therefore, hold that paragraph 6 of the Order saves the transactions entered into by the petitioners and that the respondents had no right to confiscate their goods on the ground that they were imported without licence. In this view, no other question arises for consideration. In the result, the orders of the respondents 2, 3 and 4 are quashed and they are directed to refund to the petitioners the amounts illegally collected from them. The petitioners in all the petitions will have their costs. SARKAR J. I think that these petitions should fail. Sometime in the latter half of 1954, the petitioners had in Pondicherry, then a French establishment in India, entered into certain agreements with foreign suppliers for the import into Pondicherry of diverse goods. It is said that at that time licences were not 322 required for such imports from the French authorities. It appears however that these authorities granted a certain amount of foreign exchange for the imports. The importers who failed to secure an allotment of foreign exchange from the French authorities often obtained it from the open market through banks. The French authorities however prohibited the banks in Pondicherry with effect from July 1, 1954, from acquiring without their permission, foreign exchange in the open market for their constituents for financing imports. The petitioners had with the consent of the French authorities obtained through the banks foreign exchange from the open market to finance their imports and had with the foreign exchange so acquired, opened irrevocable letters of credit in favour of their foreign suppliers on account of the price of the goods to be supplied. They did this shortly prior to the transfer of administration of Pondicherry and other French establishments in India on November 1, 1954, to India pursuant to an agreement made on October 21, 1954, between the Governments of France and India. The goods covered by the aforesaid imports were shipped and arrived in Pondicherry port after November 1, 1954, and were confiscated by the Government of India who had by that time taken over the administration of Pondicherry. The orders of confiscation gave an option to the petitioners to obtain a release of the goods by payment of a fine which option was availed of by them. These petitions have been filed under article 32 of the Constitution challenging the validity of the confiscation and claiming a refund of the fine paid on the ground that the confiscation was an illegal violation of the petitioners ' rights under the Constitution to hold property and to carry on business. The orders of confiscation had been made under section 167(8) of the . That section authorised the confiscation of goods imported in contravention of orders prohibiting imports made under s.19 of the same Act. Section 3 of the Imports and Exports (Control) Act, 1947, also authorised the Central Government to prohibit by orders made by it, 323 imports of goods of any specified description and provided that the goods to which the orders applied would be deemed to be goods of which the import had been prohibited under section 19 of the and that the provisions of the latter Act would have effect accordingly. Section 4 of the Imports and Exports (Control) Act provided that all orders made under r. 84 of the Defence of India Rules and in force immediately before the commencement of the Act, would be deemed to have been made under the Act There was an order made by the Government of India under r. 84 of the Defence of India Rules by Notification of the Department of Commerce No. dated July 1, 1943, which prohibited the import of the goods which the petitioners had imported. The orders of confiscation would be unexceptionable if the statutes and Order mentioned in the preceding paragraph applied to these imports. That they applied to Pondicherry as from November 1, 1954, would seem to be plain from the Order passed by the Government of India on October 30, 1954, under the , to take effect from the date of the transfer of administration, namely, November 1, 1954, called the French Establishments (Application of Laws) Order and being Ministry of External Affairs Notification No. S.R.O. 3315. This Order had been passed in view of the Indo French agreement and the transfer of administration provided thereby. Its validity is not challenged. Paragraph 3 of the Order provided that the enactments mentioned in the Schedule to it and all Orders made under those enactments and in force on November 1, 1954, would apply to the French Establishments subject to the subsequent provisions of the Order. The enactments mentioned in the Schedule included the and the Imports and Exports (Control) Act. It is not in dispute that the Order under the Defence of India Rules mentioned earlier was in force on this date. The Application of Laws Order therefore made the 42 324 , the Imports and Exports (Control) Act and the Order made under the Defence of India Rules applicable to Pondicherry as from November 1, 1954. The petitioners have however contended for reasons which I will examine presently that the Order made under the Defence of India Rules had not been applied to the French Establishments by the Application of Laws Order, but they have not disputed that the and the Imports and Exports (Control) Act were applied to Pondicherry. The petitioners rested their case mainly on the saving clause contained in paragraph 6 of the Application of Laws Order which so far as material, was in these terms: " All laws in force in the French Establishments immediately before the commencement of this Order, which correspond to the enactments in the Schedule, shall cease to have effect save as respect things done or omitted to be done before such commencement ". The petitioners have raised three points, two of which can be disposed of at once. It is said that the Order made under the Defence of India Rules did not, apply to the French Establishments for only Orders made under the enactments mentioned in the Schedule were applied to them by paragraph 3 of the Application of Laws Order, and the Defence of India Act and Rules were not enactments mentioned in the Schedule. It is true that the Defence of India Act and Rules are not mentioned in the Schedule. But as already stated, under section 4 of the Imports and Exports (Control) Act, Orders made under r. 84 of the Defence of India Rules are to be deemed to have been made under that Act. I am unable to accept the contention that an Order which has to be deemed to be made under the Imports and Exports (Control) Act is not an Order made under the Act for the purposes of paragraph 3 of the Application of Laws Order. It seems to me that when an Order is required to be deemed to have been made under an enactments it is as good as an Order made under the enactment. If it were not so, the deeming provision would lose much of 325 its value. That being so, para. 3 would make the Order applicable to Pondicherry. Then it is said that the imports were made before the commencement of the Application of Laws Order because the contracts in respect of them had been concluded and the letters of credit opened before then though the goods had not been taken across the customs barrier at Pondicherry by that time. Therefore, it is said, the imports by the petitioners would be within the saving clause in paragraph 6 as things done before the commencement of the Application of Laws Order, to which the , the Imports and Exports (Control) Act and the Order made under the Defence of India Rules would riot apply. This argument also seems to me to be ill founded. These Acts and the Order were applied to Pondicherry as from November 1, 1954. The effect of that was to prohibit imports thereafter and to render the goods imported in contravention of that prohibition liable to confiscation. What is an import and this is what was prohibited has therefore to be decided by reference to these Acts and the Order. They defined import as bringing goods into India, which in the present case would include the French Establishments by virtue of paragraph 4 of the Application of Laws Order. Therefore goods brought across the customs ' barrier into Pondicherry would be goods imported into Pondicherry. To the goods so brought into Pondicherry after November 1, 1954, the Acts and the Order made under the Defence of India Rules must apply irrespective of whether the goods were brought under contracts concluded and letters of credit opened, before that date. It is not in my view permissible to ascertain the meaning of the word 'import ' for the purpose of this case by reference to other statutes or notions and to contend that there has been an import by the making of the contract and the opening of the letter of credit without the bringing of the goods into Pondicherry as the learned counsel for the petitioners sought to do. The main argument on behalf of the petitioners is however, that the words save as respects things done 326 or omitted to be done ' in paragraph 6 of the Application of Laws Order saved not only the things done prior to the commencement of the Order, that is, the placing of the indents and the opening of the letters of credit but also the effect thereof and the rights accrued therefrom. It is said that the indents had been legally placed and the letters of credit legally opened with foreign exchange acquired with the express per. mission of the French Administration which foreign exchange could not have been acquired without such provision. It is contended that the saving clause would make the French laws applicable to the imports which were the effect of these things done before November 1, 1954, and also protect the rights acquired from the things so done, from the operation of the Indian laws. So it is said that the Confiscations Under the Indian laws were wholly illegal. Now it has to be noted that the saving clause does not say that the French laws would apply to the effect of things earlier done or protect rights accrued therefrom. I see no warrant in the absence of the necessary words to extend the application of the French laws to the effect of things done or rights acquired from the doing of them. It was said that otherwise the saving clause would be idle. I am unable to agree. If any question as to anything earlier done arose after the transfer, that question would under the saving clause have to be decided by the French laws. In the absence of the saving clause it would have been open to argument what the effect of the transfer was with regard to things previously done. I may also point out that section 6 of the General Clauses Act provides that when one enactment is repealed by another, then, in the absence of a different intention, the repeal shall not affect anything duly done or suffered under the repealed enactment nor any right accrued thereunder. It strikes me that if the saving of a thing done under the repealed enactMent also necessarily saved what is called the effect of it or rights acquired from it, it would not have been necessary to expressly provide also for the saving of the rights acquired under the repealed enactment. 327 Therefore, it seems to me that the saving of things done does not automatically save the effect of them or rights acquired therefrom. The argument that the saving clause operated to protect the imports was based on two English cases, namely, The Queen vs Justices of the West Riding of Yorkshire (1) and Heston and Isleworth Urban District Council vs Grout (2). These cases considered the terms of statutes analogous to section 6 of our General Clauses Act, providing that a repeal of one enactment by another shall not affect anything duly done or suffered under the repealed enactment or any right acquired thereunder. These provisions were therefore materially different from the saving clause now before us, as they expressly saved rights acquired under a repealed statute. The first mentioned case held that as the two statutes were substantially for the same purpose, namely, making a rate, the notice to make a rate tinder the repealed Act should have effect after the repeal in view of the saving clause as it could have been given under the repealing Act for the same purpose. It would be difficult to apply the principle of this case where two statutes have not the same purpose Apart from the fact that we have here no two statutes, the Indian enactments with which we are concerned, would seem to have made a complete departure from the position existing on the same subject during the French Administration. lit the other case it was held that when a thing duly done tinder a repealed enactment was saved by a saving clause in the repealing Act, the effect of it was also saved. But the effect of the thing done would be saved by the express provision contained in the saving clause, namely, that the repeal shall not affect any right acquired under the repealed enactment and the judgment in this case was also based on this express provision to remove any doubts that might arise as to the other reasoning employed. The thing done in this case was the giving of a notice by a local authority to certain house owners to sewer and make up a private street. The effect saved was the recovery by the local authority from the owners of the expenses of the sewering (1) (2) 328 and making of the street which it had to incur on the owner 's failure to carry out the terms of the notice. These things naturally took time and in the meantime the Act under which the notice was given had ceased to be applicable. The observation made in this case cannot be applied to a case like the present. Then again it seems to me that there is considerable difference between the terms of the saving clause, con sidered in the English cases and the saving clause with which we are concerned. The saving clause in the English cases as also section 6 of our General Clauses Act, applies where a subsequent statute repeals a previous statute passed by the legislature of the same country. That is not the position here. We have here laws of the Indian legislature replacing French laws. Indeed it is at least arguable whether without more, the French laws would have been of force after the transfer; it would seem that this difficulty was realised and so it was expressly provided by paragraph 5 of another Order called the French Establishments (Administration) Order, made by Notification No. 3314 dated October 30, 1954, issued by the External Affairs Ministry of the Government of India, that all laws in force in the French Establishments and not repealed by para. 6 of the Application of Laws Order, would continue to be in force until repealed. Further, the saving clauses considered in the English cases preserved unaffected by the repeal, only things done under the repealed enactment and the rights acquired thereunder. The saving clause that we are considering saves things done before the commencement of the Application of Laws Order whether the thing was done under any law or not; it does not purport to preserve a right acquired under a statute repealed. In Hamilton Gell vs White (1), it was observed that section 38 of the English Interpretation Act, 1889, which corresponds to section 6 of our General Clauses Act, " was not intended to preserve the abstract rights conferred by the repealed Act. . It only applies to specific rights given to an individual upon the happening of one or other of the events specified in the (1) 431. 329 statute. " Likewise in Abbott vs Minister for Lands (1) it was observed about a saving clause which protected rights accrued under repealed enactments, that, " the more right (assuming it to be properly so called) existing in the members of the community or any class of them to take advantage of an enactment, without any act done by an individual towards availing himself of the right, cannot properly be deemed a " right accrued " within the meaning of the enactment". The principle of the English cases on which the petitioners relied would not apply except to protect rights acquired under repealed statutes. In the cases before us the petitioners could not say that they had acquired any right tinder any French law, to import the goods. There was admittedly no law which gave the petitio ners any right to import any goods. The position was only that there was an absence of laws prohibiting import. That clearly did not give the petitioners any right and certainly not a right under a statute which was repealed. All that the French authorities had done was to permit the petitioners to acquire foreign exchange in the open market for financing their imports. It would be impossible to say that thereby the petitioners acquired any right under any French law to import any goods. Lastly, the principle of the two English cases applies admittedly only where there is no intention to the contrary. Now it seems to me that here there is indication of an intention to the contrary. Clause 17 of tile agreement between India and France provided that imports finalised through the grant of licence prior to the transfer would be fulfilled but the goods would be liable to customs duty normally leviable in Indian ports. Clearly, therefore, it was not intended that after the transfer, Pondicherry would remain a free port in respect of imports made even under agreements concluded prior to the transfer under a licence. On such imports duty had to be paid after the transfer. The right to import freely was not therefore intended to be preserved. If so there could have been no intention, in any event, to protect a right to import freely (1) 431. 330 under an agreement made prior to the transfer, where there was no licence granted for the import. Admittedly, the petitioners had not obtained any such licence. For all these reasons it seems to me that the English decisions relied on are of no assistance in the present case. I am unable to read the saving clause in this case as if it is the same as section 6 of our General Clauses Act or the corresponding clause in the English Interpretation Act, 1889, and to obtain guidance from the decisions based on these statutes. I have therefore come to the conclusion that the saving clause in paragraph 6 of the Application of Laws Order does not protect the imports made by the petitioners, from the operation of the Indian laws applied to the French Establishments. I would dismiss these petitions. SHAH J. Petition No. 123 of 1957: Prior to November 1, 1954, Pondicherry was one of the French Establishments in India administered by the Government of France. Under the French administration, except specified categories like gold, rock salt and certain medicinal preparations, all commodities could be imported into the Pondicherry Port without a licence. The French Administration exercised control on im port of commodities into Pondicherry indirectly by making allotment of the requisite foreign exchange. The Government of France made an overall allotment of foreign exchange for the French Establishments in India, and persons desiring to import goods in Pondicherry and other French Indian settlements were, on applications addressed to the Chief Commissioner, French Settlements, granted foreign exchange facility for financing imports, out of that allotment. Besides the allotment of foreign exchange for financing im ports into the French Establishments in India, certain other currency allotments were made by the Government of France in the light of Trade Agreements between the French Government and other countries. The Chief Commissioner of Pondicherry issued permits for the import of commodities specified in the Trade 331 Agreements upto the current ceilings fixed in the Agreements. Two kinds of permits for obtaining official exchange by importers were issued by the Chief Commissioner which were known as " Authorisation " and " Attestation ". " Authorisation " was issued for import of goods from countries with which France had Trade Agreements and " Attestation " for import of goods from France and from countries with which the Government of France had not made Trade Agreements. By issuing " Authorisation " and " Attestation ", the Government undertook to provide foreign exchange for financing the imports made pursuant thereto. Since April 1, 1954, the Chief Commissioner of Pondicherry allowed intending importers to purchase foreign exchange in the open market for financing imports of merchandise. The Department of Affairs, Economics, endorsed " authorise " on the application submitted by the importers ' banker in respect of such transactions, but the Government did not undertake thereby to provide foreign exchange. As official exchange for imports was freely released, only a few imports were financed before July 1954 with the aid of exchange purchased in the open market. Negotiations were proceeding between the Government of India and the Government of France for transfer of the French Establishments in India to the Union of India, and when it came to be known that the transfer was imminent, there was feverish activity to import goods into the French Settlements with the aid of foreign exchange purchased in the open market, and in the months of August, September and October orders were placed by importers with foreign suppliers for purchase of commodities of the value of Rs. 280 lakhs to be financed by foreign exchange procured from the open market. Traders who were not normally doing business in Pondicherry and who had no business interest in French Establishments also opened offices in Pondicherry and started indenting goods, to be financed with the aid of foreign exchange in the open market. 43 332 An agreement for the de facto transfer of the ad ministration of the French Establishments in India was executed between the Government of India and the Government of France on October 21, 1954. This agreement became effective on November 1, 1954. In exercise of the powers conferred by section 4 of the , on October 31, 1954, the Government of India issued two orders section R. O. 3314, the French Establishments ( Administration) Order, 1954, and section R. O. 3315, the French Establishments (Application of Laws) Order, 1954. By section R. O. 3315, certain enactments specified in column (3) of the Schedule which included the , The , The Imports and Exports Trade (Control) Act, 1947, The Foreign Exchange Regulation Act, 1947 and The Indian Tariff Act, 1934, were applied to the French Establishments of Pondicherry, Karaikal, Mahe and Yanam, with the modification that references in the enactments, notifications, orders and regulations which were applied to the French Establishments, to India or to the States were to be construed as referring to the French Establishments also. These orders came into force on November 1, 1954. The petitioners who carried on trade in diverse commodities in Bombay opened a place of business in Pondicherry on April 14, 1954, and placed eight indents with Messrs. Shimada Trading Co., Ltd., Osaka, Japan, for importing porcelain ware, glass marbles and beltings. On an application submitted by Bankque D. L ' Indo China on behalf of the petitioners, the Bureau Des Affairs Economique, Pondicherry, endorsed " authorise " for the requisite foreign exchange purchased in the open market. This exchange was sold to the petitioners for the amount involved in the letters of credit. Between August 28, 1954, and August 31, 1954, three irrevocable letters of credit of the aggregate value of pound 12,850 were opened by the petitioners and pursuant to these letters, M/s. Shimada Trading Co., Ltd., shipped goods to Pondicherry. On November 30, 1954, the shipping documents were received by the petitioners from Messrs. Shimada Trading Co., Ltd. 333 Admittedly the goods were shipped by the foreign suppliers after the defacto transfer of Pondicherry. The applications submitted by the petitioners for the issue of customs permits sanctioning clearance of the goods were rejected by the Controller of Imports and Exports at Pondicherry. On January 5, 1955, the Chief Controller of Imports and Exports issued a public notification that on a consideration of the representations made by some of the importers asking for permission to import goods for which necessary foreign exchange had been obtained in the open market through bankers in Pondicherry and in consultation with the authorities concerned, it was " clarified for information " that open market transactions of the nature referred to in the representations were not covered by the Indo French Agreement, and that the import of goods against open market transactions after November 1, 1954, must be treated as unauthorised ; but having regard to the hardship likely to be caused to genuine importers who had placed orders in pursuance of their normal trading operations, the Collector of Customs, Pondicherry, was being authorised to accord certain concessions to genuine importers. By one of such concessions, goods shipped before November 1, 1954, were permitted to be cleared " without penalty " irrespective of their origin and value, and consignments fully paid for in foreign currency and shipped after November 1, 1954, and ordered before August 15, 1954, were also permitted to be cleared it without penalty". The goods indented by the petitioners were confiscated by the customs authorities exercising powers under section 167(8) of the , on the ground that the same had been imported without a valid licence and in contravention of the Department of Commerce and Industries Notification No. 43 1 T.C./43 dated July 1, 1943, (as amended) read with sub section 2 of section 3 of the Imports and Exports Trade (Control) Act, 1947. The petitioners were by orders passed between February 28 and March 4, 1955, given an option to clear the goods for " home consumption " on payment of customs duty and fine specified in the order. These 334 orders were confirmed in appeal by the Board of Revenue and by the Government of India in exercise of revisional jurisdiction. In the meanwhile the petitioners paid the duty and the fine imposed by the customs authority and cleared the goods. The Union Government having rejected the Revision applications, the petitioners submitted this petition under article 32 of the Constitution for a writ or direction in the nature of certiorari requiring and commanding the Chief Controller of Imports and Exports, Pondicherry, the Collector of Customs and Central Excise, Pondicherry, the Central Board of Revenue and the Union of India and quashing the orders passed by the Customs authorities and the Union of India and for a mandamus requiring the respondents to forbear from giving effect to or otherwise acting upon the orders passed by the Customs authorities and the Union of India, and for a further writ or order directing the respondents to restore to the petitioners the sum of Rs. 30,890 paid as penalty for releasing the goods. Undoubtedly, the petitioners had before November 1, 1954, placed indents for importing goods of diverse descriptions from foreign suppliers and for that purpose, they had acquired foreign exchange through their bankers in the open market. The petitioners had also opened irrevocable letters of credit in favour of the Japanese suppliers. It may be assumed, even though there is no clear evidence in that behalf, that the petitioners were after opening irrevocable letters of credit, unable to cancel the indents. Section 167, cl. (8), of the , in so far as it is material, provides that if any goods, the importation of which is for the time being prohibited or restricted by or under Chapter IV of the Act, are imported into India contrary to such prohibition or restriction, such goods shall be liable to confiscation. By section 3 of the Imports and Exports Trade (Control) Act, XVIII of 1947, the Central Government is authorised by order published in the official Gazette to prohibit, restrict or otherwise control in all cases or in specified classes of cases, the import, the bringing into any Port or place 335 in India of goods of any specified description. By section 4 all orders made under r. 84 of the Defence of India Rules or that rule as continued in force by the Emergency Provisions (Continuation) Ordinance 1946, and in force immediately before the commencement of the Act, in so far as they were not inconsistent with the provisions of that Act, continued to remain in force and were to be deemed to have been made thereunder. Under the rules framed under the Defence of India Rules, the import of goods of the description indented by the petitioners, was, it is not disputed, prohibited, and the rules framed under the Defence of India Rules continued in force by the operation of section 4 of the Imports and Exports Trade (Control) Act, 1947. The rules and orders made under r. 84 of the Defence of India Rules were on November 1, 1954, operative as if they were made under the Imports and Exports Trade (Control) Act, 1947, and when that Act was extended to the French Establishment of Pondicherry, these rules and orders became also applicable to that area. By section 19 of the , the Central Government may by notification prohibit or restrict the bringing by sea, goods of any specified description into India across any customs frontier as defined by the Central Government. By section 2(b) of the Imports and Exports Trade (Control) Act, 1947, import is defined as bringing into India by sea, land or air. Import of goods therefore means carrying goods across the customs frontier declared by the Government of India. There is no dispute that under section 19, the Port of Pondicherry was declared a customs frontier. Admittedly, the goods indented by the petitioners were brought into India, i.e., imported into India after November 1, 1954. Importation of these goods without a licence in that behalf being prohibited under a notification under the Imports and Exports Trade (Control) Act, by bringing the goods into the Pondicherry Port, prima facie section 167(8) of the was contravened. But the petitioners contend that in view of the agreement between the Government of India and the Government of France and the two orders issued in 336 exercise of the powers conferred by section 4 of the , the provisions of the and the orders made or deemed to be made under the Imports and Exports Trade (Control) Act, 1947, did not apply to the goods in question. By cl. 3 of the agreement dated October 21, 1954, the Government of India succeeded to the rights and obligations resulting from such acts of the French Administration in these Establishments as were bind ing on the territory. By para. 5 of article 10, acts or deeds constitutive of rights established prior to the date of the de facto transfer in conformity with French law retained the value and validity conferred at that time (by the same law). By article 17, in so far as it is material, all orders placed outside the establishments and finalised through the grant of a licence by competent authorities in accordance with the laws and regulations in force prior to the date of the de facto transfer were to be fulfilled by the Government of India who were to grant the requisite foreign currency, if the goods were imported within the period of validity of the relevant licence subject to payment of customs duty and other taxes normally leviable at Indian Ports. This agreement is between the Government of India and the Government of France, and the covenants thereof do not purport to and cannot confer any rights enforceable at the instance of citizens of Pondicherry or of India. By section 3, certain obligations enforceable against the French Administration were undertaken by the Government of India, but no obligations thereby enforceable were undertaken by the Indian Government which the petitioners could enforce. 5 of article 10 falls in the chapter headed " Judicial Matters " and only declares that acts and deeds which constitute rights in conformity with the French Law shall retain the same value after merger with the Union of India and by article 17, the obligation is undertaken by the Government of India to fulfil the orders placed outside the Establishments and finalised through the grant of a licence by competent authorities. But the petitioners had obtained no license from any competent authority for importing or even for indenting the goods. 337 It was urged that the orders section R. O. 3314 and section R. O. 3315 issued under the should be construed in the light of the agreement between the Government of India and the Government of France. By section R. O. 3314, provision is made by the Government of India for the administration of the erstwhile French Establishments. By cl. 5 of that notification, all laws in force in the French Establishments or any part thereof immediately before the commencement of the order and not repealed by cl. 6 of the French Establishments (Application of Laws) Order, 1954, shall continue to remain in force until repealed or amended by a competent authority. The law, if any, relating to the import of goods into India applicable in the French Establishments prior to November 1, 1954, stood expressly repealed by cl. 3 of section R. O. 3315 which provided that the enactments specified in column 3 of the Schedule as in force before the commencement of this order shall be applied to and shall be in force in the French Establishments subject to (a) any amendments to which the enactments are for the time being generally subject in the territories to which they extend ; (b) the modifications, if any, specified in column 4 of the schedule; and (c) the subsequent provisions of the order. By column 3 of the schedule to this order, the , the and the Imports and Exports Trade (Control) Act were expressly applied to the French Establishments, and under the provisions of these Acts and notifications issued thereunder as from November 1, 1954, no person could without a license in that behalf import goods of the nature indented by the petitioners. By cl. 6, it was enacted that " unless otherwise specifically provided in the schedule, all laws in force in the French Establishments immediately before the commencement of this order, which correspond to the enactments specified in the schedule, shall cease to have effect, save as respects things done or omitted to be done before such commencement ". The and the Imports and Exports Trade (Control) Act were expressly made applicable to the French Establishment of 338 Pondicherry and all corresponding law in that territory ceased to have effect save as respects things done or omitted to be done before such commencement. Clause 6 does not authorise the doing of things expressly forbidden by the provisions of the Acts made applicable by schedule 3 in the Pondicherry Establishment, and by the use of the expression, " things done or omitted to be done " in the clause, to the rights or legal consequences which may but for the application of the enactments specified in schedule 3 have flown from the acts done or omitted to be done the French law does not continue to apply. The clause undoubtedly protects French laws which correspond to the enactments specified in schedule 3 in so far as they concern things done or omitted to be done before the commencement of S, R. O. 3315. In superseding the French law in force on the prescribed date, the cl. 6 emphasises that the enactments specified in schedule 3 have no retrospective operation, and as counterpart thereof provides that all transactions which have been concluded before November 1, 1954, will continue to be govered by the French law notwithstanding the enactment of the Acts specified. Since the date of the de facto transfer of the French Establishments to the Indian Union, all imports of goods across the customs frontier at Pondicherry were subject to the provisions of the and the Imports and Exports Trade (Control) Act; and goods shipped after November 1, 1954, in pursuance of indents before that date were not expressly saved from the operation of the restrictive provisions of those Acts. On and from November 1, 1954, the law if any relating to the import of goods operative in the French territory was superseded and the goods having been brought into the Pondicherry Port after November 1, 1954, the import was governed by the and the Imports and Exports Trade (Control) Act and not by any law of the French territory. The supersession of the French laws by the application of the statutes set out in schedule III was, on November 1, 1954, complete, " save as respects things done or omitted to be done ". Does the expression " things done " include consequences which may 339 have ensued in future but for the supervention of the merger agreement ? Ex facie, by cl. 6, the French law is kept alive in respect of " things done or omitted to be done " i.e., things done or omitted to be done in the past; it has not the effect of keeping alive that law in respect of things to be done or omitted to be done in future. All transactions completed after November 1, 1954, will, on the plain words of cl. 6, be governed by the statutes made applicable by virtue of cl. 3 of section R. O. 3315. Section 6 of the , has in terms no application when the court is called upon to ascertain the effect of supersession of French law by the application of the specified statutes by cl. 6 of section R. O. 3315. In terms section 6 of the applies to the effect of repeal of enactments of the Indian legislature, and there is nothing in section R. O. 3315 which supports the plea that the section applies as if the French law in operation before merger of the French Establishments is to be regarded as a statute enacted by the Indian legislature. In that premise, it is difficult to appreciate how the principle of cases decided by the courts in England on the words of section 38 of the Interpretation Act, 1889 (52 and 53 Viet. ch. 63) which are substantially the same as those used in section 6 of the , can lend any assistance in interpreting the meaning of the expression " things done or omitted to be done " in cl. 6 of section R. O. 3315. By enacting section R. O. 3315, the French law after its supersession has not been expressly kept alive in respect of any right or privilege acquired or accrued under the things done under that law; and it would be an unwarranted incursion into the field of legislation to attempt to extend the protection of that law to transactions which have taken place after the prescribed date relying upon the . Nor is the interrelation between the agreement of purchase with a foreign seller, and the various processes leading to the delivery of goods to a common carrier and the ultimate import of goods sufficient to include within the expression " things done " used in 44 340 cl. 6 of section R. O. 3315 consequences of the things done which may ensue in future. Within the expression " in the course of import of the goods into the territory of India " used in article 286(1) (b) of the Constitution, a series of integrated activities resulting in the taking of goods across the customs frontier may be involved. But import as defined in the Imports and Exports Trade (Control) Act is bringing a commodity in the territory of India; preliminary steps even if they are closely integrated therewith are not included in that definition. If steps preliminary to import are not included in the concept of import, in dealing with the provisions of the and the Imports and Exports Trade (Control) Act, it would be difficult to afford protection of the French laws expressly granted by virtue of cl. 6 of section R. O. 3315 to such of the preliminary steps as have taken place before the prescribed date, and to create an exemption in favour of imports consequential upon those preliminary steps, which the legislature has declined to do. In my view, therefore, by the use of the expression things done or omitted to be done before such commencement " in cl. 6 of section R. O. 3315 French law applies to acts and omissions before November 1, 1954, and not to legal consequences of those acts and omissions ensuing after that date, and hence import of goods across the customs frontier in the Pondicherry Port after November 1, 1954, without a licence in that behalf is contrary to the provisions of the and the Imports and Exports Trade (Control) Act. The provisions of the and the Imports and Exports Trade (Control) Act whereby restrictions are imposed upon the import and export of goods are not by themselves unreasonable. If the petitioners are not entitled to the benefit of cl. 6 of the Indo French Agreement, there is no other ground on which they can successfully impugn the validity of the orders imposing duty and penalty. I am therefore of the view that this petition should be dismissed with costs. 341 For reasons set out in the principal petition, petitions Nos. 124 and 125 of 1957 and 118 of 1959 should also be dismissed with costs. BY COURT: In view of the majority Judgment, the petitions are allowed. The petitioners in all the petitions will have their costs. Petitions allowed. [/INST] In pursuance of an agreement dated October 21, 954, entered into between the Government of India and the Government of France whereby there was a de facto transfer of the administration of Pondicherry and other French Settlements to the Government of India as and from November 1, 1954, a notification dated October 30, 1954, was issued by the Government of India called the French Establishments ' (Application of Laws) Order, 1954, by virtue of which certain enactments specified in column (3) of the Schedule which included the Sea Customs Act, 306 1878, the Imports & Exports Trade (Control) Act, 1947, and the Foreign Exchange Regulation Act, 1947, were extended to Pondicherry. Paragraph 6 of the Order provided: "Unless otherwise specifically provided in the Schedule, all laws in force in French Establishments immediately before the commencement of the Order, which correspond to enactments specified in the Schedule, shall cease to have effect, save as respect things done or omitted to be done before such commencement Shortly prior to the transfer of the administration of Pondicherry to India, the petitioners had entered into certain agreements with foreign suppliers for the import into Pondicherry of diverse goods. Pondicherry was, prior to the transfer to India, a free port without any restrictions on imports, except on a few items, and the importers could acquire foreign exchange either at the official rate in respect of some transactions or at the open market in respect of others. The petitioners had with the consent of the French authorities obtained through the banks foreign exchange from the open market to finance their imports and had, with the foreign exchange so acquired, opened irrevocable letters of credit in favour of their foreign suppliers on account of the price of the goods to be supplied. On or about November 1, 1954, the goods covered by the aforesaid imports were in different stages of shipment and arrived at the port of Pondicherry in January and February 1955. The Collector of Customs treated the imports of the goods as unauthorised and confiscated the same and gave the petitioners an option to pay in lieu of confiscation a penalty, on the ground that the petitioners had not obtained a licence for bringing the goods into Pondicherry and that section 167(8) of the , was contravened. The petitioners claimed, inter alia, that the transactions entered into by them with the foreign dealers were " things done " within the meaning of para. 6 of the French Establishments ' (Application of Laws) Order, 1954, and that therefore the imports by the petitioners were within the saving clause of that paragraph. Held, (Per Sinha, C. J., Imam and Subba Rao, JJ. Sarkar and Shah, JJ. dissenting): (1) that on its proper interpretation, the expression " things done " in para. 6 of the French Establishments ' (Application of Laws) Order, 1954, was comprehensive enough to take in not only things done but also the effects or the legal consequences flowing therefrom ; The Queen vs Justices of the West Riding of Yoykshire, and Heston and Isleworth Urban District Council vs Gyout, , relied on. (2) that the bringing of the goods into India and the rele vant contracts entered into by the petitioners with the foreign dealers formed parts of a same transaction, and therefore, the: imports were the effect or the legal consequence of the, " things done ", i.e., the contracts entered into by, the petitioner; 307 State of Travancore Cochin vs The Bombay Co. Ltd., ; and State of Travancore Cochin V. Shanmugha Vilas Cashew Nut Factoyy, ; , relied on. (3) that para. 6 of the order saved the transactions entered into by the petitioners and that, therefore, the Collector of Customs had no right to confiscate their goods on the ground that they were imported without a licence. Per Sarkar, J. (1) The mere making of the contracts and the opening of the letters of credit without the bringing of the goods into Pondicherry would not amount to an " import " and, therefore, the imports by the petitioners would not be within the saving clause in para. 6 as things done before the commencement of the Application of Laws Order. (2) In the absence of the necessary words to extend the application of French laws to the effect of things done or rights acquired from the doing of them, the saving clause in para. 6 could not protect the imports made by the petitioners from the operation of the Indian laws applied to the French Establishments. Per Shah, J. (1) Steps preliminary to import, even if they are closely integrated therewith, are not included in the concept of import, in dealing with the provisions of the and the Imports and Exports Trade (Control) Act. (2) By the use of the expression things done or omitted to be done before such commencement in cl. 6 of the French Establishments ' (Application of Laws) Order, 1954, French law applies to acts and omissions before November 1, 1954, and not to legal consequences of those acts and omissions ensuing after that date, and hence import of goods across the customs frontier in the Pondicherry Port after November 1, 1954, without a licence in that behalf is contrary to the provisions of the and the Import and Exports Trade (Control) Act. </s>

<s>[INST] Summarize the following judgement: 134 of 1959. Petition under article 32 of the Constitution of India for enforcement of fundamental rights. J. C. Bhatt, R. Ganapathy Iyer and G. Gopalakrishnan, for the petitioner. N. section Bindra, R. H. Dhebar and T. M. Sen, for respondents Nos. 1 and 2. section K. Kapur, P. M. Mukhi and B. P. Maheshwari, for respondent No. 3. 1960. August 8. The Judgment of the Court was delivered by 17 130 SINHA C.J. This petition under article 32 of the Constitution impugns the constitutionality of the land acquisition proceedings with particular reference to the notification under section 4 of the Land Acquisition Act (hereinafter referred to as " the Act ") in respect of an area of land within the district of Thana in the State of Bombay, now known as the State of Maharashtra. In order to appreciate the controversy raised in this case, it is necessary to state the following facts. By a notification dated April 3, 1959, the first respondent, the State of Bombay (now Maharashtra) under section 4 of the Land Acquisition Act of 1894, stated that the lands specified in the schedule attached to the said notification were likely to be needed for the purposes of the third respondent, Messrs. Mukund Iron & Steel Works Ltd. a company registered under the Indian Companies Act, 1913, and having its registered office at Kurla, Bombay No. 37, in the State of Maharashtra, for its factory buildings etc. The notification further stated that under cl. (c) of section 3 of the Act, the Government was pleased to appoint the Special Land Acquisition Officer, the second respondent, to perform the functions of the Collector under section 5A of the said Act. The land in which the petitioner, who is a citizen of India, claims to be interested as owner is included in the schedule aforesaid. The petitioner appeared before the second respondent aforesaid and after several adjournments lodged objections on June 9, 1959 and also made oral submissions through his Advocate on that date and the day following, and requested the second respondent to quash the proceedings on the ground that the lands contained in the notification were not required for any public purpose and that the proceedings were vexatious and malicious. It was further stated before the second respondent that the third respondent had negotiated by private treaty for the purchase of the notified area. The second respondent adjourned further hearing of the case in order to enable the petitioner and the third respondent to come to an amicable settlement. A further hearing took place before the second respondent on July 15, 1959. On 131 that date the petitioner proposed to lead evidence of owners of several pieces of land included in the area notified for acquisition to prove that the lands included in the schedule to the notification were not as a matter of fact required by the third respondent for any public purpose and that the third respondent had even negotiated for the purchase of the said lands by private treaty, but the second respondent refused permission to lead such evidence on behalf of the petitioner. The petitioner raises a number of questions of law attacking the constitutionality of the land acquisition proceedings and prays for orders or directions to the State Government not to give its consent to the aforesaid acquisition under section 39 of the Act nor to enter into any agreement with the third respondent under section 41 of the Act nor to issue a notification under section 6 of the Act declaring that the land in question is needed for a public purpose, because after such a declaration the petitioner may be deprived of the opportunity of contending that the land was not needed for a public purpose. The third respondent, through its Business Manager, has put in an affidavit in answer to the petitioner 's case and has contended that this writ petition is premature and not maintainable, that so far, only a notification under section 4 of the Act has been issued and objections under section 5A on behalf of the petitioner have been heard by the second respondent, that the State Government has yet to be satisfied as to whether the acquisition is for purposes specified in section 40 of the Act and so long as the previous consent of the appro priate Government has not been given, the provisions of sections 6 to 37 of the Act cannot be put into operation. It is denied that the acquisition is not for a public purpose and that the proceedings are vexatious or malicious. The third respondent does not admit that the second respondent refused permission to the petitioner to lead any evidence. The averments in the petition on the merits of the controversy are denied. It is stated on behalf of the third respondent that public are vitally interested in the production of this 132 Company, the chief products being steel bars and rods which are in great public demand and are of such vital necessity to the country that their very production, distribution, supply and price are controlled by the Government. The products of the Company are consumed directly in bulk for public utility projects like dams, hydroelectric projects, roads, railways, industrial plants and housing projects, both in the public and private sectors, which constitute the core of the several five year plans of the Government. It is further stated that the Company (respondent No. 3) has included in its proposed industrial expansion projects to be established on the land sought to be acquired, extensive provisions for housing for a large number of employees ' families as also for their welfare by providing for parks, gardens, playgrounds, medical relief centre and similar other amenities for the welfare of the employees and their families. All those projects, it is claimed on behalf of the third respondent, are a " highly commendable public purpose " which is far more advantageous to the community in general than to shareholders of the Company. It is further stated that the first respondent made a detailed investigation about the usefulness to the public of the expansion project of the Company including employees ' housing schemes and welfare projects and when it was satisfied about, the bona fides of the respondent Company and the genuineness and urgency of their projects and their utility to the public that the first respondent published the notification under section 4 of the Act on April 3, 1959. The affidavit sworn to by the second respondent, Special Land Acquisition Officer, Thana, also questions the maintainability of the writ petition and generally supports the case sought to be made out by the third respondent. It is also stated on his behalf that the petitioner or any of the other persons interested in the land sought to be acquired did not produce any evidence and that it was absolutely incorrect to say that he prevented anyone from leading any evidence as alleged. The Special Land Acquisition Officer has made the following categorical statements: 133 "It is denied that the acquisition of the said lands for the purpose of the third respondent is in no way useful to the public or that the public are not entitled to the use of any of the works of the Company as alleged by the petitioner. I say that the products which are being produced and will be produced are used and intended to be used inter alia in public undertakings intended for the general industrial development of the country. It is denied that the proposed acquisition is merely for the benefit of few individuals, namely, the shareholders of the Company as alleged by the petitioner. " Further on he adds the following: " With reference to paragraph 13 of the said petition, it is denied that I did not permit the petitioner to lead any evidence before me as alleged by the petitioner. This allegation, I say, is absolutely dishonest and false. It is denied that the notification issued by Government under section 4 of the said Act is not bona fide or is an abuse of the powers vested in Government. It is denied that the said notification is illegal or that, it is not made in good faith ". On these allegations and counter allegations the petitioner has moved this Court to exercise its powers under article 32 of the Constitution on the grounds that the notification under section 4 of the Act is illegal, that the land acquisition proceedings are in violation of articles 14, 19 and 31 of the Constitution and that the acquisition is not for a public purpose and is mala fide. In order to determine the present controversy, it will be convenient, at this stage, to examine the relevant provisions of the Act. The Act has the following preamble: " Whereas it is expedient to amend the law for the acquisition of land needed for public purposes and for Companies and for determining the amount of compensation to be made on account of such acquisition ;. . In the definition section 3, the definitions of " Company " and " public purpose " are particularly noteworthy. The expression " Company " has been used in a very comprehensive sense of including not only 134 the Companies registered under several statutes, Indian and English, but also includes a society registered under the Societies Registration Act of 1860 and a registered society within the meaning of the Co operative Societies Act. The expression " public purpose ' includes the provision of village sites in districts in which the appropriate Government shall have declared by notification in the official gazette that it is customary for the Government to make such provision. It will thus be noticed that the expression " public purpose " has been used in its generic sense of including any purpose in which even a fraction of the community may be interested or by which it may be benefited. The proceedings begin with a Government notification under section 4 that land in any locality is needed or is likely to be needed for any public purpose. On the issue of such a notification it is permissible for a public servant and workmen to enter upon the land to do certain acts specified therein with a view to ascertaining whether the land is adapted for the purpose for which it was proposed to be acquired as also to determine the boundaries of the land proposed to be included in the scheme of acquisition. It will be noticed that though the preamble makes reference not only to public purposes, but tlso to Companies, the preliminary notification under section 4 has reference only to public purpose and not to a Company Section 5A, which was inserted by the amending Act of 1923 and makes provision for hearing of objections by any person interested in any land notified under section 4, makes reference not only to public purpose, but also to a Company. It is noticeable that section 5A predicates that the notification under section 4(1) may not only refer to land needed for a public purpose, but also to land needed for a Company and after the enquiry as contemplated by section 5A has been made and the Collector has heard objections, if any, by, interested parties he has to submit his report to the Government along with the record of the proceedings held by him and his recommendations on the objections. Thereupon, the Government has to make up its mind whether or not 135 the objections were well founded and the decision of the appropriate Government of those objections is to be treated as final. If the Government decides to overrule the objections and is satisfied that the land, the subject matter of the proceedings, was needed for a public purpose or for a Company, a declaration has to be made to that effect. Such a declaration has to be published in the official gazette and has to contain the particulars of the land including its approximate area and the purpose for which it is needed. Once the declaration under section 6 has been made, it shall be conclusive evidence that the land is needed for a public purpose or for a Company. Then follow the usual Proceedings after notice is given to the parties concerned to claim compensation in respect of any interest in the land in question ; and the award after making the necessary investigation as to claims to conflicting title, the compensation to be allowed in respect of the land, and, if necessary, apportionment of the amount of compensation amongst the persons believed to be interested in the land under acquisition. We are not concerned here with the proceedings that follow upon the award of the Collector and the matters to be agitated therein. From the preamble as also from the provisions of sections 5A, 6 and 7, it is obvious that the Act makes a clear distinction between acquisition of land needed for a public purpose and that for a Company, as if land needed for a Company is not also for a public purpose. The Act has gone further and has devoted Part VII to acquisition of land for Companies and in sub section (2) section of 38, with which Part VII begins, provides that in the case of an acquisition for a Company, for the words " for such purpose " the words " for purposes of the Company " shall be deemed to have been substituted. It has been laid down by section 39 that the machinery of the Land Acquisition Act, beginning with section 6 and ending with section 37, shall not be put into operation unless two conditions precedent are fulfilled, namely, (1) the previous consent of the appropriate Government has been obtained and (2) an agreement in terms of section 41 has been executed by the Company. 136 The condition precedent to the giving of consent aforesaid by the appropriate Government is that the Government has to be satisfied on the report of the enquiry envisaged by section 5A(2) or by enquiry held under section 40 itself that the purpose of the acquisition is ;to obtain land for the erection of dwelling house , for workmen employed by the Company or for the provision of amenities directly connected therewith or that such acquisition is needed for the construction of some work which is likely to prove useful to the public. When the Government is satisfied as to the purposes aforesaid of the acquisition in question, the appropriate Government shall require the Company to enter into an agreement providing for the payment to the Government (1) of the cost of the acquisition, (2) on such payment, the transfer of the land to the Company and (3) the terms on which the land shall be held by the Company. The agreement has also to make provision for the time within which the conditions on which and the manner in which the dwelling houses or amenities shall be erected or provided and in the case of a construction of any other kind of work the time within which and the conditions on which the work shall be executed and maintained and the terms on which the public shall be entitled to use the work. Such are the relevant provisions of the Act that we have to consider with reference to the question of the constitutionality of the land acquisition proceedings now impugned. The first ground of attack is based on article 31(2) of the Constitution. The provisions of article 31(2) make it clear beyond all controversy that in order that property may be compulsorily acquired, the acquisition must be for a public purpose and by authority of law. But article 31(5)(a) lays down that nothing in cl. (2) shall affect the provisions of any existing law other than a law to which the provisions of cl. (6) applies (and the Act is obviously a law to which the provisions of cl. (6) do not apply). Therefore even if the Act contemplated acquisition for a company which may or may not be for a public purpose, it would be saved by article 31(5)(a) as an existing law. (See Lilavati Bai vs State of Bombay (1)). Further, though it may (1) ; 137 appear on the words of the Act contained in Part 11, which contains the operative portions of the proceedings leading up to acquisition by the Collector that acquisition for a Company may or may not be for a public purpose, the provisions of Part VII make it clear that the appropriate Government cannot permit the bringing into operation the effective machinery of the Act unless it is satisfied as aforesaid, namely, that the purpose of acquisition is to enable the Company to erect dwelling houses for workmen employed by it or for the provision of amenities directly connected with the Company or that the land is needed for construction of some work of public utility. These require ments indicate that the acquisition for a Company also is in substance for a public purpose inasmuch as it cannot be seriously contended that constructing dwelling houses, and providing amenities for the benefit of the workmen employed by it and construction of some work of public utility do not serve a public purpose. It is not necessary for the purposes of this case to go into the question whether acquisition for a Company, even apart from the provisions of section 40, will be for a public purpose, or justifiable under the provisions of the Act, even on the assumption that it will not serve a public purpose. The facts of the present case have not been investigated, as this Court was moved when only a notification under section 4 of the Act had been issued; and the purpose of the acquisition in question was still at the enquiry stage. By section 38A, which was inserted by the amending Act of 1933, it has been made clear that an industrial concern not being a Company, ordinarily employing not less than 100 workmen, may also take the advantage of land acquisition proceedings if the purpose of the acquisi tion is the same as is contemplated by section 40 in respect of Companies. It has been recognised by this Court in the case of The State of Bombay v Bhanji Munji and Another (1) that providing housing accommodation to the homeless is a public purpose. In an industrial concern employing a large number of workmen away (1) [1955] 1 S.C.R. 777 18 138 from their homes it is a social necessity that there should be proper housing accommodation available for such workmen. Where a large section of the community is concerned, its welfare is a matter of public concern. Similarly, if a Company is generous enough to erect a hospital or a public reading room and library or an educational institution open to the public, it cannot be doubted that the work is one of public utility and comes within the provisions of the Act. We are not in possession of all the relevant facts in the present case as to the exact purpose for which the land is sought to be acquired. That investigation was in progress when the petitioner moved this Court. Hence, the contention raised on behalf of the respondents that the application is premature is not wholly devoid of merit. But the main attack on the constitutionality of the proceedings in question was based upon the notification under section 4, which is in these terms " exhibit " A ". NOTIFICATION REVENUE DEPARTMENT. Sachivalaya, Bombay, 3rd April, 1959. LAND ACQUISITION ACT, 1894 (1 of 1894). District Thana. No. LTH. 15 59/42051 H Whereas it appears to the Government of Bombay that the lands specified in the schedule hereto are likely to be needed for the purposes of the Company, viz., for factory buildings, etc., of M/s. Mukund Iron and Steel Works Limited, Bombay. It is hereby notified under the provisions of section 4 of the Land Acquisition Act, 1894 (I of 1894), that the said lands are likely to be needed for the purpose specified above. All persons interested in the said lands are hereby warned not to obstructor interfere with any surveyors or other persons employed upon the said lands for the purpose of the said acquisition. Any contracts for the disposal of the said lands by sale, lease, mortgage, assignment, exchange or otherwise, or any outlay or improvements made therein, without the sanction of the Collector after the date of this notification will, 139 under section 24 (seventhly) of the said Act, be disregarded by the officer assessing compensation for such parts of the said lands as may be finally acquired. If the Government of Bombay is satisfied that the said lands are needed for the aforesaid purpose, a final notification to that effect under section 6 of the said Act will be published in the Bombay Government Gazette in due course. If the acquisition is abandoned wholly or in part, the fact will be duly notified in the Bombay Government Gazette. Under clause (c) of section 3 of the Land Acquisition Act, 1894, the Government of Bombay is pleased to appoint the Special Land Acquisition Officer, Thana, to perform the functions of a Collector under section 5 A of the said Act in respect of the said lands. " It is argued that in terms the notification does not state that the land sought to be acquired was needed for a public purpose. In our opinion, it is not absolutely necessary to the validity of the land acquisition proceedings that that statement should find a place in the notification actually issued. The requirements of the law will be satisfied if, in substance, it is found on investigation, and the appropriate Government is satisfied as a result of the investigation that the land was needed for the purposes of the Company, which would amount to a public purpose under Part VII, as already indicated. See in this connection The State of Bombay vs Bhanji Munji and Another (1). In that case the question was whether the Bombay Land Requisition Act (Bombay Act XXXIII of 1948) was invalid inasmuch as the purpose for the requisition was not in express terms stated to be a public purpose. This Court laid it down that the statute was not invalid for that reason provided that from the whole tenor and intendment of the Act it could be gathered that the property was acquired either for the purpose of the State or for any public purpose. It is further argued that section 4(1) of the Act had deli berately omitted the words " for a Company " and insisted upon a public purpose. The absence from the notification under section 4 aforesaid of those words, (1) [1955] 1 S.C.R 777. 140 namely, for a public purpose, are fatal to the proceedings. The purpose if the notification under section 4 is to carry on a preliminary investigation with a view to finding out after necessary survey and taking of levels, and, if necessary, digging or boring into the sub soil whether the land was adapted for the purpose for which it was sought to be acquired. It is only under section 6 that a firm declaration has to be made by Government that land with proper description and area so as to be identifiable is needed for a public purpose or for a Company. What was a mere proposal under section 4 becomes the subject matter of a definite proceeding for acquisition under the Act. Hence, it is not correct to say that any defect in the notification under section 4 is fatal to the validity of the proceedings, particularly when the acquisition is for a Company and the purpose"" has to be investigated under section 5A or section 40 necessarily after the notification under section 4 of the Act. The other attack under article 19(1)(f) of the Constitution is equally futile in view of the decisions of this Court in State of Bombay vs Bhanji Munji and Another (1) and Lilavati Bai vs State of Bombay (2). Nothing was said with reference to the provisions of article 14 of the Constitution, though that Article has been referred to in the grounds in support of the writ petition. For the reasons given above, this petition must be dismissed with costs to the contesting parties. Petition dismissed. (1) [1955] 1 S.C.R. 777. [/INST] By a notification under section 4 of the Land Acquisition Act, 1894, the State of Bombay (now Maharashtra) sought to acquire certain lands, including those of the petitioner, which were likely to be needed by a company, manufacturing steel bars and rods, for its factory and buildings and appointed a Special Land Acquisition Officer to function as a Collector under section 5A of the Act. The petitioner by an objection filed before the said officer denied that the lands were required for a public purpose and prayed that the proceedings be quashed. By his petition to this Court under article 32 of the Constitution the petitioner challenged the legality of the notification under section 4 of the Act on the ground that it did not in terms say that the acquisition was for a public purpose, and that the acquisition proceedings infringed articles 19 and 31 of the Constitution. Held, that it is not essential that a notification under section 4 of the Land Acquisition Act, 1894, should expressly state that 129 the land sought to be acquired is needed for a public purpose. Where the land is required for a company, the requirement of the law will be sufficiently met if the appropriate Government is satisfied on a report under section 5A(2) or by an enquiry under section 40 of the Act that the purpose of the acquisition is the same as contemplated by section 40 of the Act. It is apparent from the definitions of the expressions com pany ' and 'public purpose ' contained in section 3 of the Act that the former is used in a very comprehensive sense and the latter is used in its generic sense including any purpose which may benefit even a fraction of the community and such purposes as are mentioned in section 40 of the Act must fall within its ambit. State of Bombay vs Bhanji Munji, [1955] 1 S.C.R. 777, referred to. A notification under section 4 of the Act envisages a preliminary investigation and it is only under section 6 that the Government makes a firm declaration. It is not, therefore, correct to say that a defect in the notification can be fatal to the acquisition proceedings and particularly where the acquisition is for a company and investigation has to be made under section 5A or section 40 after the issue of the notification. In this view of the matter the present application must be premature. Clause (6) of the article 31 has obviously no application to the Land Acquisition Act, 1894, and so it is saved by article 31(5)(a) of the Constitution even if it contemplates acquisition for a company which may or may not be for a public purpose. Lilavati Bai vs State of Bombay, ; , referred to. The attack under article 19(i)(f) of the Constitution must also fail in view of the decision of this Court in State of Bombay vs Bhanji Munji, [1955] 1 S.C.R. 777. </s>

<s>[INST] Summarize the following judgement: minal Appeal No. 158 of 1956. Appeal by special leave from the judgment and order dated February 9, 1955, of the Calcutta High Court in Criminal Revision No. 282 of 1954, arising out of the judgment and order dated December 15, 1953, of the Second Municipal Magistrate, Calcutta, in Case No. 2629C of 1952. Feb. 8, 9, 10. section M. Bose, Advocate General for the State of West Bengal, A. C. Mitra, B. Sen, P. K. Bose and D. Gupta, for the appellant. Three questions arise for determination in this appeal: (1) whether State is a " person " within the meaning of section 386 of the Calcutta Municipal Act, 1923, (2) does the Constitution make any change in the principal of prerogative as part of the common law and (3) does article 372 of the Constitution keep the existing law intact, i. e., the law as declared in L. R. 73 1. A. 271 to the effect that the Crown is not bound by any statute unless it is expressly named or unless it can be held to be included by necessary implication. The word " person " has been held not to include the State. [A.I.R. 1954 Punj. 49 ; A.I.R. 57 Punj. 150; A.I.R. 53 Nag. 35 ; A.I.R. 1955 Nag. 177 ; I.L.R. 1953 1 Cal. 355; 62 C.W.N. 561. 33 Pat. 603 takes the contrary view.] If the word " person " included the State, article 300 of the Constitution would not be 161 necessary. How far the Crown is bound by a Statute not specifically naming it is laid down by the Privy Council in L.R. 73 I.A. 271. The decision of the Madras High Court taking a contrary view in I.L.R. was not cited before the Privy Council and is based upon the wrong assumption that common law changed with the change of legislation. The coming into force of the Constitution does not alter the law as laid down in L.R. 73 I.A. 271, I.L.R. and I.L.R. Article 372 of the Constitution includes the common law of the land and continues the same after the coming into force of the Constitution. [I.L.R. , I.L.R. This common law doctrine of the immunity of the Crown from Statutes not specifically naming it or referring to it by necessary implication is applicable in United States also. ; [52 L. Ed. 82; ; M. C. Setalvad, Attorney General for India, R. Ganapathy Iyer, R. H. Dhebar and T. M. Sen, for intervener No. 1 The question is whether the ancient rule of English common law declared to be applicable to India by the Privy Council is applicable to the construction of section 386 and it has to be examined as to what was the position before and after the Constitution. The High Court has decided that even before the Constitution the principle did not apply in spite of the Privy Council decision. The statute of 1923 must be con strued in accordance with the rule of interpretation prevailing in 1923. The makers of statute in 1923 did not intend to include State in the word " person ". The decision of the Privy Council was the binding law of the land unless there was legislation abrogating it or taking away its effect. Article 372 of the Constitution actually continues the law as laid down in L.R. 73 I.A. 271. This Article uses the expression " of the law in force in India " and not the words " existing law ". The same expression is used in section 292 of the Government of India Act and was interpreted in There is nothing in the Constitution which takes away the applicability of the rule. There is nothing in 21 162 that rule or in its nature repugnant to any provision of our Constitution. The rule is illustrated in ; and I C.L.R. 406. The rule is applicable to all forms of Governments and is based on the ground of public policy and not merely on the ground of prerogative. ; ; V. K. T. Chari, Advocate General for Madras and T. M. Sen, for intervener No. 4. Supported the Advocate General of Bengal. H. M. Seervai, Advocate General for Maharashtra and R. H. Dhebar, for intervener No. 5. The word " person " should be given its normal meaning. It does not include the Crown or the State. It would not include the State unless the statute would be meaningless without such inclusion. [L.R. 73 I.A. 271 ; I C.L.R. 406]. By " necessary implication " is meant that without the inclusion of the crown or the State the beneficent purpose of the statute would be wholly frustrated. The consensus of judicial opinion in Bombay has been the same as expressed in L.R. 73 I.A. 271. The rule has nothing to do with forms of Government.[93 L. Ed. 1406]. Indian decisions have uniformly taken this view. [5 Bom. H.C.R. 23 ; I.L.R. I Bom. 213; 36 Bom. L.R. 820; ; I.L.R. 2 All. 196]. I.L.R. accepts the rule but says that it does not apply to taxation. This was a wrongful curtailment of the prerogative. [Halsbury, Vol. 7, p. 469, para 98]. The judgments of the Privy Council delivered before January 26, 1950, are binding on all courts in India except the Supreme Court and they are binding till the Supreme Court takes a different view. [A.I.R. 1953 Cal. 524; A.I.R. 1955 Nag. 293; Government of India Act, section 212 provided that the judgments of the Federal Court and of the Privy Council shall be binding and shall be followed. section M. Sikri, Advocate General of Punjab and D. Gupta, for intervener No. 2. In pre Constitution statutes the word " person " could include " the Crown " but normally or ordinarily it would not so include. In I.L.R. 1958 Punj. 201 it was held that person " included the State of Punjab and the Union 163 of India. The rule laid down by the Privy Council is equally applicable to a Republic. ; ; 65 L. Ed. 315; ; and ; In A.I.R. 1956 Pat. 91 the State has been held to be a person. G. C. Mathur and C. P. Lal, for intervener No. 3. Adopted the arguments of the Advocate General of West Bengal and of the Attorney General of India. T. M. Sen, for intervener No. 6. Adopted the arguments of the Advocate General, Bengal and the Attorney General of India. N. C. Chatterjee, Sunil K. Basu and Sukumar Ghose, for respondents. Section 386 is directed towards maintenance of healthy condition etc. and is a wholesome provision for safeguarding the health of the people by providing for the control of storing houses and for the equality of the stores. The financial aspect, i. e., the recovery of license fees or fine is inconsequential. The prerogative of immunity from the statutes is only available when the State acts as State and not when it descends to trade and business. State is a person. Salmond, 11th Edition, p. 35, defines person as an entity capable of rights and duties. It has the power to hold and acquire property ; it can sue and be sued [Article 300 of the Constitution ; 60.Punj. L. R. 546.]. The correct rule of interpretation is that to exempt the State from the operation of a statute there must be express exclusion in favour of the State. [Friedman in The mere fact that the State cannot be sent to jail, does not indicate that it is not a person. A Corporation is a person. It is the stigma of the conviction that matters and it is not a question of hurting the State financially. ; [1950] S.C.R. 720. A Corporation can be prosecuted even where mens rea or state of mind is concerned. [Paton on Jurisprudence, 2nd Edition, p. 279]. Sanctions of criminal law should be available against the State for enforcing the law. [72 C. L. R. 409; Willis ' Constitution Law, p. 37]. State is a person. ; ; I. L. R. [1951] 1 All. 269]. When State engages in trade or commerce, it must be treated in the same 164 way as ordinary citizens. [A. 1. R. ; A. 1. R. 1956 Pat. 91.] State is not a person only for the purposes of article 14. The doctrine of immunity of States from the operation of its laws cannot be invoked in the present constitutional set up. The rule is based on royal prerogative. ; ; Willis p. 54]. The rule springs from the prerogative that the King can do no wrong. There is no one equivalent to the King now in India and therefore the prerogative does not survive. Law is a scheme of social control and the command of a superior. If the State claims immunity, it must be exempted by express legislation. Immunity cannot be implied. There has been progressive restriction on the immunity of the State. ; ; ; I.L. R. lays down the correct law. After the coming into force of the Constitution, the High Courts are not bound by the judgment of the Privy Council. All powers are derived from the Constitution and no immunities can be implied. Even if any immunity can be implied, then it cannot be invoked in respect of any trading or commercial activity. [5 Bom. H. C. R. Appendix 1 at p. 13; ; ; 90 L. Ed. 326]. The activity carried on by the State in storing food grains etc., and distributing them was trading activity and not exercise of Governmental function. The State is bound by necessary implication by the provisions of the Calcutta Municipal Act, 1.923. There are provisions in the Act which expressly exempt the State from their operation. See section 126. section M. Bose in reply. Common law can be amended by legislation. See section 4, Hindu Succession Act (30 of 1956) and Hindu Adoptions and Maintenance Act (78 of 1956). There is difference between Civil and Criminal liability. [72 C. L. R. 406, at 409, 424, 425]. The State is not carrying on any trading activity but is acting in the exercise of essential Governmental functions. ; Common law of England was introduced in the Presidency towns by statutes. See Ormond 's Rules of Court; 1. L. R. 61 Cal. 165 H. M. Seervai, (with the permission of the Court). It is a settled rule that if a word is not a term of art, you must take the ordinary meaning and not go to technical books. ; ; 90 L. Ed. 396; Halsbury Vol. 7, p. 221]. section M. Sikri, (with the permission of the Court) referred to Holdsworth History of the English Law, ' Vol. 10, p. 354. August 16. The Judgment of Sinha, C.J., Imam and Shah, JJ., was delivered by Sinha, C. J. Sarkar and Wanchoo, JJ., delivered separate judgments. SINHA C. J. This appeal by special leave is directed against the judgment and order of the High Court at Calcutta dated February 9, 1955, whereby that Court, in its revisional jurisdiction, set aside an order of acquittal dated December 15, 1953, passed by the Municipal Magistrate, Calcutta, in respect of the prosecution launched by the Corporation of Calcutta, respondent in this Court, against the appellant. The relevant facts are these. On July 1, 1952, the Corporation of Calcutta made an application for summons under section 488 of Bengal Act III of 1923, which was substituted by West Bengal Act XXXIII of 1951, against " the Director of Rationing and Distribution representing the Food Department of the Government of West Bengal ". The offence complained of was " for using or permitting to be used premises No. 259, Chitpur Road, Upper, for the purpose of storing rice etc., under the provisions of the Bengal Rationing Order, 1943, without a licence under section 386 for the year, 1951 52, corresponding section 437 of the C.M.C. Act, 1951 ". Section 386(1)(a) of the Calcutta Municipal Act is in these terms: ,, No person shall use or permit to be used any premises for any of the following purposes without or otherwise than in conformity with the terms of a licence granted by the Corporation in this behalf, namely, any of the purposes specified in Schedule XIX 166 Item 8 of the said Schedule is " storing, packing, pressing, cleansing, preparing or manufacturing, by any process whatever, any of the following articles and the articles mentioned include rice, flour, etc. The facts alleged by the prosecution were not denied in behalf of the Department, which was in the position of the accused, but it was contended by way of a preliminary objection that the prosecution was not maintainable in law. After hearing arguments for the parties the learned trial Magistrate passed an order acquitting the accused relying upon a decision of the Calcutta High Court in the case of The Corporation of Calcutta vs Sub Postmaster, Dharamtala Post Office(1), holding that the provisions of section 386 of the Act, neither in terms nor by necessary implication, bound the Government. The respondent moved the Calcutta High Court in its revisional jurisdiction in Criminal Revision No. 282 of 1954, which was heard by a Division Bench consisting of J. P. Mitter and section N. Guha Ray, JJ. Cxuha Ray, J., who delivered the judgment of the Court, Mitter, J., concurring, held that the previous decision of the same High Court in The Corporation of Calcutta vs Sub Postmaster, Dharamtala Post Office (1) was clearly distinguishable. The distinction pointed out was that the previous decision of the Court had relied upon the decision of the Judicial Committee of the Privy Council in Province of Bombay vs Municipal Corporation of the Citu of Bombay (2), in a case arising before the coming into force of the Constitution. As the present case arose after the advent of the Constitu tion, the High Court did not feel bound by the aforesaid decision of the Privy Council and therefore examined the legal position afresh. On such an examination, the High Court came to the conclusion that the Indian Legislature in enacting laws acted on the assumption that the Government would be bound unless excluded either expressly or by necessary implication oftener than on the assumption that it would not be bound, unless the Legislature so provided expressly or by necessary implication. The High Court took the view that the decision of the Division (1) (2) (1946) L.R. 73 I.A. 271. 167 Bench of the Madras High Court in Bell vs The Municipal Commissioners for the City of Madras (1) was more in consonance with the law in India than the opposite view expressed in the Privy Council judgment aforesaid. They definitely decided that the law of India, even before the coming into effect of the Constitution, 7 and even at the time of the passing of the Government of India Act, 1935, was that the Government was bound by a Statute unless it was exempted either expressly or by necessary implication. In that view of the matter, the High Court further observed that the question whether the decision aforesaid of the Privy Council was still good law under article 372 of the Constitution did not arise and that, if it did, it was inclined to the view that the law declared by the Privy Council was not continued by any provision of law. In effect, the High Court took the view that the State was bound by the Statute unless it was excluded from its operation either expressly or by necessary implication. In that view of the matter, it held that section 386 of the Act bound the appellant, set aside the order of acquittal and sent the case back to the learned Magistrate for disposal according to law. The appellant made an application for special leave to appeal from the aforesaid judgment and order of the High Court, and obtained special leave in September 1955. It is thus clear that this case had remained pending in this Court for about five years. If this Court agreed with the view expressed by the High Court, the case would have to be tried on merits and the trial would begin more than eight years after the institution of the petition of complaint, but, as will presently appear, this prosecution was misconceived and therefore, in effect, no one has been the worse for the long pendency of the prosecution, which now must come to an end. The short question for determination in this appeal is whether any offence had been committed by the appellant, as alleged against him. If he was bound by the provisions of the Act to take out a licence on payment of the necessary fees, he must be held to have contravened the provisions of that Statute. It has (1) Mad. 457. 168 been contended by the learned Advocate General of Bengal, representing the appellant, that the decision of the Privy Council referred to above is still good law and that the contrary decision of the Division Bench of the Madras High Court (1) did not take the correct view of the legal position. The argument further is that the Privy Council decision was certainly binding on the Courts in India at the time it was rendered. That was the law of the land as declared by the highest judicial authority. Has that judicial determination been altered by the Constitution ? It has been argued that the law in India, even after the coming into effect of the Constitution, continues to be the same as the law in England in respect of the prerogatives of the Crown. The Act in question does not make any express provision binding the Government and there was nothing in the Act to show to the contrary by necessary implication. The Act could operate with reasonable efficacy without being held to be binding on the Government. It was further pointed out that the High Court had failed to take into con sideration the fact that that High Court itself had construed the Calcutta Municipal Act of 1923, which was replaced by the present Act of 1951, on the basis of the Privy Council decision not to have bound the Government. The Act of 1951 did not make any provision expressly abrogating that view. Hence, it is argued the High Court should have felt bound by the previous decision of that very Court given on the basis of the Privy Council decision; and had erred in taking the opposite view. The argument further was that the State is not a person within the meaning of the penal section with reference to which the prosecution had been launched. The common law could not have been overridden impliedly by a course of legislation. The common law applies to India even after the Constitution, not because there is the King or the Queen, but because it is the law in force. In other words, what was the prerogrative of the sovereign has now become the law of the land in respect of the sovereignty of the State. Thus the law of England, which (1) Mad, 457. 169 in its source was the prerogative of the Crown, was the common law of the land and was adopted by the Constitution by article 372, subject to the reservations contained therein. The Attorney General for India as also the Advocates General of Madras and Bombay supported the contention raised on behalf of the appellant. Mr. N. C. Chatterjee, who appeared on behalf of the respondent, contended that the State is a legal person as recognised in article 300 of the Constitution and was, therefore, capable of rights and obligations; that unless there is an express exclusion of the State by the Legislature, the Act would apply to all, including the State. He further contended that under the Constitution there is no King and, therefore, there cannot be any question of prerogative. Any exemption from the operation of the statute must be found in express immunity under the law and cannot be implied. He went to the length of contending that a State 's prerogative is inconsistent with the whole Constitution. Whatever may have been the legal position before the coming into effect of the Constitution, it has not countenanced the continuance of any such prerogative as is contended for on behalf of the appellant. Another line taken by Mr. Chatterjee is that when the State embarks upon a business, it does so not in its sovereign capacity, but as a legal person, subject to the same rights and liabilities as any other person. In effect, therefore, he contended that the State is a person within the meaning of section 386 of the Act; that the doctrine of immunity of States from the operation of its laws cannot be invoked after the advent of the Constitution, and, alternatively, that even if the immunity is available to the State as a sovereign power, it is not available to the State when it embarked upon a commercial undertaking and that. in any case, the State was bound by the law by applying the rule of necessary implication from the provisions of the Act. In this case it is manifest that it is the Government of West Bengal which is sought to be prosecuted 22 170 through one of its officers. The prosecution is not against a named person, but against the Director of a named Department of the Government. The person who was the Director of the Department at the relevant date, that is to say, in the year 1951 52 may not be the same person who answered that description on the date the prosecution was launched. In essence, therefore, it is the Government of West Bengal which has to answer the charge levelled by the respondent, the Corporation of Calcutta. Whether a prosecution against such an indeterminate person would or would not lie is a matter which has not been raised and, therefore, need not be discussed. The question most canvassed before us in whether the penal section invoked in this case applies to Government. It has been contended, and in our opinion rightly, that the provisions of the penal section neither by express terms nor by necessary implication are meant to be applied to Government. The decision of the Judicial Committee 'of the Privy Council(1), if it is good law even now, completely covers this case, but the decision of the High Court, now under examination, has taken the view that the earlier decision of the Division Bench of the Madras High Court (2 ) has laid down the correct law, and not the Privy Council decision. We have, therefore, to decide which of the two decisions has taken the correct view of the legal position as it obtained on the day the prosecution was launched. It is well established that the common law of England is that the King 's prerogative is illustrated by the rule that the Sovereign is not necessarily bound by a statutory law which binds the subject. This is further enforced by the rule that the King is not bound by a statute unless he is expressly named or unless he is bound by necessary implication or unless the statute, being for the public good, it would be absurd to exclude the King from it. Blackstone (Commentaries, Vol. I, 261 262) accurately summed up the legal position as follows: "The king is not bound by any act of Parliament, unless he be named therein by special and (1) (1946) L.R. 73 I.A. 271. (2) Mad. 457. 171 particular words. The most general words that can be devised. affect not him in the least, if they may tend to restrain or diminish any of his rights or interests. For it would be of most mischievous consequence to the public, if the strength of the executive power were liable to be curtailed without its own express consent by constructions and implications of the subject. Yet, when an act of Parliament is expressly made for the preservation of public rights and the suppression of public wrongs, and does not interfere with the established rights of the crown, it is said to be binding as well upon the king as upon the subject; and, likewise, the king may take the benefit of any particular act, though he be not specialty named." (Quoted at p. 355 of Holdsworth, A History of English Law, Vol. The King 's prerogative is thus created and limited by common law and the sovereign can claim no prerogative, except such as the law allows. (See Halsbury 's Laws of England, Vol. 7, Third Edition, para. 464, at p. 22 1). The prerogative of the Crown in respect of property is thus stated in the same volume of Halsbury 's Laws of England, para. 980, at p. 465: "The Crown not being bound by any statute whereby any prerogative right, title, or interest belonging to it may be divested or abridged, unless expressly named or bound by clear implication, property owned, and occupied by the Crown is exempt from taxation unless rendered liable either by express words or necessary implication. Moreover, an express exemption of particular classes of Crown property in a statute is not in itself sufficient to raise the implication that such property only is exempt, and that other property not falling within the exception is bound, such clauses being inserted merely ex majore cautela. " That was the law applicable to India also, as authoritatively laid down by the Privy Council in the case referred to above. That decision was rightly followed by the Calcutta High Court as stated above. That would be the legal position until the advent of the Constitution. 172 The question naturally arises: whether the Constitution has made any change in that position ? There are no words in the Constitution which can be cited in support of the proposition that the position has changed after the republican form of Government has been adumbrated by our Constitution. It was argued on behalf of the respondent that the existence of such a prerogative is negatived by the very form of our new set up, that is to say, it was contended that the republican form of Government is wholly inconsistent with the existence of such a prerogative. In our opinion, there is no warrant for such a contention. The immunity of Government from the operation of certain statutes, and particularly statutes creating offences, is based upon the fundamental concept that the Government or its officers cannot be a party to committing a crime analogous to the I prerogative of perfection ' that the King can do no wrong. Whatever may have been the historical reason of the rule, it has been adopted in our country on grounds of public policy as a rule of interpretation of statutes. That this rule is not peculiar or confined to a monarchical form of Government is illustrated by the decision of the Supreme Court of U. section A. in the case of United States of America vs United Mine Workers of America (1), where it is laid down that restrictions on the issue of injunctions in labour disputes contained in certain statutes do not apply to the United States Government as an employer or to relations between the Government and its employees and that statutes in general terms imposing certain restrictions or divesting certain privileges will not be applied to the sovereign without express words to that effect. Similarly, in the case of United States of America vs Reginald P. Wittek (2), the question arose whether the District of Columbia Emergency Rent Act applied to government owned defence housing or to government owned low rent housing in the District, and it was ruled by the Supreme Court, reversing the decision of the Municipal Court of Appeals, that the statute in question did not apply to the United States Government (1) ; (2) ; 173 which was not a " landlord " within the meaning of the Act. The decision was based on the rule that a general statute imposing restrictions does not impose them upon the Government itself without a clear expression or implication to that effect. Another illustration of the rule is to be found in the case of Jess Larson vs Domestic and Foreign Commerce Corporation (1). In that case a suit by a citizen, in effect, against the Government (War Assets Administration) for an injunction was dismissed by the District Court on the ground that the Court did not have jurisdiction, because the suit was one against the United States. The Supreme Court, by majority, held that the suit as against the United States must fail on the ground that according to the laws of the country the sovereign enjoyed an immunity which was not enjoyed by the citizens. The case of Roberts vs Ahern (2) is another illustration of the same rule. It was held by the High Court of Australia in that case that the Executive Government of the Commonwealth or of a State is not bound by a statute unless the intention that it shall be so bound is apparent. On the other hand, article 372 of the Constitution has specifically provided that subject to the other provisions of the Constitution all the laws in force in this country immediately before the commencement of the Constitution shall continue in force until altered or repealed or amended by a competent Legislature or by other competent authority. The expression " law in force " has been used in a very comprehensive sense as would appear from the provisions of sub cls. (a) and (b) of cl. (3)of article 13 of the Constitution. If we compare the provisions of article 366(10) which defines " existing law " which has reference to law made by a legislative agency in contradistinction to " laws in force " which includes not only statutory law, but also custom or usage having the force of law, it must be interpreted as including the common law of England which was adopted as the law of this country before the Constitution came into force. It is thus clear that far from (1) ; : ; (2) (1904) I. C.L.R. 406. 174 the Constitution making any change in the legal position, it has clearly indicated that the laws in force continue to have validity, even in the new set up, except in so far as they come in conflict with the express provisions of the Constitution. No such provision has been brought to our notice. That being so, we are definitely of the opinion that the rule of interpretation of statutes that the State is not bound by a statute, unless it is so provided in express terms or by necessary implication, is still good law. But Mr. Chatterjee further contended, alternatively, that even if it were held that the Government as a sovereign power may have the benefit of the immunity claimed, it is not entitled to that immunity when it embarks upon a business and, in that capacity, becomes subject to the penal provisions of the statute equally with other citizens. This question was not raised below and has not been gone into by the High Court, nor is it clear on the record, as it stands, that the Food Department of the Government of West Bengal, which undertook rationing and distribution of food on a rational basis had embarked upon any trade or business. In the absence of any indication to the contrary, apparently this Department of the Government was discharging the elementary duty of a sovereign to ensure proper and equitable distribution of available food stuffs with a view to maintaining peace and good Government. Therefore, the alternative argument suggested by Mr. Chatterjee has no foundation in fact. It only remains to consider the other alternative argument that even if the State has not been bound by the penal section in the statute in question in express terms, it must be deemed to be bound by it by necessary implication. But no specific provisions of the statute in question have been brought to our notice which could lend any support to this alternative argument. It has not been shown to us that if the section which was sought to be applied against the Government were held not expressly to apply to Government, the law will lose any of its efficacy, or that its working will be hampered in any way. It must, therefore, be 175 held that there is no substance in this contention either. The appeal is accordingly allowed, the judgment under appeal set aside and the acquittal of the appellant confirmed. SARKAR J. The appellant is an officer of the Government of West Bengal. He was prosecuted before a Municipal Magistrate of Calcutta for storing rice in certain premises without obtaining a licence for that purpose from the respondent, the Corporation of Calcutta, as required by section 386 of the Calcutta Municipal Act, 1923. That was an Act passed by the legislature of the former Province of Bengal and may, for the present purpose, be taken to have been passed by the legislature of the State of West Bengal. In storing the rice the appellant had acted in his official capacity and for carrying out the West Bengal Government 's rationing scheme. The Magistrate acquitted the appellant holding that the Act did not bind the Government as it was neither expressly nor by necessary implication made bound, and so, the appellant who had been prosecuted as representing the Government would not be liable for non compliance with its provisions. On revision the High Court at Calcutta held that the English rule that a statute did not bind the Crown unless expressly or by necessary implication made bound, did not apply to Indian statutes and so the Government would be liable for breach of the provisions of the Calcutta Municipal Act. In this view of the matter, the High Court set aside the order of acquittal and sent the case back to the Magistrate for disposal on the merits. This appeal has been taken from the order of the High Court with special leave granted by this Court. The main question is whether the English rule that The Crown is not bound by the provisions of any statute unless it is directly or by necessary implication referred to " applies to India. It is said that the rule is based on the English law of Crown prerogatives and has no application to India since the promulgation of our Constitution as we have now a republican 176 form of government where no question of royal prerogatives can arise. It is pointed out that the prosecution was in this case started since the Constitution came into force and whatever may have been the position earlier, the Government can no longer take shelter under the English rule. I think the rule applies to India even after the Constitution. It seems to me that the rule as applied in modern times, is really a rule of construction of statutes and is not dependent on royal prerogatives. This is the view that appears to have been taken in all recent authorities, to some of which I wish now to refer. In Craies on Statutes (5th Ed.) it is stated at p. 392 that " The rule is analogous, if not equivalent, to the rule already stated that the common law is not presumed to be altered by statute ". The rule, therefore, is based on the presumed intention of the legislature and is, hence, a rule of construction of statutes. Then I find it stated in Attorney General vs Donaldson (1) that " It is a well established rule, generally speaking, in the construction of Acts of Parliament, that the King is not included unless there are words to that effect; for it is inferred prima facie that the law made by the Crown with the assent of the Lords and Commons, is made for subjects and not for the Crown". Again in Comber V. Justices of Berks (2) it was said in reference to this rule, " In Rex vs Cook, 3 T.R. 519, the general principle as to the construction of statutes imposing charges as containing an exemption of the Crown was laid down ". In the Australian case of Roberts vs Ahern (3), it was said, "This rule has commonly been based on the Royal prerogative. Perhaps, however, having regard to modern developments of constitutional law, a more satisfactory basis is to be found in the words of Alderson, B." The words referred to are what I have already set out from Attorney General vs Donaldson (1). In America too this rule has been applied as a rule (1) ; , 123; ; (2) ; , 65. (3) (1904) 1.C.L.R. 406, 417. 177 of construction though there is no King there but the government is of the republican form. So in United States vs United Mine Workers of America (1) it was observed, " There is an old and well known rule that statutes which in general terms divest pre existing rights or privileges will not be applied to the sovereign without express words to that effect. It has been stated, in cases in which there were extraneous and affirmative reasons for believing that the sovereign should also be deemed subject to a restrictive statute, that this rule was a rule of construction only ". Again in reference to the same rule it was said in United States V. State of California (2). " The presumption is an aid to consistent construction of statutes of the enacting sovereign when their purpose is in doubt ". In our country also in Bell vs The Municipal Commissioners for the City of Madras(3), a case on which much reliance has been placed by the respondent, it was said after referring to various English cases dealing with the rule, " This emphatic statement of the rule being founded upon general principles of construction is undoubtedly applicable as much to Indian enactments as to Colonial or Imperial Statutes ". It was also said at the same page, " The rule of construc tion above adverted to cannot itself be regarded as a prerogative of the Crown ". Then I find that in England the rule protects from the operation of a statute not only what may strictly be called Crown prerogatives, or whatever is nowadays left of them, but all the Crown 's rights, title and interest: see Halsbury 's Laws of England (3rd Ed.) Vol. VII, p. 465. In volume XXXI of the Second Edition of the same treatise it is stated with reference to the rule that, " The Crown for this purpose means not only the King personally, but also the officers of State and servants of the Crown when acting within the scope of their authority on behalf of the Crown in the discharge of executive duties ". In Mersey Docka (1) ; , 272 ; ; , 902. (2) ; , 186; ; , 574. (3) Mad. 457, 485. 23 178 vs Cameron(1), Lord Cranworth after referring to the various instances where the rule had been applied to exempt buildings occupied for purposes of the government from rates and other impositions, said, " These decisions however have all gone on the ground more or less sound, that these might all be treated as buildings occupied by the servants of the Crown, and for the Crown, extending in some instances the shield of the Crown to what might more fitly be described as the public government of the country ". Again in Coomber vs Justices of Berks (2), Lord Blackburn after referring to certain observations of Lord Westbury in the Mersey Docks case(1) said, "He there says that the public purposes to make an exemption " must be such as are required and created by the government of the country, and are, therefore, to be deemed part of the use and service of the Crown;" and in Greig vs University of Edinburgh (3) be more clearly shews what was his view by using this language, "property occupied by the servants of the Crown, and (according to the theory of the Constitution) property occupied for the purposes of the administration of the government of the country, become exempt from liability to the poor rate ". " In this case it was held that lands with buildings constructed thereon and used by county justices, and for police purposes were not liable to income tax. In Cooper vs Hawkins (4) it was held that an engine driver employed by the Crown who drove a steam locomotive on Crown service at a speed exceeding the limit specified by regulations made under a statute, was not liable as in the absence of express words, the statute did not bind the Crown. Lastly, I refer to Roberts vs Ahern (5) where a person acting under the orders of the Government of the Commonwealth of Australia had been prosecuted for having carted away nightsoil from a Post Office without a licence from, and without having given any security to, the local authority as was required by an enactment of the State of Victoria. It was held that he was not liable to prosecution because, (1) ; , 508; ; (2) ; , 65. (3) (1868) L.R.I H.L, (SC.)348. (4) (5) ; , 417. 179 " The modern sense of the rule, at any rate, is that the Executive Government of the State is not bound by Statutes unless that intention is apparent: " p. 418. It was also said that " The doctrine is well settled in this sense in the United States of America: " (p. 418). It is unnecessary to multiply instances where acts of the executive government have received the protection of the rule. All this would seem to put it beyond doubt, that whatever its origin, the rule has long been regarded only as a rule of construction. It has been widely used to exempt executive governments from the operation of statutes quite apart from protecting prerogative rights of the British Crown strictly so called. It has been held reasonable to presume that the legislature intended that executive governments are not to be bound by statutes unless made bound expressly or by necessary implication. It would be equally reason. able to do so in our country even under the present set up for the presumption has all along been raised in the past and especially as the applicability of the rule can no longer be made to depend on the prevailing form of government. In countries with a republican form of government, the Sovereign would be the State, and its acts, which can only be the acts of its executive limb would be, under the rule exempt from the operation of its statutes. Whether the royal prerogative as understood in England, exists in the present day India is not a question that can arise in applying what is a pure rule of construction of statutes. Further it is quite clear that the rule has been applied by courts in India in the construction of Indian statutes all along at any rate upto the promulgation of our Constitution, except in the solitary instance of Bell 's case (1) earlier referred to. It would therefore be right to hold that the legislatures in our country have proceeded on the basis that the rule would govern the enactments passed by them. That being so and remembering that the rule is one of construction, there would be no reason to deny its application to Indian statutes after the Constitution. The Dew republican (1) Mad. 180 form of government adopted by us would not warrant a departure from the long established rule of construction. It was then said that the course of legislation in India would indicate that it was not intended even before the Constitution that the rule would apply to Indian statutes. This contention was based on Bell 's case(1). That case seems to me to have proceeded on a basis not very sound. On an examination of certain Indian statutes it was said, " It is noteworthy that as a general rule government is specially excluded whenever the Legislature considered that certain provisions of an enactment should not bind the Government ". From this the conclusion was drawn that "According to the uniform course of Indian legislation, statutes imposing duties or taxes bind Government as much as its subjects, unless the very nature of the duty or tax is such as to be inapplicable to the Government ". It seems to me that this decision overlooks the uniform course of decisions of Indian Courts applying the rule in the construction of Indian statutes. The legislature must be deemed to have known of these decisions and if they wanted to depart from their effect they would have passed a statute bringing about the desired result. No such statute was ever passed. It is wellknown that in these circumstances the legislatures must be taken to have proceeded on the basis that the decisions were correct and the rule was to be applied to the statutes passed by them. That being so, an examination of the course of Indian legislation would be irrelevant. The cases where the Government was expressly excluded must be taken to be instances of exemptions ex majori cautila: see Hornsey Urban Council vs Hennel(2). Furthermore, it seems to me that a comparison of the number of statutes where the Government had been specially excluded from their operation with the number where the statutes are silent on the subject, is, at best, a very unsafe guide for deciding whether the rule should be applied to Indian enactments. I therefore dissent from the view expressed in Bell 's case(1), that the rule does not apply in India. (1) Mad. (2) 181 Now it seems to me that in storing the rice in the present case, the Government of West Bengal was performing one of its governmental functions. It was storing rice for purposes of rationing, that is, making food stuff available to citizens in time of scarcity. That such activity is a part of the government 's duty is unquestionable. The act for which the appellant was prosecuted was, therefore, an act of the West Bengal Government done in discharge of its ordinary duties as the government and the rule would prevent the Act from applying to make the Government liable for a breach of it. Then it is said that the Act binds the Government by necessary implication. In support of this argument we were referred to certain provisions of the Act which expressly exempted the Government from their operation. I am unable to agree that this raises the necessary implication. It has been said in Halsbury 's Laws of England (2nd Ed.) Vol. XXXI at p. 523 that " A general prerogative of the Crown is not deemed to have been abandoned by implication by reason of the specific exemption in a statute of any class of the servants of the Crown from acting in compliance with the prerogative, nor by reason of the :fact that the Crown has foregone or curtailed its rights in some other direction in another part of the statute " ; see also Hornsey Urban Council case (1) earlier referred to. These observations would show the unsoundness of the contention raised by the respondent. Lastly, it is said that the purpose of the Act was to prevent adulteration of food stuffs and this object would be wholly defeated unless the Government was bound by it. It is not in dispute that if this were so, that might be a ground for holding that the Act bound the Government. On this aspect of the case reference may be made to Province of Bombay vs Municipal Corporation of Bombay (2). I am however unable to hold that the purpose of the Act would be wholly or at all defeated if the Government were not bound by it. It seems to me that section 386 of the Act, the breach of which is complained in this case, is concerned with (1) (2) (1946) L.R. 73 I.A. 271. 182 the use of premises and not with the prevention of adulteration of food stuffs as was contended for the respondent. The provisions with regard to adulteration of food stuffs are contained in a, different part of the statute. There is nothing to show that the purpose of the Act would wholly be defeated if some premises were used contrary to the terms of the Act. I would for these reasons hold that the Act did not bind the Government and the prosecution of the appellant for an act done in the discharge of his duties as an officer of the Government cannot be maintained. This appeal should therefore be allowed and the order of the High Court set aside and that of the Magistrate restored. WANCHOO J. I have had the advantage of reading the judgments prepared by my Lord the Chief Justice and my brother Sarkar J. I agree with their conclusion but my reasons are different. I therefore proceed to state my reasons for coming to the same conclusion. The facts have already been stated in the judgment of my Lord the Chief Justice and I will not therefore repeat them. Suffice it to say that the Corporation of Calcutta initiated this prosecution, in substance, of the State of West Bengal through its Director of Rationing and Distribution under section 488 of the Calcutta Municipal Act, No. 111 of 1923, (now equivalent to section 537 of the Calcutta Municipal Act, No. XXXIII of 1951), for using or permitting to be used certain premises for the purpose of storing rice, etc. under the provisions of the Bengal Rationing Order, 1943, without a licence under section 386 of Act III of 1923, (now equivalent to section 437 of Act XXXIII of 1951). The State did not deny the facts; but it was contended on its behalf that the prosecution was not maintainable in law. The Magistrate held that the provisions of section 386 of the 1923 Act did not apply to the State either expressly or by necessary implication and therefore passed an order of acquittal. The Corporation took the matter in revision to the High Court, which distinguished an earlier decision of the High Court relied upon by the Magistrate and held that after India became a 183 democratic republic from January 26, 1950, the High Court was not bound by the decision of the Privy Council in a similar matter reported in Province of Bombay vs Municipal Corporation of the City of Bombay (1) and that the rule of construction based on the royal prerogative that the Crown was not bound by a statute unless it was expressly named therein or at any rate could be held to be bound by necessary implication, did not apply in India after January 26, 1950, and that the true rule of construction on which the Indian legislatures acted was that the State would be bound unless excluded either expressly or by necessary implication. The High Court therefore held that section 488 of the Act of 1923 read with section 386 bound the State and set aside the order of acquittal and sent the case back to the Magistrate for disposal according to law. The most important question thus is, whether the rule of construction derived from the royal prerogative in England can still be said to apply in India after January 26, 1950. If this rule of construction based on the royal prerogative does not apply, it would necessarily follow that the ordinary rule of construction, namely, that the State would also be bound by the law like anybody else unless it is expressly excluded or excluded by necessary implication, would apply. Now the rule of construction based on the royal prerogative is a survival from the medieval theory of divine right of Kings and the conception that the sovereign was absolutely perfect, with the result that the common law of England evolved the maxim that " the King can do no wrong ". In course of time however the royal prerogative in England was held to have been created and limited by the common law and the sovereign could claim no prerogatives, except such as the law allowed nor such as were contrary to Magna Carta or any other statute or to the liberties of the subject. The courts also had jurisdiction to inquire into the existence or extent of any alleged prerogative. If any prerogative was disputed, they had to decide the question whether or not it existed in the same way as they decided any other question of law. If a, (1) (1946) L.R. 73 I.A. 271. 184 prerogative was clearly established, they could take the same judicial notice of it as they took of any other rule of law: (see Halsbury 's Laws of England, 3rd Edition, Vol. 7, p. 221, para. 464). The question of royal prerogative was also considered in Attorney General vs De Keyser 's Royal Hotel Limited(1). It was held there in that even where there was prerogative it could be curtailed by a statute, if the statute dealt with something which before it could be affected by the prerogative, inasmuch as the Crown was a party to every Act of Parliament. Thus in modern times, the royal prerogative is the residue of discretionary or arbitrary authority which at any time is legally left in the hands of the Crown and is recognised under the common law of England. Two things are clear from this modern conception of royal prerogative, namely, (1) that there must be a Crown or King to whom the royal prerogative attaches, and (2) that the prerogative must be part of the common law of England. Both these conditions existed when the Privy Council decision in Province of Bombay vs Municipal Corporation of the City of Bombay (2) was given in October 1946; the King was still there and the Privy Council held that the English common law rule of construction applied to Indian legislation as much as to English statutes. I may mention however that in England also the rule has come in for criticism by writers of books on law. Glanville L. Williams in his treatise on " Crown Proceedings " says at p. 53: " The rule originated in the Middle Ages, when it perhaps had some justification. Its survival, however, is due to little but the Vis inertiae." Again at 54, the author says " With the great extension in the activities of the State and the number of servants employed by it, and with the modern idea, expressed in the Crown Proceedings Act," (compare in this connection article 300 of our Constitution), " that the State should be accountable in wide measure to the law, the presumption should be that a statute binds the Crown rather than it does not." (1) ; (2) (1946) L.R. 73 I.A. 271. 185 After January 26, 1950, when our country became a democratic republic and the King ceased to exist, it is rather otiose to talk of the royal prerogative. It is also well to remember that the English common law as such never applied to India, except in the territories covered by the original side of the three Chartered High Courts, namely, Calcutta, Bombay and Madras, (see Kahirodebihari Datta vs Mangobinda Panda(1) ) though sometimes rules of English common law were applied by Indian courts on grounds of justice, equity and good conscience. It seems to me therefore that to apply to Indian statutes a construction based on the royal prerogative as known to the common law of England now when there is no Crown in this country and when the common law of England was generally not even applicable, (except in a very small part), would be doing violence to the ordinary principle of construction of statutes, namely, that only those are not bound by a statute who are either expressly exempted or must be held to be exempt by necessary implication. In our country the Rule of Law prevails and our Constitution has guaranteed it by the provisions contained in Pt. III thereof as well as by other provisions in other Parts: (see Virendra Singh and others vs The State of Uttar Pradesh (2) ). It is to my mind inherent in the conception of the Rule of Law that the State, no less than its citizens and others, is bound by the laws of the land. When the King as the embodiment of all power executive, legislative and judicial has disappeared and in our republican Constitution, sovereign power has been distributed among various organs created thereby, it seems to me that there is neither justification nor necessity for continuing the rule of construction based on the royal prerogative. It is said that though the King has gone, sovereignty still exists and therefore what was the prerogative of the King has become the prerogative of the sovereign. There is to my mind a misconception here. It is true that sovereignty must exist under our Constitution (1) Cal. 841, 857. (2) (1955) 1.S.C.R. 415. 186 but there is no sovereign as such now. In England, however, the King is synonymous with the sovereign and so arose the royal prerogative. But in our country it would be impossible now to point to one person or institution and to say that he or it is the sovereign under the Constitution. A further question may arise, if one is in search of a sovereign now, whether the State Government with which one is concerned here is sovereign in the same sense as the English King (though it may have plenary powers under the limits .set under our Constitution). This to my mind is another reason why there being no King or sovereign as such now in our country, the rule of construction based on the royal prerogative can no longer be invoked. Reliance was placed in this connection on certain cases from Australia and Canada and also from the United States of America. So far as Australia and Canada are concerned, the cases are not of much help for the Crown exists there still. Besides in Canada and in most of the provinces of Canada and in New Zealand provisions have been specifically introduced in the Interpretation Acts laying down that no provision or enactment in any Act shall affect, in any manner whatsoever, the rights of His Majesty, his heirs or successors, unless it is expressly stated 'therein that His Majesty shall be bound thereby: (see Street on Governmental Liability ", at p. 152). In the United States also, it is doubtful if the royal prerogative as such is relied on as the basis of certain principles which are in force there. In United States of America vs United Mine Workers of America, Etc. (1), the Supreme Court did say that there was an old and well known rule that statutes which in general terms divested pre existing rights and privileges would not be applied to the sovereign without express words to that effect. But there was no discussion of the royal prerogative as such in the judgment and the rule was called a well established rule of construction only. Besides the Court went on to consider the words of the statutes under consideration and held that on a proper construction of them the United States was not bound. (1) ; 187 In United States of America vs Reginald P. Wittek (1), the Supreme Court did say that a general statute imposing restrictions does not impose them upon the government itself without a clear expression or implication to that effect; but this decision was based mainly on the terms of the State statute there under consideration and the surrounding circumstances and legislative history of the statute concerned. Another case in the same volume is Jess Larson vs Domestic and Foreign Commerce Corporation (2) at p. 1628, where a suit was brought against an officer of the United States and it was held that it was in substance a suit against the sovereign government over which the court in the absence of consent had no jurisdiction. There is no discussion in this case of the royal prerogative having continued in the United States and the decision seems to have turned on some law of that country which provides that a suit against the Government could not be tried in a court in the absence of consent. As against these decisions I may refer to H. Snowden Marshall vs People of the State of New York (3) to show that royal prerogative as such is losing ground in the United States, if nothing more. When dealing with the priority of a State over the unsecured creditors in payment of debts out of the assets of the debtor, the Supreme Court held that whether the priority was a prerogative right or merely a right of administration was a matter of local law and the decision of the highest court of the State as to the existence of the right and its incidents would be accepted by the Federal Supreme Court as conclusive. Again in Guaranty Trust Company of New York vs United States of America (4), the Supreme Court held that the immunity of the sovereign from the operation of statutes of limitation, although originally a matter of royal prerogative, was now based upon the public policy of protecting the citizens of the State from the loss of their public rights and revenues through the (1) L. Ed. 1406. (2) L. Ed. 1628. (3) ; L. Ed. 315. (4) ; 188 negligence of the officers of the State, showing that some of those immunities which in England were claimed as royal prerogatives, though preserved in the United States, were so preserved for other reasons. Besides it must not be forgotten that though the Crown no longer remained in the United, States after the attainment of independence the American colonies out of which the United States arose were colonised by English settlers who carried the common law of England with them to America with the result that the first Constitution of some of the States (like New York) after independence provided that the common law of England which together with the statutes constituted the law of the colony before independence should be and continue to be the law of the State subject to such alterations as its legislature might thereafter make: (see H. Snowden Marshall vs People, of the State of New York( '), at p. 317). That may account for the United States recognising some of those prerogative rights which were in force in England; though even so, the basis for such recognition is now more the law or public policy than any royal prerogative as such. The position in our country was somewhat different. We had the King but the common law of England did not, as already indicated, apply as a rule in this country. Now that the King has also gone, there seems to be no reason for continuing the royal prerogatives after January 26, 1950. Further it appears to me that the royal prerogative where it deals with substantive rights of the Crown as against its subjects, as, for example, the priority of Crown debts over debts of the same nature owing to the subject, stands on a different footing from the royal prerogative put forward in the present case, which is really no more than a rule of construction of statutes passed by Parliament. Where, for example, a royal prerogative dealing with a substantive right has been accepted by the, Courts in India as applicable here also, it becomes a law in force which will continue in force under article 372(1) of the Constitution. But (1) ; ; 189 where the royal prerogative is merely a rule of construction of statutes based on the existence of the Crown in England and for historical reasons, I fail to see why in a democratic republic, the courts should not follow the ordinary principle of construction that no one is exempt from the operation of a statute unless the statute expressly grants the exemption or the exemption arises by necessary implication. On the whole therefore I am of opinion that the proper rule of construction which should now be applied, at any rate after January 26, 1950, is that the State in India whether in the Centre or in the States is bound by the law unless there is an express exemption in favour of the State or an exemption can be inferred by necessary implication. The view taken by the Calcutta High Court in this connection should be accepted and the view expressed by the Privy Council in Province of Bombay vs Municipal Corporation of the City of Bombay (1) should no longer be accepted as the rule for construction of statutes passed by Indian legislatures. Let me then come to the question whether on the view I have taken of the rule of construction, the prosecution in this case can be allowed to continue. There is nothing in the Act of 1923 or in the Act of 1951 exempting the State specifically from any of the provisions of the Calcutta Municipal Act. In this case the State is being prosecuted under section 488 (or section 537 now) and that section provides for fine for breach of section 386 (or section 437 now). The provision is a penal provision ' and immediately a question arises whether the State as such, apart from its individual officers as natural persons, is liable to prosecution under the criminal law or has to be exempted from the operation of the provisions of criminal statutes by necessary implication. A criminal proceeding generally ends with punishment which may be imprisonment, or fine, or both. Now it does not require any elaborate reason to realise that the State as such cannot be sentenced to imprisonment because there is no way of (1) (1946) L.R. 73 I.A. 271. 190 keeping it in prison; therefore, by necessary implication, the State is exempt from all penal statutes and provisions providing for sentences of imprisonment or death. Then come those penal provisions which impose fines, like the present case, and the question is whether in such a case also the State must be deemed by necessary implication to be exempt from the penal provision. Generally speaking fines when inflicted by courts are realised by the State and go to the coffers of the State. In effect, therefore if the State as such is to be prosecuted under a penal statute imposing fine the result is that the Court will sentence the State to fine which will go to the State itself. It is obvious that if such is the result of a prosecution, namely that the accused gets the fine, the intention could never be that such a prosecution should be launched. Therefore where the penalty is fine and the fine goes to the State, it must be held that by necessary implication the law does not intend the State to be prosecuted for such an offence. In the present case I find that under section 81 of the Act of 1923 (or the corres ponding section 115 of the Act of 1951) the fines imposed by the Magistrate will not go to the Corporation but in the usual way to the State. Under the circumstances whatever other methods may be possible for enforcing the provisions of section 386 (or section 437 now) against the State it cannot be intended to be enforced by prosecution resulting in fine which would go to the State itself. In these circumstances it must be held that by necessary implication the State is exempt from the penal provisions contained in section 488 (now section 537). I would therefore allow the appeal, set aside the judgment of the High Court and restore the order of acquittal by the Magistrate. Appeal allowed. [/INST] The appellant was using certain premises in Calcutta for storing rice flour, etc. without taking out any license under section 386(1)(a) of the Calcutta Municipal Act, 1923. The respondent filed a complaint against the appellant for a contravention of section 386(1)(a). The trial Magistrate acquitted the appellant holding that the provisions of section 386(1)(a), neither in terms nor by necessary implication bound the Government whom the appellant represented. In revision, the High Court held that the Government was bound by a statute unless the legislature excluded it expressly or by necessary implication. The High Court declined to follow the decision of the Privy Council in L. R. 73 1. A. 271 that the general principle applicable in England applied to Indian legislation also. Held, that the State was not bound by the provisions of section 386(1)(a) of the Calcutta Municipal Act, 1923, and that the appellant was not liable to be prosecuted for a contravention of this section. Per Sinha, C. J., Imam and Shah, jj. The law applicable to India before the Constitution was as authoritatively laid down by the Privy Council in L. R. 73 I. A. 271. The Constitution has not made any change in the legal position. On the other hand it has clearly indicated that the laws in force before January 26, 1950, shall continue to have validity even in the new set up except in so far as they were in conflict with the express provisions of the Constitution. The rule of interpretation of statutes that the State is not bound by a statute unless it is so provided in express terms or by necessary implication, is still good law. Province of Bombay vs Municipal Corporation of the City of Bombay, (1946) L.R. 73 I. A. 271, applied. Bell vs The Municipal Commissioners for the City of Madras, Mad. 457, disapproved. The Corporation of Calcutta vs Sub Postmaster, Dharmatala Post Office, , United States of America vs 159 United Mine Workers of America; , , United States of America vs Reginald P. Wittek, (1949) 93 L. Ed. 1406, Less Larson vs Domestic and Foreign Commerce Corporation, ; and Roberts vs Abern, (1904) I C. L. R. 406, referred to. There is nothing in the Act to indicate that the State was bound by it by necessary implication, nor is there anything in it to show that if section 386 were not held to apply to the State the law would lose it efficacy or that its working would be hampered in any way. Per Sarkar, J. The rule that the crown is not bound by the provisions of any statute unless it is directly or by necessary implication referred to is really a rule of construction of statutes and is not dependent on royal prerogatives. It has been applied by courts in India all along before the Constitution and there is no reason why it should not be applied to the interpretation of statutes after the Constitution. Attorney General vs Donaldson, ; , Coomber V ' justices of Berks; , , Roberts vs Ahern, (1904) I C.L.R. 406, United States vs United Mine Workers of America; , , United States vs The State of California, ; Bell vs The Municipal Commissioners for the City of Madras, Mad. 457, Mersey Docks vs Cameron, ; and Coomber vs Justice of Berks, , Greig vs University of Edinburgh, (1868) L. R. I H. L. (SC.) 348 and Cooper vs Hawkin section , referred to. Section 386(1)(a) does not bind the Government by necessary implication; the fact that certain provisions of the Act expressly exempt the Government does not raise the necessary implication. Nor would the purposes of the Act be defeated if the Government were not bound by it. Hornsey Urban Council vs Hennel, and Province of Bombay vs Municipal Corporation, Bombay, (1946) L.R. 73 1. A. 271, relied on. Per Wanchoo, J. The rule of construction which is based on the royal prerogative as known to the common law of England cannot be applied to India now when there is no crown in India and when the Common law of England is not applicable. The, proper rule of construction which should be applied now is that the state is bound by a statute unless it is exempted expressly or by necessasy implication. Province of Bombay vs Municipal Corporation of the City of Bombay, (1946) L. R. 73 1. A. 271, not applied. United States of America vs United Mine Workers of America, Etc., , United States of America vs Reginald P. Wittek; , , Jess Larson vs Domestic and Foreign 160 Commerce Corporation; , , H. Snowden Marshall vs People of the State of New York, (192O) 65 L. Ed. 315 and Guaranty Trust Company of New York vs United States of America, ; , referred to. The Calcutta Municipal Act, 1923, does not specifically exempt the State from its provisions, As the State cannot be sentenced to imprisonment it is exempt by necessary implication from all penal provisions providing for sentences of imprisonment or death. Further, where a statute provides for a fine and the fine goes to the State, the State is exempted from the provisions by necessary implication as it could never be the intention that such a prosecution should be launched. The prosecution in the present case is under section 488 which provides for a fine for a breach of section 386, and the fine when imposed and realised goes to the State. Consequently, the State is exempt from the penal provisions of section 488 of the Act by necessary implication. </s>

<s>[INST] Summarize the following judgement: section 86, 147, and 155 of 1952) under article 32 of the Constitution for writs in the nature of habeas corpus. Petitioners in person in ,petitions Nos. 86, 147 and 157 of 1952. Rajani Patel for the petitioner in petition No. 155. M.C. Setalvad, Attorney General for India, (G. N. Joshi, with him) for the respondents. R. Ganapathi Iyer for the intervener (State of Hydera bad). May 26. The Judgment of the Court was delivered by BOSE J. This petition and three others, namely peti tions Nos. 147, 155 and 157 of 1952, raise issues regarding the vires and applicability to these cases of section 3 of the Preventive Detention (Amendment) Act, 1952. This judg ment is confined to those points and will govern these cases only in so far as they raise those points. The remaining points which do not touch these issues will be dealt with by another Bench. The only exception is a point raised in petition No. 155 of 1952 with which the other petitions are not concerned. We will deal with that separately. The present petition (No. 86 of 1952) was argued very ably and with commendable conciseness by the petitioner in person. The fact that he has not been able to persuade us to his view is not due to any defect in his presentation of the case. The petitioner was arrested on the 15th of November, 1951, and an order of detention under the Preventive Deten tion Act of 1950 was served on him the same day, and he was given the grounds of detention on the following day, the 16th. His case was placed before an Advisory Board and on the 8th of February, 1952, the Bombay Government "confirmed and continued" the detention under section 11 (1) of the Preventive Detention Act of 1950. This Act, as it originally stood, was due to expire on the 1st of April, 1951, but in that year an amending 686 Act was passed which, among other things, prolonged its life to the 1st of April, 1952. The order of detention in this case was passed under the Act of 1950 as amended by the ,Act of 1951. According to past decisions of this Court, the detention would have expired on the 1st of April, 1952, when the Act of 1950 as amended in 1951 would itself have expired. But a fresh Act was passed in 1952 (Act XXXIV of 1952), the Preventive Detention (Amendment) Act, 1952. The effect of this Act was to prolong the life of the Act of 1950 for a further six months, namely till the 1st of Octo ber, 1952. The question is whether that Act also prolonged the detention and whether it had the vires to do so. It was contended that the mere prolongation of the life of an Act does not, by reason of that alone, prolong the life of a detention which was due to expire when the Act under which it was made expired. Therefore, as the Act under which the present detention was made was due to expire on the 1st of ApriL, 1952, the mere prolongation of its life by the amending Act did not affect a prolongation of the detention. Accordingly, the petitioner should have been released on the 1st of April, 1952, and as there is no fresh order of detention he is entitled to immediate release. We need not express any opinion on that point because there is present in the amending Act something more than a mere prolongation of the life of the old one. There is section a which is in these terms: "Validity and duration of detention in certain cases Every detention order confirmed under section 11 of the principal Act and in force immediately before the commence ment of this Act shall have effect as if it had been con firmed under the provisions of the principal Act as amended by this Act; and accordingly, where the period of detention is either not specified in such detention order or specified (by whatever form of words) to be for the duration or until the expiry of the principal Act or until the 31st day of March, 1952, such detention order shall continue to 687 remain in force for so long as the principal Act is in force, but without prejudice to the power of the appropriate Government to revoke or modify it at any time. " It will be noticed that the concluding part of this section states that the detention order shall remain in force "for so long as the principal Act is in force." Sec tion 2 of the amending Act defines the "principal Act" to mean the Act of 1950. Therefore, it was argued, as the Act of 1950 was due to expire on the 1st of April, 1952, the present detention also came to an end on that date and so, in the absence of a fresh order of detention, the petition er 's detention after that date was illegal. This argument, though ingenious, is fallacious. The construction of an Act which has been amended is now governed by technical rules and we mast first be clear regarding the proper canons of construction. The rule is that when a subsequent Act amends an earlier one in such a way as to incorporate itself, or a part of itself, into the earlier, then the earlier Act must thereafter be read and construed (except where that would lead to a repugnancy, inconsistency or absurdity) as if the altered words had been written into the earlier Act with pen and ink and the old words scored out so that thereafter there is no need to refer to the amending Act at all. This is the rule in England:see Craies on Statute Law, 5th edition, page 207; it is the law in Amenca: see Crawford on Statutory Construc tion, page 110; and it is the law which the Privy Council applied to India in Keshoram Poddar vs Nundo Lal Mallick(1). Bearing this in mind it will be seen that the Act of 1950 remains the Act of 1950 all the way through even with its subsequent amendments. Therefore, the moment the Act of 1952 was passed and section 2 came into operation, the Act of 1950 meant the Act of 1950 as amended by section 2, that is to say, the Act of 1950 now due to expire on the 1st of October, 1952. (1)(1927) 54 I.A. 152 at 155. 688 Turning now to section 3, whose vires is questioned, and examining it clause by clause we first get these words: "Every detention order confirmed under section 11 of the principal Act and in force immediately before the commencement of this Act. " According to the rule of construction just examined, the words "principal Act" mean the Act of 1950 as amended by the Acts of 1951 and of 1952, 'that is to say, the Act of 1950 due to expire on the 1st of October, 1952. Incidental ly, in the particular context it could not mean the Act of 1950 as it stood in 1950 because no order confirmed under it as it then stood could have been alive "at the commencement of this Act", namely on the 15th of March, 1952. The section contin ues "shall have effect as if it had been confirmed under the provisions of the principal Act as amended ' by this Act. " The underlined words "as amended by this Act" were relied on to show that wherever the words "the principal Act" were referred to they meant the unamended original Act of 1950, otherwise these words would have been unnecessary. In our opinion, they were unnecessary in the sense that their absence would not have made any difference to the interpretation though it would have made the section harder to follow and understand. We say that for this reason. Without the underlined words the section paraphrased would read "Every detention order confirmed under the original Act shall have effect as if confirmed under its provisions. " If this were to be read literally it would lead to an absurdity, for if the order is actually confirmed under the original unamended Act it would be pointless to introduce a fiction and say that the order shall be deemed to be con firmed under that Act as unamended. But even apart from a strictly technical construction, the language of the section is accurate because, as we 689 have said, the rule is that an amended Act must be read as if the words of amendment had been written into the Act except where that would lead to an inconsistency, and this would be one of those cases unless the words are construed in a sensible and commonsense way. The draughtsman there fore had either to leave the words as they were, with an apparent inconsistency, or make his meaning clear by adding the words he did. But we do not think the addition made any difference to the result. We now turn to the second half of section 3, that is to say, to the words following the semi co]on. It is important to note here that this part is consequential on the first and merely explains the effect of the first half. It is also relevant to note that it deals with four different kinds of orders, different, that is to say, in the form of the words used though in the end they all come to the same thing. It deals with the following kinds of order: (1) an order in which the period of detention is not specified at all; in that event the detention would end at midnight on the night of the gist of March, 1952. It is clear that in this context the words "the principal Act" cannot mean the Act expiring on the 1st of October, 1952, because it envisages an order made before the Act of 1952 was in being and so on the date of its making the order could only refer to the Act then in being; (2) an order in which the period is stated to be "for the duration of the principal Act", that is to say, till the 31st of March, 1952 , (3) an order in which the period is specified to be until the expiry of the principal Act, which again brings us back to the 31st of March, 1952, as the last day of deten tion; (4) an order in which the period is specified to be till the 31st of March, 1952. In all these four cases the section says that the detention order shall "continue to remain in force, for so long as the principal Act is in force", that , is to say, till the 1st October, 1952. 690 That follows from the first part of the section because that is the meaning which the law directs shall be placed on these words unless the context otherwise directs and the context does not direct otherwise here. This part of the section is only explanatory. But we wish to found deeper than this. It is the duty of Courts to give effect to the meaning of an Act when the meaning can be fairly gathered from the words used, that is to say, if one construction will lead to an absurdity while another will give effect to what common sense would show was obviously intended the construction which would defeat the ends of the Act must be rejected even if the same words used in the same section, and even the same sentence, have to be construed differently. Indeed, the law goes so far as to require the Courts sometimes even to modify the grammatical and ordinary sense of the words if by doing so absurdity and inconsistency can be avoided. See the speech of Lord Wens leydale in Grey vs Pearson (1) quoted with approval by the Privy Council in Narayana Swami vs Emperor (2); also Salmon vs Duncombe(3). The rule is also set out in the text books: See Maxwell on the Interpretation of Statutes, 9th edition, page 236, and Craies on Statute Law, 5th edition, pages 89 to 93. The meaning of section 3 is quite plain and only desperate hair splitting can reduce it to an absurdity. Courts should not be astute to defeat the provisions of an Act whose meaning is, on the face of it, reasonably plain. Of course, this does not mean that an Act, or any part of it, can be recast. It must be possible to spell the meaning contended for out of the words actually used. We hold that there is no difficulty of construction. It was next argued that in any event the extended deten tion became a fresh detention (because of the Act of 1952) from the date the Act came into force, and reliance was placed upon the judgments of two of us, Mahajan and Das JJ. in section Krishnan vs The State of Madras(4). It is enough to say that was not the (1) r at 106. (3) 11 App. 627 at 634. (2) A.I.R. 1939 P.C. 47. (4) ; at 635 and 640. 691 decision of the Court in that case, and further, that the two Judges who held it was a fresh detention nevertheless considered that a fresh order with its concomitant fresh grounds and a fresh reference to the Advisory Board were not required; therefore, either way the petitioner must fail. Reference was made to the equality clause in article 14 of the Constitution but that argument is easily met because the classification which section 3 makes is reasonable. In one class it places all those whose cases have already been considered by the Advisory Board and in the other those whose cases have yet to go before it; also the law is fair, or at any rate as fair as detention laws can be, despite this distinction because power is left to the appropriate Government to revoke or modify these orders, or any of them, at any time. Substantially therefore there is no differenti ation. Article 14 was considered at length in The Slate of West Bengal vs Anwar Ali Sarkar (1), and according to the law laid down there, the Court must be satisfied on two points before it can strike at a law on the ground of unlawful discrimination. It must be satis fied (1) that the law in fact discriminates and (2) that such discrimination is not permissible on the principle of a rational classification made for the purposes of the legislation. The argument here was that section a discriminated against those detenus whose cases had been referred to the Advisory Board and whose detention was confirmed, on the strength of its report, under section 11 (1) before the amending Act of 1952 was passed. The reason given was that these detentions are automatically extended up to the 1st of October, 1952, by section 3 without further reference to an Advisory Board, whereas in other cases, that is to say, in the case of those who were detained before the amending Act but whose cases had not been referred at the date it came into force, and in the case of those detained after the (1)[1952] S.c.R.284 692 amending Act, the Advisory Board is called into play and individual attention is given to each case with the result that many of those detentions might not be for as long as six months. They might, for example, be only for one month or two. It was urged that this was discrimination of a kind which cannot be supported by any principle of permissible classification because classification into the above catego ries has no reasonable relation to the objects of the legis lation, such as security of the State, maintenance of public order and so forth. We are unable to accept this line of reasoning. To say that section. 3 automatically extends the detention of persons in the petitioner 's position to the 1st of October, 1952, and stops there, is only to make a partial statement of the effect of section 3 because the extension is subject to the power of the appropriate Government to revoke or modify it at any time. In other words, the automatic con tinuation of the detention till the 1st of October is not absolute and irrevocable but is made dependent on the power of the appropriate Government to revoke or modify it at its discretion under section 13 of the Act. The State may or may not continue the detention for the whole of the extended period. In both classes of cases the duration the deten tion within the overall limit of the life of the Act is left to the discretion of the State. The only difference is that in the one class of cases the discretion is exercised after the period has been extended by the amending Act, in the other the appropriate Government fixes the period itself in its discretion and can again at its discretion revoke or modify it. In both cases, the substance of the law is that the period of detention is left to the discretion of the State, and so there is no substantial discrimination. It was argued that however fair this may look on paper, in practice there will be grave discrimination because, as a matter of fact, the State will not apply its mind in the majority of cases like the petitioner 'section That is an argument we cannot accept and no material Was placed before us t0 justify such a conclusion, 693 We turn now to the next point. It was contended that sec tion 3 offends the Constitution because article 22 (4) and (7) do not envisage the direct intervention of Parliament in a whole batch of cases. The protection guaranteed is that there shall be individual attention and consideration to each separate case by some duly specified and constituted authority. In our opinion, this is not accurate. Article 22 (4) guarantees that there shall be no preven tive detention for more than three months unless the law authorising it makes provision for an Advisory Board and the Board after considering each individual case separately reports that there is in its opinion sufficient cause for such detention. To that extent there must be individual consideration of each case, but once the report is made and is unfavourable to the detenu, then the detention can be for a longer period provided it does not exceed "the maximum period prescribed by any law made by Parliament under sub clause (b) of clause (7). " Sub clause (b) of clause (7) empowers Parliament to prescribe "the maximum period for which any person may in any class or . . . of cases be detained under any law providing for preventive deten tion. " Parliament is accordingly empowered to specify a class. It has done so. The class is all persons whose cases have already been considered by an Advisory Board. It is empowered to prescribe a maximum period. That also it has done. The extended detention (that is to say, for more than three months) can then be "under any law providing for preventive detention. " A law made by Parliament falls within these words. Parliament is equally authorised to say who shall determine the period of detention, and as there is nothing in the Constitution to prevent it can itself exer cise the authority it is empowered to delegate to others. Stress was laid on the words "any person" in subclause (b) of clause (7) and it was contended that this contem plates individual attention in each case. But 694 if that is so, then it means that Parliament must itself direct the maximum period for each separate person falling within the class individually. The words are, we think, reasonably plain and we hold that Parliament can prescribe the maximum for a class taken as a whole as it has done in section 3. It was next argued that once the power given under clause (7) to fix a maximum period has been exercised the power exhausts itself and cannot be exercised again in respect of the same detention. In our opinion, no such limitation is imposed upon Parliament by the Constitution. Then it was said that section 3 stands on a footing different from section 12 of the amending Act of 1951 as it introduces the idea of potentially indefinite detention and accordingly is repugnant to the Constitution, and in any event is a fraud upon it. In so far as this means that section a fixes no time limit, the contention is unsound because the section specifies the exact period of the deten tion, namely till the expiry of the Act of 1950, that is to say, till the 1st of October, 1952. In so far as it means that Parliament is enabled to continue detentions indefi nitely by the expedient of periodic amendments in the Act of 1950, the answer is that Parliament has the power. This was precisely the power exercised in the amending Act of 1951 and upheld by this Court in section Krishnan vs The State of Madras(1). The present Act is no different from that in this respect. So far, we have dealt with the facts in petition No. 86 of 1952. The facts in the other three petitions naturally differ in their details but they all conform to the same general pattern so far as the points discussed above are concerned, so there is no need to discuss them individually. We hold that section 3 of the amending Act of 1952 is intra vires and that the detentions are not bad on any of the grounds discussed above. The rest of the points raised in each individual case are left open except for one point which (1) ; 695 arises in petition No. 155 of 1952. That point is as fol lows. The first ground of detention given to the petitioner in this case reads: "Being the President of Jamat of Agris you have used your position as such to increase your influence over the residents of Uran Peta, have created a band of obedient and trusted associates, have inflicted heavy fines on villagers in Uran Peta who have disregarded your wishes and have imposed on them boycott or excommunication in cases of their refusal to pay the fines. " It was argued that at the very outset 'these allegations import nothing more than an exercise of functions such as the infliction of fines and excommunication which the peti tioner as head of the caste had authority to do. They do not touch any of the matters covered by section 3 (1) (a) of the , under which the petitioner is detained. For example, they do not touch the security of the State or the maintenance of public order or any of the other matters specified in section 3. They are therefore irrelevant to the detention, and as it is impossible to say how far these irrelevant matters influenced the detention, the petitioner is entitled to release. Reliance was placed upon certain observations of the Federal Court in Rex vs Basudev(1). We think it unnecessary to examine this point because we do not think the ground is irrelevant nor do we agree that it means what the petitioner says. In our opinion, the grounds of detention must be regarded as a whole and when that is done the relevance of the first ground becomes plain. The gravamen of the charge against the petitioner is that he aimed at setting up a parallel government in the Uran Peta area and that in order to achieve that end he did various acts such as intimidating the workers in the salt pans with threats of murder, and his own workers with threats of death, unless they carried out his (1) at 651. 696 orders; and among the lesser instances given to illustrate the exercise of parallel governmental authority are the ones set out in the first ground, namely the infliction of fines with the sanction of excommunication and boycott to ensure their payment and due obedience to his orders. This point has no force and is decided against the petitioner. It will not be open to him to re agitate this afresh when his case is reheard on the remaining issues. All the four cases will now be set down for hearing on the remaining points which arise in them. As they do not involve constitutional issues they need not go before a Constitution Bench. Agent for the petitioner in Petition No. 155: M.S.K. Sastri for P.G. Gokhale. Agent for the respondents and Intervener:P. A. Mehta. [/INST] An order directing the detention of the petitioner was made on the 15th of November, 1951, under the Preventive Detention Act of 1950 as amended by the Amending Act of 1951, which prolonged the duration of the Act of 1950 up to the 1st April, 1952. The Preventive Detention (Amendment) Act of 1952 extended the duration of the Act of 1950 for a further period of six months, that is to say, until the 1st October, 1952. Section 3 of the Act of 1952 provided further that detention orders confirmed under the principal Act and in force immediately before the commencement of the Act of 1952, shall, where the period of detention is not specified in the order, remain in force "for so long as the principal Act (which was defined as the Act of 1950) was in force. " It was contended on behalf of the petitioner that his detention after 1st April, 1952, was illegal. Held, (i)When a subsequent Act amends an earlier one in such a way as to incorporate itself or a part of itself into the earlier, then the earlier Act must thereafter be read and construed (except where that would lead to a repug nancy, inconsistency or absurdity) as if the altered words had been written into the earlier Act with pen and ink and the old words scored out so that there is no need to refer to the amending Act at all. After the passing of the Act of 1952 the expressions "the Act of 1950" and "the principal Act" meant the Act of 1950 as amended by the Act of 1952, and the effect of section 3 of the Act of 1952 was that the detention of the petitioner would remain in force until the 1st October, 1952, without prejudice to the power of the Government to modify or revoke it; (ii) section 3 did not contravene article 14of the Constitu tion as there was a rational classification of the cases of detention orders in the section, and the period of detention was left in every case to the discretion of the State; (iii) the words "any person" in sub cl. (b) of c1.7 of article 22 of the Constitution do not contemplate that individ ual attention should be paid to each case; on the contrary, the words used in the said sub clause empower the Parliament to prescribe the maximum for a class taken as a whole as it has done in section 3, and section 3 does not therefore offend cl. (4) or cl. (7) of article 22; (iv) the power of the Parliament to fix a maximum period does not exhaust itself once it has exercised that power but can be exercised again in respect of the same detention; (v) section 3 is not repugnant tO the Constitution on the ground that it does not fix a time limit, for it speci fies the period as until the expiry of the Act; nor on the ground that it introduces the idea of potentially indefinite detention by periodical amendments; for the Parliament has the power to do that: 685 </s>

<s>[INST] Summarize the following judgement: Appeal No. 26 of 1956. Appeal by Special Leave from the Judgment and Order dated the 22nd April, 1954, of the Rajasthan High Court in Writ Petition No. 76 of 1951. N. C. Chatterjee, J. B. Dadachanji and M. section K. Aiyangar, for the appellants. K. N. Rajagopal Sastri and D. Gupta, for the respondents. August 31. The Judgment of the Court was delivered by HIDAYATULLAH J. This is an appeal with the special leave of this Court against the judgment of the High Court of Rajasthan dated April 22, 1954. The appellant is a private limited Company, which was incorporated in 1945 in the former Kotah State. The income tax authorities sought to tax its profits and income for the assessment year 1950 51 corresponding to the previous year, 1949 50. The appellant claimed exemption under section 14(2)(c) of the Indian Income tax Act, 1922, as it stood before the amendment in 1953, contending that the exemption stood good even after the amendment. This claim was rejected by the High Court, which was moved under article 226 of the Constitution. Hence this appeal. Prior to the integration of Kotah State into the United State of Rajasthan in 1949, there was no income tax law in force in Kotah State. Till the formation of the State of Rajasthan, there was no such law in force in any part of Rajasthan, except Bundi State. The Indian Finance Act of 1950 made the Indian Income tax Act, 1922, applicable to the whole of India, except the State of Jammu and Kashmir, and suitably amended the Indian Income tax Act. Rajasthan then became, from April 1, 1950, a taxable territory. For the assessment year 1950 51, income tax was sought to be imposed in the State of Rajasthan. One 455 Madan Gopal Kabra move the High Court under article 226 of the Constitution to restrain the taxing authorities from claiming tax for the period prior to April 1, 1950, contending that inasmuch as Rajasthan was not a taxable territory before April 1, 1950, no tax for a period prior to that date could be demanded. This Court in an appeal by the Department against the decision of the High Court of Rajasthan, which had accepted the contention, held that the tax was leviable. It is not necessary to give the details of the decision on that occasion. The judgment of this Court is reported in The Union of India vs Madan Gopal Kabra (1). The present appellant and fourteen others filed petitions under article 226 of the Constitution, urging fresh grounds by a later amendment. Their contention was that section 14(2)(c) of the Indian Income tax Act, as it stood on April 1, 1950, granted an exemption, and that this exemption was not affected by the amendment of the said provision in 1953 even though the amendment was retrospective from April 1, 1950, unless the Finance Act, 1950, which applied the Income tax Act to this area was also amended. This contention was not accepted by the High Court which dismissed the petition under article 226, holding inter alia that this point was also decided by this Court against Madan Gopal Kabra. In this appeal, this point alone is argued, and it is contended that the point is still open for decision. Section 14(2)(c), as it stood before the amendment in 1953, read as follows: " The tax shall not be payable by an assessee (c) in respect of any income, profits or gains accruing or arising to him within Part B State unless such income, profits or gains are received or deemed to be received in or are brought into the taxable territories in the previous year by or on behalf of the assessee, or are assessable under section 12 B or section 42 ". The amendment provided " In section 14 of the principal Act in clause (c) of sub section (2), for the words and letter 1 Part B State ' (1) ; 456 the words the State of Jammu and Kashmir ' shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 1950 ". The result of this amendment was described by this Court in Kabra 's case (1) to be as follows: " It may be mentioned here that the exemption from tax under a. 14(2)(c) of the Indian Act of income accruing within Part B States was abrogated, except as regards the State of Jammu and Kashmir, by the amendment of that provision with effect from the first day of April, 1950." Mr. N. C. Chatterjee appearing for the appellant contends that the point cannot be considered to have been finally decided, and that the remark is descriptive only of what the Parliament had purported to do. He claims that the point can and should be reconsider. In support of his contention, be urges that the effect of the passing of the Indian Finance Act, 1950, and the application of the Indian Income tax Act to Rajasthan and other Part B States was to incorporate the Indian Income tax Act by reference in the Indian Finance Act with such modifications and amendments as were then made. Any subsequent amendment of the Indian Income tax Act had no effect on the original Act as incorporated by reference in the Indian Finance Act, unless the latter was suitably amended also. The argument which did not find favour in Kabra 's case (1) was again advanced, though in another form. It is that the amendment operates from April 1, 1950, and that the income accrued prior to April 1, 1950, and it was still exempt, because the exemption was withdrawn only from April 1, 1950. In our opinion, both the arguments have no substance, and the position indicated by this Court in the passage cited earlier, represents the true state of the law. To begin with, the exemption is in respect of liability to tax in any year of assessment, and the exemption in the assessment year 1950 51 was in regard to the income in the previous year. For the same reason, the withdrawal of the exemption in the assessment year 1950 51 conversely affected the (1) ; 457 income of the previous year, 1949 50 which is the subject matter of tax in this case. The next argument misconceives the nature of the Indian Finance Act, 1950. By that Act, the Indian Income tax Act was applied, but the Income tax Act was not incorporated by reference in the Indian Finance Act to become a part of it. The application of the Indian Income tax Act made Rajasthan a taxable territory subject to the Indian Income tax law, and Parliament was competent to enact a new law for the area, just as it did for the whole of the rest of India. The fiction in the amendment made the exemption to disappear as if it had never been granted, and unless there was a saving, the amendment must operate to obliterate the exemption. in fact, the whole purpose and intent of the amendment was to reach this result from the assessment year 1950 51 onwards, and there could be no saving. The argument assumes the premise that the Income tax Act was incorporated in the Indian Finance Act, 1950, but there is neither precedent nor warrant for the assumption that when one Act applies another Act to some territory, the latter Act must be taken to be incorporated in the former Act. It may be otherwise, if there were words to show that the earlier Act is to be deemed to be re enacted by the new Act. The Indian Finance Act, 1950, was concerned with the application of the Indian Income tax Act to this area, which it did by amending the definition of 'taxable territory ' in the Indian Income tax Act and by applying that Act to the territory. Thereafter, the Indian Parliament could amend the Income tax Act retrospectively, and the amendment would apply also to the new taxable territory. In our opinion, both the arguments are not valid. The appeal fails, and will be dismissed with costs. Appeal dismissed. [/INST] The appellant, a private limited company, was incorporated in 1954 in the former Kotah State which had integrated with the United States of Rajasthan in 1949. The United States of Rajasthan became State of Rajasthan, a Part B State. The Indian Finance Act, 1950, made the Indian Income tax Act, 1922, applicable to Part B States with effect from April 1, 1950, whereupon Rajasthan became a taxable territory. The Income tax (Amendment) Act, 1953, amended section 14(2)(C) of the Indian Income tax Act, 1922. Thereupon the Income tax authorities sought to tax the profits and income of the appellant for the assessment year 1950 51 who claimed exemption under section 14(2)(C) of the Indian Income tax Act, 1922, as it stood before the amendment in 1953. The question for decision was whether in view of the decision of this Court in Madan Gopal 's case it was still open to the appellant to contend that the amendment operated from April 1, 1950 and that income accrued prior to April x, 1950, was still exempt although the exemption was withdrawn only from April 1, 1950. Held, that the withdrawal of the exemption in the assessment year 1950 51 conversely affected the income of the previous year 1949 50. The application of the Indian Income tax Act made Rajasthan a taxable territory subject to the Indian Income tax law and Parliament was competent to enact a new law for the area, just as it did for the whole of the rest of India. The fiction in the amendment made in section 14(2)(C) made the exemption in respect of liability to tax the income for the year 1949 50 to disappear as if it had never been granted and obliterated the exemption. The whole purpose and intent of the amendment was to reach this result from the assessment year 1950 51 onwards, and there could be no saving. The argument assumes the premise that the Income tax Act was incorporated in the Indian Finance Act, 1950, but there is neither precedent nor warrant for the assumption that when one Act applies another Act to some territory, the latter Act must be taken to be incorporated in the former Act. It may be otherwise, if there were words to show that the earlier Act is to be deemed to be re enacted by the new Act. 454 Union of India vs Madan Gopal Kabra, ; , referred. </s>

<s>[INST] Summarize the following judgement: Appeal No. 231/1955. Appeal from the Judgment and Decree dated February 16, 1954, of the Patna High Court in Title Suit No. 105/1953. 446 N. C. Chatterjee, Sanjeev Choudhuri and Ganpat Rai, for the appellant. C. K. Daphtary, Solicitor General of India, P. K. Chatterjee and T. M. Sen, for respondent No. 1. * Lal Narayan Sinha, Bajrang Sahai and R. C. Prasad, for respondent No. 2. 1960. August 31. The Judgment of the Court was delivered by WANCHOO J. This is an appeal from a decree of the Patna High Court. The appellant is a Public Limited Company with its registered office at Calcutta. A mining lease was granted to it by the Raja of Ramgarh on December 29, 1947, for a period of 999 years in respect of 3026 villages situate within the Ramgarh Estate and the appellant was put in possession thereof. On February 1, 1950, the appellant granted a sub lease of two of the villages comprised in its grant to one Bhagat Singh for a term of 15 years. In the meantime the Mines and Minerals (Regulation and Development) Act (LIII of 1948), (hereinafter called the Act), had come into force along with the Mineral Concession Rules, 1949 (hereinafter called the Rules), in the area in which the two villages lay. Bhagat Singh then applied to the Deputy Commissioner, Hazaribagh, for the grant of a certificate of approval under the Rules. Thereupon the Deputy Commissioner, taking the view that the sub lease granted was in contravention of the Act and the Rules, filed a complaint on September 25, 1951, before a magistrate against two directors and the secretary of the appellant charging them with the breach of r. 45 of the Rules and also rr. 47 and 49 (now r. 51) read with r. 51 (now r. 53) and section 9 of the Act. While the criminal case was going on, the appellant filed a suit challenging the validity and constitutionality of the Act and the Rules. A number of grounds were taken in support of this challenge but it is not necessary now to set out all of them, as learned counsel for the appellant has confined his arguments only to two points, namely, (i) a sub lease is not covered by the definition of the term ' mining lease ' in section 3(d) of the 447 Act and therefore the Act and the Rules do not apply to a sub lease at all, and (ii) as these Rules were made under sections 5 and 6 of the Act and not under section 7 they have no application to a sub lease granted by a lessor, even after the coming into force of the Act and the Rules, where the lessor 's own lease was of a date anterior to the coming into force of the Act and the Rules. The suit was resisted by the respondents and their defence was that the term ' mining lease ' included a sub lease and that the Rules framed under Bs. 5 and 6 of the Act were applicable to all sub leases granted after the Act and the Rules had come into force. The High Court repelled the contentions raised by the appellant against the validity and constitutionality of the Act and the Rules. It further held that the term 'mining lease ' as defined in section 3(d) of the Act included a sub lease and therefore the Act and the Rules applied to sub leases granted after the Act and the Rules came into force and it was immaterial that the lease granted to the appellant was anterior in time to the coming into force of the Act and the Rules. On this view, the suit was dismissed. Thereupon the appellant applied for a certificate which was granted and that is how the matter has come up before us. The main question that falls for consideration is whether the term 'mining lease ' as defined in section 3(d) of the Act includes a sub lease. Clause (d) of section 3 is in these terms: " mining lease ' means a lease granted for the purpose of searching for, winning, working, getting, making merchantable, carrying away, or disposing of mineral oils or for purposes connected therewith, and includes an exploring or a prospecting licence; ". There is no specific mention of a sub lease in it. But if one takes the plain meaning of the words used in section 3(d), it is clear that the term 'mining lease ' means any kind of lease granted for the purpose of searching for, winning, working, getting, making merchantable, 448 carrying away or disposing of minerals or for purposes connected therewith. It is significant that the definition does not require that the lessor must be the proprietor; and so on a fair reading it would include a lease executed by the proprietor as much as a lease executed by the lessee from such a proprietor. If we turn to the definition of 'lease ' in section 105 of the , we find that a lease of immovable property is a transfer of a right to enjoy such property made for a certain time, express or implied or in perpetuity in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value to be rendered periodically or on specified occasions to the transferor by the transferee who accepts the transfer on such terms. What a lease therefore requires is a transferor and a transferee and a transfer of immovable property on the terms and conditions mentioned in section 105. How the transferor gets his title to make a lease is immaterial so long as the transaction is of the nature defined in section 105. Applying therefore the plain words of section 3(d) of the Act and the definition of lease as contained in section 105 of the , it is perfectly clear that there is a transferor in this case, (namely, the appellant) and a transferee (namely, Bhagat Singh) who has accepted the transfer; the transaction is with respect to immovable property and creates a right to enjoy such property for a certain term and for consideration on the conditions mentioned in it. Though, therefore, the document may be termed a sub lease in view of the fact that the transferor is not the owner of the property transfer red but is itself a lessee, the transaction between the appellant and Bhagat Singh is nothing but a mining lease. The terms ' sub lease ', ' under lease ' and "derivative lease ' are used conveniently to indicate not only that the transfer is a lease but also that the transferor is not the owner of the property but is a lessee ; but the transfer as between a lessee and a sub lessee is nonetheless a lease provided it satisfies the definition of section 105. We may add that Ch. V of the , which deals with leases of immovable 449 property has nowhere made any distinction between a lease and a sub lease and all the provisions of that Chapter which apply to a lease also apply to a sublease. It is only when dealing with the rights and liabilities of the lessee that section 108(j) of the lays down that the lessee may transfer absolutely or by way of mortgage or sub lease the whole or any part of his interest in the property, and that is where one finds mention of a sub lease, namely, that it is a lease by a person who is himself a lessee. But the fact that the lessor is himself a lessee and the transaction between him and the person in whose favour he makes the transfer by way of lease is called a sub lease does not in any way change the nature of the transfer as between them. Therefore on the plain words of section 3(d) read with section 105 of the there can be no doubt that the term 'mining lease ' includes a sub lease. ' Learned counsel for the appellant referred in this connection to a number of statutes wherein a sub lease has been expressly stated to be included in the term 'lease '. In the Mines and Minerals (Regulation and Development) Act, LXVII of 1957, which has replaced the Act, the term 'mining lease ' has been defined in section 3(c) as meaning a lease granted for the purpose of undertaking mining operations and includes a sublease. The 1957 Act was enacted after the judgment of the High Court in this case and the legislature apparently thought it fit ex abundanti cautela to say that a sub lease is included within the term ' mining lease '. In the corresponding English Act also as well as the English Law of Property, 1925, a lease has been defined to include a sub lease. The fact however that in some laws a lease is defined to include a sub. lease, does not mean that a lease cannot otherwise include a sub lease. An example to the contrary is the , where the definition of the word 1 lease ' clearly includes a sub lease. Learned counsel for the appellant also relied on certain decisions in which it was held that a lease did not include a sub lease. Those decisions, however, turn on the particular terms of the enactment there under 450 consideration and are of no assistance in determining the question whether the term 'mining lease ' in the Act includes a mining sub lease. Ordinarily, a lease will include a sub lease unless there is anything to the contrary in the particular law. We may in this connection refer to the observations of Jessel, M. R., in Camberwell and South London Building Society vs Holloway (1) at p. 759: " The word `lease ' in law is a well known legal term of well defined import. No lawyer has ever suggested that the title of the lessor makes any difference in the description of the instrument, whether the lease is granted by a freeholder or a copyholder with the licence of the Lord or by a man who himself is a leaseholder. It being well granted for a term of years it is called a lease. It is quite true that where the grantor of the lease holds for a term, the second instrument is called either an under lease or a derivative lease, but it is still a lease. . .". We see nothing in the Act to indicate that the term ' mining lease ' as defined in a. 3(d) does not include a mining sub lease. On the other hand, looking to the purpose and object with which the Act was passed, it seems to us quite clear that a sub lease must be included within the term 'mining lease ' as it obviously is within the plain words of section 3 (d). That the Act was passed in the public interest is shown by the fact that it provides for the regulation of mines and oil fields and for the development of minerals. The intention was that the mineral wealth of the country should be conserved and should be worked properly without waste and by persons qualified in that kind of work. With that object in view section 5 inter alia provides for making rules as to the conditions on which mining leases may be granted and the maximum or minimum area and the period 'for which such lease may be granted as also the terms on which leases in respect of contiguous areas may be amalgamated, and the fixing of the maximum and minimum rent payable by a lessee (1) , 759 451 whether the mine is worked or not. Section 6 provides for framing of rules for the conservation and development of minerals, the manner in which any mineral or any area as respects which the grant of mining lease is prohibited may be developed and the development of any mineral resources in any area by prescribing or regulating the use of engines, machinery or other equipment, and so on. These provisions for the conservation, development and regulation of mining areas and minerals would be more or less completely frustrated if a mining sub lease was not included in the definition of the term 'mining lease ', for then all that would be necessary for a per. son who wanted to avoid the law would be to interpose an intermediary between himself and the owner and get a sub lease from him which would be free from the regulatory control of the Act and the Rules. 'We are therefore of opinion that looking at the plain words of section 3(d) and the object and the purpose for which the Act was passed, it is clear that a mining sub lease is included within the definition of the term 'mining lease ' and there is nothing in the Act which militates against this. We therefore hold that a mining sub lease made after the coming into force of the Act and the Rules is included in the term 'mining lease ' as defined in section 3 (d) and is subject to the Act and the Rules. The argument in this connection is that a. 4 of the Act provides that no mining lease shall be granted after the commencement of the Act otherwise than in accordance with the rules framed under the Act and any mining lease granted otherwise shall be void and of 'no effect. Sections 5 and 6 give power to the Central Government to make rules for purposes already set out above and refer to mining leases granted under section 4 Then comes section 7, which lays down that the Central Government may by notification in the official gazette make rules for the purpose of modifying or altering the terms and conditions of any mining lease 58 452 granted prior to the commencement of the Act so as to bring such lease into conformity with the rules framed under Be. 5 and 6. It is urged that where a mining lease has been granted before the Act and the Rules came into force, it is only the rules framed under section 7 which will affect any sub lease granted by such a lessee even though the sub lease is after the date on which the Act and the Rules came into force. Section 7 in our opinion was enacted for an entirely different purpose, as sub section (2) thereof will show. It is however not necessary to go into this matter further, for once it is held that a, sub lease is included in the term 'mining lease ', the rules made under sections 5 and 6 would apply to such a sub lease, if it is made after the Act and the Rules came into force. In the present case, the sub lease was granted after the Act and the Rules came into force in the area with which the sub lease is concerned and therefore the sub lease would be governed by the Act and the Rules. There is no question in this case of modifying or altering the terms and conditions of any mining lease granted prior to the commencement of the Act, for the Act and the Rules are being enforced with respect to a sub lease which is a mining lease, within the definition of that term in section 3(d), made 'after the Act and the Rules came into force. No change is being made by the Rules in the terms and conditions of the mining lease granted to the appellant and all that has happened is that the appellant 's directors and secretary, are being prosecuted for granting a sub lease (which is a mining lease) against the provisions of the Act and the Rules after the Act came into force. There is no force therefore in this contention of the appellant and it must be repelled. There is no force in this appeal and it is hereby dismissed with costs. , One set of hearing costs only. Appeal dismissed. [/INST] The appellant, a limited company, which was the lessee of a mining lease granted a sub lease in respect of two of the villages comprised in its grant. The secretary and two of the directors of the company were prosecuted for having contravened the provisions of the Mines and Minerals (Regulation & Development) Act, 1948, and the Mineral Concession Rules, 1949, which were framed under it. The appellant contended, firstly, that the sub lease was not covered by the definition of the term " Mining lease " of the Act and as such the Act and Rules did not apply to a sub lease at all ; and secondly, that as these rules were made under sections 5 and 6 of the Act and not under section 7 they have no application to a sub lease granted by a lessor, even after the coming into force of the Act and the Rules where the lessor 's own lease was of date anterior to the coming into force of the Act and the Rules. Held, that the definition of " Mining lease " contained in section 3(d) of the Mines and Minerals (Regulation and Development) Act, 1048, does not require that the lessor must be a proprietor and its plain language read with section 5 of the , makes it clear that a mining lease includes one executed by a proprietor as much as a lease executed by the lessee from such proprietor. The facts that the lessor is himself a lessee, and the transaction between him and the person in whose favour he makes the transfer by way of lease is called a sub lease does not in any way change the nature of the transfer as between them. Held, further, that the Rules made under sections 5 and 6 of the Act would apply to a mining sub lease if it is made after the Act and the Rules came into force. </s>

<s>[INST] Summarize the following judgement: Appeal No. 212/55. Appeal from the Judgment and Decree dated July 7, 1953, of the Calcutta High Court in Appeal from Original Order No. 157 of 1952, arising out of the Judgment and Decree dated March 28, 1952, of the said High Court in Civil Rule No. 1409 of 1951. B. Sen and P. K. Bose for the appellants. P. K. Ghosh for the respondent. section C. Mazumdar for the Intervener (Gopalpur Land Development Society, Ltd.). August 29. The Judgment of the Court was delivered by SINHA C. J. The only substantial question that arises for determination in this appeal, on a certificate granted by the Calcutta High Court under article 133 (1)(c) of the Constitution, is whether the Government of West Bengal was bound to frame a development scheme under the provisions of the West Bengal Land Development and Planning Act, 21 of 1948, which hereinafter will be referred to as the Act, when it exercised its power of emergency under section 7 of the Act. The facts of this case lie within a very narrow compass and are as follows: The respondent was the owner of about 18 bighas of land in a certain village in the district of 24 Parganas. By a notification dated January 6, 1950, and published in the Calcutta Gazette dated January 12, 1950, under section 4 of the Act, the Government declared that the cadastral survey 370 plots, particulars whereof were given in the notification, were likely to be needed for the settlement of immigrants and for creation of better living conditions in the locality. Thereafter a notification was ' issued under section 6 read with section 7 of the Act and published in the Calcutta Gazette dated April 27, 1950, declaring that the plots covered by the notification under section 4 aforesaid were needed for the very same purposes as stated in the notification under section 4. On or about December 16, 1950, possession of those plots, except three, was taken by the Government. When the Government started to erect certain structures on the land thus acquired and stored building materials near about, the respondent moved the High Court under article 226 of the Constitution challenging the vires of the Act and impugning the legality of the proceedings taken under the Act. The matter was heard by H. K. Bose, J., sitting singly. Before him the grounds urged in support of the petition were that the release of the three plots from the acquisition proceedings rendered the entire proceedings bad in law; that there was no urgency for the Government to take steps under section 7 of the Act, and for issuing the notifi cation under section 6 ; and that the provisions of the Act infringed the fundamental rights of the respondent, petitioner in the High Court, enshrined in article 19(1)(f) of the Constitution. The learned Judge, by his judgment dated March 28, 1952, negatived all those contentions and discharged the rule issued by the High Court on the Government of West Bengal and others under article 226 of the Constitution. The respondent preferred an appeal under the Letters Patent. The appeal was heard by a Division Bench consisting of G. N. Das and Debabrata Mookerjee, JJ. By their judgment dated July 7, 1953, it was held that the Act did not infringe the provisions of article 31 (2) of the Constitution and that therefore it became unnecessary to express any opinion with respect to the provisions of article 19(1)(f). But the Bench also examined the provisions of the Act in the light of article 19(1)(f) of the Constitution and came to the conclusion that there was no infirmity in the Act, 371 even on that score, Having decided all the points raised on behalf of the appellant before it, the High Court allowed the appellant to raise another controversy, which had not been raised before the learned single Judge, namely, whether it was incumbent on the Government to frame a development scheme, after A possession had been taken by it, of the land in question. Ordinarily, such a controversy should not have been allowed to be raised for the first time in the court of appeal. Be that as it may, it came to the conclusion that even though the Government was entitled to deal with the land on an emergency basis under section 7 of the Act, it was incumbent on the State Government to frame a development scheme after possession had been taken. The main reason for this conclusion as given by the High Court is that though section 7 had armed the Government with the power to take possession of the property before framing a scheme of development, the section does not, in terms, dispense with the necessity of framing a development scheme, after the emergency had been declared and possession taken. In that view of the matter, the court of appeal allowed the appeal in part and directed a writ of mandamus to issue to the respondents before it, requiring them to proceed to frame a development scheme in terms of the Act. The State of West Bengal and other officials who had been impleaded as respondents in the High Court applied for leave to appeal to this Court from the said judgment of the appeal court. The High Court granted the leave prayed for, on condition that the appellants paid for the representation of the respondent before this Court by a junior Advocate of this Court. That is how the matter comes before this Court. It was argued on behalf of the appellants that the appeal court had misapprehended the scope and effect of sections 4, 5, 6 and 7 of the Act; that the Act contemplated two categories of acquisition proceedings, namely, (1) acquisition under section 6, after compliance with the provisions of section 5 and (2) acquisition in case of an emergency under section 7 read with section 6 of the Act; that the condition precedent laid down in section 5 necessitating 48 372 the framing of a scheme before a declaration under section 6 of the Act was made, is specifically excluded in cases of emergency once a declaration of emergency under section 7 is made. The High Court was, therefore, in error in insisting upon the framing of a development scheme under section 5 of the Act, when that section had not been made applicable to the case of an emergency acquisition. Once the property has been acquired it vests in the Government and thereafter the original holder of the property has no say in the matter, except on the question of amount of compensation. Mr. Sen, for the appellants, finally contended that if the High Court was right in insisting upon a scheme of development being framed, the whole purpose of declaring an emergency would be defeated. The learned counsel for the respondent has not made any serious attempt to meet the contentions raised on behalf of the appellants, but has attempted to show that the provisions of the Act, in so far as they give special powers to Government to declare an emergency and then to proceed with the acquisition without the necessity of framing a scheme of development, were unconstitutional, both in view of the provisions of article 31(2) and article 19(1)(f). He also made a very feeble attempt to rely upon the provisions of article 14 of the Constitution and to suggest that the respondent was being discriminated against in the application of the emergency provisions of the Act to his case. In our opinion, the contentions raised on behalf of the appellants are manifestly well founded and the High Court was clearly in error in issuing the mandamus against the appellants. Before dealing with the contentions raised on behalf of the parties, it is convenient, at this stage, to set out the relevant provisions of the Act. The Act replaced the West Bengal Land Development and Planning Ordinance, 11 of 1948, which was in similar terms. The Act and the Ordinance, which it replaced, were enacted apparently as a result of the emergency created by the continual exodus of Hindus from East Pakistan on a mass scale and the consequent immigration of a very large population into West Bengal ' as a result of the 373 partition. The Act was enacted " to provide for the acquisition and development of land for public purposes ". It adopts the definitions of " land ", " Collector " and " company " as in the Land Acquisition Act, 1 of 1894, to which it is, in its terms, supplementary. In the definition section 2, " development scheme " means, a scheme for the development of land for any public purpose; and a " notified area " has been defined as an area declared as such under sub section (1) of section 4. " Public purpose " has been defined in cl. (d) of section 2 as including (i) the settlement of immigrants who have migrated into the State of West Bengal on account of circumstances beyond their control, (ii) the establishment of towns, model villages and agricultural colonies, (iii) the creation of better living conditions in urban and rural areas, and (iv) the improvement and development of agriculture, forestry, fisheries and industries ; but does not include a purpose of the Union. Section 3 authorises the State Government to appoint the " prescribed authority " for carrying out the purposes of the Act. Section 4 is, in terms, analogous to section 4 of the Land Acquisition Act and authorises the State Government by notification in the Official Gazette to declare any area to be a notified area on being satisfied that that specified area is needed or is likely to be needed for any public purpose. The Act was amended in 1955 by the West Bengal Act, XXIII of 1955, and one of the amendments made by that Act was to add section 4A making provision for objections to be taken by any person interested in any land within the notified area, for an opportunity of being heard and for an enquiry being made on the merits of such objections, and finally for submission to the State Government of a report on the objections raised. We are not concerned in this case with section 4A, because it was inserted into the Act after the decision of the case by the High Court. Section 5, with which we are mainly concerned in this case is in these terms: "5(1). The State Government may direct the prescribed authority, or, if it so thinks fit in any case, authorise any Company ' or local authority, to prepare, in accordance with the rules, a development scheme 374 in respect of any notified area and thereupon such scheme shall be prepared accordingly and submitted, together with such particulars as may be prescribed by the rules, to the State Government for its sanction : Provided that no scheme shall be necessary for acquisition of land for the public purpose specified in sub clause (i) of clause (d) of section 2. A development scheme submitted to the State Government under subsection (1) may, after taking into consideration any report submitted under sub. section (2) of section 4A, be sanctioned by it either without any modification or subject to such modifications as it may deem fit. " The proviso to a. 5 was added by the same amending Act (West Bengal Act XXIII of 1955) and is likewise inapplicable to this case. Section 6 again is, in terms, analogous to section 6 of the Land Acquisition Act, which provides for the declaration to be published in the Official Gazette to the effect that the State Government was satisfied that any land in a notified area, for which a development scheme has been sanctioned under section 5(2) of the Act, is needed for the purpose of executing such a scheme, unless there already has been a declaration made under section 7 of the Act. Section 7, which is another section, the construction of which is involved in this case, is in these terms: " In cases of urgency, if in respect of any notified area the State Government is satisfied that the preparation of a development scheme is likely to be delayed, the State Government may, at any time, make a declaration under section 6, in respect of such notified area or any part thereof though no development scheme has either been prepared or sanctioned under section 5." Section 8 makes the provisions of the Land Acquisition Act applicable to acquisition proceedings taken in pursuance of the declaration made, either under section 6 or section 7 of the Act, subject to certain reservations made in pursuance of the provisos to section 8, relating to taking possession, determination of the amount of compensation, and of market value. The other sections of the Act are not relevant to the point in controversy in this case and, therefore, need not be adverted to. 375 It will be noticed that section 7 is in the nature of a proviso to section 6. Section 7 provides that in cases of urgency, if the State Government is satisfied that the preparation of a development scheme is likely to be delayed, it may make a declaration tinder section 6 that the land was needed for a public purpose, even though no development scheme has either been prepared or sanctioned under section 5. The section, therefore, in clear terms, authorises the State Government to issue the necessary declaration under section 6, which puts the machinery of land acquisition proceedings into motion, if it is satisfied that the public purpose necessitating the acquisition of the land in question would be subserved without the preparation of a development scheme. The Act itself came into existence in circumstances of great urgency. Naturally, therefore, in suitable cases, where the preparation of a development scheme would cause delay, the Government was authorised to proceed with the acquisition of land after making the necessary declaration under section 6. As already indicated after that declaration has been made by Government in the Official Gazette and the necessary enquiry made about compensation and the making of the award, the property becomes vested in tile Government. The question naturally arises whether there is anything in the Act which makes it obligatory on the State Government to prepare a scheme of development thereafter. The High Court has recognised the need for taking speedy action to meet the emergency created by the heavy influx of immigrants. The High Court has observed that section 7 does not, in terms, dispense with the framing of a development scheme and that it merely says that the Government may issue a declaration under section 6, even though no development scheme has been framed. But the High Court has further observed that even after taking possession of the property under r. 8, framed under the Act, within three days, there is no reason why the normal process envisaged in the Act should not be gone through. The argument proceeds further that the Act itself contemplated land planning and development and therefore the framing of a development scheme was an essential part of the 376 process. Hence, in the view of the High Court the framing of a development scheme was necessary in the normal course before the declaration under section 6 is made by the Government, and in the case of urgency under section 7, after taking possession of the land in question. In our opinion, such a construction of the provisions of the Act is not warranted by the terms of the Act. The addition of the proviso to section 5, quoted above, makes it clear that the Legislature has recognised the necessity in special circumstances of not framing a scheme in the case of the public purpose contemplated in cl. (d)(i) of section 2, namely, for the purpose of settlement of immigrants. On a fair reading of the relevant provisions of the Statute, it becomes clear that the Act contemplated acquisitions of two distinct classes, namely, (1) where the Government bad first considered and sanctioned a development scheme under the provisions of section 5 and then made a declaration that the land in a notified area was needed for the purpose of executing the particular development scheme and (2) where the notification under section 6 is made without any development scheme being prepared and sanctioned under section 5. Once the declaration is made under section 6, the machinery of the Land Acquisition Act, 1 of 1894, comes into operation, of course subject to the reservations contained in the provios to section 8, as aforesaid. The Land Acquisition Act itself does not contemplate the preparation of any such scheme of development. In other words, section 7 completely dispenses with the statutory necessity of pre paring a scheme of development as envisaged in section 5 of the Act in cases where the Government has taken the decision that it is necessary to proceed further with the acquisition proceedings without waiting for the preparation of a scheme. To insist upon the preparation of a development scheme would amount to rendering the provisions of section 7 otiose. There is no justification for the observation made by the High Court that the Legislature did not intend that the State Government should proceed with the land acquisition proceedings under the Act without framing a scheme of development. 377 The High Court has recognised the legal position that it is open to the Government to take possession of the land under acquisition within three days after the making of the declaration of urgency under section 7, but has insisted that, even after taking possession as a measure of urgency, the Government was bound to,, prepare a scheme of development. If that were so, the question naturally arises: to what use the land so taken possession of was to be put. The taking of possession in cases of urgency would itself predicate the use of the land thus taken possession of by the Government. But if the Government were to wait for the preparation and sanction of the scheme before putting the land acquired to any use, the very purpose of declaring the urgency and the taking of possession would be defeated. It is clear, therefore, that the Legislature did not mean to insist upon the preparation of a scheme of development in cases of land acquisition brought within the purview of section 7 of the Act. That disposes of the appeal. But the learned counsel for the respondent appealed to the provisions of articles 14, 19(1)(f) and 31(2) of the Constitution in aid of his contention that section 7 of the Act was ultra vires. Apparently, there is no discrimination. As already indicated, there are two classes of cases into which the land acquisition proceedings envisaged by the Act fall. The two classes can be easily identified and the purpose of the classification is based on a rational consideration, having due regard to the purpose and policy underlying the Act, namely, to acquire land for the public purpose, inter alia, of resettling immigrants who had to leave their hearth and home on account of circumstances beyond their control. Such cases of urgency, as come under section 7, are clearly meant to serve the main purpose of the Act. In our opinion, therefore, there is no substance in the contention that discrimination is implicit in the provisions of section 7. The attack on the Act based on articles 19(1)(f) and 31(2) of the Constitution is futile in view of the provisions of article 31B, which is in these terms: 378 " Without prejudice to the generality of the provisions contained in article 31A, none of the Acts and Regulations specified in the Ninth Schedule nor any of the provisions thereof shall be deemed to be void, or ever to have become void, on the ground that such Act, Regulation or provision is inconsistent with, or takes away or abridges any of the rights conferred by, any provisions of this Part, and notwithstanding any judgment, decree or order of any court or tribunal to the contrary, each of the said Acts and Regulations shall, subject to the power of any competent Legislature to repeal or amended it, continue in force. " The Act in question is the last entry (serial number 20) in the Ninth Schedule. Article 31B, quoted above, which renders the Act immune from all attacks based on the provisions of Part III of the Constitution relating to fundamental rights, makes it unnecessary to discuss with reference to the provisions of the statute that, even if the question were open, the Act does not stiffer from any such infirmity, as is attributed to it. In view of the considerations set out above, we allow this appeal, set aside the judgment under appeal with costs here and in the High Court. The respondent 's petition questioning the vires of the Act is dismissed. Appeal allowed. [/INST] By a notification under section 4 of the West Bengal Land Deve lopment and Planning Act, 1948, the Government declared that certain plots of land belonging to the respondent were needed for the settlement of immigrants from East Pakistan and for improving living conditions in the locality. Thereafter a second notification was issued by the Government under section 6 read with section 7 of the Act declaring that the plots covered by the previous notification were needed for the same purpose as stated therein. When the Government started to erect structures on the land thus acquired the respondent moved the High Court under article 226 of the Constitution challenging the vires of the Act and impugning the legality of the proceedings taken under tile Act. The petition was heard by a judge of the High Court sitting singly who negatived all the contentions of the petitioner and discharged the rule. On appeal by the respondent under the Letters Patent, a Division Bench of the High Court held that the Act did not infringe the provisions of articles 19(i)(f) and 31(2) of the Constitution. The High Court further held that it was incumbent on the State Government to frame a development scheme after possession of the land had been taken even though the Government was entitled to deal with the land on an emergency basis under section 7 of the Act, which runs thus: " In cases of urgency, if in respect of any notified area the State Government is satisfied that the preparation of a development scheme is likely to be delayed, the State Government may, at any time, make a declaration under section 6, in respect of such notified area or any part thereof though no development scheme has either been prepared or sanctioned under section 5 ". The High Court allowed the respondent 's appeal and directed a writ of mandamus to issue to the Government requiring them to proceed to frame a development scheme in terms of the Act. On appeal by the State of West Bengal on a certificate granted by the High Court, 369 Held, that the High Court was in error in issuing the mandamus against the appellants. Section 7 of the Act com pletely dispensed with the statutory necessity of preparing a scheme of development as envisaged in section 5 of the Act in cases where the Government had taken the decision that it was necessary to proceed further with the acquisition proceedings without waiting for a development scheme. No discrimination was implicit in the provisions of section 7 of the Act and no fundamental right of the appellant was infringed either under article 14 or articles 19(1)(f) and 31(2) of the Constitution. </s>

<s>[INST] Summarize the following judgement: Appeal No. 247 of 1960. Appeal from the judgment and order dated October 3, 1958, of the Punjab High Court in First Appeal from Order No. 131 of 1958. A.V. Viswanatha Sastri and Naunit Lal, for the appellant. U.M. Trivedi and Ganpat Rai, for the respondent. September 7. The Judgment of the Court was delivered by DAS GUPTA J. What do the words " has migrated to the territory of India " in article 6 of the Constitution mean ? That is the main question in this appeal. The appellant, Shanno Devi, was one of the unsuccessful candidates at the general election held in March 1957 for the Punjab Legislative Assembly. The respondent, Mangal Sain, was the successful candidate. The nomination papers of these and other candidates which were scrutinised on February 1, 1957, were accepted on the same date. The voting took place on March 12, and after counting of votes on March 14, 1957, the respondent, Mangal Sain was declared duly elected. On March 27, 1957, the appellant filed an election petition and challenged the respondent 's election on various grounds, the principal ground being that the Returning Officer had improperly accepted the nomination paper of the respondent on the ground that he was not a citizen of India and was not qualified to stand for election. With the other grounds which 578 were taken in this petition we are no longer concerned as after the Election Tribunal rejected these several grounds they were not pressed before the High Court and have also not been raised before us. The Election Tribunal however held that Mangal Sain was not an Indian citizen at the time he was enrolled as a voter or at the time his nomination papers were accepted and even at the time when he was elected. Accordingly the Tribunal allowed the election petition and declared the respondent 's election to be void. On appeal by Mangal Sain to the High Court the only point raised was whether the appellant was a citizen of India at the commencement of the Constitution. If he was a citizen of India at the date of such commencement, it was not disputed, he continued to be a citizen of India on all relevant dates, viz., the date of his enrollment as a voter, the date of acceptance of his nomination and the date of his election. If however he was not a citizen of India at the commencement of the _Constitution he had not since acquired citizenship and so his election would be void. The respondent 's case all along was that he was a citizen of India at the commencement of the Constitution under article 5 of the Constitution and apart from that he must be deemed to be a citizen of India at such commencement under article 6 of the Constitution. The Election Tribunal as already indicated rejected both these contentions. The learned judges of the High Court while indicating that they were inclined to think that the respondent 's claim to citizenship of India under article 5 could not be sustained did not consider that matter in detail, but held that his claim to be deemed to be a citizen of India at the commencement of the Constitution under article 6 thereof must prevail. The primary facts as found by the Tribunal on the evidence led by the parties before it, have been correctly summarised in the judgment of the High Court in these words: "On the evidence led by the parties the learned Tribunal held that it was proved that Mangal Sain was born of Indian parents sometime in 1927 in village Jhawarian, District Sargodha, and that when he was only two years old he was taken by his parents from 579 Jhawarian to Mandlay in Burma wherefrom the entire family returned to Jullunder (Punjab) in 1942 when Burma was occupied by the Japanese forces during the Second World War. After having stayed for a few days in Jullunder, Mangal Sain, his parents and his brother went to their home district Sargodha where they stayed for about two or two and a half years. During this period Mangal Sain passed Matriculation examination from the Punjab University and after having himself matriculated he again returned to Jullunder, where he was employed in the Field Military Accounts Office from 8th December, 1944 to 7th August, 1946, when his services were terminated because of his continuous absence from duty. Mangal Sain 's parents and his brother according to the findings of the learned Tribunal also returned from Sargodha to Jullunder and lived there for about two and a half years from some time in 1945 onwards before they again went over to Burma which country they had left in 1942 due to its occupation by the Japanese forces. While Mangal Sain was in service in the Field Military Accounts Office, he joined Rastriya Swayam Sewak Sangh movement and became its active worker. Sometime after his services were terminated, he shifted the scene of his activities to Hissar and Rohtak districts where be moved from place to place to organise the Rastriya Swayam Sevak Sangb movement. During this period apparently he had no fixed place of residence and he used to reside in the offices of the Jan Sangh and took his meals at various Dhabas. For about 4 months from June to September in the year 1948 Mangal Sain served as a teacher in Arya Lower Middle School, Rohtak. In July 1948 Mangal Sain submitted to the ' Punjab University his admission form for the University Prabhakar examination which form was duly attested by Prof. Kanshi Ram Narang of the Government College Rohtak. Sometime in January 1949 he was arrested in connection with the Rastriya Swayam Sevak Sangh movement and was detained i n Rohtak District Jail from 10th January, 1949, till 30th May, 1949. In August 1949 he again appeared in Prabhakar 580 examination and was placed in compartment, he also appears to have organised Rastriya Swayam Sevak Sangh in the districts of Rohtak and Hissar during the years 1948 49 and he used to move about from place to place without having any fixed place of abode. The Tribunal further found that it was sometime in the end of 1949 or in January 1950 that Mangal Sain left India and went to Burma where his parents and other brothers were already residing. In that country he tried to secure permission to stay there permanently, but the Government of Burma did not agree and directed him to leave that country ; in this connection he applied for a writ to the Supreme Court of Burma but his petition was disallowed. On the 29th October, 1951, Mangal Sain deposited with the competent authority in Burma the registration certificate granted to him under the Registration of Foreigners Act, 1948, and a few days later he came back to India and since then he has been living in this country and has been organising Rastriya Swayam Sevak Sangh movement in the districts of Hissar and Rohtak. In 1953 he was again arrested and detained in Rohtak jail as a detenue from the 8th February to 8th May, 1953, when be was transferred to Ambala jail ". On these facts the Tribunal further held that it cannot be said " that the respondent had an intention to settle in India permanently and that he had no intention of ever leaving it ". Taking along with these facts the respondent 's declaration in the affidavit (exhibit 5) to which we shall presently refer the Tribunal further held that " his own declaration in the affidavit (exhibit 5) and his conduct in going over to Burma and trying to settle there permanently furnish convincing proof that all along he had the intention to follow his parents and other relations to Burma and to settle there permanently ". The Tribunal finally concluded by saying that ,it is also quite clear that in the case of this respondent it cannot be said that he had no other idea than to continue to be in India without looking forward to any event certain or uncertain which might induce him to change his residence 581 On these findings of fact the Tribunal held that the respondent could not be deemed to be a citizen of India under article 6 of the Constitution. On these same primary facts mentioned above, Mr. Justice Dua who delivered the leading judgment of the High Court recorded his conclusion thus: "I can draw but only one conclusion from the evidence on the record, that the appellant who had moved from his home district to Jullunder had, after the 15th August, 1947, no other intention than of making the Dominion of India as his place of abode. On the 15th August, 1947, therefore the appellant 's migration from Jhawarian to the territory of India was clearly complete, whatever doubts there may have been before that date, though I would be prepared even to hold that he had moved away from his village in 1944 and had migrated to the eastern districts of the Punjab" Mr. Justice Falshaw agreed with this conclusion. On these conclusions the learned Judges held that the respondent 's claim to be deemed a citizen of India at the commencement of the Constitution must succeed. The main contention on behalf of the appellant is that the conclusion of the High Court, that when the respondent moved away from his village in 1944 and that at any rate after the 15th August, 1947, he had no other intention than of making the Dominion of India his place of abode, was arbitrary. It was also contended that in any case the migration under article 6 of the Constitution has to take place after "the territory of India " as contemplated in the Constitution had come into existence. Lastly it was contended, though faintly, that the respondent had not in any case complied with the requirements of being ordinarily a resident in the territory of India since the date of his migration. The respondent 's counsel besides challenging the correctness of the above contention further urged that the words " migrated to the territory of India " in article 6 only means come to the territory of India " and does not mean come to the 582 territory of India with the intention of permanently residing there ". The extreme contention raised by Mr. Sastri on behalf of the appellant that migration under article 6 must take place after the territory of India came into existence under the Constitution cannot be accepted. It has to be noticed that article 6 deals with the question as to who shall be deemed to be a citizen of India at the commencement of the Constitution. That itself suggests, in the absence of anything to indicate a contrary intention, that the migration which is made an essential requirement for this purpose must have taken place before such commencement. It is also worth noticing that cl. (b) of article 6 which mentions two conditions, one of which must be satisfied in addition to birth as mentioned in el. (a) and " migration " as mentioned in the main portion of the Article being proved, speaks in its first sub cl. of migration " before the 19th day of July 1948 " and in sub cl. (ii) migration " after the 19th day of July 1948 ". The second sub cl requires that the person must be registered as a citizen of India by an officer appointed in that behalf by the Government of the Dominion of India on an application made by him therefore to such officer before the commencement of the Constitution. The proviso to that Article says that no person shall be so registered unless he has been resident in the territory of India for at least six months immediately preceding the date of his application. It is clear from this that the act of migration in article 6 must take place before the commencement of the Constitution. It is clear therefore that " migrated to the territory of India " means " migrated " at any time before the commencement of the Constitution to a place now in the territory of India. This brings us to the important question whether migrated to the territory of India " means merely come to the territory of India " or it means " come to the territory of India to remain here " or in other words, " come to the territory of India with the intention of residing here permanently". There can be no doubt that the word migrate " taken by itself is 583 capable of the wider construction " come from one place to another " whether or not with any intention of permanent residence in the latter place. It is beyond controversy that the word " migrate " is often used also in the narrower connotation of " coming from one place to another with the intention of residing permanently in the latter place". Webster 's Dictionary (Second Edition, 1937) gives the following meaning of the word " migrate ": " To go from one place to another; especially, to move from one country, region, or place of abode or sojourn to another, with a view to residence; to move; as the Moors who migrated from Africa to Spain ". The Corpus Juris Secundum published in 1948 gives the same meaning except that it also gives " to change one 's place of residence " as one of the meanings. The word " Immigrate " which means " migrate into a country " and its derivatives " Immigrant " and " Immigration " have received judicial consideration in several Australian and American cases, in connection with prosecutions for contravention of Immigration laws. The Courts in Australia, were of opinion, on a consideration of the scheme and subject matter of their laws in question that the word " Immigrant " in the Immigrant Registration Act, 1901, and in section 51 of the Australian Constitution means a person who enters Australia whether or not with the intention of settling and residing there (Vide Chia Gee vs Martin (1)). The American courts however took the view in United States vs Burke (2), Moffitt vs United States (3) and United States vs Atlantic Fruit Co. (4) on a consideration of the purpose and scheme of the legislation, that "Immigrant" means a person who comes to the United States with a view to reside there permanently. We have referred to these cases on the meaning of the word " Immigration to show that there can be no doubt that the word migrate" may have in some contexts the wider meaning " come or remove to a (1) ; (2) (1899) 99 Federal Reports 895. (3) (1904) 128 Federal Reports 375. (4) (1914) 212 Federal Reports 711. 75 584 place without an intention to reside permanently" and in some, context the narrower meaning " come or remove to a place with the intention of residing there permanently". The fact that the Constitution makers did not use the words " with the intention to reside permanently " in article 6 is however no reason to think that the wider meaning was intended. In deciding whether the word " migrate " was used in the wider or the narrower sense, it is necessary to consider carefully the purpose and scheme of this constitutional legislation. The Constitution after defining the territory of India and making provisions as to how it can be added to or altered, in the four articles contained in its first Chapter proceeds in the second Chapter to deal with the subject of citizenship. of the seven articles in this chapter the last Article, article 11, only saves expressly the right of Parliament to make provisions as regards acquisition and termination of citizenship and all other matters relating to citizenship. Of the other six articles, the first, article 5, says who shall be citizens of India at the commencement of the Constitution; while articles 6 and 8 lay down who though not citizens under article 5 shall be deemed to be citizens of India. article 10 provides that once a person is a citizen of India or is deemed to be a citizen of India he shall continue to be a citizen of India, subject of course to the provisions of any law that may be made by Parliament. article 9 provides that if a person has voluntarily acquired citizenship of any foreign State he shall not be a citizen of India or deemed to be a citizen of India. article 7 also denies the right of citizenship to some persons who would have otherwise been citizens of India under article 5 or would be deemed to be citizens of India under article 6. The primary provision for citizenship of India, in this scheme is in article 5. That follows the usual practice of insisting on birth or domicile which shortly stated means " residence with the intention of living and dying in the country " as an essential requirement for citizenship; and confers citizenship on a person fulfilling this requirement if he also satisfied another requirement as regards his birth within what 585 is now the territory of India or birth of any of his parents within this area or ordinary residence in this area for a continuous period of five years immediately preceding the commencement of the Constitution '. If there had been no division of India and no portion of the old India had been lost this would have been sufficient, as regards conferment of citizenship apart from the special provision for giving such rights to persons of Indian origin residing outside India. But part of what was India as defined in the Government of India Act, 1935, had ceased to be India and had become Pakistan. This gave rise to the serious problem whether or not to treat as citizens of India the hundreds of thousands of persons who were of Indian origin in the sense that they or any of their parents or any of their grand parents had been born in India but who, would not become citizens under article 5. The Constitution makers by the provisions of article 6 decided to treat as citizens some of these but not all. Those who had not come to the new India before the date of the commencement of the Constitution were excluded; those who had so come were divided into two categories those who had come before the 19th July, 1948, and those who had come on or after the 19th July, 1948. Persons in the first category had in order to be treated as citizens to satisfy the further requirement of " migration " whatever that meant, and of ordinary residence in the territory of India since they " migrated " to India; while those in the second category had, in addition to having migrated, to be residents for not less than six months preceding the date of the application for registration as citizens which application had to be filed before the date of the commencement of the Constitution. But while the primary provisions in the Constitution as regards the citizenship for people born at a place now included in India and people whose parents were born at a place now in India insist on the requirement of intention to reside here permanently by using the word " domicile ", article 6 which under the scheme of the Constitution deals with what may be called " secondary citizenship " and says about some persons that 586 they will be deemed to be citizens of India, does not mention " domicile " as a requirement. Can it be that the Constitution makers thought that though in the case of persons born in what has now become India or those any of whose parents was born in what is now India as also in the case of person who had been residing here for not less than five years in what is now India, it was necessary to insist on domicile before conferring citizenship, that was not necessary in the case of persons whose parents or any of Whose grand parents had been born in what was formerly India but is not now India ? In our opinion the Constitution makers could not have thought so. They were aware that the general rule in almost all the countries of the world was to insist on birth or domicile as an essential prerequisite for citizenship. They knew that in dealing with a somewhat similar problem as regards citizenship of persons born out of what was then the territory of Irish Free State, the Constitution of the Irish Free State had also insisted on domicile in the Irish Free State as a requirement for citizenship. There can be no conceivable reason for their not making a similar insistence here as regards the persons who were born outside what is now India, or persons any of whose parents or grand parents were born there. Mention must also be made of the curious consequences that would follow from a view that an intention to reside permanently in the territory of India and is not necessarily in article 6. Take the case of two persons, one of whom was born in what is now India and has all along lived there and another person who though born in what is now India went to live in areas now Pakistan and then moved back to areas in what is now India. The first named person would have to satisfy the requirement of domicile at the commencement of the Constitution before he is a citizen; but the second person would not have to satisfy this condition. It would be unreasonable to think that such a curious result could have been intended by the Constitution makers. For all these reasons it appears clear that when the framers of the Constitution used the words " migrated 587 to the territory of India " they meant " come to the territory of India with the intention of residing there permanently ". The only explanation of 'their not expressly mentioning " domicile " or the " intention to reside permanently " in article 6 seems to be that they were confident that in the scheme of this Constitution the word "I migration " could only be interpreted to mean " come to the country with the intention of residing there permanently ". It is of interest to notice in this connection the proviso to article 7. That article provides in its first part that a person who would be a citizen of India or would have been deemed to be a citizen of India in articles 5 and 6 would not be deemed to be a citizen if he has migrated from the territory to Pakistan after March 1, 1947. The proviso deals with some of these persons who after such migration to Pakistan have returned to India. It appears that when this return is under a permit for resettlement or permanent return that is, resettlement in India or return to India with the intention to reside here permanently the main provisions of Article 7 will not apply and for this under article 6 of the Constitution such a person would be deemed to have migrated to India after the 19th July, 1948. That the return to India of such migrant has to be under a permit for resettlement or permanent return in order that he might escape the loss of citizenship is a strong reason for thinking that in article 6 the intention to reside in India permanently is implicit in the use of the phrase "I migrated to the territory of India". It may sometimes happen that when a person moves from one place to another or from one country to another he has, at the point of time of moving, an intention to remain in the country where he moved only temporarily, but later on forms the intention of residing there permanently. There can be no doubt that when this happens, the person should at this later point of time be held to have " come to the country with the intention of residing there permanently ". In other words, though at the point of time he moved into the new place or new country he cannot be said to have migrated to this place or country 588 he should be held in law to have migrated to this later place or country at the later point of time when he forms the intention of residing there permanently. This view of law was taken both by the Election Tribunal and the High Court and was not seriously disputed before us. The Election Tribunal and the High Court therefore rightly addressed themselves to the question whether in 1944 when Mangal Sain first came to Jullunder in what is now the territory of India from his home in Jhawarian now in Pakistan he had the intention of residing in India permanently and even if he at that point of time had no such intention, whether after he had come in 1944 to what is now the territory of India, he had at some later point of time formed the intention of residing here permanently. On this question, as already indicated, the Election Tribunal and the High Court came to different conclusions. While the Election Tribunal held that Mangal Sain had at no point of time the intention of residing in India permanently, the High Court was prepared to hold that even when he moved from his home in 1944 to the eastern districts of Punjab he had the intention of residing there permanently, and held that at least after August 15, 1947, he had no other intention than of making the Dominion of India his place of abode, and residing here permanently. It has been strenuously contended before us that in coming to this conclusion the High Court has acted arbitrarily and has ignored important evidence which, it is said, showed clearly that the respondent had no intention of residing permanently in India. In considering such an argument, it is proper for us to bear in mind the provisions of section 116B of the Representation of the People Act which lays down that the decision of the High Court on appeal from an order of the Election Tribunal in an election petition shall be " final and conclusive ". It has been pointed out in more than one case by this Court, that while these provisions do Dot stand in the way of this Court 's interfering with the High Court 's decision in a 589 fit case, it would be proper for us to bear these provisions of the Representation of the People Act in mind when the correctness of such a decision is challenged before this Court. It is unnecessary for us to consider whether the view of the High Court that even in 1944 Mangal Sain could be said to have been migrated to the eastern districts of Punjab can be successfully challenged or not. Even assuming that conclusion is out of the way, the further conclusion of the High Court that having moved from his home district to Jullunder in 1944 Mangal Sain had after August 15, 1947, no other intention than of making the territory of India his place of abode would be sufficient to prove his migration to the territory of India from what is now Pakistan. We have been taken through the materials on the record relevant to this question and we can see nothing that would justify our interference with the High Court 's conclusion on this point. Much stress was laid by the appellant 's counsel on the fact that Mangal Sain left Indian shores for Burma in January, 1950, and after his arrival there made an application under section 7(1) of the Union Citizenship Act, 1948, (of Burma) giving notice of his intention to apply for a certificate of naturalization and his statement therein that he intended to reside permanently within the Union of Burma. Assuming however, that in October, 1950, or even in January ' 1950, when he left for Burma, Mangal Sain had formed the intention of taking up his permanent residence in Burma, that is wholly irrelevant to the question whether in 1947 he had the intention of residing permanently in India. Learned counsel for the appellant also drew our attention to a statement made in this very application that Mangal Sain had returned to Burma with his mother in 1947. The High Court has after ' considering this statement held that he had not so returned in 1947. We see no reason to differ with this finding of the High Court. In our opinion, there is nothing on the record to justify any doubt as regards the correctness of the High Court 's decision that after August 15, 1947, Mangal Sain who had earlier moved from a place now in Pakistan to Jullunder in India definitely, made up 590 his mind to make India his permanent home. Whether or not in January, 1950, he changed that intention is irrelevant for our purpose. Our conclusion therefore is that the High Court is right in holding that Mangal Sain satisfies the first requirement of article 6 of the Constitution of " migration to the territory of India from the territory now included in Pakistan ". It is not disputed and does not ever appear to have been disputed that Mangal Sain was born in India as defined in the Government of India Act, 1935, and thus satisfies the requirement of cl. (a) of article 6. There can be no doubt also that since the date of his migration which has for the present purpose to be taken as August 15, 1947, Mangal Spain has been St ordinarily residing in the territory of India ". Mr. Sastri contended that to satisfy the test of being " ordinarily resident in the territory of India since the date of his migration " it had to be shown that Mangal Sain was in India on January 26, 1950. We do not think that is required. It is first to be noticed that article 6 of the Constitution is one of the Articles which came into force on November 26, 1949. For applying. the test of being "ordinarily resident in the territory of India since the date of his migration ", it is necessary therefore to consider the period up to the 26th day of November, 1949, from the date of migration. It is not however even necessary that on the 26th day of November, 1949, or immediately before that date he must have been residing in the territory of India. What is necessary is that taking the period beginning with the date on which migration became complete and ending with the date November 26, 1949, as a whole, the person has been " ordinarily resident in the territory of India ". It is not necessary that for every day of this period he should have resided in India. In the absence of the definition of the words " ordinarily resident " in the Constitution it is reasonable to take the words to mean " resident during this period without any serious break ". The materials on the record leave no doubt that there was no break worth the. name in Mangal Sain 's residence in the 591 territory of India from at least August 15, 1947, till the 26th November, 1949. We have therefore come to the conclusion that the High Court was right in sustaining Mangal Sain 's claim to be deemed a citizen of India under article 6 of the Constitution and, in that view was also right in allowing his appeal and ordering the dismissal of the Election Petition. In the view we have taken as regards Mangal Sain 's claim to citizenship under article 6 of the Constitution it is not necessary to consider whether his claim to citizenship under article 5 of the Constitution was also good. We therefore dismiss the appeal with costs. Appeal dismissed. [/INST] The respondent was the successful candidate at the general election held in March, 1957, for the Punjab Legislative Assembly. The appellant who was one of the unsuccessful candidates, filed an election petition and challenged the validity of the respondent 's election on the grounds, inter alia, that the latter was not a citizen of India and was, therefore, not qualified to stand for election. It was found that he was born of Indian parents sometime in 1927 in India as defined in the Government of India Act, 1935, in a village which since August 15, 1947, became part of Pakistan, that in 1944 he had moved from his home district to Jullunder in what is now the territory of India, and that after August 15, 1947, he definitely made up his mind to settle in India with the intention of residing there permanently. There was some evidence to show that he went to Burma in January, 1950, and made unsuccessful attempts to secure permission from the Government of Burma to stay there permanently. The question was whether the respondent could be deemed to be a citizen of India within the meaning of article 6 of the Constitution of India. Held:(1) that the expression " migrated to the territory of India " in article 6 of the Constitution means " migrated at any time before the commencement of the Constitution to a place now in the territory of India ". (2)that in article 6 the words " migrated to the territory of India " mean " come to the territory of India with the intention of residing there permanently ". (3)that where a person moves from one country to another and has, at the time of moving, a intention to remain in the country where he moved only temporarily, but later on forms the intention of residing there permanently, he should be held in law to have migrated to that country at the later point of time. (4)that for applying the test of being " ordinarily resi dent in the territory of India since the date of his migration " in article 6(b)(i), what is necessary to be shown is that during the period beginning with the date on which migration became 577 complete and ending with November 26, 1949, as a whole, the person has been " ordinarily resident in the territory of India ". Whether he was not in India on January 26, 1950, or whether he formed an intention of taking up his permanent residence in Burma when he left for that place in January, 1950, was not relevant. (5)That the words " ordinarily resident " in the Consti tution mean " resident during this period without any serious break ". It is not necessary that for every day of this period the person should have resided in India. (6)that the respondent satisfied the requirements of article 6 ofthe Constitution and that his claim to be deemed a citizen of India must be upheld. </s>

<s>[INST] Summarize the following judgement: 67/1960. Petition under Article 32 of the Constitution of India for enforcement of fundamental rights. 633 A. V. Viswanatha Sastri and B. B. L. Iyengar, for the petitioners. C. K. Daphtary, Solicitor General of India, R. Ganapathy Iyer and R. H. Dhebar, for the respondents. September 8. The Judgment of the Court was delivered by A SUBBA RAO J. This is a petition under article 32 of the Constitution to quash the order of the first respondent dated April 28, 1960, and the scheme dated April 20, 1960, and to direct the first respondent to deal with the application of the petitioner for renewal of its permit in accordance with law. The petitioner was doing business of motor transport in Bombay State for over 20 years. It had four permanent stage carriage permits granted some years ago and renewed from time to time to ply buses on the following routes: (i) Yeotmal Umerkhed. 2 return trips. (ii) Yeotmal Pusad. 4 return trips. The term of the latest permits expired on December 31, 1959. About four months prior to the expiry of the permits the petitioner applied on August 24, 1959, for the renewal of the permits under section 58(2) of the (Act IV of 1939), (hereinafter called the Act). On October 29, 1959, the State Transport Department published its proposed scheme for the nationalization of the road transport services in respect of an area which included the routes of the petitioner. On November 9, 1959, the petitioner wrote a letter to the Secretary, the Regional Transport Authority, Nagpur, asking him why its application for renewal of the stage carriage permits had not been published as required by section 57 of the Act. It also expressed its apprehension that the application was not published by the Regional Transport Authority with a view to assist the State Transport Department in ousting it from the said routes and that the Authority was creating a situation in order to force the petitioner to accept temporary permits under section 62(d) of the Act . The Secretary, the Regional Transport 634 Authority, by his letter dated November 11, 1959, replied to the effect that the application for renewal had been published on November 8, 1959, and that the said application would be considered before the expiry date and that no question of issuing temporary permits would arise. On November 19, 1959, the Assistant Manager of the State Transport Department on behalf of the State Transport Department filed applications before the Regional Transport Authority for issue of permits to it in respect of the said two routes among others. It was mentioned therein that as per the notification published in the Bombay Government Gazette dated October 29, 1959, the Provincial Transport Services proposed to take over the aforesaid routes from January 1, 1960. The Provincial Transport Services also filed objections against the renewal of the permits in favour of the petitioner. On December 10, 1959, the said applications were published in the Gazette and it was notified therein that representations, if any, should be submitted on or before December 15, 1959, and that the said objections along with the applications for permits would be considered in a meeting to be held by the Regional Transport Authority in the month of December, 1959, at Nagpur or at a later date which may be notified in due course. On December 21, 1959, the Secretary of the Regional Transport Authority intimated to the petitioner that in the meeting of the Regional Transport Authority scheduled to be held on December 31, 1959, it would not be possible to consider its applications for renewal due to " heavy agenda ". It was also suggested to it to apply for the grant of temporary permits pending renewal in good time so that they could be issued before the due date. The petitioner on the same date replied to that letter wherein it pointed out that " the heavy agenda mentioned in your letter is, we hold, a design to cover your attempt to ad Vance the cause of the Provincial Transport Services, (U. G. O.), Nagpur ". Without prejudice to its rights the petitioner applied for temporary permits as directed by the Authority On December 29, 1959, temporary permits were issued for one month from January 1, 635 1960, and thereafter they were extended for another month and made available upto March 31, 1960. The ,next meeting of the Regional Transport Authority scheduled to be held on February 5, 1960, was adjourned to February 24, 1960, and on January 22, 1960, the Chief Minister of Bombay issued notices to the petitioner and others that objections to the proposed scheme would be heard on February 24, 1960; but on the said date the applications were not disposed of on the ground that the matter was sub judice in the High Court of Bombay. On March 17, 1960, the Provincial Transport Services filed a fresh application before the Regional Transport Authority under Ch. IVA of the Act for the grant of permits for plying buses on the routes mentioned therein. It was also brought to the notice of the Regional Transport Authority that the Provincial Transport Services desired to operate tile routes in question from May 1, 1960, or any other date as may be fixed by the Regional Transport Authority. Presumably, the second application was filed as the earlier application was filed not under Ch. IV but Under Ch. IVA of the Act on the basis of the proposed scheme. On March 31, 1960, the Regional Transport Authority met again, but the applications for renewal of permits filed by the petitioner were not taken up for consideration. It is suggested that as 30 days had not expired from the date of the filing of the applications by the Provincial Transport Services the petitioner 's applications could not be taken up for consideration. On April 14, 1960, the Chief Minister of Bombay heard the objections and on April 19, 1960, the scheme with modifications was duly approved by the Government and published on April 20, 1960. The approved scheme covered only the routes in respect of which only tem porary permits were issued and excluded the routes in regard to which pucca permits were issued. The approved scheme included the petitioner 's routes. On April 20, 1960, the applications were again adjourned to April 29,1960. On April 26, 1960, the petitioner moved this Court under Art.32 of the Constitution and on April 28, 1960, the petition was dismissed as premature. 636 On the same day even though the Regional Transport Authority was informed that this Court was moved by the petitioner its renewal applications were rejected on the ground that the scheme was approved by the Government. The present petition was filed on April 29, 1960, for the aforesaid reliefs. The main contention of learned counsel, Mr. A. V. Viswanatha Sastri, for the petitioner, is that the Regional Transport Authority was actuated by mala fides in the disposal of the applications for renewal of the permits, and that though under the provisions of the Act it had no alternative but to renew the permits of the petitioner it adjourned the matter from time to time with an evil design to enable the Government to approve the scheme. In that situation, he contends, the proper course is to set aside the order of the Regional Transport Authority and direct it to dispose of the petitioner 's applications for renewal of permits as on the date when they were filed. To appreciate this argument it is necessary to notice some of the relevant provisions of the Act. Under section 58 of the Act, " A stage carriage permit or a contract carriage permit. . shall be effective without renewal for such period, not less than three years and not more than five years, as the Regional Transport Authority may specify in the permit ". Clause (2) provides for the renewal of permits on application made and disposed of as if it were an application for a permit. Section 57 prescribes the procedure in the matter of the disposal of applications for permits. Section 57 (1) enables the filing of an application for a permit at any time, and clause (2) of that section says that such an application shall be made not less than six weeks before the date on which it is desired that the permit shall take effect, and, under cl. (3) thereof, on receipt of such an application for permit the Regional Transport Authority shall publish the application in the prescribed manner calling for representations to be made on a date not being less than 30 days from the date of publication. After hearing the said objections and representations, the applications will be disposed of in accordance with the provisions of 637 the Act. Section 62 enables the Regional Transport Authority to grant permits without following the procedure prescribed under section 57 to be effective for a limited period not in any case to exceed four months, to authorize the use of a transport vehicle temporarily pending decision on an application for the renewal of a permit. The second proviso to that section states that a temporary permit under the said section shall, in no case, be granted more than once in respect of any route or area specified in an application for the renewal of a permit during the pendency of such application for renewal. Section 68F enables the State Transport Undertaking, in pursuance of an approved scheme, to apply in the manner specified in Ch. IV for a stage carriage permit in respect of a notified route and on such an application the Regional Transport Authority shall issue such a permit to the said Undertaking notwithstanding anything contained to the contrary in Ch. Under cl. (2) of that section, for the purpose of giving effect to the approved scheme in respect of a notified area or notified route, the Regional Transport Authority may by order refuse to entertain any application for the renewal of any other permit, to cancel any existing permit or to modify the terms of any existing permit. Section 68G prescribes the principles and method of determining compensation in respect of the permits cancelled or modified. The foregoing provisions, so far relevant to the present enquiry, may be summarized thus: An operator of a stage carriage may apply for renewal of his permit not less than 60 days before the date of its expiry; the said application will be disposed of as if it were an application for a permit and he will be given preferential treatment, the other conditions being equal; the Act does not prescribe any outer limit for disposal of the application for renewal of a permit, for its disposal would depend upon the applications filed by others and the time required for complying with the conditions laid down in section 57; but the requirement that the application shall be filed not less than 60 days before the date of the expiry, the injunction that pending an application for 638 renewal of a permit, temporary permit shall not be given more than once and the time limit of four months for a temporary permit fixed in section 62 indicate that, though there is no statutory prohibition, the application is expected to be disposed of ordinarily before the term of the, permit expired or, in case of unavoidable delay, within a reasonable time thereafter; after a scheme has been approved, if the State Transport Undertaking applies for a permit, the Regional Transport Authority shall issue the permit to it and for the purpose of giving effect to the approved scheme the said Authority is authorized to refuse to entertain an application for renewal of any other permit or cancel or modify any existing permit; if the Regional Transport Authority cancels or modifies a permit, compensation is, payable to the operator affected. In the present case the permits expired on December 31, 1959. The petitioner filed applications for renewal on August 24, 1959, and they were rejected on the ground that there was an approved scheme on April 28, 1960. On December 29, 1959, temporary permits were granted for one month and after the expiry of those permits, another set of temporary permits was issued for another month ending with March 31, 1960. It is true that under the second proviso to section 62 temporary permits could not have been granted more than once, but a transgression of that provision by the Regional Transport Authority does not affect the question raised. As the provisions of the Act do not prescribe any time limit for the disposal of an application for renewal of permits, we cannot hold that the Regional Transport Authority acted without jurisdiction in rejecting the applications some months after the date of the expiry of the terms of the permits. If there was any inordinate delay in the disposal of an application, it was open to the affected party to ask for a mandamus to direct the appropriate Authority to dispose of the petition within a reasonable time. But no such step was taken by the petitioner, though it filed a writ petition in the High Court for other reliefs. 639 The next question is whether the Regional Transport Authority exceeded its power in rejecting the applications. In this context it will be convenient to read the relevant portions of section 68F, which read: Section 68F: "(1) Where, in pursuance of an approved scheme, any State transport undertaking applies. . . for a stage carriage permit the Regional Transport Authority shall issue such permit to the State transport undertaking. . . (2) For the purpose of giving effect to the approved scheme in respect of a notified area or notified route, the Regional Transport Authority may, by order, (a) refuse to entertain any application for the renewal of any other permit. " Learned counsel for the petitioner contends that section 68F applies only when an application for permit is made by a State Transport Undertaking in pursuance of an approved scheme and that in the present case as the application was filed by the State Transport Undertaking before the scheme was approved, the provisions of the section were not attracted. It is true that under section 68F the Regional Transport Authority is bound to issue a permit to a State Transport Undertaking only ' if it applies in pursuance of an approved scheme. That is why in the present proceedings the Authority did not issue any permit to the State Transport Undertaking; but sub section (2) of section 68F is not conditioned by any such limitation. The Regional Transport Authority is authorized for the purpose of giving effect to an approved scheme to refuse to entertain an application for renewal of any other permit. This power does not depend upon the presentation of an application by the State Transport Undertaking for a permit. This power is exercisable when it is brought to the notice of the Authority that there is an approved scheme and, to give effect to it, the application for renewal cannot be entertained. By the time the application for renewal came to be disposed of, admittedly the scheme had been approved by the Government of Bombay and the routes in question were included in the said scheme. Therefore$ 82 640 the Authority was within its rights not to entertain the applications filed by the petitioner. It is contended that the word " entertain " refers to an application filed for the renewal of a permit after the scheme was approved and that the said provision has no relevance to an application for renewal made before that date. The word " entertain " may mean " to receive on file or keep on file ", and in that sense the Authority may refuse to keep an application on its file by 1. rejecting it either at the time it is filed or thereafter. It does not connote any time but only describes the scope of the duty under that clause. It can only mean that the Authority cannot dispose of the application on merits but can reject it as not maintainable. Any other meaning given to this word leads to an anomalous position, for even if the approval of a scheme had been brought to the notice of the Regional Transport Authority, it would have to order the renewal of the permit and thereafter it would have to cancel the permit, presumably, on an application filed by the State Transport Undertaking. We do not think that the legislature used the word " entertain " to bring about that result. A wider meaning of the word " entertain " would enable the smooth working of the provisions of the section and we have no reason to accept the narrower meaning suggested by the learned counsel. We, therefore, hold that the Regional Transport Authority had power under section 68F(2) of the Act in the circumstances of the case to reject the applications filed by the petitioner. The next contention of the learned counsel is that the scheme suffers from the vice of discrimination inasmuch as, though it excluded the petitioner from operating on the route between Yeotmal and Umerkhed, it allowed others to ply their buses on that route on their way from Akola to Umerkhed or Amravati to Umerkhed. There is no basis for this argument in the affidavit filed by the petitioner is support of the writ petition. We do not think that we are justified in allowing the petitioner to raise the plea for the first time before us. We do not, therefore, allow it to do so. 641 Lastly it is argued that the Chief Minister confirmed the scheme on extraneous considerations not covered by section 68C of the Act. In paragraph 24 of his order the Chief Minister observed, " On merits, it is quite clear to me that having regard to the resources of the P. T. section and the amenities that it provides to the public, it is in the public interest that the scheme submitted by the P. T. section, Nagpur, should be approved ". Under section 68C the question that arose for consideration before the Chief Minister was whether the transport services should be run by the State Transport Under. taking to the exclusion of the petitioner and whether it was necessary to do so in public interest to provide an efficient, adequate, economical and properly co ordinated road transport service. The Chief Minister found on the material placed before him that it was necessary in the public interest that the scheme submitted by the Provincial Transport Services should be approved. In support of his conclusion, he took into consideration that the Provincial Transport Services were in possession of sufficient resources and were in a better position to provide amenities to the public and therefore in public interest they should be given preference over the private operators of buses. We cannot say that the Chief Minister took any extraneous circumstances into consideration in coming to that conclusion. The record in this case is not indicative of promptitude or efficiency in the matter of discharge of the statutory functions by the Regional Transport Authority. The various dates, the reasons given for putting off the disposal of the petitions for renewal from time to time and the timing and the manner of the final disposal are such as may legitimately give rise to the allegation that the Regional Transport Authority was not, to say the least, fair and impartial in the discharge of its duties. A statutory tribunal is expected to discharge its functions fairly and without bias even in a case where the interests of the Government are involved. Considering the facts and circumstances of this case, we cannot say that the complaint of the petitioner that the adjournments were not for the 642 reasons mentioned in the orders but were only to give time to enable the Government to approve the scheme, may not be wholly unjustified. In the circumstances, though we are dismissing the application, we are not awarding any costs to the respondents. Petition dismissed. [/INST] As the petitioner 's stage carriage permits were to expire on December 31, 1959, it made applications for a renewal of them 81 632 on August 24, 1959. on December 29, 1959, temporary permits were granted to the petitioner for one month and thereafter for another, made available up to March 31, 196o. The matter was adjourned from time to time and ultimately on April 28, 196o, the petitioner 's applications were rejected on the ground that a scheme of nationalisation including the petitioner 's routes had in the meantime been approved by the Government on April 20, 196o. The petitioner applied under article 32 of the Constitution for a writ quashing the said order and the scheme, on the ground that the Regional Transport Authority was actuated by mala fides and its real purpose in granting the adjournments was to enable the Government to approve of the scheme, and for a direction that the petitioner 's applications for renewal might be disposed of according to law as on the date when they were filed. Held, that the petition must fail. The , does not prescribe any time limit for the disposal of an application for renewal of permits and it cannot be said that the Regional Transport Authority in the instant case acted without jurisdiction in rejecting the applications even though months had elapsed after the permits had expired and notwithstanding that section 62 permitted the issue of no more than one temporary permit. Even so, the relevant provisions of the Act indicate that an application for renewal of a permit has to be disposed of ordinarily before the expiry of the permits or within a reasonable time thereafter. It was, therefore, open to the petitioner, if it was aggrieved by the delay, to ask for a mandamus directing the Authority to dispose of its applications within a reasonable time. Although section 68F(1) of the Act applies only where the State Transport Undertaking applies for a permit in pursuance of an approved scheme, section 68F(2) is not conditioned by any such limitation and the word 'entertain used by it does not refer to an application filed for the renewal of a permit after the approval of the scheme. That word does not connote any time but describes the scope and duty under that clause and only means that the Authority cannot dispose of an application on merits but can reject it as not maintainable either at the time it is filed or thereafter. Statutory bodies are in duty bound to act promptly and efficiently and discharge their functions fairly and without bias even where the Government is interested. The conduct of the Regional Transport Authority, in the instant case, in granting adjournments, not for the reasons they purported to be but to enable the Government to approve of the scheme, must be disapproved. </s>

<s>[INST] Summarize the following judgement: Appeals Nos. 401 to 403 of 1960. Appeals by special leave from the judgment and orders dated March: 1, 1960, of the Punjab High Court 601 (Circuit Bench) at Delhi in Civil Revision Cases Nos. 166 D, 167 D and 168 D of 1958. A. V. Viswanatha Sastri, section section Chadha and R. section Narula, for the appellants (in all the appeals). C. B. Aggarwala and B. Kishore, for the respondents (in C. A. No. 401 of 60). C. B. Aggarwala, R. M. Gupta and G. O. Mathur, for the respondents (In C. As. 402 & 403 of 60). September 8. The Judgment of the Court was delivered by KAPUR J. These appeals are directed against three judgments and orders of the Punjab High Court in three Civil Revisions Nos. 166 D, 167 D and 168 D which were brought by the appellants against three of their tenants under section 35 of the Delhi & Ajmer Rent Control Act (XXXVIII of 1952), hereinafter termed the Act. The appellants in all the three appeals are the landlords and the respondents in the three appeals are three different tenants. The appellants filed three separate suits for the eviction of their three tenants under cl. (g) of proviso to section 13(1) of the Act on the ground that the premises were bona fide required for purposes of rebuilding. On February 27, 1953, the parties in all the three suits entered into a compromise in the following terms : "We have compromised the case with the plaintiff. A decree may be passed for Rs. 82/8/ on account of rent in suit and for ejectment in respect of the shop in suit in favour of the plaintiff against the defendants ' The defendants will vacate the shop by 4 3 53 and hand over possession to the plaintiff and the plaintiff will hand over its possession again (second time) to the defendants within six months from 4 3 53 after constructing it afresh. We shall pay such rent as this court will fix ". Thereupon the court passed the following order and a decree followed thereon: " In terms of the statements of the plaintiff., defendant and counsel for defendants a decree for Rs. 82/8/ on account of rent in suit be passed in favour 602 of the plaintiff against the defendants. Also decree for ejectment be passed in respect of the shop in suit in favour of the plaintiff against the defendants and that the defendants do give possession of the shop in suit by 4 3 53 to the plaintiff and that the plaintiff after constructing it afresh within six months from 4 3 53 give it to the defendants. From out of the money deposited, a sum of Rs. 82/8/ be paid to the plaintiff and the balance returned to the defendants. The defendants shall be responsible to pay the rent fixed by the court ". According to the decree the possession was to be given to the appellants on March 4, 1953, but it was actually delivered by the three respondents between March 7 and 15, 1953. On the completion of the building the three respondents filed three separate applications under section 15 of the Act for their being put into possession. These applications were filed on October 7, 1953. The High Court held that the compromise did not comprise any matter which was not the subject matter of the suit ; that the respondents could enforce the terms of the decree in the proceedings which they took, i. e., under section 15 of the Act; that time was not of the essence of the compromise and therefore of the decree and consequently in spite of the possession of the premises having been given by the respondents after the date specified in the decree, i. e., March 4, 1953, the respondents were entitled to enforce the decree by execution and apply for possession being restored to them ; at any rate they could apply for restitution under the inherent powers of the Court. Thus the High Court was of the opinion that though section 15(2) of the Act was not applicable to the proceedings they could be treated as Execution proceedings. Against this judgment and order the appellants have come in appeal to this court by special leave. Under section 13 of the Act the respondents are protected against eviction excepting for the reasons given in the proviso. The appellants had filed the original suits for eviction under section 13, proviso (g), which was as under 603 Section 13: " Notwithstanding anything to the contrary contained in any other law or any contract, no decree or order for the recovery of possession of any premises shall be passed by any court in favour of the landlord against any tenant including a tenant whose tenancy is terminated): Provided that nothing in this sub section shall apply to any suit or other proceeding for such recovery of possession if the Court is satisfied (g) that the premises are bona fide required by the landlord for the purpose of rebuilding the premises or for the replacement of the premises by any building or for the erection of other building and that such building or rebuilding cannot be carried out without the premises being vacated ; ". Thus when the suits were brought the provisions of the Act were invoked. The decrees passed were on the basis that the premises were required by the landlord for rebuilding which falls under section 13 and the decrees also incorporated the requirements of section 15 which provides: "The Court shall, when passing any decree or order on the grounds specified in clause (f) or clause (g) of the proviso to sub. section (1) of section 13 ascertain from the tenant whether he elects to be placed in occupation of the premises or part thereof from which he is to be evicted and if, the tenant so elects, shall record the fact of the election in the decree or order and specify therein the date on or before which he shall deliver possession so as to enable the landlord to commence the work of repairs or building or rebuilding, as the case may be. (2) If the tenant delivers possession on or before the date specified in the decree or order, the landlord shall, on the completion of the work of repairs or building or rebuilding place the tenant in occupation of the premises or part thereof. (3) If, after the tenant has delivered possession on or before the date specified in the decree or order the landlord fails to commence the work of repairs or building or rebuilding within one month of the specified date or fails to complete the work in a reasonable 604 time or having completed the work, fails to place the tenant in occupation of the premises in accordance with sub section (2), the Court may, on the application of the tenant made within one year from the specified date, order the landlord to place the tenant in occupation of the premises or part thereof on the original terms and conditions or to pay to such tenant such compensation as may be fixed by the Court". The compromise, the order and the decree provided (1) that the respondents will vacate their respective shops on March 4, 1953, and hand over possession to the appellants; (2) they elected to get back possession after rebuilding,which the appellants agreed to hand back on September 4, 1953; (3) the rent after such possession was to be determined by the court. It was contended on behalf of the appellants that the above facts taken with the circumstances that the decree was passed in a suit under section 13(1), proviso (g), show that this was an order passed and a decree made in accordance with the terms of section 15 of the Act. It is significant that the respondents themselves made the applications to the court under section 15 of the Act. For the respondents it was argued that the decree was not one under section 15 of the Act because the decree was based on a compromise whereby the parties fixed the date of delivery of possession to the appellants; fixed the date for completion of the rebuilding and agreed between themselves as to repossession by the respondents. It was submitted that although the time for giving delivery to the appellants was fixed in the compromise it was not of the essence of the contract. In our opinion the contentions raised by the appellants are well founded and the appellants must succeed. The suits for eviction were brought within the framework of the Act and were based on the provisions of section 13, proviso (g). No eviction would have been possible excepting when conditions laid down in section 13 were satisfied. The decrees which were passed were substantially in accordance with the provisions of section 15 of the Act and as was contended by the appellants they were decrees under which the premises had to be vacated by the respondents on a specified day. 605 Under that section they had the right to elect and did elect to get possession after rebuilding; this possession was to be given by the landlords to the tenants within a reasonable time and six months ' period was fixed by Consent between the parties and the rent, if the respondents were not put into possession on the same terms as before, was to be settled by court and that is what was done under the terms of the consent decree. The applications for being put into possession which were filed by the respondents were really under section 15(3) of the Act. As the respondents did not deli ver possession to the appellants on or before the dates specified in the decree the provisions of section 15 contained in sub section (3) of that Act were not available to them and they were ,not entitled to be put into possession as prayed by them. It was argued that the appellants had taken possession of the premises after the specified date without protest and had even accepted rent upto then and were therefore estopped from raising that defence. The appellants had conceded in the court,% below that plea could be raised in a suit if it was brought. In the view we have taken we think it unnecessary to express any opinion oil this point. The High Court was, in our opinion, in error in ordering possession to be, delivered to the respondents. The appeals must therefore be allowed and the judgments and orders of the High Court set aside. The appellants will have their costs in this Court. One set of hearing Costs. Appeal allowed. [/INST] Three separate suits for eviction by the appellant were brought against the three respondents within the framework of the Delhi & Ajmer Rent Control Act and were based on the provisions of section 13(g) for the bona fide requirements of rebuilding. Terms of compromise which were substantially in accordance with the provisions of section 15 of the Act were put in by the parties and decrees were passed in the suits, under which the premises had to be vacated by the respondents on a specified day, which condition the respondents failed to observe and actually handed over the possession of the premises in suit at a later date. On completion of the building the respondents filed an application under section 15 of the Act for their being put into possession. The High Court inter alia held that though section 15 of the Act was not applicable to the proceedings yet the respondents could impose the terms of the decree and the proceedings could be treated as execution proceedings for enforcing the said terms. The appellants challenged the judgments of the High Court and contended that on the facts of the case and the circumstances, the decrees in suit under section 13(1) proviso (d) shows that the order was passed and a decree made in accordance with the terms of section 15 of the Act and further it was significant that the respondents them selves had made the application to the Court under section 15 of the Act. The respondents submitted that the decree was not one under section 15 of the Act because the decree was based on a compromise and the time for giving possession was not. of the essence of the contract : Held, that as the tenant respondents did not deliver posses sion of the premises to the landlord appellant on or before the dates specified in the decree, the provisions of section 15 (3) of the Delhi and Ajmer Rent Control Act (38 of 1952) were not available to them and they were not entitled to be put in possession. </s>

<s>[INST] Summarize the following judgement: Appeal No. 61/1959. Appeal by special leave from the judgment and order dated December 4, 1957, of the Orissa High Court in O.J.C. No. 449 of 1956. 607 C. K. Daphtary, Solicitor General of India, D. N. Mukherjee and T. M. Sen, for the appellants. The respondent did not appear. September 8. The Judgment of the Court was delivered by SHAH J. The respondent was appointed in the year 1950 a Sub Inspector on probation in the Orissa Police force. In view of the adverse reports received against him on July 28, 1954, notice was served on the respondent calling upon him to show cause why he should not be discharged from service " for gross neglect of duties and unsatisfactory work ". In the notice, ten specific instances of neglect of duty and two instances of misconduct acceptance of illegal grati fication and fabrication of official record were set out. By his explanation, the respondent submitted that action had already been taken against him by the Superintendent of Police in respect of instances of neglect of duty set out in the notice and no further action in respect thereof could on that account be taken against him, because to do so would amount to imposing double punishment. He denied the charge relating to misconduct and submitted that it was based on the uncorroborated statements of witnesses who were inimical to him. He also asked for an opportunity to cross examine those witnesses. The Deputy Inspector General of Police considered the explanation and observed: "I have carefully gone through the representation of the probationary section I. His argument that he has already been punished by the section P. for specific instances of bad ' work does not help him very much since all these instances of bad work during the period of probation have to be taken together in considering his merits for confirmation or otherwise. The section 1. has already had long enough of chance to work under different section Ps. though in one District, but he has not been able to procure a good chit from anyone. He has also been adversely reported against after the representation dealt with therein was submitted. It 78 608 is, therefore, no good retaining him further in service. He is discharged from the date on which this order is served on him ". The Deputy Inspector General of Police on December 11, 1954, in discharging the respondent from service, passed a formal order as follows: " Probationary section I. Ramnarayan Das of Cuttack District is discharged from service for unsatisfactory work and conduct with effect from the date the order is served on him ". The respondent then presented a petition under article 226 of the Constitution in the High Court of Judicature, Orissa, challenging the validity of the order passed and praying for the issue of a writ in the nature of certiorari or any other writ quashing the order of discharge. Inter alia, the respondent urged, (1) that the order of discharge was invalid since he was not given a reasonable opportunity to show cause against the action proposed to be taken in regard to him within the meaning of article 311(2) of the Consti tution, (2) that the order of discharge was invalid since he was not afforded an opportunity to be heard nor was any evidence taken on the charges framed. The High Court by order dated December 4, 1957, set aside the order of discharge. In the view of the High Court, the Deputy Inspector General of Police had taken into consideration allegations of corruption in passing the impugned order and also that he had refused to give to the respondent an opportunity to cross examine witnesses on whose statements the charge of misconduct was made. The High Court observed that by discharging the respondent from service without holding an enquiry as contemplated by r. 55 of the Civil Services (Classification, Control and Appeal) Rules and without complying with the requirements of article 311(2) of the Constitution, an " indelible stigma affecting his future career " had been cast. Against the order issuing the writ quashing the order discharging the respondent from service, this appeal has been preferred by special leave. The respondent was undoubtedly at the time when proceedings were started against him and when he 609 was discharged from service, a probationer, and had no right to the post held by him. Under the terms of his appointment the respondent was liable to be( discharged at any time during tile period of his probation. By r. 668 of the Police Manual of the Orissa State, in so far as it is material, it is provided : " All officers shall in the first instance be appointed or promoted on probation. Where the period of probation is not otherwise provided for in the Rules, it shall be for a period of two years in the case of executive officers. The authority empowered to make such appointment or promotion may at any time during such probation period and without the formalities laid down in Rule 820 remove an executive officer directly appointed or revert such an officer promoted who has not fulfilled the conditions of his appointment or who has shown himself unfitted for such appointment or promotion ". Rule 681 of the Police Manual by cl. (b) in so far as it is material provides, " Those promoted from the rank of Assistant Sub Inspector shall be confirmed (Rule 659(e)) and those appointed direct shall be on probation for a period of two years. At the end of that period, those pronounced competent and fit will be confirmed by the Deputy Inspector General. The others will be discharged by the same authority ". Rule 55 B of the Civil Services (Classification, Control and Appeal) Rules, in so far as it is material provides : " Where it is proposed to terminate the employment of a probationer, whether during or at the end of the period of probation, for any specific fault or on account of his unsuitability for the service, the probationer shall be apprised of the grounds of such proposal and given an opportunity to show cause against it, before orders are passed by the authority competent to terminate the employment". Notice to show cause whether the employment of the respondent should be terminated was, by r. 55 B made obligatory. The Deputy Inspector General of Police who had appointed the respondent apprised 610 him by notice of the grounds on which the order of discharge was proposed to be made and required him ,,to show cause why action as proposed should not be taken. The notice consisted of two parts, (1) relating ;to ten heads of " gross neglect of duty and unsatisfactory work " and (2) " suspicious and un police man like conduct " in which specific instances of fabrication of public records and acceptance of illegal gratification were set out. The Deputy Inspector General of Police by his order which ha; been set out hereinbefore, expressly observed that he had, in considering the case of the respondent for confirmation, to take into account the reports received by him. The formal order communicated to the respondent also stated that the respondent was discharged from service for unsatisfactory work and conduct. The reasons given in the order clearly indicate that the notice served upon the respondent was under r. 55 B of the Civil Services (Classification, Control and Appeal) Rules for ascertaining whether he should be confirmed or his employment terminated. Prima facie, the order is one terminating employment of the respondent as a probationer, and it is not an order dismissing him from service. The High Court has however held that the order of discharge amounted to imposing punishment, because the respondent had been " visited with evil consequences leaving an ineligible stigma on him affecting his future career ". The respondent has not appeared before us to support the judgment of the High Court, but the learned Solicitor General who appeared in support of the appeal has very fairly invited our attention to all the materials on the record and the relevant authorities which have a bearing on the case of the respondent. In Shyam Lal vs The State of Uttar Pradesh and the Union of India (1), it was held that compulsory retirement under the Civil Services (Classification, Control and Appeal) Rules of an officer did not amount to dismissal or removal within the meaning of article 311 of the Constitution. In that case, the public servant (1) ; 611 concerned was served with a notice to show cause in respect of three specific items of misdemeanor as a public servant to which he submitted his explanation. Thereafter, the President, after considering the case and the recommendation of the commission appointed to investigate the case, decided that the public servant should be retired forthwith from service ". This order was challenged by a petition under 226 of the Constitution filed in the High Court at Allahabad. In an appeal against the order dismissing the petition, this court held that the order compulsorily retiring the public servant involved " no element of charge or imputation " and did not amount to dismissal or removal within the meaning of article 311(2) of the Constitution and the order of the President was not liable to be challenged on the ground that the public servant had not been afforded full opportunity to show cause against the action proposed to be taken in regard to him. In Parshottam Lal Dhingra vs Union of India (1) this court by a majority held that if an officer holding an officiating post had no right under the rules governing his service to continue in it, and such appointment under the general law being terminable at any time on reasonable notice, the reversion of the public servant to his substantive post did not operate as a forfeiture of any right: that order " visited him with no evil consequences " and could not be regarded as a reduction in rank by way of punishment. Bose, J., who disagreed with the majority observed that the real test was whether evil consequences over and above those that ensued from a contractual termination, were likely to ensue as a consequence of the impugned order: if they were, article 311 of the Constitution would be attracted even though such evil consequences were not prescribed as penalties under the Rules. In that case, Das; C. J., in delivering the judgment of the majority, entered upon an exhaustive review of the law applicable to the termination of employment of public servants and at pp. 861.863 summarised it as follows: (1) ; 612 " Any and every termination of service is not a dismissal, removal or reduction in rank. A termination of service brought about by the exercise of a contractual right is not per se dismissal or removal, as has been held by this court in Satish Chander Anand vs The Union of India (1). Like wise the termination of service by compulsory retirement in terms of a specific rule regulating the conditions of service is not tantamount to the infliction of a punishment and does not attract article 311(2) as has also been held by this court in Shyam Lal vs The State of Uttar Pradesh (2). . In short, if the termination of service is founded on the right flowing from contract or the service rules then, prima facie, the termination is not a punishment and carries with it no evil consequences and so article 311 is not attracted. But even if the Government has, by contract or under the rules, the right to terminate the employment without going through the procedure prescribed for inflicting the punishment of dismissal, or removal or reduction in rank, the Government may, nevertheless, choose to punish the servant and if the termination of service is sought to be founded on misconduct, negligence, inefficiency or other disqualification, then it is a punishment and the requirements of article 311 must be complied with. As already stated, if the servant has got a right to continue in the post, then, unless the contract of employment or the rules provide to the contrary, his services cannot be terminated otherwise than for misconduct, negligence, inefficiency or other good and sufficient cause. A termination of the service of such a servant on such grounds must be a punishment and, therefore, a dismissal or removal within article 31 1, for it operates as a forfeiture of his right and he is visited with the evil consequences of loss of pay and allowances. It puts an indelible stigma on the officer affecting his future career. . But the mere fact that the servant has no title to the post or the rank and the Government has, by contract, express or implied, or under the rules, the right to reduce him to a lower post does not mean that an order of reduction of a servant (1) ; (2) ; 613 to a lower post or rank cannot in any circumstances be a punishment. The real test for determining whether the reduction in such cases is or is not by way of punishment is to find out if the order for the reduction also visits the servant with any penal consequences. . The use of the expression, " terminate " or " discharge " is not conclusive. In spite of the use of such innocuous expressions, the court has to apply the two tests mentioned above, namely, (1) Whether the servant had a right to the post or the rank or (2) Whether he has been visited with evil consequences of the kind hereinbefore referred to ? If the case satisfies either of the two tests then it must be held that the servant has been punished and the termination of his service must be taken as a dismissal or removal from service. . " The respondent had no right to the post held by him. Under the terms of his employment, the respondent could be discharged in the manner provided by r. 55 B. Again mere termination of employment does not carry with it " any evil consequences " such as forfeiture of his pay or allowances, loss of his seniority, stoppage or postponement of his future chances of promotion etc. It is then difficult to appreciate what " indelible stigma affecting the future career " of the respondent was cast on him by the order dis charging him from employment for unsatisfactory work and conduct. The use of the expression " discharge " in the order terminating employment of a public servant is not decisive : it may, in certain cases amount to dismissal. If a confirmed public servant holding a substantive post is discharged, the order would amount to dismissal or removal from service; but an order discharging a temporary public servant may or may not amount to dismissal. Whether it amounts to an order of dismissal depends upon the nature of the enquiry, if any, the proceedings taken therein and the substance of the final order passed on such enquiry. Where under the rules governing a public servant holding a post on probation, an order terminating the probation is to be preceded by a notice to show cause 614 why his service should not be terminated, and a notice is issued asking the public servant to show cause whether probation should be continued or the officer should be discharged from service the order discharging him cannot be said to amount to dismissal involving punishment. Undoubtedly, the Government may hold a formal enquiry against a probationer on charges of misconduct with a view to dismiss him from service, and if an order terminating his employment is made in such an enquiry, without giving him reasonable opportunity to show cause against the action proposed to be taken against him within the meaning of article 311(2) of the Constitution, the order would undoubtedly be invalid. The Solicitor General invited our attention to a recent judgment of this court, State of Bihar vs Gopi Kishore Prasad (1)in which, delivering the judgment of the court, the learned Chief Justice extracted five propositions from the authorities and particularly from Parshottam Lal Dhingra 's case (2), dealing with the termination of employment of temporary servants and probationers. The third proposition set out in the judgment is as follows: " But instead of terminating such a person 's service without any enquiry, the employer chooses to hold an enquiry into his alleged misconduct, or inefficiency, or for some similar reason, the termination of service is by way of punishment, because it puts a stigma on his competence and thus affects his future career. In such a case, he is entitled to the protection of article 311(2) of the Constitution ". This proposition, in our judgment, does not derogate from the principle of the other cases relating to termination of employment of probationers decided by this court nor is it inconsistent with what we have observed earlier. The enquiry against the respondent was for ascertaining whether he was fit to be ' confirmed. An order discharging a public servant, even if a probationer, in an enquiry on charges of misconduct, negligence, inefficiency or other disqualification, may (1) A.I.R. [1960] section C. 689. (2) ; 615 appropriately be regarded as one by way of punishment, but an order discharging a probationer following upon an enquiry to ascertain whether he should be 0 confirmed, is not of that nature. In Gopi Kishore Prasad 's case (1), the public servant was discharged from service consequent upon an enquiry into alleged misconduct, the Enquiry Officer having found that the public servant was " unsuitable " for the post. The order was not one merely discharging a probationer following upon an enquiry to ascertain whether he should be continued in service, but it was an order as observed by the court " clearly by way of punishment ". There is in our judgment no real inconsistency between the observations made in parshottam. Lal Dhingra 's case (2) and Gopi Kishore Prasad 's case (1). The third proposition in the latter case refers to an enquiry into allegations of misconduct or inefficiency with a view, if they were found established, to imposing punishment and not to an enquiry whether a probationer should be confirmed. Therefore the fact of the holding of an enquiry is not decisive of the question. What is decisive is whether the order is by way of punishment, in the light of the tests laid down in Parshottam Lal Dhingra 's case (2). We have carefully considered the evidence and the authorities to which our attention has been invited and we are definitely of opinion that the High Court was in error in holding that the order discharging the respondent from service amounted to dismissal which attracted the protection of article 311(2) of the Constitution. In that view of the case, this appeal will be allowed and the petition for a writ dismissed. There will be no order as to costs throughout. Appeal allowed. (1) A.I.R. 1960 S.C. 689. [/INST] The respondent was appointed a Sub Inspector on probation in the Orissa Police Force. A notice was served on him to show cause why he should not be discharged from service " for gross neglect of duties and unsatisfactory work ". He submitted his explanation and asked for opportunity to cross examine certain witnesses. The Deputy Inspector General of Police considered the explanation unsatisfactory and passed an order discharging the respondent from service " for unsatisfactory work and conduct ". The respondent contended that the order was invalid on two grounds: (i) that he was not given a reasonable opportunity to show cause against the proposed action within the meaning of article 311(2), and (ii) that he was not afforded an opportunity to be heard nor was any evidence taken on the charges. Held, that the order of discharge did not amount to dismis sal and did not attract the protection of article 311(2) of the Constitution and was a valid order. The services of the respondent, ' who was a probationer, were terminated in accordance with the rules and not by way of punishment. He had no right to the post held by him and under the terms of his appointment he was liable to be discharged at any time during the period of his probation. The notice given to the respondent was under Rule 55 B of the Civil Services (Classification, Control and Appeal) Rules which made it obligatory to give such notice before terminating the services of a probationer. The enquiry was merely for ascertaining whether he was fit to be confirmed. Shyam Lal vs The State of U. P., ; and Purshottam Lal Dhingra vs Union of India, ; , referred to. State of Bihar vs Gopi Kishore Prasad, A.I.R. 1960 S.C. 689, distinguished. </s>

<s>[INST] Summarize the following judgement: Appeal No. 317 of 1955. Appeal by special leave from the judgment and order dated October 18, 1952, of the Income tax Appellate Tribunal, Calcutta Bench, in Income tax Appeal No. 807/1950 51. A. V. Viswanatha Sastri and section C. Mazumdar, for the appellant. 62 484 C. K. Daphtary, Solicitor General of India, K. N. Rajagopal Sastri, R. Ganapathy Iyer, R. H. Dhebar and D. Gupta, for the respondent. September 2. The Judgment of the Court was delivered by SARKAR J. In 1944, the appellant was a resident of Lahore. On October 14, 1944, he was assessed to income tax by the Income tax Officer, Lahore, for the assessment year 1944 45 on an income of Rs. 49,047. As is well known, in August, 1947, India was partitioned and Lahore came to be included in the newly created Dominion of Pakistan and went out of India. After the partition, the appellant shifted to Delhi and was residing there at all material times. The appellant held shares in a company called Indra Singh and Sons Ltd. which had its office at Calcutta. The other shares in that company were held by Indra Singh and Ajaib Singh. The holdings of all the shareholders were equal. An annual general meeting of this company was held on April 17, 1943, in which the accounts for the year ending March 31, 1942, were placed for consideration. The accounts were passed at the meeting but no dividend. was declared though the accounts disclosed large profits. On June 11, 1947, an Income tax Officer of Calcutta passed an order under section 23A of the Income tax Act that Rs. 14,23,110 being the undistributed portion of the assessable income of the company for the year ending March 31, 1942, after the deductions provided in the section, be deemed to have been distributed as dividend among the three shareholders on the date of the general meeting, that is, April 17, 1943. As a result of this order a sum of Rs. 4,74,370. being his share of the amount directed to be distributed, had under the section, to be included in the income of the appellant for the assessment year 1944 45. The validity of this order was never challenged. The Income tax Officer, Calcutta, informed the Income tax Officer, Delhi, of the order made by him under a. 23A. Thereupon the Income tax Officer, Delhi, on April 10, 1948, issued a notice under a. 34 485 of the Act to the appellant then residing in Delhi, requiring him to file within thirty five days, a revised return for the year 1944 45 as a part of his income for that year had escaped assessment. Obviously the notice was on the basis that the said sum of Rs. 4,74,370 had escaped assessment for the year 1944 45. On February 10, 1949, the appellant submitted a revised return under protest and included in it the said sum of Rs. 4,74,370. The Income tax Officer, Delhi, then reopened the earlier assessment and on March 25, 1949, made a fresh assessment order for 1944 45 assessing the appellant on an income of Rs. 5,23,417. The appellant appealed against this order to the Appellate Assistant Commissioner but his appeal was dismissed. He then appealed to the Income tax Appellate Tribunal but was again unsuccessful. He has filed the present appeal with special leave of this Court against the judgment and order of the Income tax Appellate Tribunal. A preliminary point as to the maintainability of this appeal was taken by the learned Solicitor General appearing on behalf of the respondent Commissioner of Income tax, that the appellant having been unsuccessful in availing himself of the other remedy provided in the Act should not be allowed the extraordinary remedy of approaching this Court with special leave. Now, under the Income tax Act, the appellant could apply to the Tribunal to refer to a High Court any question of law that arose out of the former 's decision. The Act itself gave no right of appeal at all from that decision, nor any other remedy against it. The appellant had applied to the Tribunal for an order referring certain questions arising out of its decision to the ' High Court at Calcutta but was unsuccessful in getting an order for reasons to be presently stated. The Tribunal was in Calcutta. The appellant, who was in Delhi, asked a firm of income tax practitioners named section K. Sawday & Co. in Cal cutta, to move the Tribunal for an order of reference. Sawday & Co. had the necessary petition and papers prepared. They sent these to the appellant at Delhi by post on January 5,1953, for his signature and the 486 papers reached Delhi on January 7, 1953. The appellant who was then the Defence Minister of the Government of India, was at the time, away from Delhi on official tour. Immediately on his return from tour he signed the papers and on January 21/22, 1953, sent them from Delhi by post to Sawday & Co. in Calcutta. The papers reached Calcutta on January 24, 1953, but were not delivered to Sawday & Co. before January 28, 1953, due to a postman 's default as was admitted by the postal authority concerned. Sawday & Co. filed the petition in the Tribunal on the same date but that was one day too late as it should have been filed on January 27, 1953. The Tribunal thereupon dismissed the application as having been made out of time. The appellant appealed against this dismissal to the High Court at Calcutta but the High Court dismissed the appeal. In these circumstances, the appellant moved this Court for special leave to appeal and asked for condonation of delay in moving this Court, placing before it all the facts which we have earlier mentioned. This Court on a consideration of these facts condoned the delay and granted special leave. There was no attempt by the appellant to overreach or mislead the Court and the Court in its discretion gave the leave. In these circumstances, we are unable to agree with the contention that the appellant is not entitled to proceed with this appeal, because he could have availed himself of the remedy provided by the Act and was by his own conduct, unable to do so. This Court had inspite of this thought fit to grant leave to the appellant to appeal from the decision of the Tribunal. Further the learned counsel for the appellant intends to confine himself to questions of law arising from the Judgment of the Tribunal. We, therefore, see no reason why the appeal should not be heard. The main question in this appeal is whether the proceedings taken against the appellant under section 34 of the Act were valid. That section has been amended but we are concerned with it as it stood on April 10, 1948, when the notice under it was issued. The first point is that the proceedings under section 34 487 could not be taken by the Income tax Officer, Delhi. It is said that the proceedings under that section are only a continuation of the original assessment proceedings, and therefore, it is the Officer who made the original assessment order or his successor in office, who alone could start the fresh proceedings. It is hence contended that it is the Income tax Officer, Lahore, who could proceed against the appellant under section 34 and the Income tax Officer, Delhi, had no jurisdiction to do so. The contention then comes to this that in the circumstances of this case, ' no proceedings under section 34 could be taken against the appellant in India at all. The learned Solicitor General said that this was an objection as to the place of assessment under section 64 of the Act, and could not be entertained as it had not been taken within the time provided under the second proviso to sub sec. (3) of that section. If that proviso applied to the present case, the appellant had to raise the objection that proceedings under section 34 could not be taken at Delhi within the thirty five days Mentioned in the notice under the section. It is said that this had not been done. It seems to us however that the proviso would apply only if an objection to a place of assessment had been taken under section 64 and the objection that the appellant has taken in this case is not one under that section. That section applies where the assessment can be made in one place or another in India and an objection is taken to one of such places. Here the contention is that the assessment under section 34 can be made only in Lahore and therefore cannot be made. in India at all. To such a contention section 64 has no application. The Solicitor General 's point must therefore fail. We are however of the opinion that the contention of the appellant is without foundation. Section 34 provides that in the cases mentioned in it, the income may be assessed or reassessed and the provisions of the Act shall, so far as may be, apply accordingly as if the notice issued under the section had been issued under section 22(2) of the Act. Now the place where an assessment is to be made pursuant to a notice under 488 s.22(2) has to be determined under section 64. Indeed that is the only provision in the Act for deciding the proper place for any assessment. There is nothing which makes section 64 inapplicable to an assessment made under section 34. Therefore, it seems to us clear, that the place where an assessment under section 34 can be made has to be decided under section 64. Now the appellant was not carrying on any business, profession or vocation. He was working as the Defence Minister of the Government of India and residing in Delhi. He could be properly assessed by the Income tax Officer, Delhi, under section 64(2) if the assessment was the original assessment. This is not in dispute. It follows that no objection can legitimately be taken by the appellant to his assessment under section 34 by the Income tax Officer, Delhi. We find nothing in the two cases cited by Mr.Sastri, who appeared for the appellant, to support the contention that in this case the assessment under section 34 could not have been made in India at all. In neither of these cases any question as to the place of assessment tinder section 34 or any other section arose. In the first, C. V. Govindarajulu vs Commissioner of Income tax,, Madras (1), it was held that the proceedings under section 34 and the original assessment proceedings were not separate and therefore in the former, a penalty could be levied under section 28 for failure to submit a return pursuant to a general notice under section 22(1) on which the latter were deemed to have commenced. It does not follow that because the two assessments are not separate for certain purposes, the latter must take place only where the first had been made. In the second, Lakshminarain Bhadani V. Commissioner of Income tax, Bihar & Orissa (2), this Court held that a proceeding under section 34 may be taken against a karta of a Hindu undivided family to reopen an original assessment on the family, though in the meantime, there had been a disruption of the family and an order in respect of it had been passed under section 25A(1) of the Act. It was said that the position was as if the Income tax Officer was proceeding to assess the (1) I.L.R. (2) 489 income of the Hindu undivided family as in the year (if assessment. This of course does not mean that the assessment under section 34 must take place at the place where the original assessment was made or not at all. Then it is said that the Income tax Officer reassessed the appellant 's income under section 34 on the basis that part of it, namely, the dividend that became liable to be included in the appellant 's income under section 23A, had escaped assessment. It is contended that on a proper reading of section 34 this would not be a case of income escaping assessment because that section applies to income actually escaping assessment and not to income deemed to have escaped assessment which is all that has happened in the present case. It is said that in order that income may escape assessment there must in fact have been an income. It is also said that in order to apply section 34 to this case two fictions have to be resorted to, namely, (a) bringing an income into existence where none existed and (b) holding that income has escaped assessment where no income actually did so. It is argued that the language of section 34 does not permit two fictions being created, and that as the section reopens a closed transaction, it must be strictly construed. Reliance was placed on certain decisions in support of this contention. First, we were referred to two English cases, namely, Dodworth vs Dale (1) and D. & G. R. Rankine vs Commissioners Inland Revenue (2). These cases do not assist the appellant for they were not concerned with a statutory provision like section 23A on which the present case turns and which requires that an assessee would be deemed to have received a certain income on a specified date in the past and also requires that income to be included in his total income for assessment to tax. The other case to which we were referred was the decision of this Court in Chatturam Horliram Ltd. V. Commissioner of Income tax, Bihar and Orissa (3) where it was said that the contention " that the escapement from assessment (1) (2) (3) ; , 300 301. 490 is not to be equated to non assessment simpliciter, is not without force,". This Court however in the very next sentence proceeded to state clearly that " it is unnecessary to lay down what exactly constitutes `escapement from assessment" '. The actual decision in this case affords no assistance to the appellant and has not been relied on by him. It is clear from what we have read from the judgment in it that it does not lay down a test to decide when an income may be said to have escaped assessment. On its own merits also we are unable to accept the argument of the learned counsel for the appellant. Section 23A requires that on an order being made under it, the undistributed portion of the assessable income of the company for a year as computed for income tax purposes and after the deductions provided in the section, is to be ',deemed to have been distributed as dividends amongst the shareholders as at the date of the general meeting ", being the meeting at which the accounts for the year concerned were passed, and "thereupon, the proportionate share thereof of each shareholder shall be included in the total income of such shareholder for the purpose of assessing his total income ". The section creates a fictional income arising as on a specified date in the past and it does so for the purpose of that income being included in the income of the shareholders for assessment of their income tax. The income must therefore be 'deemed to have been in existence on the date mentioned for the purpose of assessment to tax. It is as if it actually existed then. Now if the assessment for the relevant year does not include that income, it has escaped assessment. That is what happened in this case. Therefore the case is one to which a. 34 would clearly apply. It is said that section 23A was meant to apply only to cases where pending assessment for any year, an order is made under that section creating a fictional income in that Year. We see no reason however so to restrict the operation of the section: the words in ' it do not warrant such restriction. There is no limitation of time as to when an order under B. 23A can be made. 491 Therefore it can be made at a time when the assessment of the income of the shareholder for the year concerned has been completed. There is no reason why that order should not be given effect to by proceedings duly taken under section 34. We do not also agree that the rejection of the appellant 's present argument will compel us to raise two fictions. There is only one fiction, namely, that raised by section 23A. That fiction having been raised, the income that has thereby to be deemed to exist must be held to have actually escaped assessment. We are unable to agree that in order to apply section 34 to an income deemed to exist under section 23A, we would have to read the former section to cover a case where income has to be deemed to have escaped assessment. If the income had come into existence, and not been assessed, it has escaped assessment; it is not a case where the income has to be deemed to have escaped assessment. In our view, therefore, the present contention of the appellant must fail and the income deemed to have been received by him by virtue of the order made tinder section 23A on June 11, 1947, must be held to have escaped assessment for the year 1944 45 and his income must therefore be liable to reassessment under section 34. It is now necessary to refer to one of the reasons on which the judgment of the Tribunal is based. It was there said that " It was incumbent on the Income tax Officer, Calcutta ' passing the order under section 23A to have included the sum of Rs. 4,74,370/ in the other assessed income of the assessee and to have recomputed the assessable income and the tax thereon". It was held that " the Income tax Officer, Delhi, went wrong in having recourse to the provisions of section 34 and making an assessment thereunder " but that this a mounted to a mere irregularity not vitiating the assessment made under that section. In the end the Tribunal observed,, " Anyhow, the Tribunal is empowered to substitute its own order for that of the Income Tax Officer and acting under that power we assess the assessee under the provisions of See. 23A(1) of the Indian Income tax Act 63 492 It seems to us that the Tribunal was wrong in the view that it took. The learned Solicitor General conceded that this is so. We are unable to agree that an assessment could be made under section 23A. That section does not provide for any assessment being made. It only talks of the fictional income being included in the total income of the shareholders " for the purpose of assessing his total income". The assessment therefore has to be made under the other provisions of the Act including section 34, authorising assessments. In our view, the assessment in this case had been properly made by the Income tax Officer, Delhi, under the pro. visions of section 34. Lastly, it is said that a. 23A is unconstitutional inasmuch as it was beyond the competence of the legislature that enacted it. This section has been redrafted and amended several times since it was first enacted in 1930. We are concerned with the section as it stood on June 11, 1947, when the order under it was made in this case. Sub section (1) of the section in the form that it stood then and that is the material portion of the section for our purposes was enacted by Act VII of 1939. It is that sub section which gave the power to make an order that the undistributed portion of the assessable income of the company shall be deemed to have been distributed as dividends and provided that thereupon the proportionate share thereof of each shareholder shall be ' included in his income for assessment. The enactment was by the Central legislature which then derived its competence to legislate from the Government of India Act, 1935. There is no doubt, and neither is it disputed, that sub section had been enacted under the power contained in entry 54 of List I in the Seventh Schedule to the Government of India Act, 1935. The entry read, " Taxes on income other than agricultural income". The argument of Mr. Sastri is that this entry only authorises legislation for taxing a person on his income; under it a law cannot be made taxing one person on the income of another. Mr. Sastri says that in law a company and its shareholders are different persons a proposition 493 which is indisputable and therefore section 23A is incompetent as it purports to tax the shareholders on the income of the company in which they hold shares, He points out, and this again is not in dispute, that the section does not give a right to a shareholder on an order being made under it, to realise from the company the dividend, which by the order is to be deemed to have been paid to him. He says, and this also seems right, that the income remains the income of the company and a shareholder is taxed on a portion of it representing the dividend deemed to have been paid to him. In spite of all this it seems to us that the legislation was not incompetent. Under entry 54 a law could of course be passed imposing a tax on a person on his own income. It is not disputed that under that entry a law could also be passed to prevent a person from evading the tax payable on his own income. As is well known the legislative entries have to be read in a very wide manner and so as to include all subsidiary and ancillary matters. So Entry 54 should be read not only as authorising the imposition of a tax but also as authorizing an enactment which prevents the tax imposed being evaded. If it were not to be so read, then the admitted power to tax a person on his own income might often be made infructuous by ingenious contrivances. Experience has shown that attempts to evade the tax are often made. Now it seems to us that section 23A was enacted for preventing such evasion of tax. The conditions of its applicability clearly lead to that conclusion. The first condition is that the company must have distributed as dividend less than sixty per cent of its assessable income after deduction of income tax and supertax payable by it. The taxing authority must then be satisfied Chat the payment of a dividend or of a larger dividend than that declared, would, in view of losses incurred in earlier years or the smallness of the profit made, be unreasonable. Lastly, the section does not apply to a company in which the public are substantially interested or a subsidiary company of a public company whose shares are held by the parent 494 company or by the nominees thereof The section provides by an explanation as follows: For the purpose of this sub section, a company shall be deemed to be a company in which the public are substantially interested if shares of the company (not being shares entitled to a fixed rate of dividend, whether with or without a further right to participate in profits) carrying not less than twenty five per cent of the voting power have been allotted unconditionally to, or acquired unconditionally by, and are at the end of the previous year beneficially held by the public (not including a company to which the provisions of this sub section apply), and if any such shares have in the course of such previous year been the subject of dealings in any stock exchange in the taxable territories or in fact freely transferable by the holders to other members of the public. The section thus applies to a company in which at least 75 per cent of the voting power lies in the hands of persons other than the public, which can only mean, a group of persons allied together in the same interest. The company would thus have to be one which is controlled by a group. The group can do what it likes with the affairs of the company, of course, within the bounds of the Companies Act. It lies solely in its hands to decide whether a dividend shall be declared or not. When therefore in spite of there being money reasonably available for the purpose, it decides not to declare a dividend it is clear that it does so because it does not want to take the dividend. Now it may not want to take the dividend if it wants to evade payment of tax thereon. Thus by not declaring the dividend the persons constituting the group in control, could evade payment of super tax, which, of course, is a form of income tax. They would be able to evade the super tax because super tax is payable on the dividend in the hands of the shareholders even though it may have been paid by the company on the profits out of which the dividend is paid, and because the rate at which super tax is payable by a company may be lower than the rate at which that tax is payable by other 495 assessees. By providing that in the circumstances mentioned in it, the available assessable income of a company would be deemed to have been distributed as dividend and be taxable in the hands of the shareholders as income received by them, the section would prevent the members of such a group from evading by the exercise of their controlling power over the company, payment of tax on income that would have come to them. That being so, the section would be within entry 54. In conceivable circumstances the section may work hardship on members of the public who hold shares in such a company but that would not take the section outside the competence of the legislature. It would still be an enactment preventing evasion of tax. Considerations of hardship are irrelevant for deciding questions of legislative competence. It is further quite clear that in the absence of a provision like section 23A it is possible so to manipulate the affairs of a company of this kind as to prevent the undistributed profits from ever being taxed and experience seems to have shown that this has often happened. The following passage from Simon 's Income Tax, 2nd Edn., Vol. 3, p. 341, fully illustrates the situation : " Generally speaking, surtax is charged only on individuals, not on companies or other bodies corporate. Various devices have been adopted from time to time to enable the individual to avoid surtax on his real total income or on a portion of it, and one method involved the formation of what is popularly called a 'one man company '. The individual transferred his assets, in exchange for shares, to a limited company, specially registered for the purpose, which thereafter received the income from the assets concerned. The individual 's total income for tax purposes was then limited to the amount of the dividends distributed to him as practically the only shareholder, which distribution was in his own control. The balance of the income, which was not so distributed, remained with the company to form, in effect, a fund of savings accumulated from income which had not immediately 64 496 attracted surtax. Should the individual wish to avail himself of the use of any part of these savings he could effect this by borrowing from the company, any interest payable by him going to swell the savings fund; and at any time the individual could acquire the whole balance of the fund in the character of capital by putting the company into liquidation. " The section prevents the evasion of tax by, among others, the means mentioned by Simon. The learned Solicitor General sought to support the competence of the legislature to enact the section also on another ground. He said that entry 54 permitted tax on income and contended that it. authorised taxing of A on the income of B. He said that, where a shareholder was taxed on the income of the company, the two being considered separate legal entities, the tax was none the less on income though the burden of the tax was put on one to whom the income had not accrued or by whom it had not been received and so was within the scope of entry 54. In support of this contention he referred to B. M. Amina Umma vs Income Tax Officer. Kozhikode (1), Janab Jameelamma vs The Income tax 'Officer, Nagapattnam (2) and C. W. Spencer vs Income Tax Officer(3). As earlier stated, Mr. Sastri disputes the correctness of this contention. We do not consider it necessary to pronounce on this question or as to the correctness of the decisions cited so far as they support it. In our view, the legislative competence to enact the section can be clearly upheld on the ground that it was to prevent evasion of in come tax and that would be enough to dispose of the argument advanced by Mr. Sastri that the section was an incompetent piece of legislation. This appeal therefore fails and it is dismissed with Costs. Appeal dismissed. [/INST] The appellant, at the time a resident of Lahore, was asses sed to income tax on an income of Rs. 49,047 for the assessment year 1944 45 by the Income tax Officer, Lahore. After the partition in 1947 he shifted to Delhi and resided there. He was one of the three share holders of a company called Indra Singh and Sons Ltd. of Calcutta, the shares of all the three shareholders being equal. The company at a meeting held oil April 17, 1943, passed its accounts for the year ending March 31, 1942, but declared no dividends although the accounts disclosed large profits. On June 11, 1947, the Income tax Officer, Calcutta, passed an order under section 23A of the Income tax Act that the sum of Rs. 4,74,370, being the appellant 's share of the undistributed assessable income of the company, be included in his income for the assessment year 1944 45. Thereupon the Income tax Officer, Delhi, on April 10, 1948, issued a notice to the appellant, who was then working as the Defence Minister of India and residing in Delhi, under section 34 of the Act to file a revised return, which he did under protest, reopened the earlier assessment and by a fresh order made on March 25, 1949, assessed the appellant on an income of Rs. 5,23,417 for the year in question. It was contended on behalf of the appellant that the proceeding under section 34 could be held only in Lahore and not in India at all. The question for determination was whether the Income tax Officer, Delhi, could validly reassess the appellant under section 34 of the Act. Held, that the issue of a notice under section 34 of the Income tax Act, 1922, under the provision of the section itself, attracted such provisions of the Act as might apply to a notice issued under section 22(2) of the Act and since section 64 of the Act was the only provision under which the place of assessment upon a notice under section 22(2) could be determined, in absence of anything to the contrary in the Act, section 64 applied to an assessment under section 34 of the Act. The appellant was, therefore, rightly assessed by the Income tax Officer, Delhi, under section 64(2) of the Act. 483 C. V.Govindarajulu vs Commissioner of Income tax, Madras, I.L.R. and Lakshminarain Bhadani vs Commissioner of Income tax, Bihar and Orissa, , held inapplicable. The time specified by the proviso to section 64(3) could have no application since the contention in the present case was that the assessment under section 34 could be made only in Lahore and not in India at all. Section 23A of the Act, as it then stood, raised only one fiction, and not two, and that was of an income arising on a specific date in the past with the purpose that such income might be included in the income of a share holder for assessment. That income must, therefore, be deemed to have existed on the date for the purpose of assessment and, if not included in the assessment for the relevant year, must be taken to have actually escaped assessment so as to attract section 34 of the Act. Dodworth vs Dale, , D. & G. R. Rankine vs Com missioners of Inland Revenue, and Chatturam Horliram Ltd. vs Commissioner of Income tax, Bihar and Orissa, ; , held inapplicable. There is no warrant for the proposition that section 23A of the Act was meant to apply only to cases where pending assessment for any year, an order is made under that section creating a fictional income that year. Such an order could, therefore, be made even after the assessment of the income of the share holder for the year concerned had already been completed. But section 23A does not itself provide for any assessment being made and that has to be made under other provisions of the Act authorising assessment including section 34. It is not correct to say that section 23A(1), as it then stood, was beyond the competence of the Legislature and was as such unconstitutional. Under Entry 54 of List I of the Seventh Schedule to the Government of India Act, 1935, the Legislature could pass not only a law imposing a, tax on a person on his own income but also a law preventing him from evading the tax payable on his income and there can be no doubt that section 23A, properly construed, was meant to prevent such evasion. </s>

<s>[INST] Summarize the following judgement: Appeal No. 407 of 1956. Appeal from the judgment and order dated February 14, 1956, of the former Judicial Commissioner 's Court, Bhopal, in Misc. Civil Case No. 24 of 1955. Sanat P. Mehta and section N. Andley, for the appellant. K. N. Rajagopal Sastri and D. Gupta, for the respondent. September 2. The Judgment of the Court was delivered by section K. DAS J. This is an appeal on a certificate under article 133 of the Constitution. The short question for decision is whether the learned Judicial Commissioner of Bhopal rightly dismissed a petition under article 226 of the Constitution made by the Bhopal Sugar Industries, Limited, hereinafter referred to as the appellant company, praying for the issue of an appropriate order or direction in the nature of a writ of mandamus to compel the Income tax Officer, Bhopal, respondent herein, to carry out certain directions given by the Income tax Appellate Tribunal, Bombay, to the said officer in an appeal preferred by the appellant company from an order of assessment made against it by the respondent. The relevant facts are these. The appellant company carries on the business of manufacturing and selling sugar in various grades and quantities. It has its factory at Sehore which was formerly in the Bhopal State and is now situate in the State of Madhya Pradesh. It purchased sugar cane from local cultivators and also grew its own sugar cane in farms situate in that State, such sugar cane being used for its manufacture of sugar. During the year of account ending on September 30, 1950, the appellant company purchased 7,72,217 maunds of sugar cane from local 61 476 cultivators at various purchasing centers, 14 in number, situate at a distance of about 8 to 22 miles from its factory. The price paid was Rs. 1 4 6 per maund, that being the price fixed, by the then State of Bhopal. The average cost of transporting the sugar cane from the various centers to the factory was stated to be Rs. 0 4 9 per maund. During the same period the appellant company grew its own sugar cane to the extent of 6,78,490 maunds and brought the same along with the cultivators ' sugar cane to its factory for manufacturing sugar. For the sugar cane grown on its own farms the appellant company claimed Rs. 1 13 0 per maund as its market value (including Rs. 0 4 9 as average transport charges), the total market value for 6,78,490 maunds thus coming to Rs. 12,29,763. The appellant company deducted from the aforesaid, market value a sum of Rs. 9,77,772 as agricultural expenses, namely, expenses of harvesting, loading, etc., and claimed the balance of Rs. 2,51,991 as agricultural income to be deducted from the computation of its total income for the assessment year 1951 52. The respondent accepted the figure of Rs. 9,77,772 as agricultural expenses but computed the market value of 6,78,490 maunds of sugar cane grown on the appellant company 's own farms at Rs. 9,33,000 at the rate of Rs. 1 6 0 per maund; thus according to this computation there was a loss of Rs. 44,772 and the respondent held in his assessment order that the appellant company was not entitled to claim any deduction of agricultural income for the assessment year. The appellant company then appealed to the Appellate Assistant Commissioner, Jubbalpore, who determined the market value of the sugar cane grown on the appellant company 's own farms at Rs. 10,07,132 at the rate of Rs. 1 7 9 per maund. This resulted in an agricultural income of Rs. 29,360, which the Appellate Assistant Commissioner allowed to be deducted from the total income of the appellant com pany. Not satisfied with the order of the Appellate Assistant Commissioner, the appellant company preferred 477 an appeal to the Income tax Appellate Tribunal, Bombay, and claimed that the market value of the sugar cane grown on its farms should be Rs. 1 13 0 per maund and not Rs. 1 7 9. There was no dispute before the Tribunal as to the agricultural expenses, and the question which the Tribunal had to decide related to the market value of 6,78,490 maunds of sugar cane grown on the appellant company 's own farms. After referring to r. 23 of the Income tax Rules and certain other matters, the Tribunal said: " We are, therefore, inclined to think that 'market ' within the meaning of rule 23 is not the centers but the factory where the assessee company manufactures sugar. This being the position in order to find out the market value, we have to add the transport charges from the centers to the factory. We were told that the transport charges amounted to Rs. 0 4 9 per maund. We have not been able to verify this figure. In our opinion, therefore, the sugar cane produced by the assessee company in its own farms has to be valued at Rs. 1 4 6 per maund plus the average transport charges per maund from the centers to the factory". The Tribunal then gave the following directions to the respondent : " We would, therefore, direct the Income tax Officer to ascertain the average transport charges per maund from the centers to the factory and to add to it the rate of Rs. 1 4 6 per mand and on that basis work out the market value of the sugar cane grown by the assessee company in its own farms. If the market value comes to more than Rs. 1 7 9 per maund further relief to the necessary extent will be given by the Income tax Officer. If, however, the market value is less than Rs. 1 7 9 the appeal must fail ". The Commissioner of Income tax then applied to the Tribunal for a reference under section 66(1) of the Income tax Act, stating that a question of law arose out of the Tribunal 's order in as much as the Tribunal was not justified, in the opinion of the Department, to add average transport charges to the price of 478 Rs. 1 4 6 per maund of sugar cane grown by the appellant company. This application woos, however, withdrawn on August 4, 1954. The order of the Tribunal thus became final and was binding on the parties. In the meantime, the appellant company moved the respondent to give effect to the directions of the Tribunal. After some abortive correspondence between the respondent and his higher officers on one side and the appellant company on the other, the respondent informed the appellant company on March 24, 1955, that no relief could be given to it. In his letter of that date the respondent said: "In this connection your attention is invited to the order of the Tribunal to ascertain the cost of transportation of the sugar cane from the farms to the factory which could only be considered in working out the market value of the agricultural produce. As is evident from your account books you are found to have debited a sum of Rs. 59,116 only out of the total transportation expenses to your agricultural produce account. Naturally, therefore, only the expenses so incurred by you can be considered in working out the market value of the agricultural sugar cane. By adding the transportation charges to the valuation of sugar cane at Rs. 1/4/6 on 6,78,490 maunds of agricultural produce the total cost of the agricultural produce would be Rs. 9,28,431. Against this by the order of the Appellate Assistant Commissioner the value of the farm cane was taken at Rs. 10,07,132 and thus the excess allowance of Rs. 78,701 has already been allowed to you. Thus as the market value of the agricultural produce does not in any case exceed Rs. 1 7 9 as held by the Appellate Assistant Commissioner the result of the Tribunal 's order as per their finding given in para 8 of the order results in no relief being given to you. " It is worthy of note here that while the Tribunal had directed the respondent to ascertain the average transport charges from the centers to the factory, the respondent referred to the cost of transportation from the farms to the factory. Clearly enough, the respondent misread the direction of the Tribunal and failed 479 to carry it out. He proceeded on a basis which was in contravention of the direction of the Tribunal. In these circumstances, the appellant company moved the Judicial Commissioner, Bhopal, then exercising the powers of a High Court for that area, for the issue of a writ to compel the respondent to carry out the directions given by the Tribunal. The learned Judicial Commissioner found in express terms that the respondent had acted arbitrarily and in clear violation of the directions given by the Tribunal ; in other words, he found that the respondent had disregarded the order of the Tribunal, failed to carry out his duty according to law and had acted illegally. Having found this, the learned Judicial Commissioner went on to examine the correctness or otherwise of the order of the Tribunal and found that the Tribunal went wrong in not treating the centers as 'markets ' within the meaning of r. 23 of the Income tax Rules. He then came to the conclusion that in view of the error committed by the Tribunal, there was no manifest injustice as a result of the order of the respond ent ; accordingly, he dismissed the application for the issue of a writ made by the appellant company. We think that the learned Judicial Commissioner was clearly in error in holding that no manifest injustice resulted from the order of the respondent conveyed in his letter dated March 24, 1955. By that order the respondent virtually refused to carry out the directions which a superior tribunal had given to him in exercise of its appellate powers in respect of an order of assessment made by him. Such refusal is in effect a denial of justice, and is furthermore destructive of one of the basic principles in the administration of justice based as it is in this country on a hierarchy of courts. If a subordinate tribunal refuses to carry out directions given to it by a superior tribunal in the exercise of its appellate powers, the result will be chaos in the administration of justice and we have indeed found it very difficult to appreciate the process of reasoning by which the learned Judicial Commissioner while roundly condemning the respondent for refusing to carry out the directions of the superior 480 tribunal, yet held that no manifest injustice resulted from such refusal. It must be remembered that the order of the Tribunal dated April 22, 1954, was not under challenge before the Judicial Commissioner. That order had become final and binding on the parties, and the respondent could not question it in any way. As a matter of fact the Commissioner of Income tax had made an application for a reference, which application was subsequently withdrawn. The Judicial Commissioner was not sitting in appeal over the Tribunal and we do not think that in the circumstances of this case it was open to him to say that the order of the Tribunal was wrong and, therefore, there was no injustice in disregarding that order. As we have said earlier, such view is destructive of one of the basic principles of the administration of justice. In fairness to him it must be stated that learned counsel for the respondent did not attempt to support the judgment of the Judicial Commissioner on the ground that no manifest injustice resulted from the refusal of the respondent to carry out the directions of a superior tribunal. He conceded that even if the order of the Tribunal was wrong, a subordinate and inferior tribunal could not disregard it; he readily recognised the sanctity and importance of the basic principle that a subordinate tribunal must carry out the directions of a superior tribunal. He argued, however, that the order of the Tribunal was unintelligible and the respondent did his best to understand it according to his light. This argument advanced on behalf of the respondent appears to us to be somewhat disingenuous. We find no difficulty in understanding the order of the Tribunal; it directed the respondent " to ascertain the average transport charges per maund from the centers to the factory and add to it the rate of Rs. 1 4 6 per maund of sugar cane". The direction is clear and unambiguous. The respondent instead of ascertaining the average transport charges per maund from the centers to the factory, referred to the transport charges from the farms to the factory and on that footing disregarded the directions of the Tribunal ; for ' 481 the respondent to say thereafter that the order of the Tribunal was not intelligible betrays a regrettable lack of candour. We must, therefore, reject the argument of learned counsel for the respondent. The learned Judicial Commissioner referred to three decisions in support of the proposition that a direction or order in the nature of a writ of mandamus cannot be claimed as of right, nor need such a writ issue for every omission or irregularity; Bimal Chand vs Chairman, Jiagunj Azimgunj Municipality (1); Gram Panchayat, Vidul of Vidul vs Multi Purpose Co operative Society of Vidul (2) and Messrs. Senairam Doongarmall vs Commr. of Income Tax, Assam (3). In the view which we have expressed, namely, that by the im pugned order the respondent failed to carry out a legal duty imposed on him and such failure was destructive of a basic principle of justice, a writ of mandamus should issue ex debito justiciae to compel the respondent to carry out the directions given to him by the Income tax Appellate Tribunal, Bombay, and it is unnecessary to consider the decisions referred to above except merely to state that in none of them arose any question of condoning a refusal by an inferior tribunal to carry out the directions given to that tribunal by a superior tribunal in the undoubted exercise of its appellate powers, on the ground that the order of the superior tribunal was wrong. We must, therefore, allow this appeal, set aside the judgment and order of the Judicial Commissioner dated February 14, 1956 and issue an order directing the respondent to carry out the directions given by the Income tax Appellate Tribunal, Bombay, in its judgment and order dated April 22, 1954. The appellant company will be entitled to its costs in the proceedings before the Judicial Commissioner and in this Court. Appeal allowed. (1) A.I.R. 1954 Cal 285. (2) A.I.R. 1954 Nag. (3) A.I.R. 1955 Assam 201. [/INST] The Income tax Appellate Tribunal in the exercise of its appellate jurisdiction gave certain directions to the respondent, an Income tax Officer, in connection with the ascertainment of the market value of sugarcane grown by the appellant at their farm and used by them for the manufacture of sugar. The appellant asked the Income_tax Officer to give effect to the said order and directions of the Tribunal but was informed that no relief could be given. Thus the Income tax Officer failed to carry out the directions of the Tribunal. Held, that the refusal to carry out the directions which a superior Tribunal had given in exercise of its appellate powers was in effect a denial of justice and was further more destructive 475 of one of the basic principles in the administration of justice based as it is in this country on a hierarchy of courts; and the result of such refusal would lead to chaos in the administration of justice. </s>

<s>[INST] Summarize the following judgement: iminal Misc. No. 320/60. Application for exemption from compliance with the requirements of Rule 5 of Order XXI, Supreme Court Rules, 1950 (as amended). July 18, 19, 20 21, 22. section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the petitioner. H.M. Seervai, Advocate General for the State of BombayAtul Setalved and R. H. Dhebar, for the respondent. [SinhaC. J. Do you dispute the power of the Court to make this rule ?] H.M. Seervai: No, My Lord. The Court imposes a penalty in 'its judicial capacity; the Executive remits the penalty in its executive capacity. There is no clash between the two powers. The powers of the Executive do not collide with the powers 'of the judiciary. The prerogative of the King or the President can never be in conflict with the judiciary, executive or legislature. Prerogatives come to aid the process of justice. Power of pardon is plenary in nature and unfettered. It could be exercised at any time after the commission of the offence, before indictment, during the trial and after the trial. [Sinha C. J. Is not that power of pardon exercised before the trial ?] Pardon is given after the offence is proved. In the United States the question is never asked whether the President has invaded the power of the judiciary. [Sinha C. J. So far as India is concerned take a ,case like this: A man is convicted for murder and. sentenced to imprisonment for life. But subsequently it is found that the deceased died a natural death or the deceased appeared alive afterwards. What will happen ?] A pardon will be granted(s. 401). The President is entitled to pardon a person convicted for an offence punishable with death, United States vs Wilson, ; at 644, Ex parte Wells, ; , 423. 500 A free and unconditional pardon has the effect of obliterating the crime. Section 426(1) empowers the Court to suspend the sentence or grant bail. The Executive, Judiciary and Legislature, paralysing each other never happens. United States vs Klein, ; , Ex Parte Grossman, ; [SUBBA RAO J. Your argument assumes that if the Governor 's order was valid then the Supreme Court Rule would not come in. It may not be necessarily so because in the present case there was a conviction and sentence and the accused has no right of appeal. The accused invited the order of the Governor. Entertainment of the appeal by special leave is in the discretion of the Supreme Court. Unless there are adequate reasons for the Governor to make this order, why should we use our discretion to give exemption to the accused from the rules of the Court ?] The sentence having been suspended there is no sentence and therefore this Court need not insist on his surrender. [SUBBA RAO J. The provisions, of article 161 did not say that the power under it could be exercised notwithstanding other provisions of the Constitution. Was it, therefore, not necessary to hormonise this power with other constitutional provisions such as article 142 ?] [KAPUR J. In India have the Courts power to suspend a sentence?] Yes, in a limited way as provided in section 426. [KAPUR J. If the sentence is suspended, there is no sentence.] No, there is no sentence to surrender to. The execution of sentence is an executive power. The function of the Court ends with the passing of the sentence. To carry the sentence into execution is an executive order. United States vs Benz, ; , 358. In India we start with section 401 of the Code of Criminal Procedure, 1898, and section 295 Government of India Act,1935. Pardon is a part of the Constitutional scheme, Balmukand vs King, Emperor, L. R. 42 I. A. 133. 501 Exercise of prerogatives is in the jurisdiction of the Executive and not the judiciary, Lala Jairam Das vs King Emperor, L. R. 72 1. A. 120. The powers are in aid of justice. [SUBBA RAO J. Your argument is that one acts in the judicial field, while the other acts in the executive field and hence there is no conflict. But whatever the nature of the power, the Governor in exercising that power is encroaching on the field occupied by the Supreme Court. Under the Constitution the Supreme Court can entertain appeals and pass the necessary orders and perhaps, under the rules suspend or stay execution of a sentence. On the other hand the Governor under article 161 has powers to suspend the sentence. I am suggesting that where there is a conflict of jurisdiction between the Judiciary and the Executive is it not reasonable to bring harmony between these two? What is wrong in confining the power of the Governor to cases where there is no appeal pending before the Supreme Court ? Can the executive interfere with the judiciary in the midst of a case?] Yes, in its administrative capacity it can ask the. Advocate General to enter a nolle prosequi and terminate the trial. This a statutory power. Babu Lal Chokhani vs Emperor, Court refused bail but the executive suspended the sentence. The State of Bihar vs M. Homi, ; Rule 5 Order XXI, of the Supreme Court Rules represent 's a well settled practice of all courts but it cannot affect the power of pardon or the exercise of prerogatives which is unfettered. The Rule postulates that there is a sentence to surrender to '. Under articles 72, 161 the President 's prerogative is not made subject to any parliamentary legislation. There is no limit to article 72 or article 161 in the Constitution express or implied, Hari Vishnu Kamath vs Syed Ahmad Ishaque; , The powers of the Court and the Executive are distinct and separate. The Executive comes in after the Court has performed its function. 502 [KAPUR J. YOU are talking about suspension of the sentence but can the Supreme Court suspend the sentence ? We can grant bail but can we suspend the sentence? Yes, the Supreme Court has the power to stay the execution of sentence.] [KAPUR J. IS the condition imposed upon Commander Nanavati illegal ?] No, nobody has said so. The Court can say Judicially that justice requires that a convicted person should remain in jail but the President can say on considerations of mercy that he should be set at liberty, King vs section section Singh, I.L.R. 32 Pat. Power of prerogative is far wider than the judicial powers of the Court. The expression " at any time " in section 401, Code of Criminal Procedure, recognises this principle. [GAJENDRAGADKAR J. Can the naval authorities keep the petitioner in naval custody ? Is it legal ?] The naval authorities made no such request. The Governor ordered him to be kept in naval custody and the naval authorities did not object. There is nothing illegal about it. It was perfectly legal. The validity of the Governor 's order has not been referred to this constitutional bench of the Court. There is a distinction between illegal and unlawful. Illegal is that which the law directly forbids; unlawful is that which the law does not recognise. [SINHA C. J. What is unlawful may become lawful by consent but what is illegal cannot become legal even by consent.] The Governor 's order should not be held to be illegal without any complaint to that effect from the parties concerned and in their absence. When the navy accepted the Governor 's order it could be presumed that there was a usage, section 3(3)(12), Navy Act. There is no section in the Navy Act which prohibits such custody. [GAJENDRAGADKAR J.7 18 this the position now that the Provost Marshall is keeping the petitioner in 503 his custody without any express provision of the Navy Act?] Section 14 of the Navy Act. There is a difference between a private person and a naval officer being detained in naval custody. Commander Nanavati is still in naval service. He cannot leave the naval service. [SUBBA RAO J. There are two ways of reconciling the powers of the Governor under article 161 and those of the Supreme Court under articles 142, 144, 145. One way was to say that the Supreme Court had no power when the Executive exercised its powers. The other way was to say that while both had powers, so far as pardon and remission were concerned the Executive had the exclusive power, but as far as suspension was concerned, when proceedings were pending in the Supreme Court the Executive could not make an order impinging upon the Supreme Court 's power.] But in the interest of justice the Supreme Court can pass any suitable order. The power of the Supreme Court under article 141 is a power generally exercisable in all cases but the Governor 's power is a special power. If there is a conflict between a General power and a special power the special power should prevail although I don 't admit that there is a conflict. H. N. Sanyal, Additional Solicitor General of India,S. M. Sikri, Advocate General for the State of Punjab and T. M.Sen, for the Attorney General of India. There is no conflict at all. The power of the Supreme Court is a judicial power; the power of the Governor is an executive power. They cannot collide at all. The Supreme Court can certainly exercise its power but let it not disregard the power of the executive. Let both the powers be harmonised. C.B. Agarwala (Amicus Curiae) The Supreme Court is a Court of record under article 129 and has the constitutional privilege of prescribing. its procedure under which it will exercise its discretion vested in it under the Constitution. By article 145 the Supreme 65 504 Court has the constitutional power to lay down rules imposing conditions under which alone it would entertain a special leave petition. The material rule is made under the constitutional right given to the Supreme Court as a Court of Record and not under a law made under article 245. Subordinate legislation presupposes a rule made under laws enacted under article 245. Its analogy cannot be .applied to rules under article 145. The fact that the rules made by the Supreme Court under article 145. require the approval of the President cannot convert the rules into a law made under article 245. The rule in question made by the Supreme Court requires that the special leave petition is subject to the condition that the petitioner surrenders to the authority of the Supreme Court, and by passing the order in question the Governor has deprived the Supreme Court of its authority over the custody of the accused pending the special leave petition. Article 161 read with article 154 shows that the Governor even while exercising his constitutional powers cannot affect, modify or override the powers of the Supreme Court or the procedure prescribed by it. After a special leave petition is made to it or when the appeal is admitted, the Supreme Court has ample jurisdiction to give relief by way of suspension of sentence under article 141 and the rules. Power of suspension of sentence is not exercisable by the Executive when relief can be granted by the trial Court or a competent Court of appeal. The appropriate construction of the rule would indicate that the Governor 's powers under article 161 operate only up to the stage when an application for special leave is made under article 136 and cannot interfere with the authority of the Supreme Court thereafter. Assuming, without admitting, that the Governor could interfere with the authority and jurisdiction of the Supreme Court he could do so only if a valid order was made under article 161. The order under consideration being subject to an illegal condition is an illegal order. Even if, the condition is not illegal it has been 505 operated only by the petitioner 's voluntary consent with the object of not complying with the rule of the Supreme Court. The Supreme Court will decline to exercise its discretion in favour of the petitioner who by his voluntary act put himself out of its jurisdiction. Under article 144 the Governor 's authority is bound to aid the court in the exercise of its jurisdiction. It is open to the petitioner to approach the Government to modify the Governor 's order to enable him to comply with the procedure of the Supreme Court. [KAPUP. J. Has the Court power to suspend a sentence ? Has any court ever done so ? Has any court ever ordered that the sentence will take effect after a certain period of time ?] The appellate Court has the. power to suspend the sentence under article 142. [SINHA C. J. The Executive can intervene at, any time during the trial.] Yes, in the case of pardon, The State of Bombay vs The United Motors (India) Ltd., ; [SINHA C: J. The argument of the petitioner is that there is no sentence in operation and therefore there is nothing to surrender to.] There is apparently a conflict. The Court says the petitioner must surrender to his sentence. The Executive says that he need not surrender and will remain in some other custody. The Governor has extended the period of, suspension till the decision of the petitioner 's appeal in this Court. There is clash with the rule of this Court. [SINHA C. J. If the Supreme Court refused bail can the executive suspend the sentence ?] No, it cannot, in cases of suspension there is apparently a conflict. There is a distinction between pardon and suspension. Suspension stands on a different footing. Pardon can be granted at any stage but suspension of sentence can be made only after the sentence is inflicted. H.M. Seervai in reply. Nothing in articles 142, 145 and sections 411, 426, Code of Criminal Procedure, will 506 supersede the powers of the Governor to grant reprieve, etc. The Code of Criminal Procedure gives the power of suspension, of bail, etc. [KAPUR J. Did the Federal Court have power to suspend a sentence.] Yes, it had the power to grant bail or stay execution of sentence. The power of the Court to suspend is not absolute. [SINHA C. J. The Executive is bound to execute the orders of the Court.] Yes, but if the Government, after the passing of the Court 's order, itself in its own jurisdiction passes an order suspending the sentence the Executive in that case has no authority to execute the order of the Court, United States vs Benz, ; , Hales Pleas of the Crown, Reprieves before or after the judgment, p. 412, Rogers vs Peck, 50 L. Ed. 256Reprieve being granted when a matter was before the Court. September 5. The Judgment of Sinha, C. J., Gajendragadkar, Subba Rao and Wanchoo, JJ., was delivered by Sinha C. J. Kapur, J., delivered a separate Judgment. SINHA C. J. This matter has been placed before the Constitution Bench in father extraordinary circumstances, as will presently appear. It involves the question as to what is the content of the power conferred on the Governor of a State under article 161 of the Constitution ; and whether the order of the Governor of Bombay dated March 11, 1960, impinges on the judicial powers of this Court, with particular reference to its powers under article 142 of the Constitution. For the determination of the constitutional issue raised in this case, it is not necessary to go into the merits of the case against the petitioner. It is only necessary to state the following facts in order to appreciate the factual background of the order of the Governor of Bombay aforesaid impugned in this case. The petitioner was Second in Command of 1. N. section Mysore, which came to Bombay in the beginning of 507 March 1959. On April 27, 1959, the petitioner was arrested in connection with a charge of murder under section 302 of the Indian Penal Code. He was produced before the Additional Chief Presidency Magistrate, Greater Bombay, in connection with that charge on April 28, 1959. The Magistrate remanded him to police custody on that day. On the following day (April 29, 1959) the Magistrate received a letter from the Flag Officer, Bombay, to the effect that he was ready and willing to take the accused in naval custody as defined in section 3(12) of the Navy__Act, 1957, in which custody he would continue to be detained under the orders of the Naval Provost Marshall in exercise of his authority under section 89(2) and (3) of the Navy Act. There upon the Magistrate made the order directing that the accused should be detained in the Naval Jail and Detention Quarters in Bombay. The Magistrate has observed in his order that he had been moved under the instructions of the Government of India. The petitioner continued to remain in naval custody all along. In due course, he was placed on trial before the Sessions Judge, Greater Bombay. The trial was by a jury. The jury returned a verdict of 'not guilty ' by a majority of eight to one. The learned Sessions Judge made a reference to the High Court under section 307 of the Criminal Procedure Code, disagreeing with the verdict of the jury. The reference, being Cr. Ref No. 159 of 1959, was heard by a Division Bench of the Bombay High Court. The High Court accepted the reference and convicted the petitioner under section 302 of the Indian Penal Code and sentenced him to imprisonment for life, by its judgment and order dated March 11, 1960. On the same day, the Governor of Bombay passed the following order: " In exercise of the powers conferred on me by Article 161 of the Constitution of India, 1, Shri Prakasa, Governor of Bombay, am Pleased hereby to suspend the sentence passed by the High Court of Bombay on Commander K. M. Nanavati in Sessions Case go. 22 of IVth Sessions of 1959 until the appeal intended to be filed by him in the Supreme Court against his conviction and sentence is disposed of and 508 subject meanwhile to the conditions that he shall be detained in the Naval Jail Custody in 1. N. section Kunjali". In pursuance of the judgment of the High Court, a writ issued to the Sessions Judge, Greater Bombay, communicating the order of the High Court convicting and sentencing the petitioner as aforesaid. The Sessions Judge issued a warrant for the arrest of the accused and sent it to the police officer in charge of the City Sessions Court for Greater Bombay for execution. The warrant was returned unnerved with the report that the warrant could not be served in view of the order set out above passed by the Governor of Bombay suspending the sentence upon the petitioner. The Sessions Judge then returned the writ to gether with the unexecuted warrant to the High Court. In the meantime an application for leave to appeal to the Supreme Court was made soon after the judgment was pronounced by the High Court and the matter was fixed for hearing on March 14, 1960. On that day the matter of the unexecuted warrant was placed before the Division Bench which directed that, in view of the unusual and unprecedented situation arising out of the order of the Governor the matter should be referred to a larger Bench. Notice was accordingly issued to the State of Bombay and to the accused person. A Special Bench of five Judges of that Court heard the matter. The Special Bench permitted two Advocates, Mr. Kotwal and Mr. Pranjpe, to appear on behalf of the Western India Advocates ' Association. Similarly, Mr. Peerbhoy was also permitted to appear along with Mr. Latifi on behalf of the Bombay Bar Association. They were heard as amicus curiae in view of the fact that the Advocate General for the State of Bombay and the counsel for accused were both sailing in the same boat, that is to say, both of them were appearing to support the order made by the Governor. In view of the great importance of the issues involved, the Court allowed those Advocates to represent the other view point. The Advocate General of Bombay as also counsel for the 509 accused made objections to the Court hearing the Advocates aforesaid on the ground that they had no locus standi. The Advocate General of Bombay also raised a preliminary objection to the hearing of the matter by the Special Bench on the ground that it had no jurisdiction to examine the validity of the action taken by the Governor, because there was no judicial proceeding then pending. The criminal reference aforesaid, to which the State and the accused were parties, had already been disposed of and none of those parties had raised any grievance or objection to the order of the Governor impugned before the Court. The Court overruled that objection in view of the fact that the writ issued by the Court had been returned unexecuted on grounds which could be examined by the Court as to the validity of the reasons for the return of the warrant unexecuted. The High Court then examined the validity of the action taken by the Governor and came to the conclusion that it had the power to examine the extent of the Governor 's power under article 161 of the Constitution and whether it had been validly exercised in the instant case. After an elaborate examination of the questions raised before it, the Special Bench came to the conclusion that the order passed by the Governor was not invalid. It also held that the condition of the suspension of the order that the petitioner be detained in naval custody was also not unconstitutional, even though the accused could not have been detained in Naval Jail under the provisions of the Navy Act, after he had been convicted by the High Court. The Court also held negativing the contention raised on behalf of the Advocates appearing as amicus curiae that the order of the Governor did not affect the power of the Supreme Court with particular reference to r. 5 of 0. XXI of the Rules of the 'Supreme Court, which will be set out in full hereinafter. The reason for this conclusion, in the words of the High Court, is : " As the sentence passed upon the accused has been suspended, it is not necessary for the accused to surrender to his sentence. Order XXI, r. 5, of the 510 Supreme Court Rules will not, therefore, apply in this case". The High Court also overruled the plea of mala fides. In the result, the High Court held that as the order made by the Governor had not been shown to be unconstitutional or contrary to law, the ' warrant should not be reissued until the appeal to be filed in the Supreme Court had been disposed of, unless the order made by the Governor stands cancelled or withdrawn before that event. The petitioner filed his petition for special leave in this Court on April 20,1960, and also made an application on April 21, 1960, under 0. XLV, rr. 2 and 5 of the Supreme Court Rules for exemption from compliance with 0. XXI, r. 5, of those Rules. It was stated in the petition that, soon after his arrest, the petitioner throughout the trial before the Sessions Court and the hearing of the reference in the High Court, had been in naval custody and continued to be in that custody, that he had been throughout of good behavior and was ready and willing to obey any order of this Court, but that the petitioner " not being a free man it was not possible for him to comply with the requirements of r. 5 of 0. XXI of the Supreme Court Rules. . He, therefore, prayed that he may be exempted from compliance with the aforesaid rule and that his petition for special leave to appeal be posted for hearing without his surrendering to his sentence. On April 25, 1960, the special leave petition along with the application for exemption aforesaid was placed before a Division Bench which passed the following order: "This is a petition for special leave against the order passed by the Bombay High Court on reference, convicting the petitioner under section 302 of the Indian Penal Code and sentencing him to imprisonment for life. Along with his petition for special leave an application has been filed by the petitioner praying that he may be exempted from surrendering under 0. XXI, r. 5, of the Rules of this Court. His contention in this application is that he is ready and willing to obey any order that this Court may pass but that as a result of the order passed by the Governor of Bombay 511 under article 161 of the Constitution he is not a free man to do so and that is put forward by him as an important ground in support of his plea that he may be exempted from complying with the relevant rule of this Court. This plea immediately raises an important constitutional question about the scope and extent ' of the powers conferred on the Governor under article 161 of the Constitution and that is a constitutional matter which has to be heard by a Constitution Bench of this Court. We would accordingly direct that notice of this application should be served on the Attorney General and the State of Bombay and the papers in this application should be placed before the learned Chief Justice to enable him to direct in due course, i n consultation with the parties concerned, when this application should be placed for hearing before the Constitution Bench ". After the aforesaid order of this Court, it appears that on July 6, the petitioner swore an affidavit in Bombay to the effect that his application aforesaid for exemption from compliance with the requirements of r. 5 of 0. XXI of the Rules had been made under a misapprehension of the legal position and that the true position had been indicated in the judgment of the Special Bench of the Bombay High Court to the effect that r. 5 of 0. XXI of the Rules would not apply to his case in view of the Governor 's order aforesaid and that, therefore, his special leave petition be directed to be listed for admission. It is apparent that this change in the petitioner 's position as regards the necessity for surrender is clearly an afterthought. Certainly, it came after the Division Bench had directed the constitutional matter to be heard as a preliminary question. That is how the matter has come before us. Before we heard the learned Advocate General of Bombay, and the learned Additional Solicitor General on behalf of the Union of India, we enquired of Shri J. B. Dadachanji, Advocate for the petitioner, whether the petitioner was prepared to get himself released from the Governor 's order in order to present himself in this 66 512 Court so that the hearing of his special leave petition might proceed in the ordinary course, but he was not in a position to make a categorical answer and preferred to have the constitutional question determined on its merits. We had the assistance of Mr. C. B. Aggarwala, who very properly volunteered his services as amicus curiae to represent the other view point. In this Court also the situation was the same as in the High Court, namely, that unless there was an amicus curiae to represent the opposite view point, the parties represented before us were not contesting the validity of the Governor 's order. Both here and in the High Court, it was at the instance of the Court itself that the matter has been placed for hearing on the preliminary question before dealing with the merits of the petitioner 's case. The learned Advocate General of Bombay has argued with his usual vehemence and clarity of expression that the power of pardon, including the lesser power of remission and suspension of a sentence etc. is of a plenary character and is unfettered ; that it is to be exercised not as a matter of course, but in special circumstances requiring the intervention of the Head of the Executive; that the power could be exercised at any time after the commission of an offence; that this power being in the nature of exercise of sovereign power is vested in the Head of the State and has, in some respects, been modified by statute ; that the power of pardon may be exercised unconditionally or subject to certain conditions to be imposed by the authority exercising the power; that such conditions should not be illegal or impossible of performance or against public policy. It was further argued that the power of pardon is vested in the Head of the State as an index of sovereign authority irrespective of the form of Government. Thus the President of the United States of America and Governors of States, besides, in some cases Committees, have been vested with those powers, which cannot be derogated from by a Legisla ture. So far as India is concerned, before the Constitution came into effect such powers have been regulated by statute, of course, subject to the power of the 513 Crown itself. After the Constitution, the power is contained in article 72 in respect of the President, and article 161 in respect of the Governor of a State. Articles 72 and 161 are without any words of limitation, unlike the power of the Supreme Court contained in articles 136, 142, 145 and other Articles of the Constitution. Hence, what was once a prerogative of the Crown has now or crystallized into the common law of England and statute in India '. for example, section 401 of the Code of Criminal Procedure, or articles 72 and 161 of the Constitution. He particularly emphasised that the two powers, namely, the power of the Executive to grant pardon, in its comprehensive sense, and of the Judiciary are completely apart and separate and there cannot be any question of a conflict between them, because they are essentially different, the one from the other. The power of pardon is essentially an executive action. It is exercised in aid of justice and not in defiance of it. With reference to the particular question, now before us, namely, how far the exercise of the executive power of pardon contained in those two Articles of the Constitution can be said to impinge on the judicial functions of this Court, it was argued that r. 5 of 0. XXI of the Rules of this Court postulates the existence of a sentence of imprisonment and, as in this case, as a result of the Governor 's order, there is no such sentence running there could not be any question of the one trespassing into the field of the other. Rule 5 aforesaid of this Court represents the well settled practice of this Court, as of other Courts, that a person convicted and sentenced to a term of imprisonment should not be permitted to be in contempt of the order of this Court, that is to say, should not be permitted to move the appellate court without surrendering to the sentence. But the petitioner is not in such contempt, because r. 5 did not apply to him. The order of sentence against him having been suspended, he is not disobeying any rule or process of this Court or of the High Court. The power of the Supreme Court to make rules is subject to two limitations, namely, (1) to any law made by Parliament and (2) the approval of the President. On the other hand, 514 articles 72 and 161 enshrine the plenary powers of the sovereign State to grant pardon etc., and are not subject to any limitations. There could, therefore, be no conflict between these two, and if there were any conflict at all, the limited powers of the Court must yield to the unlimited powers of the Executive. As regards the condition imposed by the Governor, subject to which the sentence passed against the petitioner had been suspended, the condition was not illegal, because it did not offend against any peremptory or mandatory provisions of law. It is not the same thing to say that the condition was not authorised by law as to say that the condition was illegal, in the sense that it did what was forbidden by law. We were referred to the various provisions of the Indian Navy Act (Act LXII of 1957) to show that there were no provisions which could be said to have been contravened by the condition attached to the order of suspension by the Governor. Furthermore, the naval custody in which the petitioner continues had been submitted to by the petitioner and what has been consented to cannot be illegal, though it may not have been authorised by law. Lastly, it was contended that the observation of the High Court in the last paragraph of its judgment was entirely uncalled for, because once it is held, as was held by the High Court, that the Governor 's order was not unconstitutional, it was not open to the High Court to make observations which would suggest that the Governor had exercised his power improperly. If the exercise of the power by the Governor is not subject to any conditions, and is not justifiable, it was not within the power of the High Court even to suggest that the Governor should not have passed the order in question. The learned Additional Solicitor General adopted the able arguments of the Advocate General and added that, in terms, there was no conflict between articles 142 and 161 of the Constitution. Mr. C. B. Aggarwala, to whom the Court is obliged for his able assistance to the Court, argued that the exercise of the rule making power by the Supreme Court is not a mere statutory power, but is a constitutional privilege; that the Supreme Court alone could 515 lay down rules and conditions in accordance with which applications for special leave to appeal to the Court could be entertained ; that the material rule governing the present case was made under the constitutional power of the Supreme Court under article 145 and that the Advocate General was in error in describing it as subordinate legislation ; that 'the fact that the rules made by this Court under article 145 of the Constitution require the approval of the President cannot convert them into rules made under a law enacted in pursuance of power conferred, either by article 123 or article 245 of the Constitution; that the underlying idea behind r. 5 of 0. XXI of the Rules of this Court is to see that the petitioner to this Court or the appellant should remain under ' the directions of the Court; that the Governor by passing the order in question has deprived the Supreme Court of its power in respect of the custody of the convicted person ; that the power under article 161 has to be exercised within the limits laid down by article 154 of the Constitution. It was also argued that the petitioner could have got his relief from this Court itself when he put in his application for special leave and that in such a situa tion the Executive should not have intervened. In other words, the contention was that, like the Courts of Equity, which intervened in aid of justice when law was of no avail to the litigant, the Executive also should exercise their power only where the courts have not been clothed with ample power to grant adequate relief in the particular circumstances governing the case. It was further argued that on a true construction of the provisions of the law and the Constitution, it would appear that the Governor 's power extends only up to a stage and no more, that is to say, the Governor could suspend the operation of the sentence only until the Supreme Court was moved by way of special leave and then it was for the Court to grant or to refuse bail to the petitioner. Once the Court has passed an order in that respect, the Governor could not intervene so as to interfere with the orders of the Court. Alternatively, it was argued that, even assuming that an order of suspension in terms made by the Governor, 516 could at all be passed during the pendency of the application for leave to appeal to this Court, such an order could be passed only by the President, and not by the Governor. In any view of the matter, it was further argued, the Governor could pass an order contemplated by article 161, but could not add a condition, as he did in the present case, which was an illegal condition. It was further argued that the generality of the expressions used in section 401 of the Criminal Procedure Code has to be out down by the specific provisions of section 426 of that Code. In other words, when there is an appeal pending or is intended to be preferred, during that limited period, the trial court itself or the appellate court, has to exercise its judicial function in the matter of granting bail etc. ; and the appropriate Government is to stay its hands during that time. Before dealing with the main question as to what is the scope of the power conferred upon the Governor by article 161 of the Constitution, it will be convenient to review in a general way the law of pardon in the background of which the controversy has to be determined. Pardon is one of the many prerogatives which have been recognised since time immemorial as being vested in the sovereign, wherever the sovereignty might lie. Whether the sovereign happened to be an absolute monarch or a popular republic or a constitutional king or queen, sovereignty has always been associated with the source of power the power to appoint or dismiss public servants, the power to declare war and conclude peace, the power to legislate and the power to adjudicate upon all kinds of disputes. The King, using the term in a most comprehensive sense, has been the symbol of the sovereignty of the State from whom emanate all power, authority and jurisdictions. As kingship was supposed to be of divine origin, an absolute king had no difficulty in proclaiming and enforcing his divine right to govern, which includes the right to rule, to administer and to dispense justice. It is a historical fact that it was this claim of divine right of kings that brought the Stuart Kings of England in conflict with Parliament as the 517 spokesman of the people. We know that as a result of this struggle between the King, as embodiment of absolute power in all respects, and Parliament, as the champion of popular liberty, ultimately emerged the constitutional head of the Government in the person of the King who, in theory, wields all the power, but, in practice, laws are enacted by Parliament, the executive power vests in members of the Government, collectively called the Cabinet, and judicial power is vested in a Judiciary appointed by the Government in the name of His Majesty. Thus, in theory, His Majesty or Her Majesty continues to appoint the Judges of the highest courts, the members of the Government and the public servants, who hold office during the pleasure of the sovereign. As a result of historical processes emerged a clear cut division of governmental functions into executive, legislative and judicial. Thus was established the " Rule, of Law " which has been the pride of Great Britain and which was highlighted by Prof. Dicey. The Rule of Law, in contradistinction to the rule of man, includes within its wide connotation the absence of arbitrary power, submission to the ordinary law of the land, and the equal protection of the laws. As a result of the historical process aforesaid, the absolute and arbitrary power of the monarch came to be canalised into three distinct wings of the Government. There has been a progressive increase in the power, authority and jurisdiction of the three wings of the Government and a corresponding diminution of absolute and arbitrary power of the King. It may, therefore, be said that the prerogatives of the Crown in England, which were wide and varied, have been progressively curtailed with a corresponding increase in the power, authority and jurisdiction of the three wings of Government, so much so that most of the prerogatives of the Crown, though in theory they have continued to be vested in it, are now exercised in his Dame by the Executive, the Legislature and the Judiciary. This dispersal of the Sovereign 's absolute power amongst the three wings of Government has now 518 become the norm of division of power; and the prerogative is no greater than what the law allows. In the celebrated decision of the House of Lords in the case of Attorney General vs De Keyser 's Royal Hotel, Limited (1) which involved the right of the Crown by virtue of its prerogative, to. take possession of private property for administrative purposes in connection with the defence of the realm, it was held by the House of Lords that the Crown was not entitled by virtue of its prerogative or under any statute, to take possession of property belonging to a citizen for the purposes aforesaid, without paying compensation for use and occupation. It was argued by Sir John Simon, K. C., for the respondents that: " The prerogative has been defined by a learned author as 'the residue of discretionary or arbitrary ' authority which at any given time is legally left in the hands of the Crown '. It is the ultimate resource of the executive, and when there exists a statutory provision covering precisely the same ground there is no longer any room for the exercise of the Royal Prerogative. It has been taken away by necessary implication because the two rights cannot live together (See p. 518 of the Report). This argument on behalf of the respondents appears to have been accepted by Lord Dunedin, who delivered the leading opinion of the House in these terms: " The prerogative is defined by a learned constitutional writer as ' the residue of discretionary or arbitrary authority which at any given time is legally left in the hands of the Crown '. Inasmuch as the Crown is a party to every Act of Parliament it is logical enough to consider that when the Act deals with something which before the Act could be effected by the prerogative, and specially empowers the Crown to do the same thing, but subject to conditions, the Crown assents to that, and by that Act, to the prerogative being curtailed ". (See p. 526 of the Report). This position has been recognised in Halsbury 's Laws (1) ; 519 of England, Volume 7, Third Edition, at p. 221, in these words: .lm15 " The prerogative is thus created and limited by the common law, and the Sovereign can claim no prerogatives except such as the law allows, nor such as are contrary to Magna Carta, or any other statute, or to the liberties of the subject. The courts have jurisdiction, therefore, to inquire into the existence or extent of any alleged prerogative. We have. thus briefly set out the history of the 'genesis and development of the Royal Prerogative of Mercy because Mr. Seervai has strongly emphasised that the Royal Prerogative of Mercy is wide and absolute, and can be exercised at any time. Very elaborate arguments were addressed by him before us on this 'aspect of the matter and several English and American decisions were cited. In so far as his argument was that the power to suspend the sentence is a part of the larger power of granting pardon it may be relevant to consider incidentally the scope and extent of the said larger power; but, as we shall presently point out, the controversy raised by the present petition lies within a very narrow compass; and so concentration on the wide and absolute character of the power to grant pardon and over emphasis on judicial decisions which deal directly with the said question would not be very helpful for our present purpose. In fact we apprehend that entering into an elaborate discussion about the scope and effect of the said larger power, in the light of relevant judicial decisions, is likely to create confusion and to distract attention from the essential features of the very narrow point that falls to be considered in the present case. That is why we do not propose to enter into a discussion of the said topic or to refer to the several decisions cited under that topic. Let us now turn to the law on the subject as it obtains in India since the Code of Criminal Procedure was enacted in 1898. Section 401 of the Code gives power to the executive to suspend the execution of 67 520 the sentence or remit the whole or any part of the punishment without conditions or upon any conditions which the person sentenced accepts. Section 402 gives power to the executive without the consent of the person sentenced to commute a sentence of death into imprisonment for life and also other sentences into sentences less rigorous in nature. In addition the Governor General had been delegated the power to exercise them prerogative power vesting in His Majesty. Sub section (5) of section 401 also provides that nothing contained in it shall be deemed to interfere with the right of His Majesty, or the Governor General when such right is delegated to him, to grant pardons, reprieves, respites or remissions of punishment. This position continued till the Constitution came into force. Two provisions were introduced in the Constitution to cover the former royal prerogative relating to pardon, and they are articles 72 and 161. Article 72 deals with the power of the President to grant pardons, reprieves, respites or remissions of punishment or to suspend, remit or commute the sentence of any person convicted of any offence. Article 161 gives similar power to the Governor of a State with respect to offenses against any law relating to a matter to which the ex ecutive power of the State extends. Sections 401 and 402 of the Code have continued with necessary modifications to bring them into line with articles 72 and 161. It will be seen, however, that articles 72 and 161 not only deal with pardons and reprieves which were within the royal prerogative but have also included what is provided in sections 401 and 402 of the Code. Besides the general power, there is also provision in sections 337 and 338 of the Code to tender pardon to an accomplice under certain conditions. In this case we are primarily concerned with the extent of the power of pardon vested in the State so far as the Governor is concerned by article 161 of the Constitution Article 161 is in these terms: "1 The Governor of a State shall have the power to grant pardons, reprieves, respites or remissions of punishment or to suspend, remit or commute the sentence of any person convicted of any offence against 521 any law relating to a matter to which the executive power of the State extends. " Though article 161 does not make any reference to article 72 of the Constitution, the power of the Governor of a State to grant pardon etc. to some extent overlaps the same power of the President, particularly in the case of a sentence of death. Articles 72 and 161 are in very general terms. It is, therefore, argued that they are not subject to any limitations and the respective area of exercise of power under these two Articles is indicated separately in respect of the President and of the Governor of a State. It is further argued that the exercise of power under these two Articles is not fettered by the provisions of articles 142 and 145 of the, Constitution or by any other law. Article 142(1) is in these terms: " The Supreme Court in the exercise of its jurisdiction may pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it, and any decree so passed or order so made shall be enforceable throughout the territory of India in such manner as may be prescribed by or under any law made by Parliament and, until provision in that behalf is so made, in such manner as the President may by order prescribe. " It will be seen that it consists of two parts. The first part gives power to this Court in the exercise of its jurisdiction to pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it. The second part deals with the enforcement of the order passed by this Court. Article 145 gives power to this Court with the approval of the President to make rules for regulating generally the practice and procedure of the Court. It is obvious that the rules made under article 145 are in aid of the power given to this Court under article 142 to pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it. Rule 5 of 0. XXI of the Rules of this Court was framed under article 145 and is in these terms: "Where the petitioner has been sentenced to a 522 term of imprisonment, the petition shall state whether the petitioner has surrendered. Unless the Court otherwise orders, the petition shall not be posted for hearing until the petitioner has surrendered to his sentence. " This rule was, in terms, introduced into the Supreme Court Rules last year and it only crystallized the preexisting practice of this Court, which is also the practice in the High Courts. That practice is based on the very sound principle which was recognised long ago by the Full Bench of the High Court of Judicature, North Western Provinces, in 1870, in the case of The Queen vs Bisheshar Pershad (1). In that case no order of conviction had been passed. Only a warrant had been issued against the accused and as the war rant. had been returned unserved a proclamation had been issued and attachment of the property of the accused had been ordered, with a view to compelling him to surrender. The validity of the warrant had been challenged before the High Court. The High Court refused to entertain his petition until he had surrendered because he was deemed to be in contempt of a lawfully constituted authority. The accused person in pursuance of the order of the High Court surrendered and after he bad surrendered, the matter was dealt with by the High Court on its merits. But as observed above the Rules framed under article 145 are only in aid of the powers of this Court under article 142 and the main question that falls for consideration is, whether the order of suspension passed by the Governor under article 161 could operate when this Court had been moved for granting special leave to appeal from the judgment and order of the High Court. As soon as the petitioner put in a petition for special leave to appeal the matter became sub judice in this Court. This Court under its Rules could insist upon the petitioner surrendering to his sentence as a condition precedent to his being heard by this Court, though this Court could dispense with and in a proper case could exempt him from the operation of that rule. It is not disputed that this Court has the power to stay the execution of the sentence and to grant bail pending the (1) Vol. 2, N.W.P. High Court Reports, P. 441. 523 disposal of the application for special leave to appeal. Rule 28 of 0. XXI of the Rules does not cover that period, but even so the power of the Court under article 142 of the Constitution to make such order as is necessary for doing complete justice in this case was not disputed and it would be open to this Court even while an application for special leave is pending to grant bail under the powers it has under article 142 to pass any order in any matter which is necessary for doing complete justice. But it has been argued that, even as the terms of article 161 are without any limitation, the provisions of section 401 of the Code of Criminal Procedure are also in similarly wide terms, and do not admit of any limitation 's or fetters on the power of the Governor; the Governor could, therefore, suspend the execution of the sentence passed by the High Court even during the period that the matter was pending in this Court. In other words, the same power of dealing with the matter of suspension of sentence is vested both in this Court as also in the Governor. This immediately raises the question of the extent of the power under section 401 of the Code with respect to suspension as compared with the powers of tile Court under section 426, which enables the Court pending appeal to suspend the sentence or to release the appellant on bail. It will be seen from the language of section 426 of the Code of Criminal Procedure dealing with the power of the appellate court that, for reasons to be recorded in writing, the court may order that the execution of the sentence be suspended or that if the accused is in confinement he may be released on bail or on his own bond. Section 401 occurs in Chapter XXIX, headed " of suspensions, remissions and commutations of sentences ". This Chapter, therefore, does not deal with all the powers vested in the Governor under article 161 of the Constitution, but only with some of them. Section 426 is in Chapter XXXI, headed as "of appeal, reference and revision ". Section 426, therefore, deals specifically with a situation in which an appeal is pending and the appellate 'court has seisin of the case and is thus entitled to pass such orders as 524 it thinks fit and proper to suspend a sentence. It will thus be seen that whereas Chapter XXIX, in which section 401 occurs, deals with a situation in which pendency of an appeal is not envisaged, section 426 deals with a situation in which pendency of an appeal is postulated. In other words, Chapter XXIX deals with persons sentenced to punishment for an offence simpliciter in general terms, whereas section 426 deals with a special case and therefore must be out of the operation of section 401. But it has been vehemently argued by the learned Advocate General that the words "at any time" indicate that the power conferred by section 401 may be exercised without any limitation of time. In the context of section 401 " any time " can only mean after conviction. It cannot mean before conviction, because there cannot be any sentence before conviction. The question then is: " Does it cover the entire period after the order of conviction and sentence even when an appeal is pending in the appellate court and section 426 can be availed of by the appellant ?" It will be seen that section 426 is as unfettered by other provisions of the Code as section 401 with this difference that powers under section 426 can only be exercised by an appellate court pending an appeal. When both the provisions are thus unfettered, they have to be harmonised so that there may be no conflict between them. They can be harmonised without any difficulty, if section 426 is held to deal with a special case restricted to the period while the appeal is pending before an appellate court while section 401 deals with the remainder of the period after conviction. We see no difficulty in adopting this interpretation nor is there any diminution of powers conferred on the executive by section 401 by this interpretation. The words " at , any time " emphasise that the power under section 401 can be exercised without limit of time, but they do not necessarily lead to the inference that this power can also be exercised while the court is seized of the same matter under section 426. Turning now to articles 142 and 161, the argument of Mr. Seervai is that though this Court has the power to suspend sentence or grant bail pending hearing of the 525 special leave petition, that would not affect the power of the executive to grant a pardon, using the term in its comprehensive sense, as indicated above. Reference was in this connection made to Balmukand and others vs The King Emperor (1). That was a case where a convicted person had moved His Majesty in Council for special leave to appeal and the question arose as to the power of the executive to suspend the sentence. In that connection Lord Haldane, L. C., made the following observations: "With regard to staying execution of the sentence of death, their Lordships are unable to interfere. As they have often said, this Board is not a Court of Criminal Appeal. The tendering of advice to His Majesty as to the exercise of his prerogative of pardon is a matter for the Executive Government and is outside their Lordships ' province. It is, of course, open to the petitioners ' advisers to notify the Government of India that an appeal to this Board is pending. The Government of India will no doubt give due weight to the fact and consider the circumstances. But their Lordships do not think it right to express any opinion as to whether the sentence ought to be suspended These observations were made because the Judicial Committee of the Privy Council, unlike the Supreme Court, was not a Court of criminal appeal and therefore the question of suspending the operation of the sentence of death was not within their judicial purview. The granting of special leave by the Privy Council was an example of the residuary power of the, Sovereign to exercise his judicial functions by way of his prerogative and therefore the petitioner was left free in that case to approach the Government of India, as the delegate 'of the Sovereign, to exercise the pre rogative power in view of the circumstance that an appeal to the Privy Council was intended. The footnote to the Report also contains the following: " The petitioners were reprieved by the Government of India pending the hearing of the petition for leave to appeal". (see p. 134). (1) (1915) 42, I. A. 133. 526 It is noteworthy that the reprieve granted in that case covered only the period until the grant or refusal of the petition for leave to appeal and did not go further so as to cover the period of pendency of the appeal to the Privy Council, unlike the order now impugned in this case. The power which was vested in the Crown to grant special leave to appeal to convicted persons from India has now been conferred on this Court under article 136. The power under article 136 can be exercised in respect of " any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India ". This wide and comprehensive power in respect of any determination by any court or tribunal must carry with it the power to pass orders incidental or ancillary to the exercise of that power. Hence the wide powers given to this Court under article 142 " to make such order as is necessary for doing complete justice in any cause or matter pending before it ". As already indicated, the power of this Court to pass an order of suspension of sentence or to grant bail pending the disposal of the app lication for special leave to appeal has not been disputed and could not have been disputed keeping in view the very wide terms in which article 142 is worded. When an application for special leave to appeal from a judgment and order of conviction and sentence passed by a High Court is made, this Court has been issuing orders of interim bail pending the hearing and disposal of the application for special leave as also during the pendency of the appeal to this Court after special leave has been granted. So if Mr. Seervai 's argument is correct that the pendency of a special leave application in this Court makes no difference to the exercise of the power by the executive under article 161, then both the judiciary and the executive have to function in the same field at the same time. Mr. Seervai however contended that there could never be a conflict between the exercise of the power by the Governor under article 161 and by this Court under article 142 because the power under article 161 is executive power and the power under article 142 is judicial power 527 and the two do not act in the same field. That in our opinion is over simplification of the matter. It is true that the power under article 161 is exercised by the executive while the power under article 142 is that of the judiciary; but merely because one power is executive and the other is judicial, it does not follow that they can never be exercised in the same field. The field in which the power is exercised does not depend upon the authority exercising the power but upon the subject matter. What is the power which is being exercised in this case ? The power is being exercised by the executive to suspend the sentence; that power can be exercised by this Court under article 142. The field in which the power is being exercised is also the same, namely, the suspension of the sentence passed upon a convicted person. It is significant that the Governor 's power has been exercised in the present case by reference to the appeal which the petitioner intended to file in this Court. There can therefore be no doubt that the judicial power under article 142 and the Executive power under article 161 can within certain narrow limits be exercised in the same field. The question that immediately arises is one of harmonious construction of two provisions of the Constitution, as one is not made subject to the other by specific words in the Constitution itself As already pointed out, article 161 contains no words of limitation; in the same way, article 142 contains no words of limitation and in the fields covered by them they are unfettered. But if there is any field which is common to both, the principle of harmonious construction will. have to be adopted in order to avoid conflict between the two powers. It will be seen that the ambit of article 161 is very much wider and it is only in a very narrow field that the power contained in article 161 is also contained in article 142, namely, the power of suspension of sentence during the period when the matter is sub judice in this Court. Therefore on the principle of harmonious construction and to avoid a conflict between the two powers it must be held that article 161 does not deal with the suspension of sentence during the time that 68 528 article 142 is in operation and the matter is sub judice in this Court. In this connection it is well to contrast the language of section 209(3) and section 295(2) of the Government of India Act, 1935. Section 209(3) gave power to the Federal Court to order a stay of execution in any case under appeal to the Court, pending the hearing of the appeal. Section 295(2) provided that nothing in this Act shall derogate from the right of His Majesty, or of the Governor General if any such right is delegated to him by His Majesty, to grant pardons, reprieves, respites or remissions of punishments. It may have been possible to argue on the language of s.295(2) that the prerogative exercised by His Majesty transcended the power of the Federal Court under section 209(3);but when we compare the language of articles 72 and 161 with the language of section 295(2) of the Government of India Act, we find no words like " Nothing in this Constitution " or " Notwithstanding anything contained in this Constitution " in them. Such words have been used in many articles of the Constitution: (See for example, article 262(2) which provides specifically for taking away by Parliament by law the power of this Court in disputes relating to water and begins with words" Notwi thstanding anything in this Constitution "). The absence therefore of any such qualifying words in article 161 makes the power of this Court under article 142 of the same wide amplitude within its sphere as the power conferred on the Governor under article 161. Therefore if there is any field where the two powers can be exercised simultaneously the principle of harmonious construction has to be resorted to in order that there may not be any conflict between them. On that principle the power under article 142 which operates in a very small part of the field in which the power under article 161 operates, namely, the suspension and execution of sentence during the period when any matter is sub judice in this Court, must be held not to be included in the wider power conferred under article 161. In this connection Mr. Seervai drew our attention to the power of nolle prosequi. It may be mentioned 529 that power is not analogous to the power of par. don though its exercise may result in a case in a court coming to an end. Similar powers are contained in sections 333 and 494 of the Code of Criminal Procedure. The fact that the Advocate General in the one case and the Public Prosecutor in the other can bring a prosecution to an end has in our opinion no bearing on the question raised in the present case. In any case action under section 333 of the Code results in a discharge only and may leave it open, for example, to a private party to bring a complaint in the proper court unless the presiding judge directs that the discharge shall amount to an acquittal. Under section 494 the withdrawal of a case can only take place with the consent of the Court. In any case these proceedings being not in the nature of pardon or suspension or remission or commutation of sentence have no bearing on the ' question before us. In the present case, the question is limited to the exercise by the Governor of his powers under article 161 of the Constitution suspending the sentence during the pendency of the special leave petition and the appeal to this Court; and the controversy has narrowed down to whether for the period when this Court is in seizin of the case the Governor could pass the impugned order, having the effect of suspending the sentence during that period. There can be no doubt that it is open to the Governor to grant a full pardon at any time even during the pendency of the case in this Court in exercise of what is ordinarily called " mercy jurisdiction ". Such a pardon after the accused person has been convicted by ' the Court has the effect of completely absolving him from all Punishment or disqualification attaching to a conviction for a criminal offence. That power is essentially vested in the head of the Executive, because the judiciary has no such 'mercy jurisdiction '. But the suspension of the sentence for the period when this Court is in seizin of the case could have been granted by this Court itself If in respect of the same period the Governor also has power to suspend the sentence, it would mean that both the judiciary and the executive would be 530 functioning in the same field at the same time leading to the possibility of conflict of jurisdiction. Such a con flict was not and could not have been intended by the makers of the Constitution. But it was contended by Mr. Seervai that the words of the Constitution, namely, article 161 do not warrant the conclusion that the power was in any way limited or fettered. In our opinion there is a fallacy in the argument in so far as it postulates what has to be established, namely, that the Governor 's power was absolute and not fettered in any way. go long as the judiciary has the power to pass a particular order in a pending case to that extent the power of the Executive is limited in view of the words either of sections 401 and 426 of the Code of Criminal Procedure and articles 142 and 161 of the Constitution. If that is the correct interpretation to be put on these pro visions in order to harmonise them it would follow that what is covered in article 142 is not covered by article 161 and similarly what is covered by section 426 is not covered by section 401. On that interpretation Mr. Seervai .Would be right in his contention that there is no conflict between the prerogative power of the sovereign state to grant pardon and the power of the courts to deal with a pending cage judicially. In this connection it may be relevant to deal with another argument urged by Mr. Seervai in respect of the rule framed by this Court under 0. 21, r. 5. He contended that article 145 under which rules have been framed by this Court is in terms subject to the provisions of any law made by Parliament, and he also emphasised the fact that before the rules can come into force they have to obtain the approval of the President. In other words, the argument is that the rule making power of this Court is no more than subordinate legislation, and so if there is a conflict between 0. 21, r. 5 and article 161 the rule must yield to the powers conferred on the Governor by article 161. This argument overlooks the fact that in substance and effect the conflict is not between the said rule and article 161 but between the wide powers conferred on this Court by article 142 and similar wide powers conferred on the Governor under article 161. It would, 531 therefore, be fallacious to suggest that compliance with the rule would become unnecessary because a higher power under article 161 has been exercised by the Governor, and so in the face of the order passed by the Governor there is no longer any need to comply with the rule. We have already referred to the genesis of this rule and we have pointed out that though the rule may have been framed under article 145 the source of the power of this Court to grant bail or to suspend sentence pending hearing of any criminal matter before it is not the said rule nor article 145 but article 142; that being so, what we have to decide in the present case is whether having regard to the width and amplitude of the powers conferred on this Court and the Governor by articles 142 and 161 respectively it would not be reasonable and proper to harmonise the said two articles in such a way as to avoid any conflict between the said two powers. In the decision of this question the legal character of the rules that may be framed under article 145 cannot have any material bearing. In this connection it would be relevant to consider what would be the logical consequence if Mr. Seervai 's argument is accepted. In the present case the Governor 's order has been passed even before the petitioner 's application for special leave came to be heard by this Court ; indeed it was passed before the said application was filed and the reason for passing the order is stated to be that the petitioner intended to file an appeal before this Court. Let us, however, take a case where an application for special leave has been filed in this Court, and on a motion made by the petitioner the Court has directed him to be released on bail on executing a personal bond of Rs. 10,000 and on furnishing two sureties of like amount. According to Mr. Seervai, even if such an order is passed by this Court in a criminal matter pending before it, would be open to the petitioner to move the Governor for suspension of his sentence pending the hearing of his application and appeal before this Court and the Governor may, in a proper case, unconditionally suspend the sentence. In other words, Mr. 532 Seervai frankly conceded that, even in a pending criminal matter before this Court, an order passed by this Court may in effect be set aside by the Governor by ordering an unconditional suspension of the sentence imposed on the petitioner concerned. This illustration clearly brings out the nature of the controversy which we are called upon to decide in this case. If Mr. Seervai 's argument is accepted it would inevitably mean that by exercising his power under article 161 the Governor can effectively interfere with an order passed in the same matter by this Court in exercise of its powers under article 142. It is obvious that the field on which both the powers are operating is exactly the same. Should the sentence passed against an accused person be suspended during the hearing of an appeal on the ground that an appeal is pending ? That is the question raised both before this Court and before the Governor. In such a case it would be idle to suggest that the field on which the power of the Governor under article 161 can be exercised is different from the field on which the power of this Court can be exercised under article 142. The fact that the powers invoked are different in character, one judicial and the other executive, would not change the nature of the field or affect its identity. We have given our anxious consideration to the problem raised for our decision in the present case and we feel no hesitation in taking the view that any possible conflict in exercise of the said two powers can be reason. ably and properly avoided by adopting a harmonious rule of construction. Avoidance of such a possible conflict will incidentally prevent any invasion of the rule of law which is the very foundation of our Con stitution. It has been strenuously urged before us that the power of granting pardon is wide and absolute and can be exercised at any time, that is to say, it can be exercised even in respect of criminal matters which are sub judice; and the argument is that the power to suspend sentence is part of the larger power to grant pardon, and is similar in character and can be similarly exercised. This argument is fallacious; it ignores 533 the essential difference between the general power to grant pardon etc., and the power to suspend sentence in criminal matters pending before this Court. The first is an exclusively executive power vesting in the Governor under Art.161; it does not vest in this Court; and so the field covered by it is exclusively subject to the exercise of the said executive power; and so there can be no question of any conflict in such a case; conflict of powers obviously postulates the existence of the same or similar power in two authorities; on the other hand, the latter power vests both in this Court and the Governor, and so the field covered by the said power entrusted to this Court under article 142 can also be covered by the executive power of the Governor under article 161, and that raises the problem of a possible conflict between the two powers. That is why we have observed earlier that concentration or even undue emphasis on the character and sweep of the larger power to grant pardon is likely to distract attention from the essential features of the power to suspend sentence with which alone we are concerned in the present proceedings. As a result of these considerations we have come to the conclusion that the order of the Governor granting suspension of the sentence could only operate until the matter became sub judice in this Court on the filing of the petition for special leave to appeal. After the filing of such a petition this Court was seized .of the case which would be dealt with by it in accordance with law. It would then be for this 'Court, when moved in that behalf, either to apply r. 5 of 0. XXI or to exempt the petitioner from the operation of that rule. It would be for this Court to pass such orders as it thought fit as to whether the petitioner should be granted bail or should surrender to his sentence or to pass such other or further orders as this Court might deem fit in all the circumstances of the case. It follows from what has been said that the Governor ,had no power to grant the suspension of sentence for the period during which the matter was sub judice in this Court. A great deal of argument was addressed to us as to 534 whether the condition imposed by the Governor in his order impugned in this case was or was not legal. In the view we have taken of the Governor 's power, so far as the relevant period is concerned, namely, after the case became sub judice in this Court, it is not necessary to pronounce upon that aspect of the controversy. In the result the application dated April 21, 1960, as amended by the affidavit of July 6, 1960, praying that the special leave petition be listed for bearing without requiring the petitioner to surrender in view of the order of the Governor fails and is dismissed. KAPUR J. I have had the advantage of reading the Order proposed by my Lord the Chief Justice, but I regret I am unable to agree with it and I proceed to give my reasons: In this petition which is brought for exemption from surrender to the sentence imposed on the petitioner a question of great constitutional importance arises. The petitioner submits that his sentence having been suspended by the order of the Governor of the erstwhile State of Bombay, the rule made by this Court as to surrender which is a condition precedent to the hearing of a petition for leave to appeal against the judgment of the High Court is inapplicable to him and that it is a fit case in which he should be exempted from the operation of the rule. The facts which have given rise to this petition are set out in the order. of my Lord the Chief Justice and need not be repeated here. The decision of this petition depends upon the nature, effect, extent and operation of the powers conferred by articles 142(1), 145 and 161 of the Constitution; how they are to be construed and how and to what extent, if any, they are in conflict or in accord with each other. It will be necessary to delve into the history of the prerogative of pardons in England and America and see how far the law laid down by courts of those countries and the practice there followed is helpful in discovering the true intent and purpose of these articles of the Constitution. 535 Under the Indian Constitution the power to grant pardons is vested in the President and the Governors of States. Article 72 deals with the former and article 161 with the latter. Article 72 which is in Part V, Chapter 1, dealing with the Union Executive provides: article 72. (1) " The President shall have the power to grant pardons, reprieves, respites or remission of punishment or to suspend, remit or commute the sentence of any person convicted of any offence. (a). . . . . . . . . . . (b) in all cases where the punishment or sentence is for an offence against any law relating to a matter to which the executive power of the Union extends; (c)in all cases where the sentence is a sentence of death. (2). . . . . . . . . . . (3) Nothing in sub clause (c) of clause (1) shall affect the power to suspend, remit or commute a sentence of death exercisable by the Governor of a State under any law for the time being in force Article 161 which is in Part VI is as follows : " The Governor of a State shall have the power to grant pardons, reprieves, respites or remissions of punishment or to suspend, remit or commute the sentence of any person convicted of any offence against any law relating to a matter to which the executive power of the State extends" Article 142(1) is as under: " The Supreme Court in the exercise of its jurisdiction may pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it ". Both articles 72 and 161 give the widest power to the President or the Governor of a State as the case may be and there are no words of limitation indicated in either of the two articles. It was argued that under articles 142 and 145(1) of the Constitution certain powers are conferred on the Supreme Court and if the articles conferring powers on the President and the Governors are read along with the power given to the Supreme 69 536 Court they create a conflict and therefore to give a harmonious interpretation to all the four articles it is necessary to cut down the amplitude of the powers conferred by articles 72 and 161 of the Constitution. In regard to suspension of sentences it will be fruitful to trace the legislative history of the relevant powers of the executive and the judiciary which arise for construction. In the Criminal Procedure Code of 1861 (Act XXV of 1861) the power of the executive was confined to remission of punishments and was contained in section 54 which was as under: S.54. " When any person has been sentenced to punishment for an offence, the Governor General of India in Council, or the local Government, may, at any time, without conditions, or upon any condition which such person shall accept, remit the whole or any part of the punishment to which he shall have been sentenced ". This section was in Chapter III dealing with " Preliminary Rules " which included among other things passing of sentences, the place of confinement of persons convicted and the power of remission of sentences by the Governor General. In Chapter XXX dealing with appeals by section 421 the appellate court was given the power to suspend sentences pending appeals and release which was in the following terms: S.421. "In any case in which an appeal is allowed, the Appellate Court may, pending the appeal, order that the sentence be suspended, and if the appellant be in confinement for an offence which is bailable, may order that he be released on bail ". Then came the Criminal Procedure Code of 1872, Act X of 1872. In Chapter XXIII dealing with execution of sentences the power of the executive to remit punishment was contained in section 322 which read as under : S.322. " When any person has been sentenced to punishment for an offence, the Governor General of India in Council, or the Local Government, may at any time, without conditions, or upon any conditions which the person sentenced accepts, remit the 537 whole or any part of the punishment to which he has been sentenced " And the power of suspension of sentence pending appeals and release and bail was contained in section 281, a section in Chapter XX dealing with appeals which was in the following terms: S.281. "In any case in which an appeal is allowed, the Appellate Court may, pending the appeal, order that the sentence be suspended, and, if the appellant be in confinement for an offence which is bailable, may order that he be released on bail. The period during which the sentence is suspended shall be omitted in reckoning the completion of the punishment ". The Criminal Procedure Code was reenacted in 1882 being Act X of 1882. The power to suspend or remit sentences was contained in a separate chapter, viz., Chapter XXIX headed " Suspensions, Remissions and Commutations of Sentences ". The relevant provision was section 401 : S.401. " When any person has been sentenced to punishment for an offence, the Governor General in Council, or the Local Government, may at any time, without conditions, or upon any conditions which the person sentenced accepts, suspend the execution of his sentence, or remit the whole or any part of the punishment to which he has been sentenced. Nothing herein contained shall be deemed to interfere with the right of Her Majesty to grant pardons, ' reprieves, respites, or remissions of punishment". The power of the appellate courts as to suspension, of sentences pending appeals was given in section 426 which was in Chapter XXI dealing with appeals and that section was as follows : " 426. Pending any appeal by a convicted per son, the Appellate Court may, for reasons to be recorded by it in writing order that the execution ,of the sentence or order appealed against be suspended 538 and, if he is in confinement, that he be released on bail or on his own bond. The power conferred by this section on an Appellate Court may be exercised also by the High Court in the case of any appeal by a convicted person to a Court subordinate thereto. When the appellant is ultimately sentenced to imprisonment, penal servitude or transportation, the time during which he is so released shall be excluded in computing the term for which he is so sentenced ". A new Criminal Procedure Code was enacted in 1898, a portion of which was subsequently amended. The section dealing with powers of suspension or remission of sentence is 401 which reads as under: " 401. (1) When any person has been sentenced to punishment for an offence, the Governor General in Council or the local Government may at any time without conditions or upon any conditions which the person sentenced accepts, suspend the execution of his sentence or remit the whole or any part of the punishment to which he has been sentenced. . The original sub section (5) of this section was : "(5)Nothing herein contained shall be deemed to interfere with the right of His Majesty or of the Central Government when such right is delegated to it to grant pardons, reprieves, respites or remissions of punishment ". And this sub section was repealed by the Adaptation of Laws Order, 1950. The words Governor General in Council or the Local Government were suitably amended with the various constitutional changes. The corresponding section of appellate courts is contained in a. 426 which is in Chapter XXXI dealing with appeals etc. The relevant portions of this section when quoted are as under: " 426. (1) Pending any appeal by a convicted person, the Appellate Court may, for reasons to be recorded by it in writing, order that the execution of the sentence or order appealed against be suspended and, also, if he is in confinement, that he be released on bail or on his own bond. 539 (2) (B) Where a High Court is satisfied that a convicted person has been granted special leave to appeal to the Supreme Court against any sentence which the High Court has imposed or maintained, the High Court may, if it so thinks fit, order that pending the appeal the sentence or order appealed against be suspended, and also, if such person is in confinement, that he be released on bail ". (This subsection was added later). It may be mentioned that in the Code of 1861 the power given to the Governor General was to remit punishment to which an accused person was sentenced and the power of the appellate court was to suspend the sentence pending appeal in non bailable offenses and to release on bail in bailable cases. In the Code of 1872 also the power of the Governor General and of the local Government was one of remission of punish ment and the power of the appellate court was of suspension of sentences pending the appeal. In section 401 of the Act of 1882 the legislature chose to use the words " suspension of the execution of a sentence or remit the whole or any part of punishment ". The power was discretionary and there is nothing to indicate that this power was in any way limited. But the power given to the appellate court was differently worded from what was in the previous Codes in that now it was necessary for the Courts to record reasons emphasising that the two powers the one exercised by the executive and the other exercised by the judiciary were two separate powers, no doubt, operating for the same purpose but exercised on different considerations and in different circumstances. Of course this does not mean that the courts did not exercise their power judicially previous to the Act of 1882. In the Act of 1898 also, which is still the law, the same power of suspension of the execution of sentences or remission of punishments is mentioned in section 401 and in a. 426 giving the powers of the appellate courts the words " for reasons to be recorded in writing " are repeated showing that the legislature wanted to make 540 it clear about the essential difference in the nature of the exercise of the power conferred on the executive and on the judiciary. The words " at any time " in section 401 are very wide and show the plenary nature of the power. In the Government of India Acts previous to the Act of 1935 nothing was said about the power of the Crown or the power of the Governor General as a delegate of the Crown, and it cannot be said that the Indian legislature, whatever its powers, could affect the King 's prerogative and therefore any provision in the Criminal Procedure Code was wholly impuissant as to the King 's prerogative of pardons. See Henrietta. Muir Edwards vs Attorney General of Canada (1). Provisions such as section 401(5) are by way of abundant caution. Section 295 of the Constitution Act of 1935 was a special provision as to the power of the executive to suspend, remit or commute a sentence of death. Subsection (1) of that section provided that the power of the Governor General in his discretion were the same as were vested in the Governor General in Council immediately before the commencement of Part III of that Act but save as that no authority in India outside a province had any power to suspend, remit or commute the sentence of any person convicted in a province. Sub section (2) was a saving clause and it provided : S.295. (2) " Nothing in this Act shall derogate from the right of His Majesty, or of the Governor General, if any such right is delegated to him by His Majesty, to grant pardons, reprieves, respites or remissions of punishment. " Thus the power of the King or of the Governor General as a delegate to grant suspension remission or commutations remained unaffected by the introduction of a federal system with division of subjects between the Centre and the Provinces. This section was in the part dealing with the provisions as to certain legal matters. Thus under the Government of India Act the Governor General in his discretion had the power (1)[1930] A.C. 124, 136. 541 to remit etc. sentences of death and Governors of provinces had the power in regard to all sentences passed in a province but the power of the King and of the Governor General as a delegate remained unaffected by the first sub section of the section. Thus upto the coming into force of the Constitution the exercise of the King 's prerogative remained unaffected, was plenary, unfettered and exercisable as hitherto. Historically in England the King as the autocratic head of the Government always had the power to pardon. This was a part " of that special preeminence which the King hath over and above all other persons and out of the ordinary course of the common law, in right of his royal dignity ". A pardon is said by Lord Coke to be a " work of mercy; whereby the King, either before attainder, sentence or conviction or after forgiveth any crime, offence, punishment, execution, right, title, debt or duty, temporal or ecclesiastical ". The common law is thus stated in Hale 's Pleas of the Crown, Vol. 2, Chapter 58, page 412: "Reprieves or stays of judgment or execution are of three kinds, viz. : 1. Ex mandate regis, 2. Ex arbitrio judicis. Sometimes the judge reprieves before judgment, as where he is not satisfied with the verdict, or the evidence is uncertain, or the indictment insufficient or doubtful whether within clergy; and sometimes after judgment, if it be a small felony, the out of clergy, or in order to a pardon or transportation. Prompt. Just 22b, and these arbitrary reprieves may be granted or taken off by the justices of goal delivery, also their sessions be adjourned or finished, and this by reason of common usage, 2 Dyer, 205a, 73 Eng. Reprint, 452. 3.Ex necessitate legis. Which is in case of pregnancy, where a woman is convict of felony or treason Blackstone thus expresses this prerogative: " The only other remaining ways of avoiding the execution of the judgment are by a reprieve or a pardon; whereof the former is temporary only, the latter permanent. 542 1.A reprieve (from reprendre, to take back) is the withdrawing of a sentence for an interval of time; whereby the execution is suspended. This may be, first ex arbitrio judicis; either before or after judgment ; as where the judge is not satisfied with the verdict, or the evidence is suspicious, or the indictment is insufficient, or he is doubtful whether the offence be within clergy or sometime if it be a small felony, or any favorable circumstances appear in the criminal 's character, in order to give room to apply to the Crown for either an absolute or conditional pardon. These arbitrary reprieves may be granted or taken off by the justices of gaol delivery, although their session be finished, and their commission expired; but this rather by common usage, than of strict right. Reprieve may also be ex necessitate legis; as, where a woman is capitally convicted and pleads her pregnancy; though this is no cause to stay the judgment, yet it is to respite the execution till she be delivered. This is a mercy dictated by the law of nature in favourem prolis ". Bk. 4, chapt. 31, pp. 394, 395. After imposition of the sentence execution of the sentence may be suspended for a time which is known as respite and may be granted by the king or by the Court. Orfield 's Criminal Procedure from Arrest to Appeal, p. 529. As the possessions of the kings of En land expanded and several now colonies came under their sway the power of pardon which the kings exercised came to be exercised by their representatives in the colonies and in America from them it went to the State Governors and to the President for federal offenses. The same process was followed in this country as the various enactments and provisions set out above show. It may be repetitive but it cannot be suffici ently emphasised that both the power of pardon and the power of reprieve which is a part of the all comprehensive power of pardon are executive acts and can be exercised at any time and in any circumstances untrammeled and without control and in absolute 543 freedom except that prescribed by the Constitution; Craies on Statute Law, page 483. In the Constitution the power of the President is the same as it was in section 295 of the Constitution Act of 1935 and is unaffected in regard to sentence of death by the power conferred under article 161. The power of the Governor contained in article 161 also is of the widest amplitude as the words of the article which have been quoted above would show. In construing a constituent or an organic Statute such as the Constitution that interpretation must be attached which is most beneficial to the widest amplitude of its powers; British Coal Corporation vs King (1). The Judicial Committee in Henrietta Muir Edwards V. Attorney General of Canada (2) said: " Their Lordships do not conceive it to be the duty of this Board it is certainly not their desire to out down the provisions of the Act by a narrow and technical construction. . . . . ". In America the exercise of the power of pardon has been held to be governed by the same principles as are applicable to the exercise of the King 's power of mercy under the English Constitution. In United States V. Wilson (3) Marshall ', C. J., referring to the exercise of this power said : " As this power had been exercised from time immemorial by the executive of that nation whose language is our language, and to whose judicial institutions ours bears a close resemblance; we adopt their principles respecting the operation and effect of a ' pardon, and look into their books for the rules prescribing the manner in which it is to be used by the person who would avail himself of it". Wayne, J., in Ex parte Wells (4) said: " We still think so, and that the language in the Constitution, conferring the power to grant reprieves and pardons, must be construed with reference to its meaning at the time of its adoption. At the time of our separation from Great Britain, that power had (1) (3)8 L. Ed. 640, 643, 644. 70 (2) ; , 136. (4) ; , 424. 544 been exercised by the King, as the Chief Executive. Prior to the Revolution, the Colonies, being in effect under the laws of England, were accustomed to the exercise of it in the various forms, as they may be found in the English books. They were of course to be applied as occasions occurred, and they constituted a part of the jurisprudence of Anglo America. At that time of the adoption of the Constitution, American statesmen were conversant with the prerogatives exercised by the Crown. Hence when the words to grant pardons were used in the Constitution, they convey to the mind the authority as exercised by the English Crown, or its representatives in the Colonies. At that time both Englishmen and Americans attached the same meaning to the words " pardon ". In the convention which framed the Constitution, no effort was made to define or change its meaning, although it was limited in cases of impeachment. We must then give the word the same meaning as prevailed here and in England at the time it found a place in the Constitution. This is in conformity with the principles laid down by this court in Cathcart vs Robinson, 5 Pet. 264, 280; and in Flavell 's case, ; Attorney General 's brief" In Ex parte Grossman (1) Taft, C. J., said: .lm15 ". . . . . . . . . . . The language of the Constitution cannot be interpreted safely except by reference to the common law and to British institutions as they were when the instrument was framed and adopted. The statesmen and lawyers of the Convention, who submitted it to the ratification of the Convention of the thirteen states, were born and brought up in the atmosphere of the common law, and thought and spoke in its vocabulary. They were familiar with other forms of government recent and ancient, and indicated in their discussions earnest study and consideration of many of them, but when they came to put their conclusions into the form of fundamental law in a compact draft, they expressed them in terms of the common law, (1) ; , 530, 532, 535. 545 confident that they could be shortly and earnestly understood ". According to the American as also Indian Constitution the power as given to the President is not to reprieve and pardon but that he shall have power to grant reprieves and pardons for offenses against the United States except in cases of impeachment. Wayne, J., in Ex parte Well8 (1 ) at page 425 has explained the difference between the meaning of these two expressions. "The first convoys only the idea of an absolute power as to the purpose or object for which it is given. The real language of the constitution is general, that is, common to the class of pardons known in the law as such whatever they may be by their denomination. We have shown that conditional pardon is one of them. A single remark from the power to grant reprieves will illustrate the point. That is not only to be used to delay a judicial sentence when the President shall think the merits of the case or some cause connected with the offender may require it, but it also extends to cases ex necessitate legis . . . . Though the reprieve in either case produces delay in the execution of a sentence ", the reprieves in the two cases are different in their legal character and different as to the causes which may induce the exercise of the power to reprieve. In India also the makers of the Constitution were familiar with English institutions and the powers of English Kings and the exercise of their power both by the Governor General and the Governors of British India and of its provinces. It will be legitimate to draw on English law for guidance in the construction of the articles dealing with the power of the President and of the Governor in regard to pardons including the other forms of clemency comprised in. the two articles. It will not be inappropriate to say that the framers of the Indian Constitution were not only familiar and trained in British Jurisprudence but were familiar with the American Constitution and they were drafting their Constitution in English language and therefore to draw upon the American parallel would be wholly legitimate. (1) ; , 425. 546 The history of the prerogative of pardons and reprieves shows that the power of the executive in the matter of pardons and reprieves and other forms of pardons irrespective of the name used is of the widest amplitude and is plenary in nature and can be exercised at any time after the commission of the offence. The power of the executive is an act of grace and clemency. It is a sovereign or governmental power which ina monarchy is inherent in the King and in a Republicin the State or the people and which may, by the Constitution, be conferred on an officer or a department. It is an executive power of the Governor and it is the same as was exercised by the colonial Gover nors in America Wayne, J., in the matter of Ex parte Wells (1) has described it as an act of mercy and an act of clemency applicable to pardons of every kind and form. Field, J., in Ex parte Garland (2) termed it the benign prerogative of mercy. It is the power for avoiding the execution of the judgment by reprieve or pardon whereof the former is temporary and the latter permanent. According to Willoughby 's Constitution of America, Vol. III p. 1492: " The power to pardon includes the right to remit part of the penalty as well as the whole and in either case it may be made conditional. The power may be exercised at any time after the offence is committed, that is, either before, during, or after legal proceedings for punishment ". Ex parte Garland ; Reprieve whereby the execution is suspended is merely the postponement of the execution for a definite time and it does not and cannot defeat the ultimate execution of the judgment but merely delays it. It is extended to a prisoner in order to afford him an opportunity to procure some amelioration of the sentence which has been imposed upon him. But power to reprieve is an executive act and the sole judge of the sufficiency of facts and of the propriety of the action is the Governor. No other department in America has control over his actions. The pardoning power is in derogation of the law and the power of pardoning (1) ; , 424. (2) ; , 370 & 371. 547 when conferred on the head of the executive is an executive power and function. The pardon may be conditional and the grant of a conditional pardon is not illegal. It has been held that the power of pardon is not subject to legislative control ; Ex parte Garland (1) ; nor is it open to the legislature to change the effect of 'pardon; United States vs Klein (2). The executive may grant pardon for good reasons or bad or for any reasons at all; its act is final and irrevocable. The Courts have no concern with the reasons which actuated the executive. This power is beyond the control of the judiciary; , sections 43; Horwitz vs Connor (3). Thus in England the exercise of the power by the King is the exercise of the power of mercy. The power is plenary in nature and unfettered and as far as constitutional powers are concerned it can be exercised at any time after the commission of the offence. In America the power of the executive under the Federal or State Constitution is the same in its nature as that exercised by the representative of the English Crown in America in colonial times. 67 C. J. section 565. It has been said that executive clemency exists to afford relief from undue harshness or individual mistake in the operation or enforcement of the criminal law. It is essential in popular Governments as well as in monarchies to vest in some other party than courts the power to ameliorate or avoid particular criminal judgments and the exercise of this power is the exercise by the highest executive of his full discretion and with the confidence that he will not abuse it. In Ex parte Garland (1), it was held that the President 's pardon was not subject to legislative control,said Field, J., " the law thus conferred is unlimited . It extends to every offence known to the law and may be exercised at any time after its commission. . . . . The power of the President is not subject to legislative control. Congress can neither limit the effect not exclude from its effect any class of offenders. The benign prerogative (1) ; , 370 & 371. (2) ; (3) 548 of mercy resposed in him cannot be fettered by any legislative restriction. . In Ex parts Grossman (1) it was held that there was no difference between the power of the President and that of the king in regard to pardon and at page 535 it was observed by Taft, C. J. "Executive clemency exists to afford relief from undue harshness or evident mistake in the operation or enforcement of the criminal law. The administration of justice by the courts is not necessarily always wise or certainly considerate of circumstances which may properly mitigate guilt. To afford a remedy, it has always been thought essential in popular governments, as well as in monarchies to vest in some other authority than the court power to ameliorate or avoid particular criminal judgment. It is a check intrusted to the Executive for special cases ". That case also laid down that the exercise of the executive power to the extent of destroying the deterrent effect of judicial punishment would be to pervert it but whosoever is to make the power useful must have full discretion to exercise it and that discretion is vested in the highest officer in the nation. In Biddle vs Vuco Perovich (2), Holmes., J., in dealing with pardons said: ,, Pardon is not a private act of grace from an individual happening to possess power. It is a part of the constitutional scheme. When granted it is the determination of the ultimate authority that the public welfare will be better served by inflicting less than what the judgment fixed" and in Sorrell8 V. United State8 (3) the observation of Holmes, J., were followed and it was held the clemency is the function of the executive and it is the function of the courts to construe the Statute and not to defeat it as construed. A review of these American cases shows that the courts there have accepted that the English principles respecting the extent, operation and effect of pardons and reprieves apply in America; that the power which (1) , 530, 532, 535. (2) ; , 1163. (3) at P. 421. 549 was exercised by the king and by delegation by the colonial Governors is now exercised by the highest executive in the land and that a pardon which includes a reprieve and a respite may variously be described as an act of clemency, an act of mercy, an act of grace, an exercise of the sovereign or governmental power or the determination of the ultimate authority. Therefore the principles which govern the exercise of this executive power are quite different from those which govern the exercise of the power of the courts. It may also be pointed out that the American courts have frowned upon any interference by the courts or by the legislature with the extent and effect of the prerogative of the people vested in the President in the exercise of his power of benign mercy. It was so held in Ex parte Garland (1) and United states vs Klein (2). In the former case the President bad given a pardon to rebels who had taken part in the civil war against the forces of the federation and the legislature had reversed that pardon and it was held that pardon was not subject to legislative control and in the latter which was a conditional pardon the power of the legislature was held not to be exercisable. The power of the executive can be exercised at any time. This is so in England, in America and in India. The King ", said Lord Coke, " can forgive any crime, offence, punishment or execution either before attainder, sentence or conviction or after " ; 3 Insti. 233 ; Hawkins ' Pleas of the Crown bk. 2, Chapt.37. In the Indian Statute the words " any time " are expressly used in section 401 of the Criminal Procedure Code and in England it is an accepted practice that the Crown can pardon before or after conviction or before trial. As far as the power of pardon before trial is concerned it can be exercised by entering nolle prosequi which is also the law in India. Under a. 333 of the Code of Criminal Procedure the Advocate General can, in cases tried before the High Court, enter a nolle prosequi and this power is absolute and not subject to the control of the court. This section makes it clear that before a verdict is given the Advocate General may inform the ; , 370 & 371 (2) ; 550 court on behalf of the Government that he will not further prosecute the defendant upon the charge and he shall be discharged but this discharge does not amount to acquittal unless the Judge otherwise directs. We are informed that in the city of Bombay the power of the Advocate General extends to oases tried by the court of Session. There is no chance of private complainant being able to restart the proceedings because the Crown can always take over any criminal proceeding and then enter a nolle prosequi. Similarly the power is given in regard to other courts of original jurisdiction to the Public Prosecutor under section 494, Criminal Procedure Code, but that power is not as absolute as it is in the case of section 333 because it is subject to the consent of the Court. In the absence of constitutional restrictions the power of pardon and reprieve whether conditional or unconditional may be exercised at any time after the commission of the offence either before legal proceedings are taken or during their pendency or after an appeal is filed and while the case is pending in the appellate court. It was so held in Ex parte Grossman (1) ; Ex parte Garland (2) and so stated in 67 C. J. section 572. In the absence of a limitation imposed by law there is no limit to the period of reprieve and successive reprieves where a period is prescribed are not illegal: 67 C. J. section p. 582. A case where the power of reprieve was exercised and operated during the pendency of the appellate proceedings is, Rogers vs Peck (3). There one Mary Mabel Rogers was granted reprieve to permit her to appeal to the Supreme Court of the United States from the order of the District Court denying habeas corpus. She was convicted of murder at the December, term 1903 and was confined in solitary confinement until February 3. 1905. on which day she was to suffer the penalty of death, On February 1, 1905, the Governor reprieved the execution of sentence until June 2, 1905. On April 29, 1905, she presented a petition for a new trial to the Supreme Court of the State. The petition was admitted on May 5,1905, and fixed for hearing on (1) ; , 530, 532. 535. (2) ; ,370 &,371. (3) ; 551 May 10, 1905, but was dismissed on May 30, 1905, and a new trial was refused. On June 1, 1905, the execution of the sentence was further reprieved by the Governor until June 23, 1905. Thereupon she filed her petition in the Federal Court for a writ of habeas corpus which was dismissed. On that date the Governor further reprieved the execution of the sentence until December 8, 1905. The appeal to the Supreme Court of the United States was admitted on June 22, 1905, but the appeal was finally dismissed on November 27, 1905. One of the grounds of appeal in the Supreme Court was that the Governor, by giving the reprieve, issued his order requiring the execution while proceedings were pending in the court of the United States for her relief on habeas corpus and therefore the order was null and void and another ground was the failure of the Supreme Court of the State to grant a stay and fixing a date for execution. Both the grounds were overruled and it was held that the reprieve was to allow the cause to be heard on appeal in the Supreme Court and that the order of the Governor was not against due process clause and when the Governor had given a reprieve beyond the hearing in the State Supreme Court there was no occasion for the court to ' act in the matter. This case shows that the power of reprieve is exercisable even during the period that proceedings are pending in an. appellate court. The argument in opposition to the submissions of the learned Advocate General was that although the power of the executive to grant pardon or reprieve or suspension of sentence was absolute and could be exercised at any time yet there was a statutory as well as a constitutional limitation on the exercise of this power which excluded the power of the executive for the period when the case of a defendant had been brought before the Supreme Court or before any other appellate court as the case may be. For the latter reference was made to a. 426 of the Criminal Procedure Code which gives the power to appellate courts to suspend a sentence pending an appeal for reasons to be recorded in writing and as to the former articles 71 552 142 and 145 of the Constitution were referred to. Article 142 confers on the Supreme Court the power to do complete justice in any cause or matter pending before it and article 145 gives to; the Supreme Court power to make rules with the approval of the President but subject. to any law ;Which the Parliament may pass. Under article 145 which is the rule making power of this court, the court has made two rules which are relevant for the purpose of this appeal and they are Order 21, Rule 5 and Order 21, Rule 28 and when quoted they are as follows: O.21, R. 5 " When the petitioner has been sentenced to a term of imprisonment, the petition shall state whether the petitioner has surrendered. Unless the Court otherwise orders, the petition shall not be posted for hearing until the petitioner has surrendered to his sentence ". O.21, R. 28 " Pending the disposal of any appeal under these Rules the Court may order that the execution of the sentence or order appealed against be stayed on such terms as the Court may think fit ". Rule 5 is a salutory rule in that the court will not hear a case in which the party is in contempt of the order of the subordinate court but that rule is in express words subject to the discretion given to this court under article 136 which states: " Notwithstanding anything in this Chapter the Supreme Court may, in its discretion, grant special leave to appeal. . . Rules made under article 145 are subordinate legislation because they are subject to any law made by Parliament and can be changed by the court with the approval of the President. The change of an article, on the other hand, is to be in accordance with the provisions of the Constitution and therefore merely because this Court has also the power under the rules to grant suspension of a sentence and it has made rules that it will not entertain any petition for leave to appeal unless the petitioner surrenders himself to the sentence cannot override the provisions of article 161 ; because if there is irresolvable conflict between 553 the article and the rules then the rules must give way, being subordinate legislation. It was argued that the power of the Court under articles 142 & 145 and of the Governor under article 161 are mutually inconsistent and therefore the power of the Governor does not extend to the period the appeal is pending in this Court because law does not contemplate that two authorities, i. e., executive and judicial should operate in the same field and that it is necessary that this Court should put a harmonious construction on them. Article 142 of the Constitution, it was con. tended, is couched in language of the widest amplitude and comprises powers of suspension of sentences etc. The argument that the power of the executive to suspend the sentence under article 161 and of the judiciary to suspend the sentence under article 142 and article 145 are in conflict ignores the nature of the two powers. No doubt the effect of both is the same but they do not operate in the same field ; the two authorities do not act on the same principles and in exercising their powers they do not take the same matters into consideration. The executive exercises the power in derogation of the judicial power. The executive power to pardon including reprieve, suspend or respite a sentence is the exercise of a sovereign or govern mental power which is inherent in the State power. It is a power of clemency, of mercy, of grace " benign prerogative " of the highest officer of the State and may be based on policy. It is to be exercised on the ground that public good will be as well or better promoted by suspension as by the execution but it is not judicial process. The exercise of this power lies in the absolute and uncontrolled discretion of the authority in whom it is vested. The power of the courts to suspend sentences is to be exercised on judicial considerations. At Common Law, it was held in Ex parte U. section (1) courts possessed and asserted the right to exert judicial discretion in the enforcement of the law to temporarily suspend either the imposition of sentence or its execution when imposed to the end that pardon might be procured or (1) ; at P. 141. 554 that the violation of law in other respects might be prevented. It was also held that a Federal District Court exceeds its power by ordering that execution of a sentence imposed by it upon a. plea of guilty be suspended indefinitely during good behavior upon considerations wholly extraneous to the legality of the conviction : Ex parte U. section (1). Marshall, C. J., in U. section vs George Wilson (2) stated as follows: ". . . . It is a constituent part of the judicial system that the judge sees only with judicial eyes, and knows nothing respecting any particular case, of which he is not informed judicially ". In Ex parte Grossman (3), it was said that administration of justice by the courts is not necessarily or always wise or considerate of circumstances which may mitigate a guilt and in order to remedy this it was thought necessary to vest this in some other authority than the court to ameliorate or avoid particular criminal judgments. The exercise of this power has the effect of destroying the deterrent effect of judicial punishment. The extent of the two powers, judicial and executive and the difference between the two has been pointed out in United State8 vs Benz (4) in which it was held that no usurpation of the pardoning power of the executive is involved in the action of a court in reducing punishment after the prisoner had served a part of the imprisonment originally im. posed. At page 358 the distinction was stated as follows: " The judicial power and the executive power over sentenced are readily distinguishable. To render judgment is a judicial function. To carry the judgment into effect is an executive function. To out short a sentence by an act of clemency is an exercise of executive power which abridges the enforcement of the judgment, but does not alter it qua judgment. To reduce a sentence by amendment alters the terms of the judgment itself and is a judicial act as much as the imposition of the sentence in the first instance" (1) ; at p. 141. (2) ; , 643. (3) ; , 530. 532.535. (4) ; 555 According to Willis " Courts may exercise the power of suspending sentence although this, like the pardoning power, partakes of the nature of an executive function; which shows that giving of suspensions of sentences is an exercise of executive power; Willis ' Constitutional Law, p. 151. Clemency is the function of the executive and it is the function of the courts to construe a Statute and not to defeat it as construed. The judicial power therefore is exercisable on judicial considerations. The courts would approach every question in regard to suspension with a, judicial eye. They are unable to look to anything which is outside the record or the facts which are proved before them. It is not their sphere to take into consideration anything which is not strictly judicial. A court knows nothing of a case except what is brought before it in accordance with the laws of procedure and evidence and consequently this is a power distinct from the power of the executive which may act, taking into consideration extra judicial matters even on the ground that suspension, remission and commutation may be more for public good and welfare than no interference. These are all matters of public policy and matters which are not judicial and are within the power of the executive and therefore it cannot be said that the two powers operate in the same field. No doubt they may have the same effect but they operate in distinct fields, on different principles taking wholly irreconcilable factors into consideration. Taking the case of pardon it is important to note that pardon is granted for reasons other than innocence. A pardon, it has been said, 'affirms the verdict and disaffirms it not ". (28 Harvard Law Review at p. 647 by Samuel Williston). Commutation of sentences is a power which is exercisable by the executive to ameliorate the rigors of the punishment by courts when death sentences are imposed. It was not contended that the power of commutation is not available to the executive after the sentence is passed and before an appeal is filed or pending the appellate proceedings. It has the same effect as reduction of a sentence by a court from 556 death to one of imprisonment for life or transportation for life as it used to be. In England and in America it is exercised on the condition of acceptance by the convict but no such limitation is imposed on the power of the executive under the Indian law. But whereas the court will take into consideration only the circumstances which would justify the exercise of judicial power it is open to the executive to act on ,other grounds and the act of the executive is not subject to review by the courts, the executive being the sole judge of sufficiency of facts and of the propriety of the action and no other branch has any control over executive action. As to suspension of sentence again in section 426 of the Criminal Procedure Code it is expressly stated that an appellate court can suspend the sentence for reasons to be stated ; no such limitation is imposed on the executive under section 401 of the Code. The language of the two sections themselves shows the field in which the two powers operate although the effect may be the same. It is relevant to consider in this connection the grounds on which a court acts in regard to offenses punishable with death or imprisonment for life (s.497 of Cr. P. C.) but no such restrictions impede executive action. Similarly when the Supreme Court acts under article 142 it acts judicially and takes only those facts into consideration which are sufficient in the judicial Sense to justify the exercise of its power ; so would be the case when the power is exercised under the rules framed by the court. Thus it appears that the power of the executive and of the judiciary to exercise the power under articles 161 and 142 or under sections 401 and 426 are different in nature and are exercised on different considerations and even may have different effect. Executive power exercised in regard to sentences passed by courts is in its very nature the exercise of constitutional authority which negatives the orders of the court. Every time it is exercised it conflicts with some order of the court whether it is a case of pardon or commutation of sentence or a reprieve or suspension or respite. It is an interference with some action 557 of the court which makes the power of the executive to that extent overriding. It is for this reason that it has been said in American judgments, e. g., Ex parte Grossman(1) that although the Constitution has made the judiciary as independent of other branches as is practicable it is, as often remarked, the weakest of the three. It must look for a continuity of necessary cooperation in the possible reluctance of either of the other branches to the force of public opinion. The action of the executive interfering with sentences passed by courts is a matter which is not within the amplitude of the judicial power of the courts and whenever any action is taken by the executive, unless it is illegal, it is not justiciable nor subject to legislative control. The power that this court exercises under Order 21, Rule 5 must also depend upon the decision of the question whether article 145 can be used in derogation of the power given to the Governors under article 161. As has been stated above, being subordinate legislation, it must in reality be subordinate to the provisions of the Constitution which is obvious from the fact that any revision of the articles of the Constitution will require the procedure laid down in the Constitution for its amendment whereas the rules made under the Constitution can be changed by the court itself with the approval of the President or by a Parliamentary enactment. The language of article 161 is of the widest amplitude and applies to the various forms of clemency mentioned therein. It is not denied that the power of pardon is not affected by article 142 and this power includes the power to reprieve. It would be an undue construction of the exercise of the power of pardon to take out from its purview that portion of it which is termed reprieve or stay of execution or suspension and respite of sentence which differs from suspension of sentences only in terminology. The construction suggested would be illogical because the plenitude of the language would remain unaffected before the petition for leave to appeal is filed and after the decision (1) 69 L. Ed 527, 530, 532 535. 558 of the appeal but the power would remain suspended during the pendency of the appeal proceedings even though the power of pardon and of commutation remains intact and the suggested restriction is not borne out by the language of the article. And this construction is opposed to decisions of courts of America where the power is similar as in India. Even on the analogy of the Privy Council case Balmukand vs King Emperor (1) where reprieve was granted pending the hearing of the special leave petition, i. e., upto the date the petition was taken up, heard and decided and therefore uptil that date the reprieve was necessary and proper. In Rogers vs Peck(2) reprieve was granted for a period of time extending beyond the hearing of the appeal proceedings. If the argument as to want of the power of suspension during the period of pendency of an appeal is sustainable then the power to commute must equally be so affected because what is commutation when exercised by the executive is called reduction of sentence when ordered by the court. The two are neither different in nature nor in effect. Reference was made to a. 295 of the Government of India Act of 1935 whereby the prerogative of the King and of the Governor General as his delegate was specifically saved. Reference was also made to 8. 209(3) of that Act which gave to the Federal Court the power of stay in any case; the argument being that the prerogative power of the King and his delegate the Governor General would not be unlimited but for its being expressly saved by section 295(2). A close examination of these provisions and the application of rules of interpretation do not support the soundness of this argument. Section 209(3) is in Part IX The Judicature and Chapter 1 the Federal Court. It gave power to the Federal Court to stay executions in any case under appeal as follows: S.209(3) " The Federal Court may, subject to such terms or conditions as it may think fit to impose, order a stay of execution in any case under appeal to (1) 42 I.A. 133. (2) ; 559 the Court, pending the hearing of the appeal, and execution shall be stayed accordingly Section 295 is in Part XII Misellaneous and under sub head Provisions as to legal matters. Section 295 provided: S.295(1) " Where any person has been sentenced to death in a Province, the Governor General in his discretion shall have all such powers of suspension, remission or commutation of sentence as were vested in the Governor General in Council immediately before the commencement of Part III of this Act, but save ,as aforesaid no authority in India outside a, Province shall have any power to suspend, remit or commute the sentence of any person convicted in the Province: Provided that nothing in this sub section affects any power of any officer of His Majesty 's forces to suspend, remit or commute a sentence passed by a court martial. (2)Nothing in this Act shall derogate from the right of His Majesty, or of the Governor General, if any such right is delegated to him by His Majesty, to grant pardons, reprieves, respites or remissions of punishment Stay of execution is a term appropriate to civil proceedings as 0. 21, rr. 26 & 29 and 0. 41, r. 5 of the Code of Civil Procedure would show but even if it applied to criminal proceedings it would be of little assistance in understanding the meaning of article 142(1), in any different manner from what has been said above. But section 295(2) is pressed into service to show that wherever the Power of the executive is intended to be overriding. It is specifically so stated. So construed the power exercisable by the Governor General in his discretion and of the Governor will be of lesser amplitude and subject to the limitation of section 209(3), whereas the power of the King or the Governor General acting under section 295(2) will not be so which is seemingly incongruous. Besides the words " nothing in this Act shall derogate " in section 295(2) only emphasise the constitutional position of the King 's prerogative and of his delegate and was more in the nature of 72 560 ex abundanti cautela ' because under constitutional practice " Roy n 'est lie par ascun statute, si il ne soit expressement nosme " is a principle which has been accepted in this court qua the Union or the States. " Where the King has any prerogative, estate, right, title or interest he shall not be barred of them by the general words of an Act if be not named therein "; Broom 's Maxims, p. 39 (1939 ed.); Province of Bombay vs Municipal Corporation of the City of Bombay(1), where it was held that Crown is not bound unless expressly named or is bound by " necessary implication If the argument of limitation of the King 's prerogative because of these saving words is sound then it means in the Constitution Act the British Parliament did contemplate and provide that the power of the King or of the Governor General as his delegate as to suspensions, remissions or commutation would be overriding and exercisable in spite of the pendency of an appeal in the Federal Court. There are seven reasons for denying the argument of conflict between articles 142 and 161 : (1)As has been discussed above, the two articles operate in two distinct fields where different considerations for taking action apply. That is how the two articles are reconcilable and should be reconciled. This interpretation accords with the rule of statutory co existence stated in text books on Interpretation of Statutes, which is as follows: " It is sometimes found that the conflict of two Statutes is apparent only, as their objects are different and the language of each is restricted to its own object or subject. When their language is so confined, they run in parallel lines without meeting ". (Maxwell on Interpretation of Statutes (1953 Ed.), p. 170). (2)The proper rule of construction of Statutes was laid down in Warburton vs Loveland(2): No rule of construction can require that when the words of a Statute convey a clear meaning. . it shall be necessary to introduce another part of the (1) 73 I.A. 271. (2) , 410. 561 Statute, which speaks with less perspicuity, and of which the words may be capable of such construction as by possibility to diminish the efficacy of the other provisions of the Act" This rule was accepted in regard to the interpretation of sections 89, 92 and 93 of the Australian Constitution in the State of Tasmania vs Commonwealth of Australia (1): "Applying those expressions to these sections I should say they amount to this; Seeing that sec. 89 hair an absolutely clear meaning, the rules of construction do not require us to introduce another part of the Statute which speaks with less perspicuity, and to apply that part to the construction of sec. That would have the effect of diminishing the clearness of sec. 89 and appears to me to be an absolute inversion of the rule which is applicable in such a case ". In the instant case the words of article 161 are clear and unambiguous. It is an unsound construction to put a fetter on the plenitude of the powers given in that article by reading an earlier article which deals with the powers of a different department of Government and uses language " which speaks with less perspicuity (3)Moreover it is a relevant consideration in the matter of interpretation that the two articles are in two different parts. There is ample authority for the view that one is entitled to have regard to the indicia afforded by the arrangement of sections and from other indications; Dormer vs New Castle upon Tyne Corporation (2) per Slesser, L. J. The arrangement of sections into parts and their headings are substantive parts of the Act and as is pointed out by Craies on Statute Law (5th Ed.), p. 165, " they are gradually winning recognition as a kind of preamble to the enactments which they precede limiting or explaining their operation ". They may be looked to as a better key to construction than a mere preamble. Ibid p. 195. (1) ; , 357. (2) , 217 (C.A.). 562 In Inglis vs Bobertson(1) which turned on the meaning of the Factors Act, Lord Herschell said: "These headings are not in my opinion mere marginal notes but the sections in the group to which they belong must be read in connection with them and interpreted in the light of them". Viscount Simon, L. C., said in Nokes vs Doncaster Amalgamated Collieries Ltd. (2): "Moreover, sec. 154 contemplates or, at any rate, provides for the dissolution of the transferor company when the transfer of its undertaking has been made, and there appears to be no means of calling back to life the company so dissolved for see. 294 occurs in Part V of the Companies Act, 1929, dealing with winding up, whereas sec. 154 is found in Part IV" These cases place accent on the principle that the articles 142(1) and 161 deal with different subjects showing operation in separate fields and were not intended to overlap so as to be restrictive of each other. (4)The language of article 161 is general, i. e., the power extends equally to all class. of pardons known to the law whatever the nomenclature used ; Ex parte Wells (3) and therefore if the power to pardon is absolute and exercisable at any time on principles which are quite different from the principles on which judicial power is exercised then restrictions on the exercise of the lesser power of suspension for a period, during which the appeal is pending in this court would be an unjustifiable limitation on the power of the executive. It could not have been the intention of the framers that the amplitude of executive power should be restricted as to become suspended for the period of pendency of an appeal in the Supreme Court. (5)If this interpretation is adopted it would lead to this rather incongruous result that if the appeal is pending in a Court of Session or the High Court the power of the executive will be abundant, overriding (1) ; , 630. (2) (3) ; , 424. 563 and operative during the pendency of appeals but will be restrictive when appeal is brought in the Supreme Court. (6)Article 161 is a later provision and when it was adopted the Constitution makers had already adopted article 72 and articles 142(1) and 145. It does not seem reasonable that by so juxtaposing the articles it was the intention of the framers to constrict the power of the executive. The rules of interpretation on this point have thus been stated: (a)It is presumed that the legislature does not deprive the State of its prerogative powers unless it expresses its intention to do so in express terms or by necessary implication. Province of Bombay vs Municipal Corporation of the City of Bombay (1); Director of Rationing & Distribution vs Corporation of Calcutta (2). (b)It seems impossible to suppose that so material a change in the constitutional powers of the Governor was intended to be effected by a side wind. (e)The law will not allow alteration of a Statute by construction when the words may be capable of proper operation without it; Kutner vs Philips (3). (d)It cannot be assumed that the Constitution has given with one hand what it has taken away with another; Dormer vs New Castle upon Tyne Corporation (4). (e)If two sections are repugnant, the known rule is that the last must prevail: Wood vs Riley (5), per Keating, J. (7)The power given to the Governor in regard to pardons is a specific power specially conferred as was vested in the colonial and British Governors in Indian provinces during British days. The power given to the court under article 142(1) is a general power exercisable for doing complete justice in any cause or matter. If they, i.e., articles 161 and 142(1) deal with (1) 73 I.A. 271 (2) Criminal Appeal No. 158 Of 1956. (3) , 272. (4) 217 (C.A.). (5) 564 the same subject matter as is contended then article 161 must prevail over article 142(1) which is in accord with the constitutional position as above discussed. In the circumstances of this case 1 would grant the petitioner exemption prayed for and proceed to hear the special leave petition on merits. BY COURT: In view of the majority Judgment, the petition is dismissed. Petition dismissed. [/INST] The petitioner was Second in Command of 1. N. section Mysore which came to Bombay in the beginning of March, 1959. Soon thereafter he was arrested on a charge of murder under section 302 of the 'Indian Penal Code and was placed, and continued to remain, in naval custody all along during his trial. In due course he was placed on trial by a jury before the Sessions Judge, Greater Bombay, in which the jury returned a verdict of not guilty by a majority; but the Sessions judge disagreeing with the verdict of the jury made a reference to the High Court which convicted the petitioner under section 302 of the Indian Penal Code and sentenced him to imprisonment for life. On the same day when the High Court pronounced its judgment the Governor of Bombay passed an order under article 161 of the Constitution of India suspending the sentence passed by the High Court of Bombay on the petitioner until the appeal intended to be filed by him in the Supreme Court against his conviction and sentence was disposed of and subject meanwhile to the condition that he shall be detained in the Naval Jail custody. A warrant for the arrest of the petitioner which was issued in pursuance of the judgment of the High Court was returned unserved with the report that it could not be served in view of the order of the Governor suspending the sentence passed upon the petitioner. In course of the hearing of an application for leave to appeal to the Supreme Court filed by the petitioner in the High Court the matter of the unexecuted warrant was placed before it and a Special Bench of the High Court after examining the validity of the action taken by the Governor came to the conclusion that the order passed by the Governor was not invalid, that the order for detention of the petitioner in naval custody was not unconstitutional and that the sentence passed on the petitioner having been suspended the provisions of 0. XXI, r. 5, of the Supreme Court Rules did not apply and it was not necessary for the petitioner to surrender to his sentence. Thereafter the petitioner filed an application for special leave in the Supreme Court and also another application praying for exemption from compliance with the aforesaid rule and 498 for the hearing of his application for special leave without surrendering to his sentence. His plea at first was that as he was not a free man it was not possible for him to comply with the requirements of 0. XXI, r. 5, of the Supreme Court Rules; but he subsequently amended it to the effect that the aforesaid Rule did not apply to his case in view of the Governor 's order. On a reference of this matter by a Division Bench of this Court to the Constitution Bench for hearing, Held, that the Governor had no power to grant the suspension of sentence for the period during which the matter was sub judice in this Court. The Governor 's order suspending the sentence could only operate until the matter became sub judice in this Court on the filing of the petition for special leave to appeal whereupon this Court being in seisin of the matter would consider whether 0. XXI, r. 5 should be applied or the petitioner should be exempted from the operation thereof as prayed for. It would then be for this Court to pass such orders as it thought fit as to whether bail should be granted to the petitioner or he should surrender to his sentence or to pass such other order as the court deemed fit in the circumstances of the case. On the principle of harmonious construction and to avoid a possible conflict between the powers given under article 161 to the Governor and under article 142 to the Supreme Court, both of which are absolute and unfettered in their respective fields of operation, it must be held that. article 161,does not deal with the suspension of sentence during the time that article 142 is in operation and the matter is sub judice in the Supreme Court. Per KAPUR J. (dissenting) The language of article 161 is of the widest amplitude. It is plenary and an act of grace and clemency and may be termed as benign prerogative of mercy; The power of pardon is absolute and exercisable at any time. Rules framed under article 145 are subordinate legislation and cannot override the provisions of article 161 of the Constitution itself. While the Governor 's power to grant pardon is a power specially conferred upon him as was vested in the British Governor in British days, the power given to the Court under article 142(1) is a general power exercisable for doing complete justice in any cause or matter, and if they deal with the same matter then article 161 must prevail over article 142(1). The two powers may have the same effect but they operate in distinct fields on different principles taking wholly irreconcilable factors into consideration. The action taken by the executive being the exercise of overriding power is not subject to judicial review. It could not have been the intention of the framers of the Constitution that the amplitude of executive power should be restricted as to become suspended for the period of pendency of an appeal in the Supreme Court. </s>

<s>[INST] Summarize the following judgement: Civil Appeal No. 114 of 1951. Appeal from the Judgment and Decree dated the 5th Sep tember, 1947, of the High Court of Judicature at Allahabad (Waliullah and Sapru JJ.) in First Appeal No. 516 of 1942 arising out of Judgment and Decree dated the 3rd October, 1942, of the Court of the Civil Judge of Shahjahanpur in Original Suit No. 10 of 1941. Achhru Ram (N. C '. Sen, with him) for the appel lants. C.K. Daphtary (K. B. Asthana, with him) for the re spondents. October 20. The Judgment of the Court was deliv ered by BHAGWATI J. This is an appeal by the heirs and legal representatives of the deceased plaintiff against the decree of the High Court of Judicature at Allahabad allowing ' the appeal of the defendants against the decree passed by the Court of the Civil Judge of Shahjahanpur in favour of the plaintiff allowing the plaintiff 's claim in part. One Kailashi Nath Kapoor, the plaintiff, was employed by the District Board of Shahjahanpur, the defendants, as their Secretary in the year 1924. He 1124 was also entrusted in 1929 with the additional duties of doing assessment work for the defendants. The work done by the plaintiff did not find favour with some members of the Board and on the 9th November, 1939, six members of the Board tabled a resolution asking the Chairman to convene a special meeting of the Board to consider a resolution for the dismissal of the plaintiff. A special meeting of the Board was convened on the 17th December, 1939. Twelve charges were framed against the plaintiff and he was re quired to furnish his answers to them. A special meeting of the Board was thereafter convened on the 20th January, 1940. The resolution for the dismissal of the plaintiff was on the agenda but the meeting had to be adjourned for want of quorum to the 29th January, 1940. At the adjourned meeting of the 29th January, 1940, twenty five out of the twentyseven members of the Board were present. The charges against the plaintiff were gone into and eleven out of the twelve charges were held proved. Two resolutions were consequently passed by the Board at this meeting, one being a resolution for his dismissal, and the other being a reso lution for his suspension till the matter of his dismissal was decided under section 71 of the U.P. District Boards Act, X of 1922, on an appeal if any preferred by the plain tiff to the Government. The plaintiff preferred an appeal to the Government against the resolution for his dismissal and this appeal was dismissed by the Government on the 19th December, 1940. The plaintiff thereafter commenced in the Court of the Civil Judge at Shahjahanpur the suit out of which this appeal arises against the defendants for a declaration that the two resolutions passed by the Board on the 29th January, 1940, were illegal and ullra vires of the Board and that he continued to be the Secretary and Assessing Officer of the Board, for an injunction restraining the Board from prevent ing him from discharging his duties as such Secretary and Assessing Officer, for arrears of his salary with interest and contribution to his provident Fund and in the alterna tive 1125 for damages and compensation for illegal dismissal and suspension and for costs. The defendants contended that the said resolutions were valid and binding on the plaintiff and that the plaintiff was not entitled to any relief as claimed. The learned trial judge held that the two resolutions passed by the Board on the 29th January, 1940, were properly passed and that there was no irregularity in the procedure. He held that the resolution for dismissal of the plaintiff was valid and binding on the plaintiff but the resolution for suspension was not legal. In the result he decreed the plaintiff 's claim for arrears of salary, and the contribu tion towards the provident fund against the defendants for the period of suspension and awarded to the plaintiff a sum of Rs. 6,629 4 0 with proportionate costs, the rest of the plaintiff 's claim was dismissed. The defendants appealed to the High Court against this decree and the plaintiff filed cross objections in regard to his claim which had been disallowed. The plaintiff died during the pendency of the appeal and his heirs and legal representatives, being his widow and his four sons, were brought on the record. The High Court concurred with the trial court in the finding that there was no irregularity, impropriety or illegality in the procedure followed and the steps taken before the meet ing or at the meeting of the Board when the two resolutions were considered and passed. It however disagreed with the conclusion reached by the trial Court that the resolution for suspension was ultra vires the Board. It held that the resolution for suspension also was valid and binding on the plaintiff and thus dismissed the plaintiff 's suit with costs throughout. The crossobjections of the plaintiff were of course dismissed with costs. The heirs and legal repre sentatives of the plaintiff obtained leave to appeal to the Federal Court against this decision of the High Court and the appeal was admitted on the 5th November, 1948. Both the Courts below having found that there was no irregularity, impropriety or illegality in the procedure followed and the steps taken when the two 1126 resolutions in question were passed by the Board the only question that survived for consideration by this Court was whether the resolution for suspension of the plaintiff was valid and binding on the plaintiff or in other words whether it was competent to the Board to pass the resolution for the suspension of the plaintiff after it had passed the resolu tion for his dismissal under section 71 of the Act. Section 71 of the Act provides for the dismissal and punishment of the secretary: "A board may by special resolution punish or dismiss its secretary: Provided, firstly, that such resolution is passed by a vote of not less than two thirds of the total number of members of the board for the time being: Provided, secondly, that the secretary of a board shall have a right of appeal to the State Government against such resolution within one month from the date of the communica tion of the resolution to him, and that the resolution shall not take effect until the period of one month has expired or until the State Government have passed orders on any appeal preferred by him. " It will be relevant at this stage to note that this section 71 was amended by U.P. Act I of 1933. Section 71 as it originally stood ran thus: "A board may by special resolution punish or dismiss its secretary provided, (a) that such a resolution is passed by a vote of not less than two thirds of the total number of members of the board for the time being, or (b) that it is passed by a vote of not less than one half of the total number of members. and is ' sanctioned by the Local Government ' . It may be noted that in the original section 71 provi sion was made for the sanction of the Local Government in certain cases. No such provision is to be found in the amended section 71 of the Act. The resolution according to the amended section 71 is to be passed by a vote of not less than two thirds of the 1127 total number of members of the Board and such a resolution is not to take effect until the period of one month has expired within which the secretary can exercise his right of appeal or until the Government have passed orders on the appeal if any preferred by him. There is no question of the sanction of the Local Government to any resolution for dismissal the only provision being that the resolution is to take effect after the expiration of the period of one month or after the Government have passed orders on the appeal if any preferred by the secretary within that period of one month. Once that period of one month expires without the secretary preferring any appeal against the resolution of the Board or the Government passes final orders on the appeal preferred by him, the resolution takes effect without anything more in the nature of a sanction by the Government. The power of suspension is conferred and regulated in section 90 of the Act : "(1) Suspension may be of two kinds: (a) suspension as a punishment, and (b) suspension pending inquiry or orders. (2) Where a general power to punish is conferred by this Act, it shall be deemed to include a power to suspend as a punishment for a period not exceeding three months. (3) Where a power of dismissal, whether subject to the sanction of any other authority or not, is conferred by this Act, it shall be deemed to include a power to suspend any person against whom the power of dismissal might be exer cised, pending enquiry into his conduct or pending the orders of any authority whose sanction is necessary for his dismissal. (4) Where suspension is ordered pending inquiry or or ders, and the officer suspended is ultimately restored, it shall be at the discretion of the authority ordering his suspension whether he shall get any, and, if so what, allow ance during the period of suspension; but in the absence of any order to the contrary he shall be 1128 entitled to the full remuneration which he would have re ceived but for such suspension. " The suspension which has been thus provided for is of two categories, (1) suspension as a punishment and (2) suspension pending enquiry or orders. In the case of a suspension falling within the latter category the only power of suspension which is provided is that of suspending any person against whom the power of dismissal might be exer cised pending enquiry into his conduct or pending the orders of any authority whose sanction is necessary for his dis missal. The power of suspension pending enquiry into the conduct of the person can only be exercised if an enquiry against him has been started and before any order is made for his dismissal as a result of such enquiry. The power of suspension pending the orders of the authority whose sanc tion is necessary for his dismissal can similarly be exer cised provided the order of dismissal is made but that dismissal could be effective only after the orders of the authority whose sanction is needed for effectuating the same. The section does not provide for any other case where as on the facts before us the order of dismissal does not require the sanction of any authority but has got to await either the expiry of a particular period after such order of dismissal has been made or the result of an appeal which may be preferred to the Government within the period prescribed in that behalf. A decision of an authority to which an appeal is provided is not the same thing as a sanction by the authority. A perusal of sub section (4) of section 90 makes this position quite clear. The authority ordering the suspension is vested with the discretion to determine whether the officer suspended would get any or if so what allowance during the period of suspension where suspension is ordered pending enquiry or orders and the officer sus pended is ultimately restored. There is no provision for any allowance where the officer having been dismissed is also suspended for the period which has of necessity to expire before his appeal is time barred or before the Gov ernment passes 1129 orders on the appeal if any preferred by him within the prescribed period. Such a case is not at all provided for in sub section 4 of section 90 and the officer so suspended would be without any remedy whatever and would not be able to get any allowance at all from the authority ordering his suspension during such period of suspension. It is necessary to bear in mind the provisions of these sections 71 and 90 of the Act in order to determine whether it was competent to the Board to pass a resolution for suspension of the plaintiff after it had passed the resolu tion for his dismissal on the 29th January, 1940. On a construction of these sections 71 and 90 of the Act the trial Court came to the conclusion that the provisions of section 90 of the Act were exhaustive, that no other category of suspension apart from those specified could be ordered and that therefore the resolution for suspension of the plaintiff was ultra rites the Board. The High Court in appeal realised the difficulty of the position. It came to the conclusion that section 90 as it stood was in close conformity with the provisions of the old section 71 of the Act which provided for the resolution for dismissal passed by a vote of not less than one half of the total number of members being required to be sanctioned by the Local Govern ment. The sanction was expressly provided there. But when that section came to be amended by the U.P. Act I of 1933, the provision for sanction was deleted and it provided for the resolu tion not taking effect until the period of one month had expired within which the secretary could exercise his right of appeal or until the Government had passed orders on the appeal ii any preferred by him. When this amendment was made in the old section 71 of the Act the provision made in section 90 in regard to the power of suspension was lost sight of and no corresponding amendment was made in section 90, sub section (1)(b), sub section (3) or subsection (4) which would bring the provisions of 145 1130 section 90 in conformity with the amended section 71 of the Act. The High Court was therefore at pains to place what it called a liberal construction on the provisions of section 71 and section 90 of the Act trying to read in the power of suspension provided in section 90 also a power of suspension during the period that the secretary preferred an appeal to the Government against the order of his dismissal and the Government passed orders on such appeal. Apart from placing this so called liberal construction on the expression "the orders of any authority whose sanc tion is necesssary" in section 90 subsection 3, the High Court also brought to its aid the provisions of Section 16 of the U.P. General Clauses Act of 1904 which provides that "unless a different intention appears the authority having power to make the appointment shall also have power to suspend or dismiss any person appointed by it in exercise of that power ". It came to the conclusion that nothing in the terms of section 71 or section 90 of the Act controlled or negatived an intention to sustain the general power of suspension, i.e. suspension pending orders on an appeal. The High Court thus justified the resolution for the suspen sion of the plaintiff passed by the Board on the 29th January, 1940. We are afraid we cannot agree with this line of reason ing adopted by the High Court. The defendants were a Board created by statute and were invested with powers which of necessity had to be found within the four corners of the statute itself. The powers of dismissal and suspension given to the Board are defined and circumscribed by the provisions of sections 71 and 90 of the Act and have to be culled out from the express provisions of those sections. When express powers have been given to the Board under the terms of these sections it would not be legitimate to have resort to general or implied powers under the law of master and servant or under section 16 of the U.P. General Clauses Act. Even under the terms of section 16 of that Act, the powers which are vested 1131 in the authority to suspend or dismiss any person appointed are to be operative only "unless a different intention appears" and such different intention is to be found in the enactment of sections 71 and 90 of the Act which codify the powers of dismissal and suspension vested in the Board. It would be an unwarranted extension of the powers of suspen sion vested in the Board to read, as the High Court pur ported to do, the power of suspension of the type in ques tion into the words "the orders of any authority whose sanction is necessary". It was unfortunate that when the Legislature came to amend the old section 71 of the Act it forgot to amend section90 in conformity with the amendment of section 71. But this lacuna cannot be supplied by any such liberal construction as the High Court sought to put upon the expression "orders of any authority whose sanction is necessary". No doubt it is the duty of the court to try to harmonise the 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. Reading the present, section 71 of the Act along with section 90 of the Act we are of the opinion that the power of suspension of the nature purported to be exercised by the Board in the case before us was not the power of suspension contemplated in section 90 sub section (3) of the Act. If the plaintiff allowed the period of one month to expire without preferring an appeal against the resolution to the Government or if the Government passed orders dismissing his appeal, if any, the resolution for ' his dismissal would become effective without any sanction of the Government. The words used therefore in section 90, sub section (3) "pending the orders of any authority whose sanction is necessary for his dismissal" are inappropriate to the present facts and could not cover the case of a suspension of the nature which was resorted to by the Board on the 29th January, 1940. We are therefore of the view that the resolution for suspension which was 1132 passed on the 29th January, 1940, was ultra vires the powers of the Board. We have accordingly come to the conclusion that the decision reached by the High Court that the resolution for suspension which was passed by the Board on the 29th Janu ary, 1940, was valid and binding on the "plaintiff was erroneous and that the conclusion reached by the trial Court was correct. The learned Solicitor General appearing for the defendants has however informed us that the sum of Rs. 6,629 4 0 and the proportionate costs which were awarded by the trial Court to the plaintiff have already been paid to the plaintiff. Nothing therefore remains to be recovered by the heirs and legal representatives of the plaintiff even on the basis that the decree of the trial Court is restored as a result of this judgment of ours. The only thing which therefore survives is the question of the costs of this appeal. The trial Court had already awarded to the plaintiff proportionate costs. The High Court in reversing the judgment of the trial Court dismissed the plaintiff 's suit with costs throughout including the costs of the cross objections which were filed by the plain tiff. The heirs and legal representatives of the plaintiff filed the present appeal in regard to the whole claim of the plaintiff as laid in the plaint. That claim could not be sustained before us by the heirs and legal representatives of the plaintiff and they only succeeded before us in regard to the claim of the plaintiff which had been allowed by the trial Court. If an order for proportionate costs of this appeal were made it would certainly work to the prejudice of the heirs and legal representatives of the plaintiff. We are not disturbing the order which had been made by the High Court in regard to the costs of the appeal before it. No time was taken up before us in arguing the appeal on other points except the one in regard to the resolution for the suspension of the plaintiff being ultra rites and we think that under the circumstances of the case the proper order to pass in regard to the costs of this appeal before us should be that each party should bear its own costs. 1133 The only order which we need pass in this appeal before us under the circumstances is that the appeal is allowed, the decree of the trial court is restored, and each party do bear and pay its own costs of this appeal. Appeal allowed. [/INST] Section 71 of the U.P. District Boards Act, 1922, as amended in 1933 provided that a resolution of the Board for the dismissal of its secretary shall not take effect until the period of one month has expired or until the State Government have passed orders on any appeal preferred by him. A District Board passed a resolution for dismissal of its secretary and also for his suspension till the matter of his dismissal was decided under section 71 of the Act on an appeal if any preferred by the secretary: Held, that under section 90 of the Act a secretary could be suspended only as a punishment or pending inquiry or 1123 pending the orders of any authority whose sanction is neces sary for his dismissal. The words "pending the orders of any authority whose sanction is necessary for his dismissal" could not appropriately cover the case of a suspension like the present one and the resolution for suspension was 'therefore ultra vires. Held further, that since the Board was created by stat ute, and its powers of dismissal and suspension are defined and circumscribed by sections 71 and 90 of the Act it would not be legitimate to have resort to general or implied powers under the law of master and servant or under section 16 of the U.P. General Clauses Act;and even under section 16 of that Act powers which are vested in an authority to suspend or dismiss any person appointed, are to be operative only "unless a different intention appears" and such a different intention is to be found in sections 71 and 90 of the Act which codify the powers of dismissal and suspension vested in the Board. </s>

<s>[INST] Summarize the following judgement: s Nos. 76, 217 to 228 of 1960. Petitions under Article 32 of the Constitution of India for enforcement of Fundamental Rights. A. V. Viswanatha Sastri and T. V. R. Tatachari, for the petitioners (In petitions Nos. 76, 87, 93 104 and 217 228 of 1960). T. V. R. Tatachari, for the petitioners (In petitions Nos. 72 and 229 233 of 1960). D. Narasaraju, Advocate General for the State of Andhra Pradesh, P. R. Ramchandra Rao and T. M. Sen, for the respondents (In all the petitions). September 8. The Judgment of the Court was delivered by SUBBA RAO J. These petitions are filed under article 32 of the Constitution for the enforcement of the petitioners ' fundamental right to carry on the business of motor transport in West Godavari District in 645 the State of Andhra Pradesh by the issuance of writs of certiorari or any other appropriate writs, orders or directions to quash the schemes of road transport services as finally approved by the Government of Andhra Pradesh on March 21, 1960, and for other incidental reliefs. In exercise of the powers conferred by section 68C of the (IV of 1939), as amended by the Central Act 100 of 1956, (hereinafter called the Act), Shri Guru Pershad, the Chief Executive Officer, Andhra Pradesh State Road Transport Corporation, (hereinafter called the Transport Corporation) published seven proposals dated December 7, 1959, in the Andhra Pradesh Gazette dated December 17, 1959, propounding seven schemes for the nationalization of the road transport in respect of different parts of West Godavari District in that State. Under that notification objections from the public and affected parties were invited to be filed within 30 days of the publication thereof More than 3000 objections were received by the Government against the said schemes. After considering the objections, the Government issued notices to the objectors or their representatives and the representatives of the Transport Corporation informing them of the time, place and the dates of hearing. On the notified dates, namely, March 10, 11 and 12, 1960, 200 objectors were present and most of them were represented by Advocates. The Transport Corporation was also represented by its Chief Executive Officer and its legal advisers. The Minister in charge of the portfolio of transport held an enquiry, considered the conflicting arguments advanced, gave definite findings on the points urged, rejected all the objections but one and approved the schemes with a slight modification. The seven schemes were directed to be put in force from different dates which were given in the order made by the Minister. The aggrieved operators who were not satisfied with the order of the Minister filed the present petitions for the said reliefs. Shri A. V. Viswanatha Sastri, learned counsel for the petitioners, raised before us the following points. 646 (1)The provisions of Ch. IVA of the Act are ultra vires the powers of Parliament because they are within the exclusive legislative field of the States. (2) The provisions of Ch. IVA of the Act infringe the fundamental rights of the petitioners under article 19(1)(g) of the Constitution and are not saved by el. (6) of the said Article. (3) The provisions of Ch. IVA are also violative of article 14 of the Constitution. (4) The order of the Government confirming the schemes is vitiated by the doctrine of bias and, therefore, void. (5) Though in fact seven schemes are framed, in effect they are component parts of one scheme and that device has been adopted to circumvent the judgment of this Court in Srinivasa Reddy vs The State of Mysore (1). (6) The schemes are void inasmuch as they area prepared and published by the Chief Executive Officer who was not one of the persons who could act on behalf of the Transport Corporation under section 13 of the Road Transport Corporations Act. (7) The schemes as propounded by the Transport Corporation did not give the number of vehicles proposed to be operated in each route as it should have given under r. 4 of the Andhra Pradesh Motor Vehicles Rules (hereinafter called the rules) and the modification made by the Minister directing the Transport Corporation to do so does not also comply with the requirements of the said rule. (8) In exercise of the power conferred under r. 5 of the Rules, the State Transport Under, taking conferred upon itself power to vary the fre quency of the services and that rule and the note made pursuant thereto are inconsistent with the provisions of the Act and, therefore, void. (9) The proposed schemes include three new routes and that is illegal as the said Transport Undertaking has no power to include any new routes in a scheme proposed by it. Though many other questions are raised in the petitions, they are not pressed before us. Learned Advocate General for the State of Andhra Pradesh sought to sustain the schemes as approved by the Minister in their entirety. (1) (1960] 2 S.C.R. 130. 647 We shall now proceed to deal with the contentions in the order they were raised. (1) : The first contention does not now merit a detailed consideration as it has been considered and rejected by this Court in H. C. Narayanappa vs The State of Mysore (1). In that case, after considering the question, Shah, J., speaking for this Court, observed: "We are therefore of the view that Chapter IVA could competently be enacted by the Parliament under entry No. 21 read with entry No. 35 of the Concurrent List." Nothing further Deed be said on this point. With respect we accept and follow the said decision. (2): The next contention is based upon article 19 of the Constitution. The question is whether Ch. IVA of the Act is saved by article 19(6) of the Constitution. If Chiva, which provides for the nationalization of road transport services in the manner prescribed, thereunder is not a permissible legislation covered by article 19(6), it would certainly offend against the fundamental right of the petitioners to do business in motor transport. The constitutional validity of Ch. IVA of the Act was raised in Gullapalli Nageswara Rao vs Andhra Pradesh Road Transport Corporation (2). There it was argued that Ch. IVA of the Act was a piece of colourable legislation whose real object was to take over the business of the petitioners therein under the cover of cancellation of permits in contravention of article 31 of the Constitution and that plea was rejected by this Court. But no attack was made on the validity of Ch. IVA of the Act on the ground that it infringed the provisions of article 19(1)(g) of the Constitution and was not saved by cl. (6) of the Article. That point is now raised before us. Under article 19(1)(g), all citizens shall have the right to carry on trade or business. The material part of (6) of article 19, as amended by the Constitution (First Amendment) Act, 1951,reads: " Nothing in sub clause (g) of the said clause. shall affect the operation of any existing law in so far (1) ; (2) [1959] Supp. 1 S.C.R. 319. 83 648 as it relates to, or prevent the State from making any law relating to. . the carrying on by the State, or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise. " The only question is, how far and to what extent article 19(6) secures the validity of Ch. IVA of the Act from attack that it offends against article 19(1)(g) ? Learned counsel for the Petitioners contends that article 19(6)(ii) provides only for partial exclusion of citizens, that is, the exclusion of a certain class of persons as a whole and not for partial exclusion of some among the same class. As section 68C, the argument proceeds, enables the State Transport Undertaking to frame a scheme for excluding some among the same class, the said provision is not saved by article 19(6) of the Constitution. Relevant portions of section 68C of the Act read: " Where any State transport undertaking is of opinion that. . . it is necessary in the public interest that road transport services in general or any particular class of such service in relation to any area or route or portion thereof should be run and operated by the State transport undertaking, whether to the exclusion, complete, or partial, of other persons or otherwise. " Under this section a scheme may be framed in respect of road transport service in general or in respect of a particular class of such service empowering the State Transport Undertaking to run the said service ; it may be in relation to any area or route or a portion thereof; it may also be to the exclusion of all or some of the persons running the said service in general or a particular class of it. The section enables the State to take over particular class of a service, say, the bus service, and exclude all or some of the persons doing business in that class of service. Learned counsel says that this section confers a wide power beyond the permissible limits of article 19(6)(ii) of the Constitution. To state it differently, the argument is that while article 19(6)(ii) does not enable a partial exclusion 649 of some among the same class of service, section 68C permits the said exclusion. The answer to this argument depends upon the true meaning of the provisions of the said Article. Under sub cl. (ii) of article 19(6), the State can make a law relating to the carrying on by the State or by a corporation owned or controlled by the State, of any particular business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise. Article 19(6) is only a saving provision and the law made empowering the State to carry on a business is secured from attack on the ground of infringement of the fundamental rights of a citizen to the extent it does not exceed the limits of the scope of the said provision. Sub clause (ii) is couched in very wide terms. Under it the State can make law for carrying on a business or service to the exclusion, complete or partial, of citizens or otherwise. The law, therefore, can provide for carrying on a service to the exclusion of all the citizens; it may, exclude some of the citizens only; it may do business in the entire State or a portion of the State, in a specified route or a part thereof The word " service " is wide enough to take in not only the general motor service but all the species of motor service. There are, therefore, no limitations on the State 's power to make laws conferring monopoly on it in respect of an area, and person or persons to be excluded. In this view, it must be held that section 68C does not exceed the limits prescribed by article 19(6)(ii) of the Constitution. (3): The next contention is that the provisions of Ch. IVA of the Act, and particularly those of section 68C thereof, offend against article 14 of the Constitution. The argument is that Ch. IVA enables the State to make a discrimination between the State Road Transport Corporation on the one hand and private operators and private transport undertakings on the other, and also to make a similar discrimination between the private operators or the private transport undertakings, and that this discrimination is left to the arbitrary discretion of the Transport Corporation. It is true that the provisions of this Chapter 650 enable a scheme to be framed conferring a monopoly on the State in respect of transport services to the partial or complete exclusion of other persons. However, the provisions of the scheme do not make any distinction between individuals operating a transport service and private transport undertakings; they are all treated as one class and the classification is only made between the State Transport Undertaking and private transport undertakings, whether the business is carried on by individuals or firms or companies. The only question, therefore, is whether such a classification offends against the equality clause of the Constitution. Article 14 says: " The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India." This doctrine of equality has been so frequently considered by this Court that it does not require any further consideration. It has been held that this Article does not prohibit reasonable classification for the purpose of legislation, but such a classification cannot be arbitrary but must be based upon differences which have rational relation to the object sought to be achieved. Doubtless in the present case, the Legislature placed the State Transport Undertaking in a class different from other undertakings. The question is whether the classification made in Ch. IVA of the Act is just and has reasonable relation to the object of the legislation. The object of Ch. IVA, as disclosed by the provisions of section 68C, is to provide in the interest of the public an efficient, adequate, economical and properly coordinated road transport service. To achieve that object section 68C confers a power on the State Transport Undertaking to prepare a scheme to run the service, whether to the exclusion, complete or partial, of other persons or otherwise. The classification has certainly reasonable nexus to the object sought to be achieved. Ordinarily a State Transport Undertaking, compared with per. sons or private undertakings, should be in a better Position than others to carry on the said services for the benefit of the public administratively, financially 651 and technically it can be expected to be in a far better position than others. It can provide more well equipped buses, give better amenities to the travelling public, keep regular timings, repair or replace the buses in emergencies. It may also employ efficient supervisory staff to keep things going at an appreciably high standard. We are not suggesting that there are no individuals or private companies who can efficiently run the service. But the State, compared with individuals, should certainly be in a better position to achieve the object, namely, to improve the road transport service in all its diverse aspects. In such a situation, when the legislature, which must be presumed to understand and correctly appreciate the needs of its own people, makes a classification between a State Transport Undertaking and others carrying On the business of transport services, we cannot say that there is no reasonable basis for such a classification. But it is said that section 68C of the Act and other provisions of Ch. IVA thereof confer an arbitrary power upon the State Transport Undertaking to discriminate between individuals and the said Undertaking between individuals and private undertakings, and between individuals and individuals. But the scheme of Ch. IVA, which has been considered by this Court in Gullapalli Nageswara Rao vs Andhra Pradesh State Road Transport Corporation (1), evolves a machinery for keeping the State Transport Undertaking within bounds and from acting in an arbitrary manner, for section 68C lays down the legislative policy in clear and understandable terms and the State Transport Undertaking can initiate a scheme only for providing an efficient, adequate, economical and properly coordinated road transport service. Another condition which it lays down is that the scheme is necessary in the public interest. The scheme so framed is published, with all necessary particulars, in the official Gazette and also in such manner as the State Government may direct; persons affected by the scheme may file objections within the prescribed time ; the State Government, after considering the objections and (1) [1959] Supp. 1 S.C.R. 319. 652 giving an opportunity to the objectors or their representatives and the representatives of the State Transport Undertaking to be beard in the matter, may approve or modify the scheme; the scheme so approved or modified is published. The rules framed under the Act provide for personal hearing. If the State Transport Undertaking seeks to modify a scheme, it will have to follow the same procedure before doing so: see as. 68C, 68D and 68E of the Act. It will be seen from the provisions of Ch. IVA of the Act that the State Transport Undertaking, before propounding a scheme, arrives at the decision on objective criteria. The parties affected and the public are given every opportunity to place their objections before the Government, and the Government, after following the prescribed quasi judicial procedure, confirms or modifies the scheme. The scheme, before it is finalised, is subjected to public gaze and scrutiny and the validity and appropriateness of the provisions are tested by a quasi judicial process. The Government cannot be equated to a Court; but the procedure prescribed accords with the principles of natural justice. It is said that the State Transport Undertaking is either the State Government or a corporation, owned or controlled by the State, and as such the entire quasi judicial procedure prescribed is only a cloak to screen the exercise of an absolute and arbitrary power on the part of the Government. We cannot say that Ch. IVA is such a device. The Legislature made a sincere attempt to protect as far as possible individual rights from the arbitrary acts of the executive. Once it is conceded that Ch. IVA of the Act is constitutionally good and that the Legislature can validly make law for nationalization of the road transport service, the procedure laid down for implementing the said policy cannot, in our view, be said to be unreasonable. If in any particular case the mala fides of the authorities concerned and collusion between the State Transport Undertaking and the State Government to deprive particular persons of their right to do road transport business or to drive out particular persons from the trade on extraneous 653 considerations, are established, that may be a ground for striking down that particular scheme. But the provisions of Ch. IVA cannot be struck down on the ground that they confer an arbitrary power on the State Transport Undertaking and on the State Government to discriminate between individuals and the State Transport Undertaking, between individuals and private undertakings, and between individuals and individuals. This question was raised in Saghir Ahmad vs The State of U. P. (1). That case dealt with the provisions of the U. P. Road Transport Act, 1951 (U. P. Act II of 1951). Under section 42(3) of that Act the Government was exempt from taking permits for its own vehicles and it could run any number of buses as it liked without the necessity of taking out permits ' for them. In furtherance of the State policy to establish a complete State monopoly in respect of road transport business, the transport authorities began not only to cancel the permits already issued to private operators but also refused to issue permits to others, who would other. wise be entitled to them. The constitutional validity of that section was questioned. It may also be mentioned that though that decision was given after the Constitution (First Amendment) Act, 1951, it was not based upon that amendment, as the Constitution before the amendment governed the rights of the parties therein. In that situation, adverting to the argument based upon article 14 of the Constitution, Mukherjea, J., as he then was, made the following observations at p. 731: " There is no doubt that classification is inherent in the concept of a monopoly; and if the object of legislation is to create monopoly in favour of the State with regard to a particular business, obviously, the State cannot but be differentiated from ordinary citizens and placed in a separate category so far as the running of the business is concerned and this classification would have a perfectly rational relation to the object of the statute.", Section 3 of that Act provided that " where the State (1) ; 654 Government is satisfied that it is necessary, in the interest of general public and for subserving the common good, so to direct, it may declare that the Road Transport Services in general, or any particular class of such service on any route or portion thereof, shall be run and operated by the State Government exclusively or by the State Government in conjunction with railway or partly by the State Government and partly by others in accordance with the provisions of this Act It was contended therein that, as the State could choose any and every person it liked for the purpose of being associated with the transport service and as there were no rules to guide its discretion, that provision would offend against article 14 of the Constitution. It was pointed out on behalf of the State that the discretion under section 3 of that Act was not uncontrolled as that could Only be done by granting of permits in accordance with the provisions of the . Accepting the construction suggested, this Court held that the discretion to be exercised by the State would be a, regulated discretion guided by statutory rules. But in the instant case, no liberal construction of the provisions need be resorted to, for Ch. IVA of the Act in specific terms provides a complete and, in the circumstances, satisfactory machinery for reasonably regulating the exclusion of all or some of the private operators from the notified area or route. We, therefore, hold that the provisions of Ch. IVA of the Act do not infringe the equality clause enshrined in Art 14 of the Constitution. (4): By the next contention the learned counsel attacks the validity of the scheme on the ground that the Government is actuated by bias against the private operators of buses in West Godavari District, and indeed had predetermined the issue. In the petitions it was alleged that the Government had complete control over the Road Transport Corporation that the entire administration and control over such road transport undertaking vested in the Government, that the Chief Secretary to the Government of Andhra Pradesh was its chairman and that, therefore, the 655 entire scheme, from its inception to its final approval, was really the act of the Government. On this hypothesis it was contended that the Government itself was made a judge in its own cause and that, therefore, its decision was vitiated by legal bias. That apart, it was also pleaded that a sub committee, consisting of Ministers, Secretaries and officers of connected departments and presided over by the Minister in charge of transport, decided in its meeting of January 28, 1960, that under the scheme of nationalization of bus service, the State Government would take over the bus services in West Godavari District and Guntur District before the end of that year and, therefore, the Minister in charge of the portfolio of transport, he having predetermined the issue, disqualified himself to decide the dispute between the State Transport Undertaking and the petitioners. The self same questions were raised in Gullapalli Nagestvara Rao vs The State of Andhra Pradesh(1). There, as in this case, it was contended that the Chief Minister, who was in charge of the portfolio of transport, could not be a judge in his own cause, as he was biased against the private operators. This Court pointed out the distinction between official bias of an authority which is inherent in a statutory duty imposed on it and personal bias of the said authority in favour of, or against, one of the parties. In dealing with official bias this Court, after considering the relevant English decisions, observed at p. 587 thus: "These decisions show that in England a statutory invasion of the common law objection on the ground of bias is tolerated by decisions, but the invasion is confined strictly to the limits of the statutory exception. It is not out of place here to notice that in England the Parliament is supreme and therefore a statutory law, however repugnant to the principles of natural justice, is valid ; whereas in India the law made by Parliament or a State Legislature should stand the test of fundamental rights declared in Part III of the Constitution." (1) ; 84 656 Then this Court proceeded to state that the provisions of the Act did not sanction any dereliction of the principles of natural justice, for the Act visualized in case of conflict between the undertaking and the operators of private buses that the State Government should sit in judgment and resolve the conflict. Much to the same effect has been stated by Shah, J., in H. C. Narayanappa vs The State of Mysore (1) though in slightly different phraseology. The learned Judge stated : " It is also true that the Government on whom the duty to decide the dispute rests, is substantially a party to the dispute but if the Government or the ,authority to whom the power is delegated acts judicially in approving or modifying the scheme, the approval or modification is not open to challenge on a presumption of bias. The Minister or the officer of the Government who is invested with the power to hear objections to the scheme is acting in his official capacity and unless there is reliable evidence to show that he is biased, his decision will not be liable to be called in question, merely because he is a limb of the Government. " In the above cases the transport department of the Government was the transport undertaking, but here the State Road Transport Corporation, which is a body corporate having a perpetual succession and common seal, is the transport authority. Though under the provisions of the Act, the State Government has some control, it, cannot be said either legally or factually that the said Corporation is a department of the State Government. The State Government, therefore, in deciding the dispute between the said undertaking and the operators of private buses is only discharging its statutory functions. This objection, therefore, has no merits. Nor can we say that it has been established that the Minister in charge of the portfolio of transport has been actuated by personal bias. The fact that he presided over the sub committee constituted to implement the scheme of nationalization of bus services in the West Godavari District does not in (1) ; 657 itself establish any such bias. Indeed, in the counter affidavit filed on behalf of the first respondent the con tents and authenticity of the reports of the proceedings of the sub committee published in the Telu daily "Andhra Pradesh " were not admitted. Even if the sub committee came to such a decision, it is not possible to hold that it was a final and ' irrevocable decision in derogation of the provisions of the Act. it was only a policy decision and in the circumstances could only mean that the sub committee advised the State Government to implement the policy of nationalization of bus services in that particular district. The said decision could not either expressly or by necessary implication involve a predetermination of the issue: it can only mean that the policy would be implemented subject to the provisions of the Act. It is not suggested that the Minister in charge of the concerned portfolio has any personal bias against the operators of private buses or any of them. We, therefore, hold that it has not been established that the Minister in charge of the portfolio of transport bad personal bias against the operators of private buses and, therefore, disqualified himself from hearing the objections under Ch. IVA of the Act. (5): The next contention is based upon the observations of this Court in Shrinivasa Reddy vs The State of Mysore (1). After elaborating on the scope of section 68C of the Act, Wanchoo, J., observed at p. 136 thus: "Therefore, the scheme to be framed must be ,such as is capable of being carried out all at once and that is why the Undertaking has been given the power to frame a scheme for an area or route or even a portion thereof. . If the Undertaking at that stage has the power to carry it out piecemeal, it would be possible for it to abuse the power of implementation and to discriminate against some operators and in favour of others included in the scheme and also to break up the integrity of the scheme and in a sense modify it against the terms of section 68E." Based on these observations it is contended that the State Government intended to frame only one scheme (1) ; 658 for the entire district though it was not in a position to implement the scheme in the entire district at one and the same time, but to circumvent the observations of this Court it had split up one scheme into seven schemes. The first respondent in its counter affidavit met this allegation in the following way: "Having regard to the resources of the Undertaking in men, material and money, each scheme has been so framed that it is capable of being carried out all at once, and in full, without breaking its integrity ' The State Transport Undertaking will carry out each of the published schemes on a date fixed by the State Government for the implementation of each scheme". The Minister in his order also adverted to this aspect and observed: " In this case, seven different schemes have been framed. Each scheme is a separate and independent scheme by itself In terms of the notification, each scheme after approval will come into force only from a date to be, fixed by the Government. Though different dates may be fixed for each scheme, each scheme will be implemented in its entirety. No piecemeal implementation of any one scheme will be done ". Indeed the order of the Minister fixed specific dates from which each of the schemes shall come into force. This Court did not lay down that there cannot be any phased programme in the nationalization of transport services in a State or in a district; nor did it hold that there cannot be more than one scheme for a district or a part of a district. The observations of this Court in regard to the implementation of a scheme piecemeal were aimed at to prevent an abuse of power by discriminating against some operators and in favour of others in respect of a single scheme. In the present case, seven schemes were framed not to circumvent the observations of this Court, but only to avoid the vice inherent in piecemeal implementation. Not only seven separate schemes were framed in respect of separate areas of the district, but also the Government made it clear that each scheme should be implemented in its entirety commencing from different dates. We do not, therefore, see any legitimate objection to the framing of seven separate, schemes. 659 Re. (6): This contention questions the validity of the schemes on the ground that the Chief Executive Officer of the Andhra Pradesh Road Transport Corporation is not empowered to publish the schemes and, therefore, the schemes were not validly published. In exercise of the powers conferred by section 68C of the Act, the Andhra Pradesh State Road Transport Corporation proposed the schemes and published them in the Andhra Pradesh Gazette, Part 11, p. 1310. The proposed schemes were signed by Guru Pershad, Chief Executive Officer, State Transport Undertaking, Andhra Pradesh Road Transport Corporation, The relevant provisions of the (Act LXIV of 1950) may be noticed at this stage. Under section 4 of the said Act, " Every Corporation shall be a body corporate by the name notified under section 3 having perpetual succession and a common seal, and shall by the said name sue and be sued ". Relevant portions of section 12 read: " A Corporation may from time to time by resolution passed at a meeting. . authorize the Chief Executive Officer or General Manager, or any other officer of the Corporation subject to such conditions and limitations if any as may be specified in the resolution to exercise such powers and perform such duties as it may deem necessary for the efficient day to day administration of its business". Section 13 says: " All orders and decisions of a Corporation shall be authenticated by the signature of the Chairman or any other member authorized by the Corporation in this behalf and all other instruments issued by a Corporation shall be authenticated by the signature of the Chief Executive Officer or General Manager or any other officer of the Corporation authorized in like manner in this behalf". Relying upon the said provisions, learned counsel for the petitioners contends that the preparation and publication of the schemes in question under section 68C of the Act are orders or decisions of the Corporation and, therefore, should be authenticated by the signature of the Chairman or any other member duly authorized under section 13 of the and not by the Chief Executive Officer. The first 660 respondent in its counter affidavit attempted to meet this contention by stating that the Corporation by resolution authorized the Chief Executive Officer to exercise such powers and perform such duties as it may deem necessary for the efficient day to day administration of its business and the Chief Executive Officer in exercise of such authorization published the schemes in the Gazette. The first respondent relied upon section 12 of the and not on section 13 thereof to sustain the power of the Chief Executive Officer to publish the schemes. We have no reason not to accept the statement of the first respondent that there was a resolution passed by the Corporation in terms of section 12 (c) of the . If so, the only question is whether the act of publishing the proposed schemes framed by the Corporation in the Gazette pertains to the day to day administration of the Corporation 's business. The Chief Executive Officer has no power under the Act to frame a scheme. Section 68C empowers only the State Transport Undertaking to prepare a scheme and cause every such scheme to be published in the official Gazette and also in such other manner as the State Government may direct. The scheme, therefore, need not be directly published by the Corporation, but it may cause it to be published in the official Gazette. The act of publishing in the official Gazette is a ministerial act. It does not involve any exercise of discretion. It is only a mechanical one to be carried out in the course of day to day administration. So understood, there cannot be any difficulty in holding that it was purely a ministerial act which the Chief Executive Officer by reason of the aforesaid resolution can discharge under section 12(c) of the . It must be presumed for the purpose of this case that the Corporation decided the terms of the proposed schemes and the said decision must have been duly authenticated by the Chairman or any other member authorized by the Corporation in this behalf and the Chief Executive Officer did nothing more than publish the said scheme in exercise of its administrative functions. We, 661 therefore,, hold that the Chief Executive Officer was well within his rights in publishing the said proposed schemes in the Andhra Pradesh Gazette. (7): The next argument turns upon the provisions of r. 4 of the Andhra Pradesh Motor Vehicles Rules. The relevant part of the rule reads: " The scheme or approved scheme to be published in the official Gazette as required under section 68C or 68D as the case may be, shall contain the following particulars: (i). . (ii) the number of vehicles proposed to be operated on each route ". In certain schemes the number of vehicles to be operated on each route was not specified, and one number was mentioned against two or more routes bracketing them. When an objection was taken before the Government in regard to this matter, the Minister accepted it and directed that the scheme might be modified so as to indicate the number of vehicles to be operated on each route separately. The schemes were accordingly ' modified by indicating the number of vehicles to be operated on each route separately and the approved schemes with the said modification were duly published in the Gazette dated March 21, 1960. The approved schemes, therefore, satisfy rule 4(2),of the Rules, for the approved schemes, as duly modified, contain the number of vehicles proposed to be operated on each route. But the point sought to be made is that the Minister himself should have fixed the number of vehicles proposed to be operated on each route and should not have merely directed the appropriate modification to be made in the approved schemes. It does not appear from the record that there was any dispute before the Minister as regards the apportionment of the number of vehicles shown against two or more routes to each of the routes; but the only contention raised was that the bracketing of the number of vehicles between two or more routes contravened the provisions of r. 4. Though the order of the Minister only contains a direction, the apportionment of the vehicles, between the routes was not made by the State Transport Authority, but only by the Government, for the approved schemes were published not by the Chief Executive Officer but 662 by the State Government. It must be presumed that the allocation also must have been made with the approval of the Minister. There are no merits in this objection either. (8): The next contention is that r. 5 framed by the State Government in exercise of the power conferred on it under section 68(1) is inconsistent with the provisions of section 68B of the Act and, therefore, is void. The schemes prepared by the State Transport Authority contain the following note: " The frequency of services on any of the notified routes or within any notified area shall, if necessary, be varied having regard to the traffic needs during any period ". In deed the said note was practically a reproduction of a note appended to r. 5. The only question is whether r. 5 and the note made pursuant thereto come into conflict with section 68E of the Act. Section 68E reads: " Any scheme published under sub section (3) of section 68D may at any time be cancelled or modified by the State transport undertaking and the procedure laid down in section 68C and section 68D shall, so far as it can be made applicable, be followed in every case where the scheme is proposed to be modified as if the modification proposed were a separate scheme". The short question that arises is whether the variation of frequency of service by the State Transport Undertaking amounts to a modification of a scheme within the meaning of section 68E of the Act. The rule is not so innocuous as the learned Advocate General of the Andhra Pradesh contends. Under that rule the State Transport Undertaking, having regard to the needs of traffic during any period, may increase or decrease the number of trips of the existing buses or vary the frequency by increasing or decreasing the number of buses. This can be done without any reference to the public or without hearing any repre sentations from them. This increase or decrease, as the case may be, 'Can only be for the purpose of providing an efficient, adequate, economical transport service in relation to a particular route within the meaning of section 68C. At the time the original schemes are proposed, the persons affected by them may file 663 objections to the effect that the number of buses should be increased or decreased on a particular route from that proposed in the schemes. The Government may accept such suggestions and modify the schemes; but under this rule the authority may, without reference to the public or the Government, modify the schemes. Learned counsel contends that the note only provides for an emergency. But the rule and the note are comprehensive enough to take in not only an emergency but also a modification of the scheme for any period which may extend, to any length of time. We are, therefore, definitely of opinion that the rule confers power on the State Transport Undertaking to modify substantially the scheme in one respect, though that power can only be exercised under section 68E of the Act in the manner prescribed thereunder. This rule is void and, therefore, the said note was illegally inserted in the schemes. But on that ground, as the learned counsel contends, we cannot hold that the schemes are void. The note is easily severable from the scheme,% without in any way affecting their structure. Without the note the schemes are self contained ones and it is impossible to hold that the schemes would not have been framed in the manner they were made if this note was not allowed to be included therein. We, therefore, hold that the note should be deleted from the schemes and the schemes are otherwise good. (9): The last of the arguments attacks the schemes in so far as they include new routes. The new routes included in the schemes are Eluru to Kovvur, and Nidadavol to Jeelugumilli. It is argued that the provisions of section 68C are concerned with the existing routes only. Support is sought to be drawn for this contention from the provisions of section 68C of the Act. The relevant part of that section says: " Where any State transport undertaking is of opinion that. . it is necessary in the public interest that road transport services in general or any particular class of such service in relation to any area or route or portion thereof should be run and operated by the State 85 664 transport undertaking. . the State transport undertaking may propose a scheme. . ". Now the contention is that the word " route " in that section refers to a preexisting route, for it is said that the words " route or portion thereof " in the section clearly indicate that the route is an existing route, for a scheme cannot be framed in respect of a portion of a proposed route. We do not see any force in this contention. Under section 68C of the Act the scheme may be framed in respect of any area or a route or a portion of any area or a portion of a route. There is no inherent inconsistency between an " area " and a " route ". The proposed route is also an area limited to the route proposed. The scheme may as well propose to operate a transport service in respect of a new route from point A to point B and that route would certainly be an area within the meaning of section 68C. We, therefore, hold that section 68C certainly empowers the State Transport Undertaking to propose a scheme to include new routes. Though some other points were raised in the affidavits filed before us, they were not pressed. In the result we hold that the note relating to the frequency of the services appended to the schemes must be deleted and that in other respects the petitions fail; and accordingly they are dismissed with costs. One set of hearing fees. Petitions dismissed. [/INST] These petitions by certain stage carriage permit holders for appropriate writs quashing seven schemes for nationalisation of road transport services in West Godavari District, approved and enforced from different dates by the Government of Andhra Pradesh, called in question the constitutional validity of Ch. IVA of the , as amended by Act 100 of 1956, and the validity of r. 5 of the Andhra Pradesh Motor Vehicles Rules framed by the State Government under section 68(1) of the Act and the note in terms of the said rule appended to the schemes which was said to be inconsistent with the Act and was as follows: "The frequency of services of any of the notified routes or within any notified area shall, if necessary, be varied having regard to the traffic needs during any period. " Held, that in view of the decision of this Court in H. C. 643 Narayanappa vs The State of Mysore, it was no longer open to the petitioners to contend that the provisions of Ch. IVA of the (IV of 1939), as amended by the Central Act 100 of 1956, were ultra vires the powers of the Parliament. H. C. Narayanappa vs The State of Mysore, [1960] 3 S.C.R. 742, followed. Nor was it correct to contend that Ch. IVA of the Act was invalid on the ground that it infringed article 19(i)(g) of the Constitution and was not saved by article 19(6) as the powers conferred on the State by section 68C of the Act exceeded the limits of article 19(6)(ii) of the Constitution. Article 19(6)(ii) is couched in very wide terms, the word 'service ' used by it is wide enough to include all species of motor service and it does not in any way limit the States ' power to confer on itself a monopoly in respect any area in exclusion of any person or persons. The only classification that Ch. IVA of the Act makes is between the State Transport Undertaking and private transport undertakings, whether carried on by individuals or firms or companies, and that classification is reasonably connected with the object it has in view. It was not, therefore, correct to say that it contravenes article 14 of the Constitution. That Chapter does not confer any arbitrary and discriminatory power upon the State Transport Undertaking nor does the quasi judicial procedure prescribed by it seek to cover such power. Any mala fide or collusive exercise of the power, therefore, in deprivation of an individual 's rights can only be a ground for quashing a particular scheme alone but not for declaring the chapter void. Since that chapter provides a complete and satisfactory machinery for reasonably regulating the exclusion of all or some of the private operators from a notified area or route it requires no liberal construction. Gullapalli Nageswara Rao vs Andhra Pradesh Road Transport Corporation, [1959] SUPP. 1 S.C.R. 319, referred to. Saghir Ahmad vs The State of U. P., ; , considered. Official bias inherent in the discharge of a statutory duty, as has been pointed out by this Court, is distinct from personal bias for or against any of the parties. Since in the instant case, the State Road Transport Corporation was neither legally nor factually a department of the State Government and the State Government in deciding the dispute between the said undertaking and the operators of private buses was only discharging its statutory function, no question of official bias could arise. Gullapalli Nageswara Rao vs The State of Andhra Pradesh, ; and H. C. Narayanappa vs The State of Mysore, ; , considered. 644 The observations made by this Court in Srinivasa Reddy vs The State of Mysore, in regard to piecemeal implementation of a scheme were directed against any abuse of power by way of discrimination as between operators and operators in respect of a single scheme. Since the seven schemes in question were intended to avoid the vice inherent in piecemeal implementation of a single scheme and were meant to be implementated in their entirety from different dates, those observations did not apply to them. Srinivasa Reddy vs The State of Mysore, ; , explained. There can be no doubt that r. 5 of the Andhra Pradesh Motor Vehicles Rules in conferring on the State Transport Undertaking the power to vary the frequency of services, gave it the power to effect a substantial modification in the scheme permissible only under section 68E of the Act, and as such the rule must be declared void. But since the note appended to the schemes in pursuance of the rule is severable from the schemes, it should be deleted and the schemes must be declared valid. The word 'route ' in section 68C of the Act does not refer to a preexisting route. It is permissible under that section to frame a scheme in respect of any area or route or any portions thereof, or a new route, since there is no inherent inconsistency between an 'area ' and a 'route '. </s>

<s>[INST] Summarize the following judgement: Appeal No. 304/56. Appeal by special leave from the judgment and order dated July 19, 1954, of the former Travancore. Cochin High Court in Income tax Reference No. 5 of 1952. A. V. Viswanatha Sastri, R. Ganapathy Iyer and G. Gopalakrishnan, for the appellant. K. N. Rajagopal Sastri and D. Gupta, for the respondent. September 1. The Judgment of the Court was delivered by SHAH J. The Commissioner of Income Tax for Mysore, Travancore Cochin and Coorg at Bangalore 60 468 referred under section 8(5) of the Travancore Taxation on Income (Investigation Commission) Act, 1124 (Malayalam Era) hereinafter referred to as the Investigation Act read with section 113 of the Travancore Income Tax Regulation, 1096 (Malayalam Era) hereinafter referred to as the Income Tax Act, the following questions to the High Court of Travancore Cochin: (1) Whether on the facts and in the circumstances of the case, there was any evidence before the commission to come to the conclusion to which it came in its report ? (2) On the facts and in the circumstances of the case was the order C. No. 76 (1) I.T/51 dated 25 10 1951 of the Government of India passed under the provisions of section 8(2) of the Travancore Taxation on Income (Investigation Commission) Act read with section 3 of the of 1950, a legal and valid order ? (3) Whether on the facts and in the circumstances of the case, the order passed by the Income Tax Officer in pursuance of the directions of the Government under section 8(2) of the Travancore Taxation on Income (Investigation Commission) Act, 1124, was a legal and valid order? The High Court answered the three questions in the affirmative. Against the order of the High Court answering the reference, this appeal has been preferred with special leave. The facts which gave rise to the reference are briefly these. The appellants are a firm of merchants carrying on business in yarn in the Districts of Trivandrum, and Nagercoil in the Travancore Cochin State. For the accounting year 1118 M. E. (August 17, 1942 to August 16, 1943), the appellants submitted a return under the Income Tax Act showing a net return of Rs.4,78,5945 0 as assessable income, and they were assessed to income tax and super tax by the Income Tax Officer on that return. In 1124 M. E., the Legislature of Travancore enacted the Investigation Act conferring authority upon the Government of Travancore to constitute a commission to be called an Income Tax Investigation Commission to investigate and, report on all matters 469 relating to taxation on income, with particular reference to the extent to which the existing law relating to, and procedure for, the assessment and collection of such taxation was inadequate to prevent evasion thereof and to investigate in accordance with the pro visions of the Act in cases referred, on or before February 16, 1950, to it under section 5. The Government was authorised after consideration of the report to direct that proceedings be taken under the various Acts including the Income Tax Act, in respect of any period commencing after August 16, 1939. By sub section (4) of section 8, all assessment or reassessment proceedings taken in pursuance of the direction under sub section (2), the findings recorded by the Commission on the case or on the points referred to it were, subject to the provisions of sub sections (5) and (6) to be final. Sub section (5) of section 8 provided for a reference to the High Court on any question of law arising out of any order made by the Commission. The State of Travancore Cochin merged with the Indian Union on March 7, 1949, but the Income Tax Act and the Investigation Act continued to apply to that area notwithstanding the merger. On August 6, 1949, the Government of Travancore Cochin passed an order referring the case of the appellants to the Commission for investigation and report under section 5 of the Investigation Act. On the evidence led before it, the Commission held by its report dated February 1, 1950, that the appellants had in the accounting year 1118 M. E. made a secret profit of Rs. 1,31,750 which was not included in the earlier assessment. The Commission then proceeded to compute the tax payable by the appellants and found that the amount of tax payable by the appellants on their true income was Rs. 1,35,736 8 0 and that they were liable to pay that amount subject to credit for the tax, already paid, The Government of Travancore Cochin by order dated February 14, 1950, accepted the report of the Commission and directed that immediate steps be taken to recover, under the Income Tax Act, from the appellants the tax due according to the findings recorded by the Commission. Pursuant to this direction, the 470 Income Tax Officer, without holding any fresh assessment proceedings, issued on March 15,1950, a demand notice under section 42 of the Income Tax Act for the additional tax imposed on the appellants according to the findings of the Commission and called upon the appellants to pay Rs. 13,337 13 0 as additional tax. The Union Legislature enacted on April 17, 1950, the providing for the extension of certain opium and revenue laws to certain parts of India. By section 2 of that Act, amongst others, the Taxation on Income (Investigation Commission) Act, XXX of 1947 (enacted by the Central Legislature) and all rules and orders made thereunder which were in force immediately before the commencement of Act XXX of 1950, were extended to the rest of India except the State of Jammu and Kashmir, but by section 3, in so far as it is material, it was provided that, " If immediately before the commencement of this Act there is in force in any part B State other than Jammu and Kashmir any law (x x x x) corresponding to the Taxation on Income (Investigation Commission) Act, 1947 (XXX of 1947); that law shall continue to remain in force. with the following modifications, (a) all cases referred to or pending before the State Commission (by whatever name called) in respect of matters relating to taxation on income other than agricultural income, shall stand transferred to the Central Commission for disposal: Provided . . . . . . . (b) . . . . . . . (bb). . . . . . . . (c) Any reference in the State law, by whatever form of words, to the State Government or the State Commission shall, in relation to income other than agricultural income, be construed as a reference to the Central Government or the Central Commission, as the case may be;". Purporting to exercise authority under section 8(2) of the Investigation Act read with section 3, cl. (c), of the , 471 1950, the Government of India, on October 25, 1951, directed that appropriate assessment proceedings under the Income Tax Act be taken against the appellants with a view to assess or reasses the concealed income of Rs. 1,31,750 which had escaped assessment On January 1, 1952, the Commissioner of Income Tax withdrew the notice of demand dated March 15, 1950, and thereafter the Income Tax Officer commenced reassessment proceedings against the appellants and by his order dated March 29, 1952, directed the appellants to pay income tax and super tax on the concealed income. At the instance of the appellants, a reference was made to the High Court of Travancore Cochin under section 8(5) of the Investigation Act and the three questions set out hereinbefore were referred to that court. ID the view of the High Court, there was evidence on which the Commission could arrive at the conclusion recorded by it. Evidently, the High Court was incompetent, in answering the question, to enter upon a review of the evidence in exercise of its advisory jurisdiction; and Mr. Viswanatha Sastri on behalf of the appellants has fairly not attempted to challenge the answer recorded by the High Court on the first question. The Government of India had, on a consideration of the report of the Commission, directed on October 25, 1951, that assessment proceedings be started against the appellants. Section 8(2) of the Investigation Act, in so far as it is material, reads as follows: " After considering the report, our Government shall by order in writing direct that such proceedings as they think fit under the Travancore Income Tax Act, VIII of 1096. shall be taken against the person to whose case the report relates in respect of the income of any period commencing after the last day of Karkadagom, 1124 (August 16, 1939) and upon such a direction being given, such proceedings may be taken and completed under the appropriate law not withstanding the restrictions contained in section 25 of the Travancore Income Tax Act, VIII of 1960. and notwithstanding any lapse of time or any decision to 472 a different effect given in the case by any Income Tax authority or Income Tax Appellate Tribunal ". By section 3 of the , XXXIII of 1950, the Investigation Act continued to remain in force with the modification that reference in the State law to the State Government was in relation to income other than agricultural income, to be construed as a reference to the Central Government. Whatever authority could be exercised by the Travancore Cochin Government before the enactment of the , could therefore, since the application of that Act, be exercised by the Central Government, and the latter Government could direct in respect of a case that proceedings for reassess ment be commenced against a tax payer. The case of the appellants was referred to the Investigation Commission by the Travancore Cochin Government and report was made to that Government by the Commission, and the authority of the Government of Travancore Cochin to take action on the report having been conferred upon the Central Government by section 3(c) of the , the Central Government was primal facie competent to direct that proceedings under the Income Tax Act as may be justifiable be taken against the appellants. But Mr. Viswanatha Sastri appearing on behalf of the appellants contests that view on two grounds: (1) that the Central Government may direct proceedings to be taken under the Income Tax Act only if the report was made by a commission appointed under the Taxation on Income (Investigation Commission) Act,, XXX of 1947, and not on a report made by a commission appointed by the Travancore Cochin State under the Investigation Act, and (2) that the Travancore Cochin Government having once taken action directing recovery of the tax due, it was not competent to the Central Government under section 8(2) of the Investigation Act again to take any action on the report. 473 In our view, there is no force in either of these con tentions. The expression " the report " in section 8(2) refers to the report made under section 8(1) by the members of the Commission appointed by the Travancore Cochin Government under the Investigation Act and on a consideration of that report, the Government of India has, since the enactment of the , power to direct that proceedings for assessment or re assessment be taken under the Income Tax Act. On the plain language used by the Legislature in section 3(c) of the , the contention raised on behalf of the appellants is unsustainable. By order dated February 14, 1950, the Government of Travancore Cochin had accepted the report of the Commission and had directed the Board of Revenue to take necessary action for recovery of the amount of tax due from the appellants, and pursuant to that direction, without holding proceedings for assessment or reassessment, a demand notice was issued by the Income Tax Officer. The order passed by the Government of India on October 25, 1951, is not in any way inconsistent with the order dated February 14, 1950. Both the orders direct that steps be taken for recovery of the amount of income tax due from the appellants But, if as appears evident from section 8(4) of the Investigation Act, liability to pay income tax could arise only on an effective order of assessment, the Income Tax Officer not having assessed the income before the demand notice was issued, the Government of India, was, in our judgment, competent to direct that proceedings be taken for assessing the liability of the appellants to pay tax consistently with the provisions of the Income Tax Act. The order passed by the Government of India on October 25, 1951, may there. fore be regarded as effectuating the earlier order passed by the Travancore Cochin Government on February 14, 1950. In any event, there IN nothing in section 8(2) which justifies the contention that action may be taken thereunder only once. If an unauthorised 474 direction is given under section 8(2), there is nothing in that provision which prevents rectification of that order. By sub section (4) of section 8 of the Investigation Act, the findings recorded by the Commission in cases or points referred to them are made final in all assessment or reassessment proceedings. The Act has, by sub section (2) of section 8 removed the bar of limitation which arose by section 25 of the Income Tax Act. It was competent therefore to the Income Tax Officer to reopen the assessment proceedings notwithstanding any lapse of time and the previous order of assessment did not operate as a bar to such reassessment. The High Court was therefore in our judgment right in recording its answers on the three questions submitted by the Commissioner of Income Tax. In that view, the appeal fails and is dismissed with costs. Appeal dismissed. [/INST] The State of Travancore Cochin merged with Indian Union on March 7, 1949, but the Travancore Income tax Regulation, VIII of 1096 (Malayalam Era) and the Travancore Taxation on Income (Investigation Commission) Act, II24 (Malayalam Era), continued to apply to that area not withstanding the merger. On August 6, 1949, the Travancore Cochin Government passed an order referring the case of the appellants to the com mission constituted under the 'Travancore Taxation on Income (Investigation Commission) Act, 1124 M. E. The investigation commission held by its report that the appellants had made a secret profit in the accounting year 1118 M. E., which was not included in the income tax return submitted by the appellants earlier. The Travancore Cochin Government accepted the report and directed recovery of the tax due by its order dated February 14, 1950. The Income tax Officer without holding any fresh assessment proceedings, issued a demand notice. The Union Legislature enacted the Opium and Revenue Laws (Extension of Application) Act (33 of 1950) providing for extension of certain opium and revenue laws to certain parts of India. In exercise of the authority under section 8(2) of the said Travancore Investigation Act, read with section 3, cl. (c), of the Opium and Revenue Laws (Extension of Application) Act, the Government of India, on October 25, 1951, directed that appropriate assessment proceedings under the Travancore Income tax Act be taken against the appellants with a view to assess or reassess the concealed income which bad escaped assessment. The Commissioner of Income tax withdrew the earlier notice of demand and thereafter the Income tax Officer after reassessment proceedings directed the appellants to pay income tax and super tax on the concealed income. The said orders of the Government of India and of the 467 Income tax Officer were questioned by the appellants and the matter was referred by the Commissioner of Income tax to the High Court. The High Court held that the orders in question were valid orders. The appellant appealed with special leave. Held, that the Government of India had the powers under section 3(c) of the , to direct proceedings for assessment or reassessment under the Travancore Income tax Regulation after consideration of the report made by the Travancore Investigation Commission. The order passed by the Government of India on February 14, 1950, was not inconsistent with the order passed by the Travancore Cochin Government. Liability to pay income tax would arise only on an effective order of assessment. No such order having been passed by the Income tax Officer in the instant case, there could be no doubt as to the competency of the Government of India to direct proceedings for assessment. There is nothing in section 8(2) of the Travancore Taxation on Income (Investigation Commission) Act which states that action may be taken thereunder only once, and if an unauthorised direction is given thereunder there is nothing which prevents rectification of that order. By sub section (4) 'of section 8 of the Travancore Taxation on Income (Investigation Commission) Act the findings by the Investigation Commission are final in all assessment or reassessment proceedings. Section 8(2) of the Act removed the bar of limitation which arose by section 25 of the Income tax Act. Consequently, it was competent to the Income tax Officer to reopen the assessment proceedings notwithstanding any lapse of time and the previous order of assessment did not operate as a bar to such re. assessment. </s>

<s>[INST] Summarize the following judgement: Appeal No. 302 of 1955. Appeal by special leave from the judgment and order dated April 3, 1954, of the Mysore High Court in Regular Appeal No. 195 of 1951 52. S.A. Gopala Rao and B. R. L. Iyengar, for the appellants. Mirle N. Lakshminaranappa, P. Ram Reddy, R. Thiagarajan and C. V. L. Narayan, for the respondent. September 8. The Judgment of the Court was delivered by KAPUR J. This appeal has little substance and must, therefore, be dismissed. The appellants are the decree holders and the respondent is the judgment debtor. On February 3, 1941, by a registered deed the father of the appellants leased to the respondent the house in dispute for a period of 10 years with an option of renewal for further periods for as long as the respondent wanted. This house was used by the respondent for his hotel. The father died on January 25, 1945. On December 21, 1945, the appellants filed a suit for a declaration that the deed of lease of February 3, 1941, executed by their father was not for legal necessity or for the benefit of the family, that the alienation was not binding on them and the option of renewal under the lease was void and unenforceable on account of uncertainty. The appellants further prayed for delivery of possession and for a decree for a sum of Rs. 2,655 as past mesne profits and future mesne profits at Rs. 250 per mensem as from December 1, 1945. The respondent filed his written statement on March 11, 1946, and an additional written statement on November 26, 1946, whereby he raised an objection to the jurisdiction of the court by reason of the Mysore House Rent Control Order of 1945. The trial judge upheld the preliminary objection and dismissed the suit. On appeal, the High Court set aside the decree on the ground that the 594 nature and scope of the suit had been misconceived by the trial court and that it was not based on relationship of landlord and tenant and therefore section 8(1) of the Mysore House Rent Control Order was inapplicable and the case was remanded for retrial. On August 23, 1948, the suit was decreed. The trial court held that the lease was binding for the first period of ten years as from May 1, 1941, as it was supported by legal necessity; but the option of renewal was void and unenforceable for uncertainty and therefore a decree for possession was passed to be operative on the expiry of ten years, i.e., May 1, 1951. On appeal the High Court confirmed that decree on August 22, 1950. On July 9, '1951, the appellants took out execution of the decree and on July 22, 195 1, possession was delivered to them. The order for delivery was made without notice to and in the absence of the respondent. The proceedings, "spot mahazar" that the respondent came to the spot after delivery of the major portion of the property in dispute had been delivered to the appellants. On August 13, 1951, the respondent made an application in the Executing Court, the District Judge, under sections 47, 144 and 151 of the Code of Civil Procedure for setting aside the ex parte order of delivery and for redelivery of possession of the house to him and in the alternative for an order to the appellants to give facilities to him (respondent) to remove the various moveables and articles mentioned in the petition. The appellants pleaded that the application was not maintainable. The District Judge, on November 14, 1951, upheld this contention and dismissed the application. An appeal was taken to the High Court and it reversed the order of the Executing Court and directed the appellants to return possession of the house in dispute to the respondent along with the moveables which were in the house at the time respondent was evicted. The High Court held that the Executing Court had no jurisdiction to order the eviction of the respondent because of the provisions of Mysore House Rent and Accommodation Control 595 Order, 1948, which was in operation on the date of eviction, The High Court having refused to give a certificate under article 133 the appellants obtained special leave to appeal from this Court on January 12, 1955, and this is how the matter has come to this Court. The question for decision mainly turns upon the applicability of the provisions of the two House Rent Control Orders of 1945 and 1948 and how far they were applicable to the proceedings in the suit and execution. The Mysore House Rent Control Order of 1945 came into force on November 6, 1945, and by section 8(1) of this Act a restriction was imposed on the eviction of tenants and the relevant part of this section was: Section 8 "(1) A tenant in possession of a house shall not be evicted therefrom, whether in execution of a decree or otherwise before or after the termination of the tenancy, except in accordance with the provisions of this clause; (2)A landlord wishing to evict a tenant in possession 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 application, is satisfied This Order was replaced by the Mysore Rent and Accommodation Control Order of 1948 which came into force on July 1, 1948. The relevant provisions of this Order, i. e., sections 9 and 16 which are applicable to the present appeal are as follows: Section 9 " (1) A tenant in possession of a house shall not be evicted therefrom whether in execution of a decree or otherwise except in accordance with the provisions of this clause (2)A landlord who seeks to evict a tenant in possession shall apply to the Controller for a direction in that behalf If the Controller, after giving tenant a suitable opportunity of showing cause against such application , is satisfied: this Order shall Prevent 596 a landlord from filing a suit for eviction of a tenant before a competent civil court, provided that no decree for eviction of a tenant, passed by a civil court shall be executed unless a certificate to that effect is obtained from the Controller " It was argued on behalf of the appellants before the High Court and that argument was repeated before us that the Mysore House Rent Control Order of 1948 was repugnant to the provisions of the (Act IV of 1882) which was brought into force in the State of Mysore by Part B States (Laws) Act, 1951 (Act III of 1951). This Act was enacted on February 22, 1951, and came into force on April 1, 1951, which was termed the appointed day. It was contended therefore that the House Control Order could not operate on the rights of the parties on the day when the Executing Court made the. order for delivery of possession to the appellants, i.e., July 9, 1951, or when the delivery was actually given, i.e., on July 22, 1951. To test the force of this argument it is necessary to examine the provisions of Part B States (Laws) Act and how and when as a consequence of it the became effective and operative in the State of Mysore. Section 3 of that Act deals with the extension and amendment of certain Acts and Ordinances. The Acts and the Ordinances specified in the Schedule were amended and became applicable as specified and as a consequence the fourth paragraph of section 1 for the words " Bombay ' Punjab or Delhi ", the words " that the said States " were substituted. Therefore the effect of the Part B States (Laws) Act merely was that qua the , the State of Mysore was placed on the same footing as the States of Bombay, Punjab or Delhi. It was by virtue of a Notification No. 2676 Cts. 46 51 5 dated September 12, 1951, that the was extended to the State of Mysore as from October 1, 1951. Consequently the laws of the State applying to leases which would include the Mysore House Rent Control Order of 1948 continued to be in force and applicable to cases that were pending till it was repealed by the 597 Mysore Rent Control Act of 1951 which received the President 's assent on August 16, 1951. The argument, therefore, that as from April 1, 1951, as a result of repugnancy the House Rent Control Order of 1948 stood repealed must be repelled as unsound and cannot be sustained, because it was an existing law which was saved by article 372 of the Constitution and remained unaffected by article 254. The Punjab High Court in M/s. Tilakram Rambaksh vs Bank of Patiala (1) discussing the effect of Part B States (Laws) Act on the application of the to PEPSU said: " All that Central Act III of 1951 has done is to make it possible for Part B States to extend the Act to any part of territory by notification. Actually, however, this wag never done by PEPSU or Punjab and the is not as such in force there. It is unnecessary in the circumstances to examine the argument further ". Although the question of repugnancy was raised in the High Court at the time of the hearing of the appeal, the true effect of section 3 of the Part B States (Laws) Act was not brought to the notice of the learned Judges nor was the Notification placed before them, but it was discussed by the High Court in its order refusing certificate under article 133(1) of the Constitution. The argument of repugnancy, therefore, is wholly inefficacious in this appeal. The inapplicability of section 47 to the proceedings out of which the appeal has arisen was also raised before us, but that contention is equally unsubstantial because the question whether the decree was completely satisfied and therefore the court became functus officio is a matter relating to execution, satisfaction and discharge of the decree. It was held by this Court in Ramanna vs Nallaparaju (2) that: " When a sale in execution of a decree is impugned on the ground that it is not warranted by the terms thereof, that question could be agitated, when it arises between parties to the decree, only by an application under section 47, and not in a separate suit ". (1) A.I.R. 1959 Pb. 440, 447. (2) A.I.R. 1956 $.C. 87, 91. 598 See also J. Marret vs Mohammad Shirazi & Sons (1) where the facts were that an order was made by the Executing Court directing contrary to the terms of the decree the payment of a certain fund to the decree holder. The Madras High Court in K. Mohammad Sikri Sahib vs Madhava Kurup (2) held that where the Executing Court was not aware of the amendment of the Rent Restriction Act by which the execution of a decree was prohibited and passed an ejectment order against a tenant, the Executing Court could not execute the decree and any possession given under an ex parte order passed in execution of such a decree, could be set aside under section 151 of the Code of Civil Procedure. The prohibition is equally puissant in the present case and section 47 read with section 151 would be equally effective to sustain the order of redelivery made in favour of the respondent. The applicability of res judicata and the defenses of waiver and estoppel were also raised by the appellants. The contention of res judicata was based on the plea taken by the respondent in his written statement, dated March 11, 1946, where he pleaded that the civil court had no jurisdiction to order eviction because of the House Rent Control Order, 1945, to which the reply of the appellants was that considering the nature of the suit and the consequential remedy that they were seeking, the plea of jurisdiction of the court was not open to the respondent. Thereupon the trial court raised a new 'issue " whether this court has jurisdiction to try the suit, in view of the House Rent Control Order " which was decided against the respondent and a decree in favour of the appellants was passed on August 23,1945. This judgment formed the basis of the argument before us that the plea of in executability of the decree could not be raised because it was barred on the principle of res judicata. The plea of res judicata is not available to the appellants as the prohibition on account of the House Rent Control Order was not against the passing of the decree but against its execution and therefore the objection to the executability could only be taken (1) A.I.R. 1930 P.C. 86, (2) A.I.R. 1949 Mad. 599 at the time of the execution of the decree which in the instant case could not be done because the order for delivery by the Executing Court was passed without notice to the respondent. We must, therefore, repel the contention based on the ground of res judicata. The argument of waiver and estoppel is also devoid of force. This plea was based on a letter which the respondent 's lawyer sent in reply to the respondent asking to make arrangements to put the appellants in possession. The former replied thereto that his client ' was making arrangements and as soon as he could do go, he would hand over possession to the appellants. This is slender basis for the sustainability of the plea of waiver and estoppel. There is no conduct on the part of the respondent which has induced the appellants to change their position or has in any way affected their rights and the plea of non executability which has been taken is based on statute and against statute there cannot be an estoppel. This ground taken by the appellants is equally unsound and must be rejected. The contention raised that ignoring sections 9(1) and 16 of the 1948 House Rent Control Order is no more than an error in the exercise of jurisdiction does not appear to be sound because those sections are a fetter on the executability of the decree and not merely an error in the exercise of the jurisdiction. In the present case the two sections mentioned above were a restriction on the power of the court to execute the decree and therefore this argument must also be, rejected. In the result this appeal fails and is dismissed with costs. Appeal dismissed. [/INST] The appellants in execution of a decree passed in their favour for possession over a house obtained possession thereof on July 22, 1951. The order for delivery of possession was made without notice to and in the absence of the respondent. The respondent made an application in the Executing Court under sections 47, 144 and 151, Code of Civil Procedure for setting aside the ex parte order of delivery and for redelivery of possession of the house to him or in the alternative, for an order to the appellants for giving facilities for removing the moveables from the house. The Executing Court upheld the contention of the appellant that 76 592 the respondent 's application was not maintainable. On appeal by the respondent the High Court held that the Executing Court had no jurisdiction to order the eviction of the respondent because of the provisions of the Mysore House Rent and Accommodation Control Order, 1948, which was in operation on the date of eviction and under sections 9 and 16 of which certain restrictions were placed on the eviction of tenants. On appeal to this Court by special leave, the appellants contended, inter alia, as they did in the High Court also , that the Mysore House Rent Control Order of 1948 was repugnant to the provisions of the (IV of 1882), which became applicable in the State of Mysore by Part B States (Laws) Act, 1951 (Act III of 1951), which came into force on April 1, 1951 ; and therefore the House Control Order could not operate on the rights of the parties on the day when the Executing Court made the order for delivery of possession to the appellants, i. e., July 9, 1951, or when delivery was actually given i.e., on July 22, 1951. Held, that the came into force only when it was extended by notification dated September 12, 1951, under section 3 of that Act, i.e., from October 1, 1951, and therefore the Mysore House Rent and Accommodation Control Order, 1948, was not repealed as from April 1, 1951, when the Part B States (Laws) Act, 1951, came into force and was in force when the possession was delivered. It was then an existing law which was saved by article 372 of the Constitution and remained unaffected by article 254, and the question of repugnancy to the (Act IV of 1882) did not arise in this case. M/s. Tilakram Rambaksh vs Bank of Patiala, A.I.R. 1959 Punj. 440, considered. Section 47 of the Code of Civil Procedure was applicable to the proceeding out of which this appeal has arisen because the question whether the decree was completely satisfied and therefore the court became functus officio was a matter relating to execution, satisfaction and discharge of the decree. Ramanna vs Nallaparaju, A, I. R. and J. Marret vs Mohammad Shirazi and Sons, A.I.R. 1930 P. C. 86, considered. Where the court was not aware of the statutory restriction by which the execution of a decree was prohibited and passed an ejectment decree against a tenant the Executing Court could not execute the decree and any possession given under an ex parte order passed in execution of such a decree could be set aside under section 151 of the Code of Civil Procedure. K.Muhammad Sikri Sahib vs Madhava Kurup, A.I.R. 1949 Mad. 809, considered. 1 The contentions of the appellant based on the ground of res judicata and estoppel were without any force. Sections 9(1) and 16 of the House Rent Control Order placed restrictions on 593 the power of the Court to execute the decree and ignoring them was not merely an error in the exercise of jurisdiction. </s>

<s>[INST] Summarize the following judgement: Appeal No. 123/55 669 Appeal by special leave from the judgment and order dated November 12, 1951, of the Punjab High Court in Writ Petition No. 116 of 1951. N. C. Chatterjee, section N. Andley, J. B. Dadachanji and Rameshwar Nath, for the appellants. section M. Sikri, Advocate General for the State of Punjab, N. section Bindra and D. Gupta, for the respondent. September 13. The Judgment of the Court was delivered by DAs GUPTA J. This appeal is against the judgment of the High Court of Punjab rejecting the appellant 's application under article 226 of the Constitution. In this application the appellants who had been carrying on the business of commission agents in Forward Contracts at Ludhiana alleged that the Punjab Forward Contracts Tax Act, 1951 (Punjab Act No. VII of 1951), was ultra vires the powers conferred upon the State Legislature and prayed for a declaration that the Act and the notification made and the rules promulgated thereunder by the respondent, State of Punjab, were void. There was a further prayer for directing the State of Punjab by a writ of mandamus or other appropriate writ to allow the petitioners to carry on the business of Forward Contracts or as commission agents in Forward Contracts unrestricted by the provisions of the above mentioned Act and the rules thereunder And not to enforce the Act. The respondent 's case as made in para. 5 of its written statement was that " the impugned Act is not ultra vires the State Legislature. It is a law with respect to the matters enumerated in& Entry 62 of the State List read with Entry No. 7 of the Concurrent List of the 7th Schedule. " The High Court held that: "The impugned Act, is an Act to tax speculation in futures, at least so far as dealers such as the present applicants are concerned, falls within Item 62 of the State List as an Act to impose taxes on betting and gambling, and to that extent at least is valid. " 670 In this view the High Court rejected the application. The only question for our decision is as regards the legislative competence of the State Legislature of Punjab to enact this statute. Though a reference under Entry 7 of the Concurrent List of the 7th Schedule of the Constitution was made in the respondent 's written statement no reliance appears to have been placed on this entry in the High Court nor has it been relied on before us by the learned counsel appearing on behalf of the respondent and it is quite clear that the impugned Act cannot fall within Item 7 of the Concurrent List which is in these terms:" Contracts, including partnership, agency, contracts of carriage, and other special forms of contracts, but not including contracts relating to agricultural land ". It is common ground before us that the Act must be held to be within the legislative competence of the Punjab State Legislature only if in pith and substance it fell within Item 62 of the State List and if it did not so fall it must be held to be beyond the State Legislature 's competence. Item 62 mentions " taxes on luxuries, including taxes on entertainment, amuse ments, betting and gambling. " If the impugned Act provides for a tax on betting and gambling then and then only it can come within Item 62. The Act provides for the levy of a tax on forward contracts and it has defined " forward contract" in section 2 in these words: "Forward contract" means an agreement, oral or written, for sale of goods on a future date but on the basis of which actual delivery of goods is not made or taken but only the difference between the price of the goods agreed upon and that prevailing on the date mentioned in the agreement or any other date is paid or received by the parties ". " Dealer " is defined in the same section to mean " any person, firm, Hindu Joint family or limited concern, including an arhti or " chamber " or association formed for the purpose of conducting business in forward contracts, who conducts such business in the course of trade in the State either on his own behalf or on behalf of any other person, arhti, "chamber" or association". ,Sale" is defined to mean 671 "the final, settlement in respect of an agreement to sell goods mentioned in a forward contract, and it shall be deemed to have been completed on the date originally fixed in the forward contract for this purpose or any other date on which the final settlement is made ". Section 4 is the charging section and provides for a levy on the business in forward contracts of a dealer a tax at such rates as the Government may by notification direct. Section 5 lays down that every dealer shall be liable to pay tax under this Act as long as he continues his business in forward contracts. Section 6 prohibits any dealer from carrying on business in forward contracts unless he has been registered and possesses a registration certificate. Section 7 deals with the mode of payment of the tax and for submission of returns while section 8 provides for assessment of the tax. As the term " forward contract " has been defined in the statute itself we have to forget for the purpose of deciding the present question any other notion about what a "forward contract" means. For the purpose of this statute every agreement for sale of goods on a future date is not a " forward contract ". It has to be an agreement for the sale of goods on a future date and has to satisfy two other conditions, viz., (1) actual delivery of the goods is not made on the basis of the agreement and (2) the difference between the price of the goods agreed upon and that prevailing on the date mentioned in the agreement or any other date is paid by the buyer or received by the seller. The test of a forward contract under this definition is that delivery of goods is not made or taken but only the difference between the price of the goods as agreed upon and that prevailing on some other date is paid. Is such a contract necessarily a wagering contract and therefore gambling ? When two parties enter into a formal contract for the sale and purchase of goods at a given price, and for their delivery at a given time it may be that they never intended an actual transfer of goods at all, but they intended only to pay or receive the difference according as the market price should vary from the 86 672 contract price. When such is the intention it has been held that is not a commercial transaction but a wager on the rise or fall of the market, which comes within the connotation of " gambling ". It is the fact that though in form an agreement for sale purports to contemplate delivery of the goods and the payment of the price, neither delivery nor payment of the price is contemplated by the parties and what is contemplated is merely the receipt and payment of the difference between the contract price and the price on a later day that makes the contract a wagering contract. In the definition of " forward contract in the impugned Act there is no reference, directly or indirectly ' to such an intention. It is only by reading for the words " actual delivery of goods is not made or taken " the words actual delivery of goods is not to be made or taken and by substituting for the words " is paid or received by the parties " the words " is to be paid or received by the parties " and also by omitting the words " on the basis of which " that the word " forward contract " as defined in the section can be held to refer to a wagering contract. This however we are not entitled to do. The reason why the Legislature did not use the words " to be made or taken " or " to be paid or received " in the definition clause is not far to seek. An agreement oral or written which in terms provides that actual delivery is not to be made or taken and that the entire price of the goods is not to be paid and only the difference between the price of the goods agreed upon and that prevailing on some other date would be paid would be hit by section 30 of the Contract Act and would not be enforceable. Parties to a written agreement for sale of goods would therefore take good care to see that the terms do not provide that delivery should not be made but only the difference is to be paid. There might be an oral understanding between the parties that no delivery should be demanded or made, but that only difference should be paid. But it will be next to impossible for a tax being imposed on the proof of such intention, not expressed in the written contract. When the agreement for sale of goods is oral, but the parties 673 agree as between themselves that no delivery would be made, but difference in price would be paid, it would be equally impossible for a taxing authority to discover in which of the contracts such an agreement has been made. The dispute whether a particular contract is a wagering contract or not arises in civil courts generally when the contract of sale is sought to be enforced and one of the parties tries to avoid the contract by recourse to section 30 of the Contract Act. When such a dispute comes before the Court, it becomes necessary to consider all the circumstances to see whether they warrant the legal inference that the parties never intended any actual delivery but intended only to pay or receive the difference according as the market price should vary from the contract price. It is therefore well nigh impossible for any taxing authority to brand a particular forward con. tract as a wagering contract ; nor is it to be expected that any party on whom the tax is sought to be levied, will voluntarily disclose that in the particular contract or in a number of contracts, the intention was not to deliver the goods but only to pay or receive the difference in price. Aware of these difficulties in the practical application of a law to levy tax on wagering contracts, the legislature decided to levy tax on contracts for sale of goods in which actual delivery is not factually made or taken, whatever be the intention at the time when the agreement was made. It appears clear therefore that the words " forward contract " as defined in the Act do not set out all the elements which are necessary to render a contract a wagering contract and so the impugned legislation to tax forward contracts as defined does not come within. Entry 62. The learned Advocate General for the State of Pun. jab tried to convince us that even though the words used in defining forward contract may include contracts which do not amount to wagering contracts, they are wide enough to include certain contracts which may be wagering contracts because of the fact that the parties to the contract, had no intention to 674 deliver the goods. If the definition is wide enough to include contracts which are wagering contracts, he contends, the statute should not he struck down as a whole but should be held to be valid in respect only of such wagering contracts. On behalf of the appellants Mr. N. C. Chatterjee has drawn our attention to the provisions of registration of " dealers " in section 6 and has argued that the very fact that the Legislature was calling upon persons dealing in " forward contracts " to register themselves and to prohibit dealing in forward contracts by non registered dealers, justifies the conclusion that the Legislature was not thinking of wagering contracts at all. As against this it is proper to note that the Constitution itself contemplated taxation on gambling " by State Legislatures. It is however one thing to tax gambling, and quite another thing for a Legislature to encourage gambling by asking persons to register themselves for this purpose. The definition of a " dealer " it has to be noticed includes " a limited concern, including, a Arhti, Chamber or association formed for the purpose of conducting business in forward contracts ". While it might happen in fact that an association would be formed for the purpose of conducting business in wagering contract, it is hardly likely that the Legislature would take upon itself the task of openly permitting and recognizing such associations. These, in our opinion, are good reasons for thinking that the Legislature did not contemplate wagering contracts at all in defining " forward contract" in the way it did. Assuming however that the definition is wide enough to include wagering contracts, the question arises whether the portion of the Act which would then be valid is severable from the portion which would remain invalid. One of the rules approved by this Court in R. M. D. Chamarbaugwala vs The Union of India (1), for deciding this question was laid down in these words: "In determining whether the valid parts of a statute are separable from the invalid parts thereof, it (1) ; 675 is the intention of the legislature that.is the determining factor. The test to be applied is whether the legislature would have enacted the valid part if it had known that the rest of the statute is invalid. " A second rule was that if "the valid and invalid parts of a statute are independent and do not form part of a scheme but what is left after omitting the invalid portion is so thin and truncated as to be in substance different from what it was when it emerged out of the legislature, then also it will be rejected in its entirety. " Applying either of these rules, we are bound to hold that the entire Act should in the present case be held invalid. It seems to us clear that if the Legislature had been conscious that taxation on all forward contracts was not within its legislative competence it would have at once seen that because of the difficulty of finding out which among the contracts for sale of goods on a future date are wagering contracts, it would not be worthwhile to enact any law for taxing wagering contracts only. It is equally clear that once the law is held to be invalid as regards forward contracts other than wagering contracts, what is left is " so thin and truncated as to be in substance different from what it was when it emerged out of the legislature ". The respondent 's contention that the statute should be hold to be valid in respect of wagering contracts even though invalid as regards other forward contracts must therefore also be rejected. Our conclusion therefore is that the impugned statute does not fall within Item 62 of the State List and that it is beyond the legislative competence of the State Legislature. The appellants were therefore entitled to appropriate reliefs as prayed for in their petition under article 226 of the Constitution. We therefore allow this appeal, set aside the order of the High Court and direct that the petition under article 226 of the Constitution be allowed and declare that the Punjab Forward Contracts Tax Act No. VII of 1951 is void and unconstitutional as it is ultra vires the powers of the State Legislature, that the notification made under the rules promulgated by the 676 respondent under this Act are also void and unconstitutional and that a mandamus do issue directing the respondent to allow the petitioners to carry on the business of forward contracts or as commission agents for forward contracts unrestricted by the provisions of the said Punjab Forward Contracts Tax Act No. VII of 1951 and the rules thereunder and not to enforce the provisions of this Act and the rules. The appellants will get their costs in this Court as also in the court below. Appeal allowed. [/INST] The appellants, who were carrying on the business of com mission agents in forward contracts, filed a petition before the High Court of Punjab under article 226 of the Constitution of India challenging the validity of the Punjab Forward Contracts Tax Act, 1951, on the ground that it was ultra vires the powers conferred upon the State Legislature. The Act provided for the levy of a tax on forward contracts which were defined, by. section 2, as agreements, oral or written, for sale of goods on a future date but on the basis of which actual delivery of goods was not made or taken but only the difference between the price of the goods agreed upon and that prevailing on the date mentioned in the agreement or any other date was paid or received by the parties. The High Court took the view that the Act was one to tax speculation in futures and fell within Entry 62 of the State List as an Act to impose taxes on betting and gambling. Held, that as the definition of the expression " forward contract " in the Punjab Forward Contracts Tax Act, 1951, does not set out all the elements which are necessary to render a contract a wagering contract the legislature could not be considered to have contemplated wagering contracts in defining " forward contracts " in the way it did. The Act therefore does not fall within Entry 62, List II, Seventh Schedule of the Constitution, and is beyond the legislative competence of the State Legislature. Held, further, that even if the definition could be considered to be wide, enough to include certain contracts which may be wagering contracts because of the fact that the parties to the contract had no intention to deliver the goods, the portion of the Act which would then be valid is so thin and truncated that the entire Act should be held invalid. R. M. D. Chamarbaugwala vs The Union of India, [1957] section C. R. 93o, relied on. </s>

<s>[INST] Summarize the following judgement: In the matter of maintainability of appeal in the Supreme Court of India. Mohan Lal Agarwala, for the petitioner. G. C. Mathur and C. P. Lal, for the respondent No. 1. 1960. September 14. The Judgment of the Court was delivered by RAGHUBAR DAYAL J. Narain Das filed a civil writ petition under article 226 of the Constitution in the High Court of Judicature at Allahabad. He subsequently moved an application under section 476 of the Code of Criminal Procedure (hereinafter called the Code) for making a complaint under section 193, Indian Penal Code, against Phanish Tripathi alleging that a certain statement in an affidavit filed by the latter was false. The learned Judge who heard this application, holding that the appellant had not succeeded in showing that any portion of the affidavit of Tripathi filed on May 14, 1959, was false, dismissed the same. It is against this order of the learned Judge of the High Court that Narain Das has filed this memorandum of appeal under section 476B of the Code. The Registry has submitted the memorandum of appeal with a report for determining the question whether the appeal is competent in this Court. Section 476 of the Code is to be found in Ch. XXXV which is headed 'Proceedings in case of certain Offences Affecting the Administration of Justice '. Section 476 empowers any Civil, Revenue or Criminal Court, when it is of the opinion that it is expedient in the interests of justice that an inquiry should be made into any offence referred to in section 195(1) (b) or (c) which appears to have been committed in or in relation to a proceeding before it, to file a complaint, after such inquiry as it thinks necessary, before a Magistrate of Class having jurisdiction. It is clear therefore that where an offence referred to in section 195(1) (b) or (c) is committed in or in relation to a proceeding in a Civil Court, an inquiry under section 476 and. the action taken 678 on that inquiry by the Civil Court, are in relation to that proceeding itself. Any person aggrieved by an order of a Court under section 476. of 'the Code may appeal in view of section 476B to the Court to which the former Court is subordinate within the, meaning of section 195(3), which provides that for the purposes of the section a Court shall be deemed to be subordinate to the Court to which appeals ordinarily lie from the appealable decrees or sentences of such former Court, or, in the case of a Civil Court from whose decrees no appeal ordinarily lies, to the,, principal Court having ordinary original civil jurisdiction within the local limits of whose jurisdiction such Civil Court is situate. The decrees of a single Judge of the High Court exercising civil jurisdiction are ordinarily appealable to the High Court under el. 10 of the Letters Patent of the Allahabad High Court read with el. 13 of the United Provinces High Courts (Amalgamation) Order, 1948. It is true that the decision of a single Judge of the High Court is as much a decision of the High Court as the decision of the appellate Bench hearing appeals against his decrees. But the Court constituted, by the single Judge is a Court subordinate to the appellate Bench of the High Court in view of the artificial judicial subordination created by the provisions of section 195(3) to the effect ' ' a Court shall be deemed to be subordinate to the Court to which appeals ordinarily lie from the appeal. able decrees. '. In the case of a Civil Court which passes appealable decrees, that Court is deemed to be subordinate to the Court to which appeals ordinarily lie from its decrees. In ' the case of a Civil Court from whose decrees no appeal ordinarily lies, that Court is deemed subordinate to the principal Court having ordinary original civil jurisdiction within the local limits of whose jurisdiction the former Court is situate, even though normally such a Court will not be subordinate to the principal Court having ordinary original civil jurisdiction within whose local limits it is situate. It was urged by the learned Advocate for Narain Das that the order of the learned single Judge under 679 s.476 did not amount to a decree and that therefore the provisions of section 195(3) were not applicable. It is not necessary for us to express an opinion on the question whether the order of the learned single Judge under section 476 is appealable under cl. 10 of the Letters Patent or not. A right of appeal against that order is given by the provisions of section 476 B. The forum of appeal is also determined by the provisions of section 476B read with section 195(3), and the only relevant consideration to determine the proper forum for an appeal against such an order of the single Judge is as to which Court the appeals against appealable decrees of the single Judge ordinarily lie. Such appeals lie to the High Court under cl. 10 of the Letters Patent of the Allahabad High Court, and therefore this appeal lies to ' the High Court. Learned counsel for the appellant relied on the decision of this Court in M. section Sheriff vs The State of Madras (1) in support of his contention that an appeal under section 476B lay to this Court from the decision of a single Judge of a High Court refusing to file a complaint under section 476 of the Code. That case is distinguishable as the question considered in that case was whether an appeal lay to this Court under section 476B of the Code from an order of a Division Bench of a High Court. It did not deal with the question whether an appeal lay to this Court under section 476B of the Code from an order of a single Judge of the High Court. No appeal lies to the High Court against the decision of a Division Bench of the High Court and therefore an appeal under section 476B from an order of the Division Bench of the High Court must lie to this Court. The fact that an appeal lies to this Court from the order of a single Judge of the High Court where the High Court certifies, under article 132 of the Constitution, that the case involves a substantial question of law as to the interpretation of the Constitution, is of no assistance to the appellant 's contention 'that this appeal is competent in this Court. It cannot be said that an appeal ordinarily lies to this Court from the (1) [1954] S.C.R. 1144. 87 680 judgment of a single Judge of a High Court because such an appeal lies with a certificate granted under article 132. We therefore hold that the present appeal does not lie to this Court and that it lies to the High Court of Judicature at Allahabad. We therefore direct that the memorandum of appeal be returned for presentation. to the proper Court. Appeal incompetent. [/INST] During the pendency of a civil writ petition in the Allahabad High Court, one N moved an application under section 476, Code of criminal Procedure, for making a complaint under section 93, Indian Penal Code, against T. A single judge who was seized of the case rejected the application. Thereupon N presented an appeal against the order of rejection of his application before the Supreme Court under section 476 B, Code of Criminal Procedure. Held, that the appeal did not lie to the Supreme Court but that it lay to the Appellate Bench of the High Court. The decrees of a single judge of the High Court exercising civil jurisdiction were ordinarily appealable to the High Court under cl. 1o of the Letters Patent of the Allahabad High Court read with cl. 13 of the U. P. High Courts (Amalgamation) Order, 1948, and as such the Court constituted by the single judge was a court subordinate to the Appellate Bench of the High Court within the meaning of section 195(3) of the Code. M. section Sheriff vs The State of Madras, [1954] S.C.R. 1144, distinguished. </s>

<s>[INST] Summarize the following judgement: Appeal No. 268 of 1959. 419 Appeal from the judgment and decree dated September 3, 1958, of the former Bombay High Court in Appeal No. 28/1958. A. V. Viswanatha Sastri, Ganpat Rai and I. N. Shroff, for the appellant. M. C. Setalvad, Attorney General for India, B. Sen and T. M. Sen, for the respondents. August 31. The Judgment of the Court was delivered by GAJENDRAGADKAR J. The appellant Raja Narayanlal Bansilal of Bombay is the Managing Agent of a Limited Company named the Harinagar Sugar Mills Limited. By virtue of the power conferred on him by section 137 of the Indian Companies Act, 1913 (VII of 1913), the Registrar wrote to the mills on November 15, 1954, that it had been represented to him under section 137(6) that the business of the company was carried on in fraud, and so he called upon the company to furnish the information which he required as set out in a part of his letter (exhibit A). On April 15, 1955, the Registrar made a report (exhibit AA) to the Central Government under section 137(5) of the said Act. This report showed that according to the Registrar the affairs of the company were carried on in fraud of contributories and they disclosed an unsatisfactory state of affairs. The report pointed out that the appellant was the Managing Agent of the company as well as its promoter, and that it was suspected that under a fictitious name of Bansilal Uchant Account the company was advancing money to the several firms owned by the appellant which were ostensibly purchased from the company 's funds. The report further stated that between the years ending in September, 1942 and 1951 about Rs. 19,200 were paid for Harpur Farm and Rs.;. 39,300 for Bhavanipur Farm, and accounts disclosed that the Uchant Account was chiefly operated upon for purchasing such lands out of the funds of the company though the purchase in fact was for and on behalf of the appellant. The Registrar also added that he had reason to believe that the Managing 54 420 Agent was utilising the property of the company in some cases for his personal gain, and concluded that, in his opinion, a case had been made out for an investigation under section 138. On receiving this report, on November 1, 1955, the 'Central Government passed an order under section 138(4) of the said Act (exhibit B) appointing the first respondent Maneck P. Mistry, who is a Chartered Accountant, as an inspector to investigate the affairs of the company from the date of its incorporation. The said inspector was asked to point out all irregularities and contraventions of the provisions of the said Act or any other law, and make a full report as indicated in a communication which was separately sent to him. This separate communication (exhibit BB) prescribes the mode of enquiry which should be adopted by inspectors. It requires that while investigating the affairs of companies the inspectors should bear in mind that for a successful prosecution the evidence in support of a charge must be clear, tangible and cogent, and that their reports should specify with reference to the evidence collected during the investigations the points specified under paragraph 2(a) to (e). In the course of their investigation the inspectors are asked to make use of the powers available to them under section 140 of the said Act including the right to examine a per son on oath. The investigation should be conducted in private and the inspectors are not entitled to make public the information received by them during the course of the investigation. Pursuant to the powers conferred on him by the said order respondent 1 wrote to the appellant intimating to him that he would examine him on oath in relation to the business of the company under section 140(2) of the said Act (exhibit C). Meanwhile on April 1, 1956, the Companies Act of 1913 (VII of 1913) was repealed by the Companies Act of 1956 (1 of 1956). For the sake of convenience we would hereafter refer to the repealed Act as the old Act and the Act which came into force on April 1, 1956, as the new Act. On July 26, 1956, the Central Government purported to exercise its power under section 239(2) of the new Act and 421 accorded approval to respondent 1 exercising his powers of investigating into, and reporting on, the affairs of the appellant including his personal books of accounts as well as the affairs of the three concerns specified in the order. These three concerns are M/s. Narayanlal Bansilal, who are the Managing Agents of Harinagar Sugar Mills, the Shangrila Food Pro ducts Limited and, Harinagar Cane Farm. It appears that the appellant is the proprietor of the firm of Narayanlal Bansilal. After this order was passed respondent 1 served upon the appellant the four impugned notices (exhibit E collectively) on May 9, 1957, May 16, 1957, May 29, 1957 and June 29, 1957, respectively. These notices are substantially identical in terms ' and so it would be sufficient for our purpose to set out the purport of one of them. The first notice called upon the appellant to attend the office of respondent 1 on the date and at the time specified for the purpose of being examined on oath in relation to the affairs of the company, and to produce before respondent 1 all the books of accounts and papers relating to the said company as mentioned in the notice. The appellant was further told that in default of compliance with the requisition aforesaid necessary legal steps would be taken without further reference to him. The notice contains a list of twelve items describing the several documents which the appellant was required to produce before respondent 1. After these notices were served on the appellant he filed a, petition (No. 201 of 1957) in the Bombay High Court and prayed that the High Court should issue a writ of certiorari or any other appropriate direction, order or writ under article 226 of the Constitution calling upon respondent 1 to produce the records of the case relating to the notices in question and to set aside the said notices, the proposed examination of the appellant and the interim report made by him. It further prayed for a writ of prohibition or any other appropriate direction, order or writ restraining respondent 1 from making any investigation under the said notices and from exercising any powers of investigation under section 239 and/or section 240 of the new Act and/or 122 from investigating into the affairs of any persons or concerns specified in the petition. The petitioner claimed these writs mainly on two grounds. He first alleged that since respondent 1 had been appointed under the old Act he had no jurisdiction to exercise powers referable to the relevant provisions of the new Act. This ground assumed that the said relevant provisions of the new Act are valid, but it is urged that the powers referable to the said provisions are not available to respondent 1 since he was appointed under the old Act. The other ground on which the writs were claimed challenges the vires of sections 239 and 240 of the new Act. This challenge assumed an alternative form. It is argued that section 240 offends against the constitutional guarantee provided by article 20(3) of the Constitution and it is also urged that certain portions of sections 239 and 240 offend against another constitutional guarantee provided by article 14 of the Constitution. It is thus on these three contentions that the petitioner claimed appropriate writs by his petition before the Bombay High Court. These pleas were resisted by the Union of India which had been joined to the proceedings as respondent 2. Mr. Justice K. T. Desai, who heard the petition, rejected the contentions raised by the petitioner, and held that no case had been made out for the issue of any writ. This decision was challenged by the appellant before the Court of Appeal in the Bombay High Court; the Court of Appeal agreed with the view taken by Desai, J., and dismissed the appeal. Thereupon the appellant applied for and obtained a certificate from the High Court, and it is with the said certificate that he has come to this Court by his present appeal. On his behalf Mr. Viswanatha Sastri has raised the same three points for our decision. Let us first examine the question whether or not the first respondent has jurisdiction to exercise the powers under the relevant provisions of the new Act. It is common ground that if respondent 1 's powers to bold the investigation in question are to be found in the relevant provisions of the old Act and not those of the new Act the impugned notices issued by him would be 423 without authority and jurisdiction. In dealing with this question it is necessary to examine the broad features of the relevant sections of the two Acts. We will begin with the old Act. Section 137 of the old Act deals with investigation by the Registrar. Section 137(1) provides that where the Registrar on ' perusal of any document which a company is required to submit to him is of opinion that any information or explanation is necessary in order that such document may afford full particulars of the matter to which it purports to relate he may, by a written order, call on the company to furnish in writing the necessary information or explanation within the time to be specified in the order. Section 137(5) requires the Registrar to make a report in writing to the Central Government if no information is supplied to him within the specified time, or if the information supplied to him appears to him to disclose an unsatisfactory state of affairs, or does not disclose a full and fair statement of the relevant matters. Thus section 137(1) to (5) deal with the investigation which the Registrar is empowered to make on a persual of the document submitted to him by a company under the provisions of this Act. Section 137(6) deals with a case where if it is represented to the Registrar on materials placed before him by any contributory or creditor that the business of a company is carried on in fraud or in fraud of its creditors or in fraud of persons dealing with the company or for a fraudulent purpose, he may, after following the procedure prescribed in that behalf, call for information or explanation on matters to be specified in his order within such time as he may fix, and when such an order is passed the provisions of section 137(2) to (5) would be applicable. This sub section provides that if at the end of the investigation the Registrar is satisfied that the representation on which he took action was frivolous or vexatious he shall disclose the identity of the informant to the company. This provision is obviously intended as a safeguard against frivolous or vexatious representations in respect of the affairs of any company. The provisions of this section are substantially similar to the provisions of section 234 of the new Act. 424 affairs of companies by inspectors, authorises the Central Government to appoint one or more competent inspectors to investigate the affairs of any company and report thereon in such manner as the said ,Government may direct. The appointment of competent inspectors can be made by the Central Government in four classes of cases as specified in section 138(1) to (4). It would be relevant to refer to two of these cases. Under section 138(1) a competent inspector can be appointed in the case of a banking company having a share capital on the application of members holding not less than one fifth of the shares issued, and under section 138(4) in the case of any company on a report by the Registrar under section 137(5). This section substantially corresponds to section 235 of the new Act. The other sections of the old Act to which reference must be made are sections 140, 141 and 141A. Section 140(1) imposes upon all persons who are. or have been officers of the company an obligation to produce before the inspectors all books and documents in their custody or power relating to the company. Section 140(2) empowers the inspector to examine on oath any such person, meaning a person who is or has been an officer of the company in relation to the business of the company and to administer an oath to him. Section 140(3) provides that if a person refuses to produce a book or a document or to answer any question he shall be liable to a fine not exceeding Rs. 50 in respect of each offence. Section 141 provides that on the conclusion of an investigation the inspectors shall report their opinions to the Central Government, and shall forward a copy of their report to the registered office of the company ; and it also provides that a copy of the said report can be delivered at their request to the applicants for the investigation. Then we have section 141A which deals with the institution of prosecutions. Section 141A(1) provides that if from any report made under section 138 it appears to the Central Government that any person has been guilty of any offence in relation to the company for which he is criminally liable the Central Government shall refer the 425 matter to the Advocate General or the Public Prosecutor. Section 141A(2) lays down that if the law officer who is consulted under (1) considers that there is a case in which prosecution ought to be instituted he shall cause proceedings to be instituted accordingly , That in brief is the scheme of the relevant provisions of the old Act. We will now examine the scheme of the relevant provisions of the new Act. It has already been noticed that sections 234 and 235 of the new Act are substantially similar to sections 137 and 138 of the old Act. Section 239 of the new Act provides for the powers of the inspectors to carry on investigation into the affairs of related companies or of managing agent or associate. The sweep of the enquiry authorised by this section is very much wider than that under the corresponding section of the old Act. Sub section (1) of this section authorises an inspector to investigate the affairs of a company and also the affairs of any other body corporate or person specified in cls. (a) to (d) if he thinks it necessary so to do. These clauses include several cases of body corporate which may have any connection direct or indirect, immediate or remote, with the affair of the company whose affairs are under investigation. It is unnecessary for our purpose in the present appeal to enumerate the said cases serially or exhaustively. It is conceded that the three other persons who have been called upon by respondent 1 to produce documents and give evidence fall within the purview of section 239. As a result of the provisions of section 239(1) the inspector has to report not only on the affairs of the company under investigation but also on the affairs of other bodies or persons who have been compelled to give evidence and produce documents during the course of the enquiry. The only safeguard provided against a possible abuse of these extensive powers is that in the case of any body corporate or person referred to in cls. (b)(ii), (b)(iii), (c) or (d) of subs. (1) the inspector shall not exercise his relevant power without first having obtained the prior approval of the Central Government thereto. Section 240 of the new Act imposes an obligation 426 on the corporate bodies and persons in respect of which or whom investigation is authorised by section 239 to produce all books and papers and to give all assistance in connection with the said investigation ; that is the result of section 240(1). Section 240(2) empowers the inspector to examine on oath any of the persons referred to in sub section (1) in relation to the relevant matters as specified. Section 240(3) deals with a case where a person refuses to comply with the obligation imposed on him by section 240(1) or (2) ; and it provides that in such a case the inspector may certify the refusal under his hand to the court, and the court may thereupon enquire into the case, hear witnesses who may be produced against or on behalf of the alleged offender, consider any statement which may be offered in defence, and punish the offender as if he had been guilty of contempt of the court. Section 240(4) deals with a case where the inspector thinks it necessary for the purpose of his investigation that a person whom he has no power to examine on oath should be .examined, and it provides that in such a case he may apply to the court, and the court may, if it thinks fit, order that person to attend and be examined on oath before it on any matter relevant to the investigation. This sub section provides for the procedure to be followed in examining such a witness. Section 240(5) lays down that notes of any examination under sub section (2) or (4) shall be taken down in writing, and shall be read over to or by, and signed by, the person examined, and may thereafter be used as evidence against him. Having thus made elaborate provisions for the production of documents and evidence in the course of the investigation by the inspector, section 241 deals with the inspectors ' report and provides that inspectors may, and if so directed by the Central Government shall, make interim reports to that Government, and on the conclusion of the investigation shall make a final report to it. Section 241(2) provides for the supply of the copy of the said report to the several parties concerned as specified in cls. (a) to (e). That takes us to section 242 which deals with prosecution. Section 242(1) provides inter alia that if from 427 any report made under a. 241 it appears to the Central Government that any person has in relation to the company been guilty of any offence for which he is criminally liable, the Central Government may, after taking such legal advice as it thinks fit, prosecute such person for the offence, and it imposes on all officers, and agents of the company, except those prosecuted, to give the Central Government all assistance in connection with the prosecution which they are reasonably able to give. That broadly stated is the position with regard to the relevant provisions of the new Act. Mr. Sastri has drawn our pointed attention to the fact that the scope and nature of the enquiry authorised by the new Act are very much wider than under the old Act, and he has characterised the relevant ,powers conferred on the investigating inspectors as draconian. He, therefore, contends that unless it is established that these powers are available to the inspector appointed under the relevant provisions of the old Act the impugned notices must be set aside; and his argument is that these powers are not available to the inspector appointed under the old Act. The decision of this question will depend mainly on the con struction of sections 645 and 646 of the new Act. Section 644 provides for the repeal of the enactments mentioned in Schedule XII; the old Act is one of the enactments thus repealed. Ordinarily the effect of the repeal of the old Act would have been governed by the provisions of section 6 of the General Clauses Act (10 of 1897), but in the case of the new Act the application of the said section is subject to the provisions of sections 645 to 657 of the Act; that is the effect of section 658 which provides that the mention of particulars in sections 645 to 657 or in any other provisions of this Act shall not prejudice the general application of section 6 of the , with respect to the effect of repeals. In other words, though section 6 of the will generally apply, its application will be subject to the provisions contained in as. 645 to 657; this position is not disputed. It is now necessary to consider section 645. It reads thus: 55 428 "Nothing in this Act shall affect any order, rule, regulation, appointment, conveyance mortgage, deed, document or agreement made, fee directed, resolution passed, direction given, proceeding taken, instrument executed or issued, or thing done, under or in pursuance of any previous companies law; but any such order, rule, regulation, appointment, conveyance, mortgage, deed, document, agreement, fee, resolution, direction, proceeding. instrument or thing shall, if in force at the commencement of this Act, continue to be in force, and so far as it could have been made, directed, passed, given, taken, executed, issued or done under or in pursuance of this Act, shall have effect as if made, directed, passed, given, taken, executed, issued or done under or in pursuance of this Act. " The effect of this section is clear. If an inspector has. been appointed under the relevant section of the old Act, on repeal of the old Act and on coming into force of the new Act, his appointment shall have effect as if it was made under or in pursuance of the new Act. Indeed it is common ground that if section 645 had stood alone and had not been followed by section 646 there would have been no difficulty in holding that the inspector appointed under the old Act could exercise his powers and authority under the relevant provisions of the new Act, and the impugned notices would then be perfectly valid. Incidentally we may refer to the provisions of a. 652 in this connection. Under this section any person appointed to any office under or by virtue of any previous company law shall be deemed to have been appointed to that office under this Act. It is, however, urged that the authority of the inspector which is in dispute is governed by section 646. This section provides: "Nothing in this Act shall affect the operation of section 138 of the Indian Companies Act, 1913 (VII of 1913), as respects inspectors, or as respects the continuation of an inspection begun by inspectors, appointed before the commencement of this Act; and the provisions of this Act shall apply to or in relation to a report of inspectors appointed under the said section 138 as they apply to or in relation to a report 429 of inspectors appointed under section 235 or 237 of this Act. " The argument is that the expression " nothing in this Act " includes section 645 and so section 646 should be read as an exception or proviso to section 645; and if that is so, all matters covered by section 138 of the old Act must continue to be governed by the said Act and not by any of the provisions of the new Act. We are unable to accept this argument. In appreciating the effect of the provisions of section 646 it is necessary to bear in mind that it occurs in that part of the new Act which deals with repeals and savings. Sections 645 to 648 are the saving sections, and ordinarily and in the absence of any indication to the contrary these saving clauses should be read as independent of, and in addition to, and not as providing exceptions to, one another. It is significant that whereas section 646 provides for the continuance of the operation of section 138 it does not make a corresponding provision for the continuance of the operation of a. 140 of the old Act which deals with the powers of the inspector to call for books and to examine parties. Besides, it may perhaps not be accurate to suggest that having regard to the provisions of section 645, section 646 is wholly redundant. It would be possible to take the view that cases falling under section 138(1) of the old Act are intended to be covered by section 646 as they would not be covered by section 645. In regard to the case of a banking company covered by section 138(1) section 646 will come into operation and that may be one of the reasons for which section 646 was enacted. It may be that the case of the banking company may also be covered by section 35 of the Banking Companies Act 10 of 1949, but since a. 138(1) applied to the said case until the old Act was repealed the Legislature may have, as a matter of caution, thought it necessary to provide for the continuance of the operation of section 138 by enacting section 646. However that may be, we feel no difficulty in holding that s: 646 should not be construed as a proviso to s.645 but as an additional saving provision. The words used in section 645 are so clear, and the policy and object of enacting the said provision are in our opinion so emphatically expressed, that it 430 would be unreasonable to hold that section 646 was intended to provide for such a radical exception to section 645. Where the Legislature enacts a saving section as a matter of abundant caution the argument that the enactment of the said section was not wholly necessary cannot be treated as decisive or even effective. Therefore, in our opinion, the High Court was right in coming to the conclusion that the inspector appointed under section 138(4) of the old Act must by legal fiction, which is authorised by section 645, be deemed to have been appointed under section 235 of the new Act, and if that is so, respondent 1 had authority and power to issue the impugned notices under section 240 of the new Act. The challenge to the validity of the impugned notices on the ground that respondent 1 had no authority to issue the said notices must, therefore, fail. That takes us to the question as to whether the relevant provisions of section 240, which empower respondent 1 to issue the relevant notices by which the appellant was called upon to give evidence and to produce documents, offend against the fundamental constitutional right guaranteed by article 20(3). It has been strenuously urged before us that the main object of the present investigation is to discover whether the appellant has committed any offenses, and so by compelling him to give evidence and produce documents he is denied the constitutional protection against self incrimination. Article 20(3) provides that " no person accused of any offence shall be compelled to be a witness against himself ". It may be assumed that the appellant is being compelled to be witness against himself in the present proceedings; but even so the question which arises for our decision is whether the appellant can be said to be a person who is accused of any offence as required by article 20(3). Mr. Sastri has contended that the words " person accused of any offence " should not receive a narrow or literal construction; they should be liberally interpreted because. the clause, in which they occur enshrines a fundamental constitutional right and the scope and reach of the said right should not be unduly narrowed down. In support of this 431 general argument Mr. Sastri has naturally relied on the historical background of the doctrine of protection against self incrimination; and he has strongly pressed into service the decisions of the Supreme Court of the United States of America dealing with the Fifth Amendment to the Constitution of the United States. The said Amendment inter alia provides that " no person shall be compelled in any criminal case to be a witness against himself ". It would be noticed that in terms the Amendment refer to a criminal case, and yet it has received a very broad and liberal interpretation at the hands of the Supreme Court of the United States of America. It has been held that the said constitutional protection is not confined only to criminal cases but it extends even to civil proceedings (Vide: McCarthy vs Arndstein(1)). As observed by Mr. Justice Blatchford in Charles Counselman vs Frank Hitchcock (2) " it is impossible that the meaning of the constitutional provision can only be that a person shall not be compelled to be a witness against himself in a criminal prosecution against himself. It would doubtless cover such cases but it is not limited to them. The object was to insure that a person should not be compelled, when acting as a witness in any investigation, to give testimony which might tend to show that he himself had committed a crime. The privilege is limited to criminal matters, but it is as broad as the mischief against which it seeks to guard ". In support of his plea that a liberal interpretation should be put on an article which enshrines a fundamental constitutional right Mr. Sastri has also invited our attention to the observation made by Mr. Justice Bradley in Edward A. Boyd and George H. Boyd vs United States (3). Says Bradley, J., " illegitimate and unconstitutional practices get their first footing in that way, namely by silent approaches and slight deviations from legal modes of procedure. This can only be obviated by adhering to the rule that constitutional provisions for the security of person and (1) ; (2) ; (3) ; ,752. 432 property should be liberally construed ". The learned judge has also added that any compulsory discovery by extorting the party 's oath, or compelling the production of his private books and papers, to convict him of crime or to forfeit his property, is contrary to the principles of a free government, and is abhorrent to the instincts of an American. It may suit the purposes of despotic power; but it cannot abide the pure atmosphere of political liberty and personal freedom". In regard to this eloquent statement of the law it may, however, be permissible to state that under the English Law the doctrine of protection against self incrimination has never been applied in the departments of Company Law ' and Insolvency Law. There is no doubt that under section 15 of the English Bankruptcy Act when a public examination of a debtor is held he is compelled to answer all questions as the court may put, or allow to be put to him, and that the answers given have to be signed by him and can be used against him in evidence (Vide: In Re: Atherton (1)); similar is the position under section 270 of the English Companies Act. However, the general argument for the appellant is that in construing article 20(3) we may take some assistance from the broad and liberal construction which has been placed on the apparently narrow and limited words used in the Fifth Amendment to the Constitution of the United States of America. Thus presented the argument is no doubt attractive, and its validity and effectiveness would have had to be fully and carefully examined if the question raised in the present appeal had been a matter of first impression ; but the construction of article 20 in general and article 20(2) and (3) in particular has been the subject matter of some decisions of this Court, and naturally it is in the light of the previous decisions that we have to deal with the merits of the appellants case in the present appeal. In Maqbool Hussain vs The State of Bombay (2) this Court had occasion to consider the scope and effect of the constitutional guarantee provided by article 20(2). A person against whom proceedings (1) (2) ; 433 had been taken by the Sea Customs Authorities under section 167 of the Sea Customs Act and an order for confiscation of goods had been passed was subsequently prosecuted before the Presidency Magistrate for an offence under section 23 of the Foreign Exchange Regulations Act in respect of the same act. It was urged on, his behalf that the proceedings taken against him before the Sea Customs Authorities was a prosecution and the order of confiscation passed in the said proceedings wag a punishment, and. so it was argued that the constitutional guarantee afforded by article 20(2) made his subsequent prosecution under section 23 of the Foreign Exchange Regulation Act invalid. This plea was rejected. In dealing with the merits of the plea this Court had to consider the meaning of the words " prosecuted and punished " used in article 20(2). Article 20(2) provides that no person shall be prosecuted and punished for the same offence more than once, and the question raised was whether the proceedings before the Sea Customs Authorities constituted prosecution, and whether the order of confiscation was punishment under article 20(2). In construing article 20(2) this Court considered article 20 as a whole and examined the interrelation of the relevant terms used in the three clauses of the said article. " The very wording of article 20 ", observed Bhagwati, J., " and the words used therein" convicted ", " commission of the act charged as an offence ", " be subjected to a penalty ", " commission of the offence ", " prosecuted and punished ", " accused of any offence " would indicate that the proceedings therein contemplated are of the nature of criminal proceedings before a court of law or a judicial tribunal. and the prosecution in this context would mean an initiation or starting of proceedings of a criminal nature before a court of law or a judicial tribunal in accordance with the procedure prescribed in the statute which creates the offence and regulated the procedure ". Having thus construed article 20(2) in the light of the relevant words used in the different clauses of the said article, this Court naturally proceeded to enquire whether the Sea Customs Authorities acted as a judicial tribunal in holding proceedings 434 against the person. The scheme of the relevant pro. visions of the Act was then examined, and it was held that the said authorities are not a judicial tribunal with the result that the "I adjudging increased rate of duty or penalty and confiscation" under the provisions of the said act did not constitute a judgment or order of a court or judicial tribunal necessary for the purpose of supporting the plea of double jeopardy. In the result the conclusion of this Court was that when the Customs Authorities confiscated the gold in question the proceedings taken did not amount to a prosecution of the party nor did the order of confiscation constitute a punishment as contemplated by article 20(2). This decision has been affirmed by this Court in the case of section A. Venkataraman vs The Union of India (1). In that case an enquiry bad been made against the appellant Venkataraman under the (Act XXXVII of 1850). On receiving the report of the enquiry commissioner opportunity was given to the appellant under article 311(2) to show cause, and, ultimately after consultation with the Union Public Service Commission the appellant was dismissed by an order passed by the President. The order of dismissal was passed on September 17, 1953. Soon thereafter on February 23, 1954, the police submitted a charge sheet against him charging him with having committed offenses under sections 161/165 of the Indian Penal Code 'and section 5(2) of the Prevention of Corruption Act. The validity of the subsequent prosecution was challenged by the appellant on the ground that it contravened the constitutional guarantee enshrined in article 20(2). The appellant 's plea was, however, rejected on the ground that the proceedings taken against him before the commissioner under the Inquiries Act did not amount to a prosecution. The relevant provisions of the said act were examined, and it was held that in an inquiry under the said Act there is neither any question of investigating an offence in the sense of an act or omission punishable by any law for the time being in force nor is there (1) 435 any question of imposing punishment prescribed by the law which makes that act or omission an offence. Mukherjea, J., as he then was, who delivered the judgment of the Court, has referred to the earlier decision in the case of Maqbool Hussain (1), and has observed that " the effect of the said decision was that the proceedings in connection with the prosecution and punishment of a person must be in the nature of a criminal proceeding before a court of law or a judicial tribunal, and not before a tribunal which entertains a departmental or an administrative enquiry even though set up by a statute but which is not required by law to try a matter judicially and on legal evidence ". Thus these two decisions can be said to have considered incidentally the general scope of article 20 though both of them were concerned directly with the construction and application of article 20(2) alone. Article 20(3) was considered by the Full Court in M. P. Sharma vs Satish Chandra, District Magistrate, Delhi (2). The question about the scope and effect of article 20(3) was raised in that case by a petition filed under article 32 of the Constitution. It appears that the Registrar of the Joint Stock Companies, Delhi State, lodged information with the Inspector General, Delhi Special Police Establishment, against the petitioners alleging that they had committed several offenses punishable under the Indian Penal Code. The lodging of this information was preceded by an investigation into the affairs of the petitioners ' company which had been ordered by the Central Government under a. 138 of the old Act, and the report received at the end of the said investigation indicated that a well planned and organised attempt had been made by the petitioners to misappropriate and embezzle the funds of the company by adopting several ingenious methods. On receipt of the said First Information Report the District Magistrate ordered investigation into the offenses and issued warrants for simultaneous searches at as many as thirty four places. By their petitions the petitioners contended that the search warrants (1) ; (2) ; 56 436 were illegal and they prayed that the same may be quashed as being in violation of Art, 20(3). The plea thus raised by the petitioners was ultimately rejected on the ground that the impugned. searches did not violate the ' said constitutional guarantee. Jagannadha das, J., who spoke for the Court, observed that " since article 20(3) provides for a constitutional guarantee against testimonial compulsion its words should be liberally construed, and that there was no reason to confine the content of the said guarantee to its barely literal import ". He, therefore, held that the phrase " to be a witness " means nothing more than to furnish evidence, and such evidence can be furnished through the lips or by production of a thing or of a document or in other modes. He also pointed out that the phrase was " to be a witness " and not " to appear as a witness " and so the protection afforded was not merely in respect of testimonial compulsion in the court room but may well extend to compel testimony previously obtained from him. The conclusion of the Court on this part of the construction was thus stated. The constitutional guarantee " is available to a person against whom a formal accusation relating to the commission of an offence has been leveled which in the normal course may result in prosecution ; whether it is available to other persons in other situations does not call for a decision in this case ". Since the First Information Report bad been recorded against the petitioners in that case it followed that the first test that a formal accusation relating to the commission of an offence must have been leveled was satisfied. The question which was then considered was whether there was any basis in the Indian Law for the assumption that a search or seizure of a thing or document is in itself to be, treated as compelled production of the same; and it was held that there would be no justification for treating the said search or seizure as compelled production; that is why the challenge to the validity of the search warrants issued against the petitioners was repelled. The effect of this decision thus appears to be that one of the. essential conditions for invoking the constitutional guarantee enshrined in article 20(3) 437 is that a formal accusation relating to the commission of an offence, which would normally lead to his prosecution,, must have been leveled against the party who is being compelled to give evidence against himself; and this conclusion, in our opinion is fully consistent with the two other decisions of this Court to which we have already referred. There are two other subsequent decisions of this ' Court to which reference may be made. In Thomas Dana vs State of Punjab (1), according to the majority decision " prosecution " in article 20(2) means a proceeding either by way of indictment or information in a criminal court in order to put an offender upon his trial. It would be noticed that this conclusion is wholly consistent with the view taken by this Court in the case of Maqbool Hussain (2) and section A. Venkataraman (3). In Mohammed Dastaqir vs The State of Madras (4) this Court had to consider article 20(3). The appellant in that case had gone to the bungalow of the Deputy Superintendent of Police to offer him a bribe which was covered in a closed envelope with a request that he might drop the action registered against him. The police officer threw the envelope at the appellant who took it up. While the appellant was still in the bungalow he was asked by the police officer to produce the envelope and he took out from his pocket some currency notes and placed them on the table without the envelope. The notes were then seized by the police officer and a rubber stamp of his office was placed on them. On these facts it was urged that in relying upon the evidence of compelled production of notes the prosecution had , violated the provisions of article 20(3). In support of this contention the general observations made by this Court in the case of M. P., Sharma(5), were strongly pressed into service. This Court, however, rejected the appellant 's arguments and held that the prosecution did not suffer from any infirmity. On the facts it was found that though the offence had in fact been already committed (1) [1959] Supp. 1 S.C.R. 274. (2) ; (3) ; (4) ; (5) ; 438 by the appellant, he had in fact not been accused of it at the stage when the currency notes were produced by him; it was also held that it could not be said that he was compelled to produce the said currency notes, because he might easily have refused to produce them, ,and so there was no occasion for him to invoke the constitutional protection against self incrimination. What then is the result of these decisions ? They show that in determining the complexion and reach of its respective sub clauses the general scheme of article 20 as a whole must be considered, and the effect of the inter action of the relevant words used 'in them must be properly appreciated. Thus considered the constitutional right guaranteed by article 20(2) against double jeopardy can be successfully invoked only where the prior proceedings on which reliance is plac ed must be of a criminal nature instituted or continued before a court of law or a judicial tribunal in accordance with the procedure prescribed in the statute which creates the offence and regulates the procedure. It would be noticed that the character of the said proceedings as well as the character of the forum before which the proceedings are initiated or conducted are treated as decisive in the matter. Similarly, for invoking the constitutional right against testimonial compulsion guaranteed under article 20 (3) it must appear that a formal accusation has been made against the party pleading the guarantee and that it relates to the commission of an offence which in the normal course may result in prosecution. Here again the nature of the accusation and its probable sequel or consequence are regarded as important. Thus we go back to the question which we have already posed: was the appellant accused of any offence at the time when the impugned notices were served on him ? In answering this question in the light of the tests to which we have just referred it will be necessary to determine the scope and nature of the enquiry which the inspector undertakes under section 240 ; for, unless it is shown that an accusation of a crime can be made in such an enquiry, the appellant 's plea under article 20(3) cannot succeed. Section 240 439 shows that the enquiry which the inspector undertakes is in substance an enquiry into the affairs of the company concerned. Certain documents are required to be furnished by a company to the Registrar under the provisions of the new Act. If, on examining the said documents, the Registrar thinks it necessary to call for information or explanation he is empowered to take the necessary action under section 234(1). Similarly, under section 234(7) if it is represented to the Registrar on materials placed before him by any contributory or creditor or any other person interested that the business of the company is carried on in the manner specified in the said sub section the Registrar proceeds to make the enquiry. Thus the scope of the enquiry con templated by section 234 is clear; wherever the Registrar has reason to believe that the affairs of the company are not properly carried on he is empowered to make an enquiry into the said affairs. Similarly under section 235 inspectors are appointed to investigate ' the affairs of any company and report thereon. The investigation carried on by the inspectors is no more than the work of a fact finding commission. It is true that as a result of the investigation made by the inspectors it may be discovered that the affairs of the company disclose not only irregularities and malpractice but also commission of offenses, and in such a case the report would specify the relevant. particulars prescribed by the circular in that behalf If, after receiving the report, the Central Government is satisfied hat any person is guilty of an offence for which he is criminally liable, it may, after taking legal advice, institute criminal proceedings against the offending person under section 242(1); but the fact that a prosecution may ultimately be launched against the alleged offender will not retrospectively change the complexion or character of the proceedings held by the inspector when he makes the investigation. Have irregularities been committed in managing the affairs of the company ; if yes, what is the nature of the irregularities ? Do they amount to the commission of an offence punishable under the criminal law ? If they do who is liable for the said offence? These and 440 such other questions fall within the purview of the ins pector 's investigation. The scheme of the relevant sections is that the investigation begins broadly with a view to examine the management of the affairs of the company to find out whether any irregularities have been committed or not. In such a case there is no accusation, either formal or otherwise, against any specified individual; there may be a general allegation that the affairs are irregularly, improperly or illegally managed; but who would be responsible for the affairs which are reported to be irregularly managed is a matter which would be determined at the end of the enquiry. At the commencement of the enquiry and indeed throughout its proceedings there is no accused person, no accuser and no accusation against anyone that he has committed an offence. In our opinion a general enquiry and investigation into the affairs of the company thus contemplated cannot be regarded as an investigation which starts with an accusation contemplated in article 20(3) of the Constitution. In this connection it is necessary to remember that the relevant sections of the Act appear in Part VI which generally deals with management and administration of the companies. It is well known, that the provisions of the Act are modeled on the corresponding provisions of the English Companies Act. It would, therefore, be useful to refer to the observations made by the House of Lords in describing the character of the enquiry held under the corresponding provisions of the English Act in the case of Hearts of Oak Assurance Co. vs Attorney General (1). In that case Lord Thankerton said " it appears to me to be clear that the object of the examination is merely to recover information as to the company 's affairs and that it is in no sense a judicial proceeding for the purpose of trial of an offence; it is enough to point out that there are no parties before the inspector, that he alone conducts the enquiry, and that the power to examine on oath is confined to the officers, members, agents and servants of the company ". We ought, however, to add that the last (1) 441 observation is no longer true about the inspector 's powers under section 240 of the new Act. In the same case Lord Macmillan observed that " the object of the enquiry manifestly is that the Commissioner may either by himself directly or through the medium of a delegate obtain the information necessary to enable him, to decide what action, if any, he should take. The cardinal words of the section are those which empower the Commissioner or his inspector to examine into and report on the affairs of the society ". Thus it is clear that the examination of, or investigation into, the affairs of the company cannot be regarded as a proceeding started against any individual after framing an accusation against him. Besides it is quite likely that in some cases investigation may disclose that there are no irregularities, or if there are they do not amount to the commission of any offence; in such cases there would obviously be no occasion for the Central Government to institute criminal proceedings under section 242(1). Therefore, in our opinion, the High Court was right in holding that when the inspector issued the impugned notices against the appellant the appellant cannot be said to have been accused of any offence; and so the first essential condition for the application of article 20(3) is absent. We ought to add that in the present case the same conclusion would follow even if the clause "accused of any offence " is interpreted more liberally than was done in the case of M. P. Sharma (1), because even if the expression 'accused of any offence" is interpreted in a very broad and liberal way it is clear that at the relevant stage the appellant has not been, and in law cannot be, accused of any offence. Thus the tests about the character of the proceedings and the forum where the proceedings are initiated or intended to be taken are also not satisfied; but, as we have already indicated, such a broad and liberal interpretation of the relevant expression does not appear to be consistent with the tenor and effect of the previous decisions of this Court. It is true that in his report the Registrar has made (1) ; 442 certain allegations on which Mr. Sastri has relied. He contends that the statements in the report do amount to allegations of commission of offenses by the appellant. What the Registrar has stated in his report in this particular case cannot be relevant or material in deciding the vires of the impugned section. The vires of the section can be determined only by examining 'the relevant scheme of the Act, and we have already Been that such an examination does not assist the appellants contention that article 20(3) is contravened. Besides, what the Registrar has stated in his report can hardly amount to an accusation against the appellant; it is a report submitted by him to the Central Government, and it is only intended to enable the Central Government to decide whether it should appoint an inspector. It is not as if the investigation before the inspector begins on the basis that the Registrar is the complainant who has made an accusation against the appellant, or that the function of the investigation is to find out whether the said accusation is proved or not. As we have already seen an enquiry under section 240 may require a large number of persons to give evidence or produce documents but it cannot be said that any accusation is made against any of the said persons. In fact three persons have been served with similar notices in the present enquiry which shows that the inspector desires to obtain relevant evidence from them as from the appellant. How can it be said that an accusation has been made against the said three persons, and that incidentally helps to bring out the real character and scope of the enquiry. Therefore we do not think that the state ments made in the Registrar 's report, on which Mr. Sastri relies can really assist us in deciding the question of the vires of section 240. It is also significant that the appellant has not challenged the validity of the impugned notices on any ground relatable to, or based on, the said report. The challenge is founded on. the broad and general ground that section 240 offends against article 20(3). We may incidentally add that it was in support of his argument based on the Registrar 's report that 443 Mr. Sastri sought to rely on the decision of the Calcutta High Court in Collector of Customs vs Calcutta Motor and Cycle Co. (1). In that case certain notices had been issued under section 171A of the Sea Customs Act to certain persons to appear before the customs officials and to produce certain documents. The High Court took the view that " it appeared from the accusations made in the search warrants at the instance" of the customs authorities and those made in one of the notices by the customs authorities themselves, that the accusations of criminal offenses could not be excluded " ; and so it was held that the requirements of article 20(3) were satisfied and the protection under the said article was available to the persons concerned. In our opinion this decision does not assist the appellant. It proceeded on the finding that accusations of criminal offenses could be held in substance to have been made against the persons concerned, and it dealt with the other points of law on that assumption. That being so, we think it unnecessary to discuss or consider the said decision. Our conclusion, therefore, is that section 240 does not offend against article 20(3) of the Constitution. That still leaves the challenge to the vires of the said section under article 14 of the Constitution, though we ought to add that Mr. Sastri did not seriously press his case under article 14, and we think rightly. The argument under article 14 proceeds on familiar lines. It is urged that the ordinary protection afforded to witnesses under section 132 of the Indian Evidence Act as well as the protection afforded to accused persons under section 161(1) and (2) of the Criminal Procedure Code, have been denied to the appellant in the investigation which respondent 1 is carrying on in regard to the affairs of his company, and that violates equality before the law. The scope and effect of article 14 have been considered by this Court frequently. : It has been repeatedly held that what article 14,prohibits is class legislation; it does not, however,, forbid reasonable classification for the purpose of legislation. If the classification on which legislation is based is founded 57 444 on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group, and if the differentia has a rational relation to the object sought to be achieved, then the classification does not offend article 14 (Vide: Shri Ram Krishna Dalmia vs Justice Tendolkar (1)). Now in the light of this test how can it be said that the classification made by sections 239 and 240 offends article 14 of the Constitution ? A company is a creature of the statute. There can be no doubt that one of the objects of the Companies Act is to throw open to all citizens the privilege of carrying on business with limited liability. Inevitably the business of the company has to be carried on through human agency, and that sometimes gives rise to irregularities and malpractice in the management of the affairs of the company. If persons in charge of the management of companies abuse their position and make personal profit at the cost of the creditors, contributories and others interested in the company, that raises a problem which is very much different from the problem of ordinary misappropriation or breach of trust. The interest of the company is the interest of several persons who constitute the company, and thus persons in management of the affairs of such companies can be classed by themselves as distinct from other individual citizens. A citizen can and may protect his own interest, but where the financial interest of a large number of citizens is left in charge of persons who manage the affairs of the companies it would be legitimate to treat such companies and their managers as a class by themselves and to provide for necessary safeguards and checks against a possible abuse of power vesting in the managers. If the relevant provisions of the Act dealing with enquiries and investigations of the affairs of the companies are considered from this point of view there would be no difficulty in holding that article 14 is not violated either by section 239 or section 240 of the new Act. The result is the appeal fails and is dismissed with costs. Appeal dismissed. [/INST] On November 15, 1954, the Registrar wrote to the company of which the appellant was the Managing Agent under section 137, Indian Companies Act, 1913, that it had been represented to him that the business of the company was carried on in fraud and called upon it to furnish certain information. On April 15, 1955, the Registrar made a report to the Central Government under section 137(5) to the effect that in his opinion the affairs of the company were carried on in fraud of contributories and they disclosed an unsatisfactory state of affairs and that a case had been made out for an investigation under section 138. Thereupon, the Central Government, on November 1, 1955, appointed an Inspector to investigate the affairs of the company and to report thereon. The Inspector was authorised under section 140 to examine any person on oath, and he wrote to the appellant that he would examine him on oath in relation to the business of the company. On April 1, 1956, the Indian Companies Act, 1913, was repealed by the Indian , which conferred wider and more drastic powers of investigation. On July 26, 1956, the Central Government accorded approval under section 239(2) of the new Act to the Inspector exercising his powers of investigating into and reporting on the affairs of the company. In May 1957 the Inspector served notices upon the appellant calling upon him to attend his office on the date and the time specified for the purpose of being examined on oath and to produce certain account books and papers relating to the company. The appellant challenged the investigation and contended : (i) that since the Inspector was appointed under the old Act he had no jurisdiction to exercise the powers referable to the provisions of the new Act, (ii) that section 240 of the new Act which provided for the production of documents and, evidence at such investigations offended article 20(3) of the Constitution, and (iii) that section 239 of the new Act which conferred powers on inspectors for investigation and section 240 offended article 14 of the Constitution. 418 Held, that the Inspector appointed under section 138(4) of the old Act must be deemed to have been appointed under section 235 of the new Act and had authority and power to issue notices under section 240 of the new Act. Section 645 of the new Act provided that the appointment of an Inspector under the old Act shall, on repeal of the old Act and on coming into force of the new Act, have effect as if it was made under the new Act. Section 646 which provided that nothing in the new Act shall affect the operation of section T38 of the old Act as respects inspectors was not an exception or proviso to section 645 and the two sections being saving sections had to be read as independent of and in addition to, and not as exceptions to, each other. Held, further that section 240 of Indian , did not offend article 20(3) of the Constitution. For invoking the constitutional right against testimonial compulsion guaranteed under article 20(3) there must be at the relevant stage a formal accusation against the party pleading the guarantee relating to the commission of an offence which may result in a prosecution. The enquiry undertaken under section 240 by the Inspector was in substance an enquiry into the affairs of the company; at this stage there was no accusation, formal or otherwise, against any specified individual. The mere fact that a prosecution may ultimately be launched against the alleged offenders would not retrospectively change the complexion or character of the proceedings held by the Inspector when he makes the investigation. Maqbool Hussain vs The State of Bombay, ; , section A. Venkataraman vs The Union of India, [1954] S.C.R. 1150, M. P. Sharma vs Satish Chandra, District Magistrate, Delhi, ; , Thomas Dana vs State of Punjab, [1959] Supp. 1 S.C.R. 274 and Mohammed Dastagir vs The State of Madras, ; , relied on. Held, further that SS. 239 and 240 of the Indian , did not violate article 14 of the Constitution. These sections denied the company and persons in charge of the management of such companies the ordinary protection afforded to witnesses under section 132 of the Evidence Act and under section 161(1) and (2) of the Criminal Procedure Code. As they were entrusted with the financial interests of a large number of citizens it was legitimate to treat such companies and their managers as a class by themselves and to provide for necessary safeguards and checks against abuse of power by the managers. The basis of the classification is founded on an intelligible differentia which has a rational relation to the object sought to be achieved. Shri Ram Krishna Dalmia vs justice Tendolkar, [1959] S.C.R. 297, applied. </s>

<s>[INST] Summarize the following judgement: Appeal No. 58 of 1958. Appeal from the Judgment and decree dated April 5, 1955, of the Calcutta High Court in Appeal from Original Order No. 206 of 1953, arising out of the judgment and order dated May 20, 1953, of the Fourth Additional Sub Judge, 24 Paris at Alipore in Misc. Case No. 15 of 1951. C. K. Daphtary, Solicitor General of India, C. B. Aggarwala and Sukumar Ghose, for the appellants. H. N. Sanyal, Additional Solicitor General of India and R. C. Datta, for the respondents Nos. 3 and 4. 1960. September 15. The Judgment of the Court was delivered by SARKAR J. This appeal arises out of an execution proceeding. It is filed by the decree holders and is directed against the judgment of the High Court at Calcutta setting aside the order of a learned Subordinate Judge at Alipore dismissing the objection of a judgment debtor to the execution. The High Court held that the decree having earlier been executed in full, the present proceedings for its execution were incompetent and thereupon dismissed the decree holders ' petition for execution. The question that arises is whether the decree had earlier been executed in full. The facts appear to have been as follows: One Sukeshwari Alied sometime prior to 1944 possessed of three plots of land which at all material times, bore premises Nos. 26, 27 and 28, Dum Dum Cossipore Road, in the outskirts of Calcutta. She left a will of which defendants Nos. 1, 2 and 6 were the executors. 682 The executors granted leases of these different plots of land to defendants Nos. 3, 4 and 5 respectively and put them in possession. Certain persons called Mohatas whose interests are represented by the appellants in the present appeal, claimed that Sukeshwari had only a life interest in the lands which on her death had vested in them and the executors had therefore no right to grant the leases. They filed a suit against the executors and the tenants on September 15, 1954, in the Court of a Subordinate Judge at Alipore for a decree declaring that the defendants had no right to possess the lands and for khas possession by evicting the defendants from the lands by removing the structures, if any, put up by them there. On March 30, 1948, the learned Subordinate Judge passed a decree for khas possession in favour of the Mohatas and gave the defendants six months time to remove the structures put up on the land. It is the execution of this decree with which the appeal is concerned. Defendant No. 3 appealed from this decree and that appeal succeeded for reasons which do Dot appear on the record. It is not necessary to refer to defendant No. 3 further as we are not concerned in this appeal with him. It may however be stated that he was in possession of premises No. 26 and no application for execution appears to have been made against him. The executor defendants also appealed from the decree. The other two tenants, defendants Nos. 4 and 5, did not appeal. Of these tenants we are Concerned only with defendant No. 4, the Bengal Breweries Ltd., a company carrying on business as distillers. It was in possession of premises No. 27, on which it had built a factory for distilling liquor and yeast. Defendant No. 5 was in possession of premises No. 28 on which stood some temples. On September 22, 1948, the Mohatas the decree. holders, filed an application in the Court of the learned Subordinate Judge for execution of the decree against defendants Nos. 1, 2, 4, 5 & 6. On September 25, the learned Subordinate Judge passed an order in execution 683 issuing a writ for delivery of possession of premises Nos. 27 and 28 to the decree holders by removing, any person bound by the decree who refused to vacate the same and fixed November 22 for making the return to the writ. On September 28, the decree holders applied to the learned Subordinate Judge for obtaining help from the police for executing the decree. On September 29, the executor defendants applied for a short stay of execution to enable them to obtain a stay order from the High Court. Defendant No. 4 also itself made an application for staying the execution for two months to enable it to come to an arrangement with the decree holders in the meantime. On the decree holders assuring the Court that they would not execute the decree till 2 p. m. of the next day these two petitions by the judgment debtors were adjourned till September 30. On September 30, 1948, the two petitions for stay were taken up for hearing by the learned Subordinate Judge. With regard to the petition by the executor defendants, he observed that he had no power to stay execution in view of 0. 41, r. 5, of the Code of Civil Procedure and thereupon dismissed that petition. The petition for time by defendant No. 4 was also dismissed but in respect of it the following observation appears in the order: " The decree holders undertake that they will allow the company to carry on normal business for six weeks from now by which time the company will settle matter with the decree holders ". Thereafter on the same day the decree holders deposited in Court, the necessary costs for police help for executing the decree and the learned Subordinate Judge requested the police to render the necessary help on October 1, 1948. It also appears that subsequently on the same day defendant No. 4 filed another petition for stay of execution and also a petition under section 47 of the Code objecting to the execution, alleging that there was a tentative arrangement between it and the decree holders that it would pay Rs. 150 as monthly rent and it need not file any appeal to challenge the validity of the decree. The decree holders opposed these petitions by defendant 684 No. 4. The learned Subordinate Judge made no order on them but adjourned them to November 11, 1948, as he felt that the matter required investigation. On October 1, 1948, the Nazir of the Court proceeded to premises Nos. 27 and 28 with certain police officers to execute the decree in terms of the writ. He found the gate of premises No. 27 closed but later the manager of defendant No. 4 opened it at his request. What happened thereafter appears from the return of the Nazir which is in the following words: " We then entered into the factory house and delivered possession in each of the buildings at about 10 30 a. m. Before removal of the furniture and other movables from those buildings there was an amicable settlement between the decree holders and the manager of the factory that the factory will run its normal business as before for 6 weeks and in the meantime the executive body of the factory will make settlement with the decree holders and some of the decree holders ' men will remain there as guards ". It is admitted that the decree holders ' guards were thereafter posted on the premises. The Nazir then proceeded to premises No. 28 and the return also shows that he delivered possession of these premises to ' the decree holders, The relevant portion of the return is in these words: "Then we proceeded towards the premises No. 28 (Old No. 8) Consisting of 2 temples and found that the priest of the temple was present. He amicably came out of the compound and possession was delivered of the temples, lands, tanks and other plots mentioned in the writ. " After possession had been delivered, the decree holders executed on the same day a receipt in acknowledgment of possession having been received by them. That receipt is in these terms: " Received from Sri Bhabataran Banerjee, Naib Nazir, District Judge 's Court, Alipore, 24 Parganas, delivery of possession of premises Nos. 7 and 8 (formerly Nos. 27 and 28) Dum Dum Cossipore Road in the above execution case, this day at 10 30 a.m. including all buildings, tanks, gardens and temples, etc., all these mentioned in the writ in its schedule. " 685 The receipt by mistake describes the premises as " formerly " Nos. 27 and 28 for the premises then bore these numbers. It appears that at 11 15 a. m. on October 1, 1948, the executor defendants moved the High Court) for a stay of execution in the appeal filed by them from the decree. The High Court directed an ad interim stay. After this order had been made the executor defendants moved the learned Subordinate Judge on the same day for consequential orders on the strength of the stay of execution granted by the High Court. The learned Subordinate Judge thereupon made the following order : " In the special circumstances recall the writ provisionally. To 5th November, 1948, for, fresh consideration if formal stay order is not received in the meantime ". This order was passed on the verbal representation of the lawyers for the executor defendants that the High Court had directed the stay of execution for there had not been time for the High Court 's order to be formally drawn up and produced before the learned Subordinate Judge. On November 22, 1948, which was the day fixed for making the return to the execution of the writ, the following order appears to have been passed by the learned Subordinate Judge in the execution case: " Possession delivered. One third party has filed an application under Or. 21, r. 100, C.P.C. Let the execution case be put up after the disposal of Misc. Case No. 13 of 1948. " The Miscellaneous Case No. 13 of 1948 was the one started on the petition of the third party under Or. 21, r. 100 of the Code, objecting to his removal by the execution. This third party was one Bhairab Tewari and he presumably was claiming some right in premises No. 28 for there was no question of his making any claim to premises No. 27 which were exclusively in the possession of defendant No. 4. The ad interim stay issued by the High Court on October 1, 1948, in the appeal filed by the executor defendants, came up for final hearing and resulted in the following order on January 21, 1949. "If anything is due on account, of costs which 686 has not been paid, that amount will be deposited in the Court below by defendant No. 4 (i.e., Mr, Sen 's client) within a month from to day, and then three month 's time from to day will be given to him to remove the machineries and vacate that portion of the land in suit which he is occupying as a lessee and which he is using now as a brewery. In default of the deposit being made and also in default of vacating the premises as directed above, this Rule will stand discharged. We do not stay delivery of possession in respect of any other item in which defendant No. 4 or No. 1, or any other defendant save and except defendant No. 3 is interested. " The appearances of the parties recorded in this order do not show any appearance having been made in connection with it by defendant No. 4. It does not appear from the records what other proceedings, if any, were taken in the appeal by the executor defendants but it is agreed that appeal was dismissed on September 8, 1954. Defendant No. 4 did not vacate at the end of the three months mentioned in the order of January 21, 1949. The parties then took proceedings in Criminal Courts under section 144 of the Code of Criminal Procedure and other connected provisions. It is not necessary to refer to these proceedings and it is enough to state that they did not affect the possession of premises No. 27 by defendant No. 4, who continued in possession till the United Bank of India Ltd. took over possession as hereinafter stated. On September 8, 1949, the following order was made by the learned Subordinate Judge in the execution case: " Decree holder takes no other steps. Possession so far as regards the Bengal Breweries are concerned, delivered. Ordered that the execution case be dismissed on part satisfaction. " On September 27, 1951, the decree holders made a 687 fresh application for execution against defendant No. 4 alone by evicting it from premises No. 27. Defend ant No. 4 put in an objection against the execution under section 47 of the Code alleging that so far as it was concerned, the decree had been fully executed as a result of the earlier execution proceedings which terminated by the order of September 8, 1949, and that further execution was not permissible in law. It is out of this objection that the present appeal has arisen and the question for decision is whether the objection to the execution so raised, is sound. As earlier stated, the learned Subordinate Judge dismissed the objection to the execution but on appeal the High Court set aside his order and dismissed the petition for execution. The High Court granted a certificate for an appeal to this Court on June 15, 1956 and on August 3, 1956, the High Court passed an order directing that the appeal be admitted. On August 11, 1960, an order was made by this Court adding three persons named Mool Chand Sethia, Tola Ram Sethia and Hulas Chand Bothra as parties respondents to this appeal. The order however provided that the appellants decree holders would have a right to object to the locus standi of these persons in the appeal. At the hearing before us only these added parties appeared to contest the appeal The appellants have raised a preliminary objection that the added parties have no locus standi and cannot be heard in the appeal. It appears that defendant No. 4 had executed three successive mortgages of premises No. 27 with all structures and appurtenances, to a bank called the Coming Banking Corporation Ltd. The first of these mortgages had been executed on May 25, 1944, and the other two mortgages had been executed after the suit in ejectment had been filed but before that suit had been decreed. The assets of the Coming Banking Corporation Ltd. became subsequently vested in the United Bank Limited. Some time in 1953, the United Bank filed a suit for enforcement of the mortgages. On May 30, 1955, a final mortgage decree was passed 88 688 in favour of the United Bank. On July 20, 1956, the mortgaged properties were put up to auction and purchased by the United Bank. On March 1, 1958, the mortgage sale was confirmed and subsequently the United Bank was put in possession of premises No. 27. On July 13,1960, the United Bank Conveyed premises No. 27 along with all structures and appurtenances and all its right, title and interest therein to these added respondents. It is by virtue of this conveyance that the added respondents obtained the order from this Court dated August 11, 1960, making them parties to the appeal. Defendant No. 4, the Bengal Breweries Ltd., is now in liquidation and it has not entered appearance to this appeal nor taken any steps to defend it. It appears to us that the added respondents were properly brought on ' record. The decision of this Court in Saila Bala Dassi vs Nirmala Sundari Dassi (1), supports that view. There it was held that an appeal is a proceeding within the meaning of section 146 of the Code and the right to file an appeal carried with it the right to continue an appeal which had been filed by the person under whom the appellant claimed and on this basis a purchaser from the appellant under a purchase made prior to the appeal was ' brought on the record of the appeal. We think that on the same principle the added respondents in the case before us were properly brought on the record. It is not in dispute that if the decree was once executed against defendant No. 4 in full, then it cannot be executed over again regarding premises No. 27. In other words, if possession had been fully delivered to the decree holders in. execution of the decree on October 1, 1948, the decree must have been wholly satisfied and nothing remains of it for enforcement by further execution. The decree was for khas possession and under Or. 21, r. 35, of this Code in execution of it possession of the property concerned had to be delivered to the decree holders, if necessary, by remov ing any person bound by the decree who refused to vacate the property. The records of the proceedings (1) ; 689 show that such possession was delivered. Defendant No. 4 was the party in possession and bound by the decree. With regard to defendant No. 4, the order made on September 8, 1949, states, " Possession so far as regards the Bengal Breweries are concerned, delivered. " This is an order binding on the decree holders. It has not been said that this order was wrong nor any attempt made at any time to have it set aside or to challenge its correctness in any manner. The same is the position with regard to the order of November 22, 1948, recording on the Nazir 's return that possession had been delivered in terms of the writ. The order of September 9, 1949, no doubt further ' states, " Ordered that the execution case be dismissed on part satisfaction ". The words " part satisfaction " in this order, however clearly do not refer to part satisfaction as against defendant No. 4, the Bengal Breweries, for the order expressly states, " possession so far as regards the Bengal Breweries are concerned, delivered. " The decree had therefore been satisfied in full as against the Bengal Breweries Ltd. and consequently as regards premises No. 27 in its possession. Even the learned Subordinate Judge who held the execution maintainable found that " the decree holders had no doubt previously got possession ". Notwith standing this, the learned Subordinate Judge decided that the decree could still be executed as he took the view that at the hearing before the High Court on January 21, 1949, defendant No. 4 " must have ignored the delivery of possession by the Naib Nazir and he cannot now be heard to say that the delivery of possession by the Naib Nazir was legal and valid ". For reasons to be stated later, we are unable to agree with this view. It is true that the Nazir 's return showed that defendant No. 4 had not been bodily removed. But the same return also shows that it had not been so removed because of certain arrangement arrived at between it and the decree holders and as the decree holders had not required the removal of defendant No. 4 from the premises. Now under Or. 21, r. 35 a person in possession and bound by the decree has to be removed 690 only if necessary, that is to say, if necessary to give the decree holder the possession he is entitled to and asks for. It would not be necessary to remove the person in possession if the decree holder does not want such removal. It is open to the ' decree holder to accept delivery of possession under that rule without actual removal of the person in possession. If he does that, then lie cannot later say that he has not been given that possession to which he was entitled under the law. This is what happened in this case. The decree holders in the present case, of their own accept ed delivery of possession with defendant No. 4 remaining on the premises with their permission. They granted a receipt acknowledging full delivery of possession. They permitted the execution case to be dismissed on September 8, 1949, on the basis that full possession had been delivered to them by defendant No. 4. The fact that they put their guards on the premises as mentioned in the Nazir 's return would also show that they had obtained full possession. It was open to the decree holders to accept such possession. Having once done so, they are bound to the position that the decree has been fully executed, from which it follows that it cannot be executed any more. In the case of Maharaja Jagadish Nath Roy vs Nafar Chandra Parmanik (1) an exactly similar thing bad happened and it was held that the decree was not capable of further execution. It was there said at p. 15, " The case, therefore, seems to me to be one of those cases in which a decree holder having armed himself with a decree for khas possession executes that decree in the first instance by obtaining symbolical possession only with some ulterior object of his own, and thereafter subsequently and as a second instalment asks for khas possession. The question is whether such a course is permissible under the law. I am of opinion that it is not ". We entirely agree with the view that was there expressed. The learned Solicitor General appearing for the appellants contended that the order of September 30, (1) 691 1948, shows that the decree holders bad undertaken to allow defendant No. 4 to carry on normal business for six weeks and therefore, on October 1, 1948, when they proceeded to execute the decree, they were not seeking to execute it in full by removing defendant No. 4 from possession. He said that the execution on October 1, 1948, was therefore not complete as defendant No. 4 had not been removed pursuant to the undertaking given on September 29, 1948. We are unable to read the order made on September 8, 1949, or the Nazir 's return and the receipt granted by the decree holders in a manner contrary to the plain meaning of the words used in them, because of the undertaking. Further, it is not the case of the decree holders that order, the Nazir 's return or the receipt is incorrect or had come into existence through any misapprehension. The legality or correctness of none of these was ever nor is now challenged. The order of September 8, 1949, is binding on the decree holders and they cannot now go behind its terms. For the same reason, neither can they go behind the order of November 22, 1948, recording in terms of the Nazir 's return that possession had been delivered. It further seems to us that if the undertaking meant that defendant No. 4, was not to be removed from possession, then the execution would have been stayed, which it was not, for the only way in which it was possible to execute the decree was by removal of defendant No. 4 from possession as it was alone in actual possession, the executor defendants claiming only rent from it as landlord. Then again the order in which the undertaking appears, also states that the stay of execution against defendant No. 4 as asked by it, was refused. Besides this, the order sheet shows that immediately after the order stating the undertaking had been made another order was made on the same day acknowledging receipt from the decree holders of the costs of the police for helping the execution and directing that the police might be approached to render any help necessary on October 1, 1948, at the time of the execution of the decree. The only possible way to reconcile all the various orders, the return 692 and the receipt, is to proceed on the basis that by the undertaking the decree holders agreed that after they had taken possession, they would allow defendant No. 4 to continue its business on the premises for six weeks with their permission. Such undertaking does not show that it was not intended to remove defendant No. 4 from possession. The learned Solicitor General also contended that the fact that the undertaking was confined only to a period of six wee s would show that the decree holders were not permitting defendant No. 4 to continue in possession after they had obtained possession from it, for then no period would have been mentioned. We are unable to accept this argument for there is nothing to prevent the decree holders after they had obtained possession under the decree, to grant permission to defendant No. 4 to continue in possession for any period they. liked; such permission could be for six weeks or for any longer or shorter period as the decree holders thought fit. The learned Solicitor General then contended that the case was one where the decree had been partly executed on one day and execution had been stopped on that day for want of time or other reason, with the object of continuing it on a subsequent day. In such a case, he said, there would be nothing to prevent subsequent execution of the same decree. It does not seem to us that the present case is of this nature. The orders and documents on the record are against this view. The further execution is not in the course of the earlier execution but is a fresh execution. The interruption in the execution was for over two years. Apart from other things, the placing of their own guards on the premises by the decree holders could only be on the basis that they had taken possession. The learned Solicitor General said that the guards had been put there with the permission of defendant No. 4. The Nazir 's return is entirely against such a view. Indeed, it is difficult to see why defendant No. 4 would permit the decree holders ' guards on the premises unless it was on the basis that possession had been taken by the decree holders and the guards 693 were there to protect their possession. The guards were subsequently removed but it does not appear, from the records. in what circumstances they were ' removed. Nor do we think that the order of October 1, 1948, assists the decree holders. That order directed the writ to be recalled provisionally. The order was wholly infructuous for the writ had earlier been duly executed. The learned Subordinate Judge himself came to that finding. as we have said, is also clear from the records of the execution case. The writ could not be recalled after it had been 'executed fully. Nor does the order establish that the decree had been executed in part only. The writ was not in fact recalled before the decree had been executed in full. The order of September 8, 1949, makes it impossible to hold that the writ was recalled after it had been executed in part only. The other argument advanced by the learned Solicitor General was based on the order of the High Court dated January 21, 1949. It was said that order indicated that the decree had not been executed by removing defendant No. 4 from possession because it, in substance, was an order for a stay of execution of the decree. It was also said that the order must have been on the basis of a representation by defendant No. 4 and a finding that the decree had not been executed by removing defendant No. 4 from possession. The contention was that finding and representation was binding on defendant No. 4 and therefore on the added respondents and further that having obtained the order on the basis that it had not been ousted from possession in execution, defendant No. 4 and hence the added respondents, could not be permitted to approbate and reprobate that position and now be heard to say that the decree had been executed in full. We think that both these contentions are ill founded. The order is far from clear. We have already pointed out that there is nothing in it to show that defendant No. 4 had asked for any stay. Defendant No. 4 had not appealed from the decree. It was not 694 entitled to a stay of the execution of the decree. It was in possession of the premises with the permission of the decree holders. The permission had initially been for six weeks which period had expire was executor defendants who had obtained an ad interim stay from the High Court on October 1, 1948. This order was infructuous because forty five minutes prior to the time that it was made, the decree had been executed in full. In those circumstances the Court on January 21, 1949, may be at the request of defendant No. 4, gave it three months ' time to vacate the premises. The request, if any, by defendant No. 4 does not involve a representation that the decree had not been executed in full. It may, at most, mean that the six weeks ' permission initially granted by the decreeholders might be further extended. With regard. to the other contention, namely, that the order of January 21, 1949, amounted to a finding that the decree had not been executed in full, we have to point out that no such finding appears on the face of it. The order was made on an interlocutory proceeding and was only in aid of the final decision in the appeal. The proceeding in which the order was made did not involve a decision of the issue whether the decree had earlier been executed in full. No finding on such an issue can therefore be implied in the order. This order does not in our view in any way prevent the added respondents from contending that the decree had been executed in full. In the result this appeal fails and it is dismissed. We do not think it fit to make any order as to costs. Appeal dismissed. [/INST] The appellant decree holders in an execution proceeding accepted delivery of possession and granted a receipt to the Nazir of the Court acknowledging full delivery of possession to them but allowed the respondents, Bengal Breweries, to remain in possession with their permission. The appellant also permitted the execution case to be dismissed on the basis that full possession had been delivered to them by the respondents. Sometime thereafter the appellant made a fresh application for execution against the respondent, for eviction which was resisted under section 47 of the Civil Procedure Code alleging that so far as they were concerned, the decree had been fully executed as a result of the earlier execution proceeding which had terminated, and that further execution was not permissible in law. Held, that it is open to the decree holder to accept delivery of possession under 0. 21, r. 35, of the Code of Civil Procedure without actual removal of the person in possession. If he does that then he is bound to the position that the decree has been fully executed, and it cannot be executed any more. Held, further, that on the principle in Saila Bala Dassi vs 681 Nirmala Sundari Dassi whereby the purchaser from the appel lant under a purchase made prior to the appeal was brought on the record of the appeal, a purchaser from the respondent under a conveyance made prior to the appeal could be brought on the record of the appeal. Saila Bala Dassi vs Nirmala Sundari Dassi, [1958] S.C.R. 1287, followed, Maharaja Jagadish Nath Roy vs Nafay Chandra Paramanik, , approved. </s>

<s>[INST] Summarize the following judgement: 125 of 1959. Petition under Article 32 of the Constitution of India for enforcement of Fundamental Rights. G.S. Pathak, A. P. Sen and J. B. Dadachanji, for the Petitioners. H. J. Umrigar and T. M. Sen, for the Respondents. September 20. The Judgment of the Court was delivered by DAs GUPTA J. In this petition under article 32 of the Constitution the petitioner, a partnership firm carrying on the business of manufacture of bidis and having its head office at Jabalpur within the State of Madhya Pradesh complain that its fundamental rights under article 19(1)(f) and (g) of the Constitution have been violated by the illegal imposition of a purchase tax on certain purchases of tobacco made by it in the State of Bombay. It appears that the Sales Tax Officer, Baroda, made an order assessing the petitioner to a purchase tax under section 14, sub section (6), of the Bombay Sales Tax Act, 1953 (Bom. Act III of 1953) for the period April 1, 1954 to September 29, 1955. The petitioner contends that this assessment was illegal inasmuch as these transactions are purchases " outside the State of Bombay " within the meaning of article 286(1)(a) of the Constitution read with the Explanation and also because these transactions took place in the course of inter State trade and commerce within the meaning of article 286(2) of the Cons titution. It was also urged that the provisions of the Bombay Sales Tax Act, 1953, do not authorise the imposition, levy or collection of any purchase tax on the transactions in question. In appears that against this assessment order made by the Sales Tax Officer on October 18, 1955, the petitioner preferred an appeal to the Assistant Collector of Sales Tax. This officer set aside the order of the Sales Tax Officer imposing a penalty under section 16(4) but dismissed the appeal against the order of assessment to tax. The order in appeal was made on 91 712 November 26, 1957. The present petition was. filed on August 4, 1958, praying for a writ in the nature of mandamus or any other appropriate direction or order against the respondents The State of Bombay, The Collector of Sales Tax, State of Bombay The Sales Tax Officer, Baroda and the Assistant Collector of Sales Tax, Northern Division, Range III, Baroda preventing them from enforcing the provisions of the Bombay Sales Tax Act against the petitioner on the transactions in question, for a writ in the nature of certiorari for quashing the proceedings taken against the petitioner and the orders of assessment made by the Sales Tax Officer and the order in appeal by the Assistant Collector of Sales Tax and for a declaration that the Act does not authorise the imposition, levy or collection of tax on the transactions in question. It will be convenient to consider first the petitioner 's contention that the Bombay Sales Tax Act, 1953, does not authorise the imposition of a tax on the purchase of bidi tobacco. The relevant portion of section 10(1) which provides for the levy of a purchase tax is in these words : "there shall be levied a purchase tax on the turnover of purchase of goods specified in column 1 of Schedule B at the rates, if any specified against such goods in column 4 of the said schedule. ." The petitioner 's contention is that bidi tobacco which was purchased by it is not one of the goods specified in Column 4 of the said schedule. Turing to Schedule B we find there are 80 entries in the first column. Against each of these entries the second column of the schedule mentions the rates of sales tax leviable under section 8 of the Act: the third column mentions the rate of general sales tax leviable under section 9, while the fourth column which is the last, column men tions the rate of purchase tax. While the entries from 1 to 79 mention specific articles, entry 80 as it stood before its amendment in 1957 was in these words: " All goods other than those specified from time to time in Schedule A and in the preceding entries." (An amendment by the Bombay Act, 71 of 713 1958, added the words " and sec. 7A " after the words " Schedule A "). The question is whether these words "all goods other than those specified from time to time in Schedule A and in the preceding entries " amount to a specification of goods for the purpose of section 10. On behalf of the petitioner Mr. Pathak contends that only the mention of specific goods can amount to specification and mention of goods in such general language as " all goods other than those specified from time to time in Schedule A and in the preceding entries " cannot be said to be a specification of goods. We are unable to accept this argument. While it is true that mention of specific goods is specification for the purpose of section 10 as also for the purpose of sections 8 and 9 of the Act, we see no reason to think that mention of goods in a general way as " all goods other than those specified from time to time in Schedule A and in the preceding entries " of Schedule B itself is not a specification. We are of opinion that the entry 80 in Schedule B is a specification of goods within the meaning of section 10 and as bidi tobacco which the petitioner purchased is not within either Schedule A or any of the earlier entries in Schedule B, purchase tax under section 10 is leviable on these purchases, at the rate mentioned against Entry 80. This brings us to the petitioner 's main contention that the purchases took place outside the State of Bombay. The contention as stated in para. 11 of the petition is that the purchases would be. deemed to have taken place in the State of Madhya Pradesh, where the tobacco was delivered for consumption. At the hearing, however, it was not disputed that the tobacco was delivered to the Company 's Ranoli Branch within the State of Bombay which made the purchase. The despatch by the Ranoli Branch to the company 's head office at Jabalpur is not a delivery as a direct result of the sale. It has been urged however that even though there was delivery in Bombay State, that delivery was not for the purpose of consumption within Bombay State; and so, the Explanation to article 286 (1)(a) does not come into operation. 714 The sales tax authorities have proceeded on the basis that as a direct result of the purchase goods were delivered in the State of Bombay for the purpose of consumption in the State of Bombay. Unless that view is shown to be wrong, the purchase must be held to have taken place within the State of Bombay and it will be unnecessary to consider the larger question whether even if the Explanation be not applicable, Bombay State is entitled to tax. The definite case of the petitioner is that the purchased tobacco is delivered to it within the State of Bombay as a direct result of the purchase. The further question that has been raised is whether such delivery was for the purpose of consumption in the State of Bombay. On behalf of the petitioner it was contended that after its delivery, the tobacco was intended to be sent to the State of Madhya Pradesh to be manufactured into bidis at that place. All that used to be done to the purchased tobacco in the State of Bombay was to have the stems and dust removed from the tobacco. Such removal of the waste material, like stems and earth, it is urged, does not amount to consumption of tobacco. It is further stated that the tobacco which is despatched to the head office after removal of the waste material is not an article Cc commercially different " from the tobacco purchased from the cultivators. In the respondents ' counter affidavit it is stated that " the petitioners after purchasing raw tobacco from the cultivators in the State of Bombay, subject the raw tobacco so purchased to process leading to its conversion into bidi pattis for immediate use in the manufacture of bidis. . . that marketable value of raw tobacco and bidi pattis differs and that both these are commercially different articles. . . There was no further affidavit filed on behalf of the petitioner to traverse the averments of the respondents that the raw tobacco is con verted into bidi patti before it is despatched outside Bombay State and that the market value of raw tobacco and bidi patti differs. Mr. Pathak also con. ceded at the hearing the correctness of the statement that anybody could go to the market to purchase the 715 article known as raw tobacco or Akho Bhuko and that he could also go and purchase from the market the article known as " bidi Patti ". That itself is sufficient proof that raw tobacco and bidi Patti are distinct and different commercial articles. It is in the background of these facts that we have to consider the question whether tobacco was delivered in the State of Bombay for consumption in that State. In answering that question it is unnecessary and indeed inexpedient to attempt an exhaustive definition of the word " consumption " as used in the explanation to article 286 of the Constitution. The act, of consumption with which people are most familiar occurs when they eat, or drink or smoke. Thus, we speak of people consuming bread, or fish or meat or vegetables, when they eat these articles of food; we speak of people Consuming tea or coffee or water or wine, when they drink these articles; we speak of people consuming cigars or cigarettes or bidis, when they smoke these. The production of wealth, as economists put it, consists in the creation of " utilities ". Consumption consists in the act of taking such advantage of the commodities and services produced as constitutes the " utilization " thereof. For each commo dity, there is ordinarily what is generally considered to be the final act of consumption. For some commodities, there may be even more than one kind of final consumption. Thus grapes may be " finally consumed " by eating them as fruits; they may also be consumed by drinking the wine prepared from " grapes ". Again, the final act of consumption may in some cases be spread over a considerable period of time. Books, articles of furniture, paintings may be mentioned as examples. It may even happen in such cases, that after one consumer has performed part of the final act of consumption, another portion of ' the final act of consumption may be performed by his heir or successor in interest, a transferee, or even one who has obtained possession by wrongful means. But the fact that there is for each commodity what may be Considered ordinarily to be the final act of consumption, should not make us forget that in reaching 716 the stage at which this final act of consumption takes place the commodity may pass through different stages of production and for such different stages, there would exist one or more intermediate acts of consumption. Thus, the final act of consumption of cotton may be considered to be the use as wearing apparel of the cloth produced from it. But before cotton has become a wearing apparel, it passes, through the hands of different producers, each of whom adds some utility to the commodity received by him. There 'is first the act of ginning ; ginned cotton is spun into yarn by the spinner; the spun yarn is woven into cloth by the weaver; the woven cloth is made into wearing apparel by the tailor. At each of these stages distinct utilities are produced and what is produced is at the next stage consumed. It is usual, and correct to speak of raw cotton being con sumed in ginning; of ginned cotton being consumed in spinning; of spun yarn being consumed in weaving; of woven cloth being consumed in the making of wearing apparel. The final product the wearing apparel is ultimately consumed by men, women and children in using it a; dress. In the absence of any words to limit the connotation of the word " consumption " to the final act of Consumption, it will be proper to think that the Constitution makers used the word to connote any kind of user which is ordinarily spoken of as consumption of the particular commodity. Reverting to the instance of cotton, mentioned above, it will be proper to hold that when raw cotton is delivered in State A for being ginned in that State. , it is delivered for consumption in State A ; when ginned cotton is delivered in State B for being spun into yarn, it is delivered for consumption in State B ; when yarn is delivered in State C for being woven into cloth in that State, it is delivered for consumption in State C; when woven cloth is delivered in State D for being made by tailor in that State into wearing apparel, there is delivery of cloth for consumption in State D; and finally when, wearing apparel is delivered in State E for being sold as dress 717 in that State, it is delivery of wearing apparel for con sumption in State E. Except at the final stage of consumption which consists in using the finished commodity as an article of clothing, there will be noticed at each stage of production the bringing into existence of a commercial commodity different from what was received by the producers. This conversion of a commodity into a different commercial commodity by subjecting it to some processing, is consumption with. in the meaning of the Explanation to article 286 no less than the final act of user when no distinct commodity is being brought into existence but what was brought into existence is being used up. At one stage of the argument what Mr. Pathak appeared to insist was that there must be destruction of the substance of the thing before the thing can be said to be consumed. That takes us nowhere, because we have still to find out what is meant by destruction of the substance. It may well be said that when a commodity is converted into a commercially different commodity its former identity is destroyed and so there is destruction of the substance, to satisfy the test suggested by the learned counsel. We think it unnecessary however to enter into a discussion of what amounts to " destruction " as even without deciding, whether there was destruction or not, we think it proper and reasonable to say that whenever a commodity is so dealt with as to change it into another commercial commodity there is consumption of the first commodity within the meaning of the Explanation to article 286. This aspect of consumption was pointed out by Das, J. (as he then was), in State of Travancore Cochin vs Shanmugha Vilas Cashew Nut Factory (1) at p. 113 of the Report. The purchase there was of raw cashew nuts. Discussing the question whether the delivery of these nuts in Travancore was for the purpose of consumption in that State, Das, J., observed: " The raw cashew nuts, after they reach the respondents, are put through a process and new articles of commerce, namely, cashew nut oil and edible cashew nut kernels, are obtained. It follows, (1) [1954) S.C.R. 53. 718 therefore, that the raw cashew nut is consumed by the respondents in the sense I have mentioned". Das, J., here proceeded on the view that using a commodity so as to turn it into a different commercial article amounts to consumption, within the meaning of the Explanation to article 286(1) (a) a view which he had earlier indicated at p. 110 of the Report. We are not aware of any case where such use of a commodity has been held not to amount to consumption. It must therefore be held on the facts of this case that when tobacco was delivered in the State of Bombay for the purpose of changing it into a commercially different article, viz., bidi patti the delivery was for the purpose of consumption. The purchases in this case therefore fall within the meaning of Explanation to article 286(1)(a) and must be held to have taken place inside the State of Bombay. There remains for consideration the objection that the transactions took place in the course of inter State trade or commerce within the. meaning of article 286(2) of the Constitution and the levy of tax was therefore prohibited by the provisions thereof. Even if these transactions were in the course of inter State trade, the bar of article 286(2) of the Constitution stands removed by the Sales Tax Laws Validation Act, for the entire period upto September 6, 1955. The levy of tax for the period September 7, 1955, to September 29, 1955, would be illegal if these transactions are in the course of inter State trade. The petitioner 's counsel however informed us that he did not want a decision on his question and would not, in this case, press his objection under article 286(2). It is unnecessary for us therefore to decide whether the transactions in question took place in the course of interState trade or commerce within the meaning of article 286(2) of the Constitution. As the petitioner has failed to establish any, violation of its fundamental right, the petition is dismissed with costs. Petition dismissed. [/INST] The petitioner Company carrying on the business of manu facturing bidis and having its head office at Jabalpur in the State of Madhya Pradesh made certain purchases of tobacco in the State of Bombay. The Sales Tax Officer assessed the petitioner to a purchase tax under the provisions of the Bombay Sales Tax Act, 1953. The petitioner contested the assessment of 710 purchase tax on the grounds that those transactions and pur chases were " Outside the State of Bombay " within the meaning of article 286(1)(a) of the Constitution read with the Explanation, that the provisions of the Bombay Sales Tax Act, 1953, did not authorise the imposition, levy or collection of any purchase tax on the transactions in question and that the transactions took place in the course of inter State trade and commerce. The petitioner 's appeal to the Assistant Collector of Sales Tax was dismissed and then the present petition for writs of mandamus and certiorari was filed in the Supreme Court. The petitioner contended that the Bombay Sales Tax Act, 1953, did not authorise the imposition of a tax on the purchase of bidi tobacco which was not one of the goods specified in column 4 of Schedule B of the said Act. The petitioner further contended that the purchased tobacco was delivered to it within the State of Bombay as a direct result of the purchase but it was intended to be sent to the State of Madhya Pradesh to be manufactured into bidis at that place. The only thing which was done in the Bombay State was to remove the stem and dust from the tobacco which process did neither amount to " consumption " of tobacco as contemplated under the Explanation to article 286 of the Constitution nor did it convert the tobacco which was sent to the Head Office into an article " commercially different " from the tobacco purchased from the cultivators. In their counter affidavit the respondents averred that the raw tobacco was converted into bidi pattis before it was sent outside Bombay State both of which were commercially different articles and the market value of which was also different. These averments were not controverted by the petitioner. Held, that the words " all goods other than those specified from time to time in Schedule A and in the preceding entries " in entry 8o of Schedule B of the Bombay Sales Tax Act, 1953, amounted to a specification of goods for the purposes of section lo of the Act and as bidi tobacco purchased by the petitioner was not within Schedule A or any of the earlier entries in Schedule B purchase tax at the rate mentioned against entry 8o was leviable under section 1o of the Act. Whenever a commodity was so dealt with as to change it into another commercial commodity there was consumption of the first commodity within the meaning of the Explanation to article 286 of the Constitution. State of Travancore Cochin vs Shanmugha Vilas Cashew Nut Factory, ; , followed. The delivery of tobacco in Bombay State for changing it into bidi patti which is a commercially different article amount ed to delivery for the purpose of consumption and the purchase fell within the meaning of article 286(i)(a) of the Constitution and took place inside tile Bombay State. </s>

<s>[INST] Summarize the following judgement: Appeal No. 24 of 1956. Appeal by special leave from the judgment and order dated March 31, 1954, of the former Madhya Bharat High Court in Civil Revision No. 183 of 1952. I. M. Lal and A. G. Ratnaparkhi, for the appellant. Rameshwar Nath and section N. Andley, for the respondent. September 12. The Judgment of the Court was delivered by KAPUR J. This is an appeal against the judgment and order of the High Court of Madhya Bharat at Gwalior and arises out of proceedings between a landlord and his tenant taken under the Accommodation 666 Control Act (XV of 1950) which, for the sake of brevity, will be termed the Act. On March 14,1948, the appellant took two houses in Morar from the respondent at a monthly rental of Rs. 80 plus other charges at Rs. 5 per month. On October 20, 1948, the appellant brought a suit for fixation of rent in the court of the Cantonment Magistrate at Morar under the provisions of Accommodation Control Ordinance (Ordinance XX of 2004 section). The Act was passed on January 25, 1950, and came into force on February 10, 1950. Because of the passing of the Act the plaint was returned on March 20, 1950, for want of jurisdiction. Thereupon on April 28, 1950, the appellant filed the suit before the Rent Controller out of which this appeal has arisen. In the suit he prayed for the fixation of fair rent at Rs. 20 per month. The respondent pleaded inter alia that the suit could not be instituted before the Rent Controller and that the suit was incompetent because no notice under section 7(2) of the Act had been given. Both the pleas of the respondent were overruled and the Rent Controller held that the notice which the appellant had given prior to the institution of the first suit was a proper notice and he decreed the suit and fixed the fair rent at Rs. 483 per annum. The respondent took an appeal to the District Judge who upheld the order of the Rent Controller but the question of notice under section 7 was not raised in that court. The respondent then filed a Revision Petition in the High Court under section 115 of the Code of Civil Procedure and under article 227 of the Constitution. The High Court held that notice under section 7 was a condition precedent to the institution of the suit; that as no such notice was given the Rent Controller had no jurisdiction to make the order. The High Court also held that the Rent Controller had passed a decree which operated retrospectively from the date of the execution of the lease deed which the Controller had no authority to decree. It was further held that the original suit was properly instituted in the civil court and the passing of the Act did not take away the jurisdiction of that court and therefore the civil court should not have returned the plaint of the appellant. 667 The principal question for decision is whether a suit could be instituted without a fresh notice because of section 7(2) of the Act ? That section provides: "Where no rent for any such accommodation has been agreed upon or where the landlord wishes to enhance, or the tenant wishes to reduce the rent agreed upon, the landlord or the tenant, as the case may be, by giving notice in writing to the other party shall proceed for having the rent fixed under subsection (4) All that this section contemplates is that a notice should be given. There are no words which make it obligatory that the notice should be issued in terms as under the Act and be given after the Act came into force nor has it prescribed any particular form. The trial court held that a proper notice had been given and therefore section 7 was applicable. No such question was raised in appeal before the District Judge ' and therefore it was not adjudicated upon. The question however was raised before the High Court. In our opinion it cannot be said that the notice which was given by the appellant was not a proper notice nor does the section mean, as contended by the respondent, that the notice had to be given as under and after the Act came into force. As we have said above it is significant that this point was never taken before the District Judge. Lastly the High Court held that the plaint should not have been returned by the civil court because the suit for fixation of fair rent related also to a period prior to the Act. Fairly construed the order of the Rent Controller does not operate retrospectively from the date of the beginning of the lease but appears to us to be prospective and after the coming into operation of the Act the jurisdiction was vested in the Rent Controller and not in the civil court. This point therefore has no substance. In the result this appeal is allowed and the judgment and order of the High Court are set aside and that of the trial court restored. The appellant will have his costs throughout. Appeal allowed. [/INST] The appellant, after due notice to the respondent, had filed a suit for fixation of rent under the provisions of the Accommodation Control Ordinance Madhya Bharat. In the meantime the Accommodation Control Act (M. P. 15 of 1950) came into force and the plaint filed by the appellant was returned. The appellant without serving a second notice filed a fresh suit under the Act,, which was decreed. The respondent contended that a suit could not be instituted under the Act without a fresh notice, because of section 7(2) of the Act. Held, that section 7(2) of the Accommodation Control Act (M. P. 15 of 1950) contemplates that a notice should be given but there are no words in the section which made it obligatory that the notice should be issued in terms as under the Act and be given after the Act came into force. In the instant case it cannot be said that the notice which was given by the appellant was not a proper notice. </s>

<s>[INST] Summarize the following judgement: Appeal No. 394 of 1960. Appeal from the judgment and order dated April 19, 1960, of the Assam High Court in Civil Rule No. 69/1959. C.K. Daphtary, Solicitor General of India, A. V. Viswanatha Sastri, Narendra Kumar Lahiri and R. Gopalakrishnan, for the appellant. N.C. Chatterjee and D. N. Mukherjee, for respondent No. 1. Naunit Lal, for respondent No. 2. 1960. September 20. The Judgment of Sinha, C. J., Kapur, Gajendragadkar and Wanchoo, JJ., was delivered by Wanchoo, J. Subba Rao, J., delivered a separate Judgment. WANCHOO J. This appeal, on a certificate granted under article 132 (1) of the Constitution by the Assam High Court, raises questions regarding the interpretation of certain provisions of the Sixth Schedule of the Constitution. A writ petition was filed by U. Jormanik Siem (hereinafter called the respondent) in the Assam High Court against the Chief Executive Member of the District Council (hereinafter called the appellant). United Khasi and Jaintia Hills District (hereinafter called the District). The case of the respondent was that he was Siem of Mylliem siemship in the District and was elected as such by the Myntries and the people according to custom in 1951. After the constitution of the District Council for the District, in 752 June 1952, the siemship was brought under it and the respondent continued to discharge the administrative and judicial functions, for which be was remunerated by a share of the gross income of the siemship. The Siem once appointed could not be removed from his office except through a referendum of the people according to custom until such custom was changed by legislation passed by the District Council with the concurrence of the Governor. No such legislation had however been passed till the writ petition was made on July 8, 1959. But on account of political differences between the respondent and the then Chief Executive Member an attempt was made after the General Elections of 1957 to harm the respondent. In consequence certain charges were levelled against the respondent and a Durbar was called by the appellant for July 6, 1959, and the respondent was asked to be present at the Durbar to defend himself. It is not clear whether the Durbar was held or Dot, but an order was issued on July 7, 1959, by the appellant in which it was said that the charges against the respondent had been forwarded to him and he had been given an opportunity to show cause on or before July 17, 1959, why he should not be removed from his office and that he had failed to appear before the appellant on July 7 as ordered. Therefore, the respondent was suspended from his office from July 8, 1959, and was required to make over charge to the acting Siem on the same day. The respondent however filed the writ petition on July 8, 1959, which was admitted the same day and notice was issued to the appellant to show cause why the writ should not be granted. The High Court also passed an order staying the operation of the order of the appellant dated July 7, 1959. The respondent contended that be could not be removed from his office or suspended by the Executive Committee of the District Council and that the order of the appellant suspending him was illegal and ultra vires being against custom and usage relating to that matter. Further the order of the appellant was without jurisdiction as it was passed without the approval of the District Council and there was no emergency 753 justifying the order. The order was also mala fide and was due to political animosity between the respondent and the Executive Committee. The petition was opposed on behalf of the appellant, and its main contention was that the Siem was nominated by an electoral college consisting of the representatives of several , clans and that the people in general had nothing to do with it and that the nomination of the Siem by the electoral college was subject to approval of the Government. In accordance with that custom, the respondent 's nomination by the Myntri electors to the siemship of Mylliem was approved by the Government and he was appointed to the office of Siem subject to confirmation by the District Council when that body came into existence. After the District Council was constituted in 1952, it approved the provisional appointment made by the Government and confirmed it on certain terms mentioned in the letter of April 9,1953. Later these terms were modified by the District Council in certain particulars by letter dated August 9, 1955, and the respondent had been working as Siem by virtue of this confirmation by the District Council on the terms conveyed to him in the two letters mentioned above. There was no custom which required a referendum of the people before the Siem of Mylliem could be removed from office. On the other hand, the Siem being appointed by the Government formerly and now by the District Council was liable to removal and or suspension by the appointing authority in case he did not act in accordance with the terms of his appointment and was guilty of oppression, misconduct or dereliction of duty. The charge of political animosity against the then Chief Executive Member was denied and attention was drawn to the respondent 's conduct in the discharge of his duties which showed that he was unfit to hold the office of Siem; consequently an order was passed on July 7, 1959, suspending him and the order was legal, intra vires and in keeping with custom and usage of the land and it was not necessary to obtain the approval of the District Council to the passing of that order which was in accordance with 754 the terms of appointment of the respondent. Further the Executive Committee, considering all the circumstances of the case, was of the opinion that the matter was of emergency and therefore took action without getting the order approved by the District Council. The High Court did not go into the question whether there was any custom by which the Siem could be removed only by a referendum. It held that after the coming into force of the Constitution, the Khasi States lost all existence as separate entities except in so far as their existence or authority was preserved by the Constitution. It also held that the respondent was appointed to the office of Siem by the Deputy Commissioner on behalf of the Government with due regard to the nomination made by the Myntri electors and this appointment was subject to confirmation by the District Council when that body was constituted and that in fact the District Council confirmed the appointment on April 9, 1953, on certain terms which were revised in 1955. It also held that the administration of the District vested in the District Council; but it was of the view that the appointment and succession of Sims were never intended to be its administrative function and therefore the District Council could only act in this matter by making law with the assent of the Governor and not by passing orders in exercise of its administrative functions. Therefore the power to appoint, even if it included the power to dismiss, could be exercised by the District Council only by means of proper legislation. In the result, the High Court allowed the petition and directed that the order of July 7, 1959, should not be given effect to as it was not supported by law. Thereupon the appellant applied for and obtained a certificate from the High Court under article 132 of the Constitution; and that is how the matter has come up before us. Before we deal with the main point on the basis of which the writ filed by the respondent in the High Court has succeeded, it will be useful to consider what the position of the Chiefs in the former Khasi States was before 1947 and how that position was affected 755 by the coming into force of the Constitution in 1950. It appears that before 1947 there were twenty five such Chiefs who had however very limited powers. In some of the States, the succession appears to have been hereditary; but in most of them the Chief by whatever name he was known was elected either by what was equivalent to an electoral college or by the people generally, the election in many cases being confined to members of certain families known as the Chief 's families. But whether the succession was hereditary or the Chief was elected by the electoral college or by the people, the recognition of the British Government through the Crown representative was necessary before the Chief could exercise any powers and this was conveyed by means of sands granted to the Chief. It further appears that the British Govern ment through the Crown representative as paramount power, reserved to itself the right to remove the Chief in case of oppression, misconduct or dereliction of duty, though before taking such action the prevalent custom in the particular State regarding the ascertainment of the wishes of the electoral college or the people was followed. The Chiefs were also under the control of the Deputy Commissioner of the district. This was the position upto the 15th of August, 1947, when India became a Dominion. Thereafter the paramountly of the British Government lapsed and it appears that the twenty five Chiefs established a Federation. Thereafter a new relationship was established between these twenty five Chiefs and the Government of India by means of an Instrument of Accession which was accepted by the Governor General of India on August 17, 1948. By this Instrument, the Chiefs individually as well as collectively as members of the Federation acceded to the Dominion of India by which all existing administrative arrangements between the Government of India and the State of Assam on the one hand and the Khasi States on the other were to continue in force until new or modified arrangements were made subject to certain exceptions as to judicial and administrative powers. It is not necessary to set out these exceptions 756 except that so far as administrative powers were concerned, only excise, forests, land and water rights and the revenue derived therefrom were excepted and all the remaining functions were to be common with the Central or State Government. Further in the matter of legislation, the Dominion Legislature and the Assam Legislature had the power to pass laws concerning subjects of common interest with the proviso that some machinery should be devised for representation in the Assam legislature. This position continued till the Constitution came into force. There was no merger as such of the twenty five Khasi States in India before January 26, 1950. But the Constitution, by the First Schedule in which the territories of the State of Assam were defined, merged the Khasi States into the State of Assam, as that State was to consist of the territories which immediately before the commencement of the Constitution were comprised in the Province of Assam, the Khasi States and the Assam Tribal Areas but excluding the territories specified in the Schedule to the Assam (Alteration of Boundaries) Act, 1951. Thus by the Constitution the Khasi States were merged in the State of Assam and any power of the Chiefs so far as administration was concerned came to end. By article 244(2) of the Constitution, however, special provisions contained in the Sixth Schedule thereof were to apply to the administration of the Tribal Areas in the State of Assam. The position therefore after the Coming into force of the Constitution was that the Chiefs lost whatever ruling or administrative powers they had by the merger of these twenty five States in Assam and the governance of these States was to be carried on according to the provisions of the Sixth Schedule. This brings us to the Sixth Schedule, and we may refer briefly to the provisions contained therein with respect to the administration of the tribal areas in Assam. By paras. 1 and 20 the whole tribal area is divided into autonomous districts and two other areas. Autonomous districts can in turn be divided into autonomous regions. Paragraphs 2 to 17 deal 757 with the administration of autonomous districts and autonomous regions, while para. 18 provides for the application by the Governor of the provisions of paras. 2 to 17 to the other two areas specified in para. Paragraph 19 deals with transitional provisions and para. 21 with the amendment of the Schedule. It may be mentioned that the United Khasi and Jaintia Hills District with which we are concerned in this case is to comprise the territories which before the commencement of the Constitution were known as the Khasi States and the Khasi and Jaintia Hills Districts, excluding certain areas within the cantonment and municipality of Shillong. District Councils and Regional Councils are to be constituted under para. 2 and the Governor is given power to make rules for the first constitution of District Councils and Regional Councils in consultation with the existing tribal councils and other representative tribal organisations within the districts or regions concerned and the rules are to provide for the composition of the councils, the delimitation of territorial constituencies, the qualifications for voting at elections and the preparation of electoral rolls, the qualifications for being elected as members of councils, the term of office of the members and any other matter relating to or connected with elections or nominations to such councils, the procedure and conduct of business in the councils, and the appointment of officers and staff of the councils. These very powers were conferred on the District or Regional Council after it came into being along with certain other powers for the formation of local Councils or Boards and their procedure and the conduct of business, and generally all matters relating to the transaction of business pertaining to the administration of the district or region, as the case may be. Further para. 2(4) provides that the administration of autonomous district shall, in so far as it is not vested under this Schedule in any Regional Council within such district, be vested in the District Council for such district and the administration of an autonomous region shall be vested in the 97 758 Regional Council for such region. Paragraph 3 gives power to the District and Regional Councils to make laws with respect to various matters including the appointment or succession of Chiefs or Headmen, subject to such laws being submitted to the Governor without whose assent they are not to come into force. Paragraphs 4 and 5 deal with administration of justice. Paragraph 6 gives powers to the District Council to establish, construct or manage primary schools, dispensaries, markets, cattle pounds, ferries, fisheries, roads and waterways. Paragraphs 7, 8 and 9 deal with financial matters. Paragraph 10 gives power to the District Councils to make regulations for the control of money lending and trading by nontribals, which are to come into force on the assent of the Governor. Paragraph 11 provides for publication of laws, rules and regulations made under the Schedule. Paragraph 12 deals with the application of Acts of Parliament and the Legislature of the State to autonomous districts and autonomous regions. Paragraph 13 deals with the budget while para. 14 provides for the appointment of a commission by the Governor at any time to inquire into and report on the administration of autonomous districts and autonomous regions. Paragraph 15 gives power to the Governor to annul or suspend any Act or regulation of District and Regional Councils under certain contingencies and also gives him power to suspend the Council and assume all or any of its powers to himself subject to such order being placed before the Assam legislature. Paragraph 16 gives power to the Governor to dissolve a District or Regional Council on the recommendation of the Commission appointed under para. 14 and order a fresh election and in the meantime to assume the administration of the area to himself subject to the previous approval of the Assam legislature. Paragraph 17 deals with the forming of constituencies for the Assam Legislative Assembly. Then we come to para. 19, which deals with transitional provisions and lays down that as soon as possible after the commencement of the Constitution, the Governor shall take steps for the constitution of 759 a District Council for each autonomous district in the State under the Schedule and until a District Council is so constituted for an autonomous district, the administration of such district shall be vested in the Governor. It also provides that no Act of Parliament or of the Assam legislature shall apply to any area unless the Governor by Public notification so directs and the Governor in giving such direction with respect to any Act may direct that the Act shall in its application to the area or to any specified part thereof, have effect subject to such exceptions or modifications as he thinks fit. The Governor is also given power to make regulations for the peace and good government of any area and any regulation so made may repeal or amend any Act of Parliament or of the Assam legislature or any existing law which is for the time being applicable to such area. The power to make regulations is subject to the assent by the President. It will thus be seen from the scheme of the Sixth Schedule that the District Council is both an administrative as well as a legislative body. Further all the administrative and Legislative powers were vested in the Governor by para. 19 till the District Councils were constituted. The Governor framed Rules under para. 2 (6) in 1951 called the Assam Autonomous Districts (Constitution of District Councils) Rules, 1951. The Rules provide inter alia for an Executive Committee with the Chief Executive Member as the head and two other members to exercise the executive functions of the District Council. The Rules also specify the matters which are excepted from the purview of the Executive Committee, though in an emergency, the Executive Committee of some of the autonomous districts is authorised to take such action with respect to excepted matters as might be necessary ; but every such case has to be laid before the District Council at its next session. In pursuance of these Rules, the District Council for the District came into being from June 1952. We have already observed that the administrative powers of the Chiefs as they existed before January 760 26, 1950, came to an end with the coming into force of the Constitution and during the transitional period all administrative powers vested in the Governor which could be exercised by those appointed by him under his powers under para. 19 of the Sixth Schedule. It is in this background that we have to consider the notification of March 6, 1951. That notification notified for the general information of the subjects of Mylliem Siemship that Government after careful consideration of the nomination made by the Myntri electors of the successor to the Siemship of Mylliem and also of the objections to this nomination, had appointed the respondent as Siem of Mylliem in place of late U. Sati Raja subject to confirmation by the District Council when that body was constituted. It was also notified that the respondent had taken over charge of the Siemship with effect from March 5, 1951. It is clear from what we have said above that the Myntri electors in this particular case used to elect a person and their election amounted to a nomination of that person for the approval of the Governor to the Siemship of Mylliem; but until the Governor approved of the nomination and appointed the person so nominated to the Siemship he could not hold office as Siem of Alylliem. The position therefore just after the coming into force of the Constitution was that the Governor was charged with the administration of the autonomous districts till the District Councils came into existence and that carried with it the power to appoint officers to carry on the administration. The appointment therefore of the respondent as Siem of Mylliem was made by virtue of the Governor 's power under para. 19 and the respondent derived his power as Siem from that appointment and could not claim any power outside that appointment. The Governor of course made it clear that the appointment was subject to confirmation of the District Council when it came into being, for the Governor 's powers at the time of the appointment were derived from para. 19 and "are transitional only. That is why it was said that the appointment was subject to confirmation by the District Council. Therefore when the ]District Council 761 came into existence in June 1952, it, in due course, in exercise of its administrative powers under para. 2 (4), considered the question of confirmation of the appointment made by the Governor in 1951 and confirmed the respondent 's appointment as Siem of Mylliem and communicated it to him along with the terms on which the confirmation was made. Besides the financial clauses, one of the terms provided that the Siem shall be subject to the control of the District Council and shall carry out all the orders issued to him from time to time by the District Council or its officers acting for and on behalf of the District Council. It was also provided that the Siem shall conduct himself in accordance with the established customs and usages approved by the District Council and in accordance with the rules, laws and regulations that the District Council may issue from time to time. Another term provided that the Siem and others shall be liable to removal from their offices by the order of the District Council if that body was satisfied that any of them did not discharge his duties properly or had been acting in a manner prejudicial to the interest of the Siomship or the District Council in general or had been conducting himself with indecorum; and such order passed by the District Council would be final. Therefore, after April, 1953, the respondent continued in the office of Siem by virtue of this confirmation by the District Council. In 1955, there was some modification of the terms which was communicated to the respondent on August 9,1955. The respondent was informed that he would continue as Siem as long as he was not removed from the Siemship by the order of the District Council for any lapse on his part; he was to submit to the directions of the District Council and to obey all orders issued by the Chief Executive Member or any officer of the District Council empowered to act on behalf of the Chief Executive Member; the respondent was to conduct the affairs of the Elaka according to the existing customs and customary laws as approved by the District Council and in accordance with the rules and regulations which the District Council had 762 enforced or might enforce in future. Provision was also made for the judicial powers of the Siem in accordance with the United Khasi Jaintia Hills Autonomous District (Administration of Justice) Rules, 1953. Besides, there were certain other terms with respect to financial matters. The consequence of these orders was that the respondent 's term as Siem was to continue as long as he was not removed from that office for any lapse on his part. The position therefore that emerges on a consideration of the three orders of 1951, 1953 and 1955 is that the respondent was holding the office of Siem by virtue of his appointment in the first instance by the Governor and its later confirmation by the District Council on terms which had been communicated to him and was thus no more than an administrative officer appointed by the District Council by virtue of its powers under para. 2 (4) of the Schedule and working under its control. This position apparently continued till 1959 when we come to the incidents which culminated in the order of July 7, 1959. We are not Concerned in this appeal with the merits of the action taken against the respondent; nor are we concerned with the question whether there were sufficient reasons for the Executive Committee to take the action which it did against the respondent. We are only concerned with the power of the Executive Committee of the District Council to take any action at all in the matter of the respondent 's removal from the office of Siem. The High Court has taken the view that the appointment and succession of a Siem was not an administrative function of the District Council and that the District Council could only act by making a law with the assent of the Governor so far as the appointment and removal of a Siem was concerned. In this connection, the High Court relied on para. 3(1)(g) of the Schedule, which lays down that the District Council shall have the power to make laws with respect to the appointment and succession of Chiefs and Headmen. The High Court seems to be of the view that until such a law is made there could be no power of appointment of a Chief or Siem like the respondent and in 763 consequence there would be no power of removal either. With respect, it seems to us that the High Court has read far more into para. 3(1)(g) than is justified by its language. Paragraph 3(1) is in fact something like a legislative list and enumerates the subjects on which the District Council is competent to make laws. Under para. 3(1)(g) it has power to make laws with respect to the appointment or succession of Chiefs or Headmen and this would naturally include the power to remove them. But it does not follow from this that the appointment or removal of a Chief is a legislative act or that no appointment or removal can be made without there being first a law to that effect. The High Court also seems to have thought that as there was no provision in the Sixth Schedule in terms of articles 73 and 162 of the Constitution, the administrative power of the District Council would not extend to the subjects enumerated in para. Now para. 2(4) provides that the administration of an autonomous district shall vest in the District Council and this in our opinion is comprehensive enough to include all such executive powers as are necessary to be exercised for the purposes of the administration of the district. It is true that where executive power impinges upon the rights of citizens it will have to be backed by an appropriate law; but where executive power is concerned only with the personnel of the administration it is not necessary even though it may be desirable that there must be laws, rules or regulations governing the appointment of those who would carry on the administration under the control of the District Council. The Sixth Schedule vested the administration of the autonomous districts in the Governor during the transitional period and thereafter in the District Council. The administration could only be carried on by officers like the Siem or Chief and others below him, and it seems to us quite clear, if the administration was to be carried on, as it must, that the Governor in the first instance and the District Councils after they came into existence, would have power by virtue of the administration being vested in them to appoint officers and others to carry 764 on the administration. Further once the power of appointment falls within the power of administration of the district the power of removal of officers and ,,others so appointed would necessarily follow as a corollary. The Constitution could not have intended that all administration in the autonomous districts should come to a stop till the Governor made regulations under para. 19(1)(b) or till the District Council passed laws under para. 3(1)(g). The Governor in the first instance and the District Councils thereafter were vested with the power to carry on the administration and that in our opinion included the power to appoint and remove the personnel for carrying on the administration. Doubtless when regulations are made under para. 19(1)(b) or laws are passed under para. 3(1) with respect to the appointment or removal of the personnel of the administration, the administrative authorities would be bound to follow the regulations so made or the laws so passed. But from this it does not follow that till the regulations were made or the laws were passed, there could be no appointment or dismissal of the personnel of the administration. In our opinion, the authorities concerned would at all relevant times have the power to appoint or remove administrative personnel under the general power of administration vested in them by the Sixth Schedule. The view therefore taken by the High Court that there could be no appointment or removal by the District Council without a law having been first passed in that behalf under para. 3(1)(g) cannot be sustained. In this case, the District Council when it confirmed the appointment of the respondent laid down certain terms by virtue of its power of administration and so far as the respondent is concerned those terms would govern the relations between him and the District Council in respect of all matters including his removal from the office of Siem. As pointed out by this Court in Parshotam Lal Dhingra vs The Union of India (1), the conditions of service of a Government servant appointed to a post are regulated by the terms of the (1) ; ,841. 765 contract of employment, express or implied, and subject thereto, by the rules applicable to the members of the particular service. In the absence of such general rules, the particular terms offered to a particular officer on his appointment would govern the relationship between the appointing authority and the person appointed in that particular case. It would therefore be wrong to hold that the respondent could not be removed from his office after his appointment in accordance with the terms on which he was appointed. On the view taken by the High Court, even the appointment of the respondent would be illegal for there was no law to support that appointment at the relevant time. But as we have said above, the Governor and later the District Councils being vested with the administration of the autonomous districts would be entitled to appoint personnel for carrying on the administration and the power to appoint would include from its very nature, being inherent in it, the power of removal, for it can hardly be contended that though the appointment might be made, the authority making the appointment would have no power to remove a person once appointed. In this particular case there can be no difficulty whatsoever because when the District Council confirmed the appointment of the respondent it laid down the terms on which the appointment will be held as well ' as the terms on which the respondent could be removed from, the office, in which he was being continued. Nor can it be said that the appointment in this case was by the Governor and therefore the Governor could alone remove him, for the notification of March 1951 made it clear that the appointment by the Governor was provisional and was subject to confirmation by the District Council when it came into existence. The District Council in fact confirmed the appointment of the respondent in April 1953 and so in law the appointment of the respondent was by the District Council and therefore it would have the power to remove him. Besides, if, as the High Court thought, the appointment of the respondent was invalid, it 98 766 would inevitably follow that he had no right to ask for a writ under article 226 ; if the appointment was bad, he had no legal right and he cannot complain against his suspension. We are therefore of opinion that the respondent being an officer appointed to carry on the administration by the District Council could be removed by it in accordance with the terms and conditions of his appointment. The next question that arises is whether the Executive Committee could take the action which it did in this case. Ordinarily, the appointment being made by the District Council, the removal could only be by it. The contention on behalf of the respondent is that even if the District Council had the power to remove in accordance with the terms and conditions of the respondent 's appointment that power could only be exercised by the District Council and not by the Executive Committee. In this connection, rr. 28, 29 and 30 of the Assam Autonomous Districts (Constitution of District Councils) Rules, 1951, are relevant. Rule 28 vests the executive functions of the District Council in the Executive Committee. Rule 29 (1) gives power to the Executive Committee to dispose of all matters falling within its purview subject to certain exceptions mentioned in r. 29(2). One of these exceptions is with respect to all important appointments. Assuming that the office of seem is an important appointment, the Executive Committee could not normally deal with it in view of the exceptions in r. 29(2). But r. 30(a) lays down that where immediate action in respect of any of the excepted matters is necessary, the Executive Committee of a District Council other than that of the Mikhir Hills or the North Cachar Hills, may take such action thereon as the emergency appears to it to require ; but every such case shall have to be laid before the District Council at its next session. The order of July 7, 1959, shows that the Executive Committee took action under r. 30(a) as it considered the matter to be one of emergency. It is not for the courts to go into the question whether there was emergency or not with respect to excepted matters and in the circumstances 767 the action taken by the Executive Committee cannot be challenged on the ground that it is beyond its power. The last point that has been urged is that in any case the Executive Committee could not suspend the respondent, and reliance in this connection is placed on The Management of Hotel Imperial vs Hotel Workers ' Union This Court held in that case as under: "It was now well settled that the power to suspend, in the sense of a right to forbid a servant to work, is not an implied term in an ordinary contract between master and servant, and that such a power can only be the creature either of a statute governing the contract, or of an express term in the contract itself. Ordinarily, therefore, the absence of such power either as an express term in the contract or in the rules framed under some statute would mean that the master would have no power to suspend a workman and even if he does so in the sense that he forbids the employee to work, he will have to pay wages during the so called period of suspension. Where, however, there is power to suspend either in the contract of, employment or in the statute or the rules framed thereunder, the suspension has the effect of temporarily suspending the relation of master and servant with the consequence that the servant is not bound to render service and the master is not bound to pay. " It is urged on the basis of these observations that in any case the respondent could not be suspended. Suspension is of two kinds. In the first place, suspension may be as a punishment, but the present is not a case of this kind of suspension ; in the second place interim suspension may be made pending inquiry into a case where removal is the result sought. It was this type of interim suspension which was dealt with in the case of Hotel Imperial (1) and it was pointed out that without an express term in the contract or without some provision of a statute or the rules there could not be interim suspension in the sense that the master could withhold the wages of the servant. But (1) ; 768 that case did not lay down that the master could not forbid the servant from working while he was inquiring into his conduct with a view to removing him from service. It was specifically said there that if the master does so, namely, forbids the servant to work and thus in fact suspends him as an interim measure he will have to pay the wages during the period of interim suspension. These wages or payment for the work done or emoluments of the office held could not be withheld in whole or in part Unless there is power to make an order of interim suspension either in the contract of employment or in the statute or the rules framed thereunder. The effect of that decision is that in the absence of such power the master can pass an order of interim suspension but he will have to pay the servant according to the terms of contract between them. ID the present case the terms and conditions communicated to the respondent do not indicate an express term giving power to the District Council to make an order of interim suspension while inquiring into the conduct of the respondent with a view to his ultimate removal. No statute or rules framed thereunder have been brought to our notice which authorised interim suspension having the effect of withholding remuneration in whole or in part. In the circumstances therefore though an order of interim suspension could be made against the respondent while inquiry into his conduct with a view to his ultimate removal is going on, his remuneration according to the terms and conditions communicated to him cannot be withheld unless there is some statute or rules framed thereunder which would justify the withholding of the whole or part of the remuneration. So far therefore as there is no statute or rule thereunder the remuneration can. not be withheld from the respondent even though an order of interim suspension, in the sense he is told not to do the work of his office, may be made against him. The order of interim suspension therefore passed in this case on July 7, 1959, would be valid subject of course to the respondent being paid the full remuneration unless the District Council can legitimately withhold the whole or part of it under some statute or 769 rules framed thereunder, there being undoubtedly DO express contract to that effect in this case. Before we part with this case we should like to point out that a law has now been passed, namely, The United Khasi Jaintia Hills Autonomous District (Appointment and Succession of Chiefs and Headmen) Act, 1959 (No. 11 of 1959), which came into force in October 1959. It deals with the appointment of Chiefs and Headmen as well as their removal and suspension (as a punishment). The word " Chief " includes a Siem, a Lyngdoh, etc. and the respondent would therefore be a chief within the meaning of this Act and further action may be taken accordingly. We therefore allow the appeal with costs, set aside the order of the High Court and direct that further action be taken in the manner indicated by us above. SUBBA RAO J. I agree with the conclusion. But 1 have considerable and serious doubts on the question whether, when the Constitution confers on an authority power to make laws in respect of a specific subject matter, the said authority can deal with the same subject matter without making such a law in its administrative capacity. I would, therefore, prefer not to express my opinion on this question. But I agree with the other two reasons given by my learned brother, namely, (1) if the respondents ' contentions were to prevail, the order of appointment would itself be bad, with the result that, the Siem would Dot have any right to the office; (2) on October 16, 1959, an Act, known as the United Khasi Jaintia Hills Autonomous District (Appointment and Succession of Chiefs and Headmen) Act (No. 11 of 1959), was passed and, therefore, there is now a valid law empowering the District Council to remove a Siem; and, as the enquiry in question is only at its initial stage, it can hereafter be validly conducted under the provisions of the said Act. [/INST] The respondent was Siem of Mylliem siemship in United Khasi and jaintia Hills District in the Tribal Areas of Assam, having been elected as such by the Myntri electors according to custom in 1951. In June, 1952, a District Council was constituted for the District under the Sixth Schedule to the Constitution and the siemship was brought under it. The rules in the Sixth Schedule empowered the District Council to make laws with respect to various matters regarding the administration of the District including the appointment or succession of Chiefs and Headmen. No law was made regulating the appointment and succession of Chiefs and Headmen. The Chief Executive Member of the Executive Committee of the District Council served on the respondent a notice to show cause why he should not be removed from his office and suspended him. The respondent challenged the action on the grounds: (i) that he could not be removed by administrative orders but only by making a law, (ii) that the Executive Committee could not take any action in this case, and (iii) that the order of suspension was ultra vires. Held, that the District Council had the power to appoint or remove administrative personnel under the general power of administration vested in it by the Sixth Schedule. The District Council was both an administration well as a legislative body. After a law was made with respect to the appointment or removal of administrative personnel the authority would be bound to follow it; but until then it could exercise its administrative powers. Since the United Khasi jaintia Hills Autonomous District (Appointment and Succession of Chiefs and Headmen) Act, 1959, had now come into force further action should be taken in accordance with that Act. The Executive Committee could, under r. 3o(a) of the Assam Autonomous Districts (Constitution of District Councils) Rules, 1951, act on behalf of the District Council in cases of emergency and it was not for the courts to go into the question whether there was an emergency or not. In these circumstances the action taken by the Executive Committee could not be challenged. An order of interim suspension could be passed against the 751 respondent while inquiry was pending into his conduct even though there was no specific provision to that effect in his terms of appointment. But he was entitled to his remuneration for the period of his interim suspension as there was no statute or rule existing under which it could be withheld. The Management of Hotel Imperial vs Hotel Workers ' Union, ; , applied. Per Subba Rao, J. It is very doubtful whether, when the Constitution confers on an authority power to make laws in respect of a specific subject matter, that authority can deal with the same subject matter without making such a law in its administrative capacity. </s>

<s>[INST] Summarize the following judgement: iminal Appeal No. 41 of 1952. Appeal by Special Leave from the Judgment and Order dated the 3rd October,, 1951, of the High Court of Judicature for the State of Punjab at Simla (Bhandari and Soni JJ in Criminal Appeal No. 86 of 1961, arising out of the Judgment and Order dated the, 31st January, 1951, of the Court of the Sessions Judge, Ambala, in Case No. 23 of '1950 and Trial No. 2 of 1951, 96 Jai GopalSethi (B. L. Kohli with him) for the Appellant. H.S. Gujral, for the respondent. Bhagat Singh Chawla, for the Caveator. October 22. The judgment 0f the Court was delivered by MAHAJAN J. Palvinder Kaur,was tried for offences under sections 302 and 201, Indian Penal Code, in connection with the murder of her husband, Jaspal Singh. She was convicted by the Sessions Judge under section, 302 and sentenced to transportation for life. No verdict was recorded regarding the charge under section 201, Indian Penal Code. appeal to the High Court she was acquitted of the charge of murder, but was convicted under section 201, Indian Penal Code, and sentenced to seven years ' rigorous Imprisonment. Her appeal by special leave is now before us. Jaspal Singh, deceased, was the son of the Chief of Bhareli (Punjab). He was married to Palvinder Kaur a few years ago and they had two children. The. husband and wife were living together in Bhareli house, Ambala. It is said that Jaspal 's relations with his father and grandfather, were not very cordial and the two elders thought that Palvinder Kaur was responsible, for this. It is also said that Jaspal lived the allowance he got from his father and supplemented his income by selling milk and eggs and by doing some odd jobs. Mohinderpal Singh (a fugitive from justice) who is related to the appellant and was employed as a storekeeper in Baldevnagar Camp, Ambala, used occasionally to reside in Bhareli house. It is suggested that he had started a liaison with Palvinder. The prosecution case is that Sardar Jaspal was administered potassium cyanide poison by the appellant and Mohinderpal the afternoon of the 6th February, 1950. The dead body was then put into a large trunk and kept in one of the rooms in the house in Ambala city. About ten days later i.e., the 97 16th February, 1950, Mohinderpal during the absence of the appellant, removed the trunk from the house in a jeep when he came there with Amrik Singh and Kartar Singh (P. Ws.), two watermen of the Baldevnagar Camp. The trunk was then taken to Baldevnagar Camp and was kept in a store room there. Three days later, the 19th February, 1950, Mohinderpal accompanied by Palvinder and a domestic servant, Trilok Chand (P. W. 27), took the trunk a few miles the ' road leading to Rajpura, got to a katcha road and in the vicinity of village Chhat took the jeep to a well a mound and threw, the box into it. The jeep was taken to a gurdwara where it was washed. After the disappearance of the deceased, his father made enquiries from Mohinderpal regarding the ' whereabouts of his missing son. Mohinderpal made various false statements to him. the 8th March, 1950, the father advertised in the "Daily Milap" begging his son to return home as soon as possible as the condition of his wife and children and parents had become miserable owing to his absence. On the 10th March, 1950, i.e., a, month and ten days after the alleged murder and 19 days after the trunk was thrown into the well, obnoxious smell was coming out of the well, and the matter being reported to the lambardars of ' village Chhat, the trunk was taken out. The matter was reported to the police and Sardar Banta Singh, Sub Inspector of Police, the 11th March arrived at the scene and prepared the inquest report and sent for the doctor. The postmortem examination was performed the spot the next day. No photograph of the body was taken and it was allowed to be cremated. After more than two and a half months, the 28th April, 1950 th first information report was lodged against the appellant and Mohinderpal and the26th June a challan was presented in the court of the committing magistrate Mohinderpal was not traceable and the case Was started against the appellant alone, 98 There is no direct evidence to establish that the appellant or Mohinderpal or both of them administered potassium cyanide to Jaspal and the evidence regarding the murder is purely circumstantial. The learned Sessions Judge took the view that the circumstantial evidence in the case was incompatible with the innocence of the accused, and held that the case against the appellant was proved beyond any reasonable doubt. The High Court appeal arrived at a different conclusion. It held that though the body found from the well was not capable of identification, the clothes recovered from the trunk and found the body proved that it was the body of Jaspal. It further held that the cause of death could not be ascertained from the medical evidence given in the case. The evidence the question of the identity of the dead body consisted of the statement of constable Lachhman 'Singh, of the clothes and other ' articles recovered from inside the trunk and of an alleged confession of the accused. As regards the first piece of evidence the High Court expressed the following opinion: "There is in our opinion considerable force in the contention that not only are foot constable Lachhman Singh and Assistant Sub Inspector Banta Singh testifying to the facts which are false to their knowledge but that the prosecution are responsible for deliberately introducing a false witness and for asking the other witnesses to support the story narrated by Lachhman Singh that he identified the body to be that of Jaspal Singh the 11th March and communicate the information to the father of the deceased the following day.) ' As regards the extra judicial confessions alleged to. have been made to Sardar Rup Singh and Sardar Balwant Singh, father and grandfather of the deceased, they were held inadmissible and unreliable. The confession made by Palvinder to the magistrate, the 15th April, 1950, was however used in evidence against her the following reasoning: "It is true that strictly speaking exculpatory statements in which the prisoner denies her guilt cannot 99 be regarded as confessions, but these statements are often used as circumstantial evidence of guilty consciousness by showing them to be false and fabricated. " It was also found that though Palvinder might have desired to continue her illicit intrigue with Mohinderpal she may not have desired to sacrifice her wealth and position at the altar of love. She may have had ' a motive to kill her husband but a stronger motive to preserve her own position as the wife of a prospective chief of Bhareli and that in this situation it was by no means impossible that the murder was committed by Mohinderpal alone without the consent and knowledge of Palvinder, and that though a strong suspicion attached to Palvinder, it was impossible to state with confidence that poison was administered by her. Therefore it was not possible to convict her under section 302, Indian Penal Code. Concerning the charge under section 201, Indian Penal Code, the High Court held that the most important piece of evidence in support of the charge was the confession which Palvinder made the 15th April, 1950, and this confession, though retracted, was corroborated this point by independent evidence and established the charge. The judgment of the High Court was impugned before us a large number of grounds. Inter alia, it was contended that in examining Palvinder Kaur at great length the High Court contravened the provisions of the Code of Criminal Procedure and that the Full Bench decision of the High Court in Dhara Singh 's case(1) was wrong in law, that the alleged confession of the appellant being an. exculpatory statement, the same was inadmissible in evidence and could not be used as evidence against her, that it had been contradicted in most material particulars by the prosecution evidence itself and was false and that in any case it could not be used piecemeal; that the offences under sections 302/34 and 201, Indian Penal Code, being distinct offences committed at two different times and being (1) (I952) , 100 separate transactions, the appellant having been convicted of the offence under section 302, Indian Penal Code, only by the Session Judge, the High Court had no jurisdiction when acquitting her of that offence to, convict her under section 201 of the same Code; that the statements of Mohinderpal to 'various witnesses land his conduct were not relevant against the appellant; that Karamchand and Mst. Lachhmi were in the nature of accomplices and the High Court erred in relying their testimony without any corrobora tion; that the High Court having disbelieved eight of the witnesses of the prosecution and having held that they were falsely introduced into the case, the investigation being extremely belated and the story having been developed at different stages, the High Court should not have relied the same; and lastly that the pieces of circumstantial evidence proved against the appellant were consistent with several innocent explanations and the High Court therefore erred in relying them without excluding those possi bilities. The decision of the appeal, in our view, lies within a very narrow compass and it is not necessary to pronounce all the points that were argued before us. In our judgment, there is no evidence 'to establish affirmatively that the death of Jaspal was caused by potassium cyanide and that being so, the charge under section 201, Indian Penal Code, must also fail. ' The High Court in reaching a contrary conclusion not only acted suspicions and conjectures but inadmissible evidence. , The circumstances in which Jaspal died will for ever remain shrouded in mystery and the material placed the record it is not possible to unravel them. It may well be that he was murdered by Mohinderpal without the knowledge or consent of Palvinder and the incident took place at Baldevnagar Camp and not at the house and that Mohinderpal alone disposed of the dead body and that the confession of Palvinder is wholly false and the advertisement issued in Milap correctly reflected the facts 101 so far as she was concerned. The evidence led by the prosecution, however, is of such a character that no, reliance can be placed it and no affirmative conclusions can be drawn from it. The remarks of the Sessions Judge; that the consequences had definitely revealed that justice could not always be procured by wealth and other worldly resources and that the case would perhaps go down in history as one of the most sensational cases because of the parties involved and the gruesome way"in which the murder was committed, disclose a frame of mind not necessarily judicial. It was unnecessary to introduce sentimentalism in a judicial decision. The High Court was not able to reach a positive conclusion that Palvinder was responsible for the murder of her husband. Whether Jaspal committed suicide or died of poison taken under a mistake or whether poison was administared to him by the appellant or by Mohinderpal or by both of them are questions the answers to which have been left very vague and indefinite by the circumstantial evidence in the case. In view of the situation of the parties and the belated investigation of the case and the sensation it created, it was absolutely necessary for the courts below to safeguard them. selves against the danger of basing their conclusions suspicions howsoever strong. Seems to us that the trial court, &Ad to a certain extent the High Court, fell into the same error against which warning was given by Baron Alderson in Beg. vs Hodge(1), where he said as follows: 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 connected whole; and the more ingenious the mind of the individual, the more likely was it, considering such matters, 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. " (1) 102 We had recently occasion to emphasize this point in Nargundkar vs The State of Madhya Pradesh(1). In order to establish the charge under section 201, Indian Penal Code, it is essential to prove that an offence has been committed mere suspicion that it has been committed is not sufficient,that the accused knew or had reason to believe that such offence had been committed and with the requisite knowledge and with the intent to screen the offender from legal punishment causes the evidence thereof to disappear or gives false information respecting such offences knowing or having reason to believe the same to be false. It was essential in these circumstances for the prosecution to establish affirmatively that the death of Jaspal was caused by the administration of potassium cyanide by some person (the appellant having been acquitted of this charge) and that she had reason to believe that it was so caused and with that knowledge she took part in the concealment and 'disposal of the dead body. There is no evidence whatsoever this point. The following facts, that Jaspal died, that his body was found in a trunk and was discovered from a well and that the appellant took part in the disposal of the body do not establish the cause of his death or the manner and circumstances in which it came about. As already stated, there is no direct evidence to prove that potassium cyanide was administered to him by any person. The best evidence this question would have been that of the doctor who performed the postmortem examination. That evidence does not prove that Jaspal died as a result of administration of potassium cyanide. the other hand, the doctor was of the opinion that there were no positive postmortem signs which could suggest poisoning. He stated that potassium cyanide being corrosive poison, would produce hypermia, softening and ulceration of the gastro intestinal track and that in this case he did not notice any such signs. He further said that potassium cyanide corrodes the lips and the mouth, and none of these signs was the body. This evidence (1) [1952] S.C.R, 1091 103 therefore instead of proving that death was caused by administration of potassium cyanide, to the extent it. goes, negatives that fact. The High Court placed reliance the confession of Palvinder made the 15th April, 1950, to bold this fact proved. The confession is in these terms: "My husband Jaspal Singh was fond of hunting as well as of photography. From hunting whatever skins (khalls) he brought home he became fond of colouring them. He also began to do the work of washing of photos out of eagerness. One day in December, 1949, Jaspal Singh said to my cousin (Tay 's son) Mohinderpal Singh to, get him material for washing photos. He(Mohinderpal Singh) said to Harnam Singh, who is head clerk in Baldevnagar Camp, to bring the same from,the Cantt. Harnam Singh went to the Cantt. and return said that the material for washing photos could be had only by a responsible Government official. He told so to Mohinderpat Singh, who said that Harnam Singh should take his name and get the medicine. Thereupon Harnam Singh went to the Cantt. and brought the medicine. I kept this medicine. As the medicine wassticking to the paper I put it in water in a small bottle and kept it in the almirah. In those days my husband was in Ambala and I lived with him in the kothi in the city. He went for hunting for 2 3 days and there he developed abdominal trouble and began to purge. He sent for medicine 3 4 days from Dr. Sohan Singh. One day I placed his medicine bottle in the almirah where medicine, for washing photos had been placed. I was sitting outside and Jaspal Singh enquired from me where his medicine, was. I told him that it was in the almirah. By mistake he took that medicine which was meant for washing photos. At that time, he fell down and my little son was standing by his side. He said 'Mama, Papa had fallen '. I went inside and saw, that he was in agony and in short time be expired. Thereafter I went to Mohinderpal Singh 104 and told him all that had happened. He said that father of Jaspal Singh had arrived and that he should be 'intimated. But I did not tell him, because his connections were not good with his son and myself. Out of fear I placed his corpse in a box and Mohinderpal Singh helped me in doing so. For 4 5 days the box remained in my kothi. Thereafter I said to Mohinderpal Singh that if he did not help me I would die. , He got removed that box from my kothi with the help of my servants and placing the same in his jeep went to his store in Baldevnagar Camp and kept the same there. That box remained there for 8 10 days. Thereafter one day I went to the camp and from there got placed the trunk in the jeep and going with Mohinderpal Singh I threw the same in a well near Chhat Banur. I do not remember the date when Jaspal Singh took the medicine by mistake. It was perhaps in January, 1950. " The statement read as a whole is of an exculpatory character. It does not suggest or prove the commission of any offence under the Indian Penal Code by any one. It not only exculpates her from the commission of an offence but also exculpates Mohinderpal. It states that the death of Jaspal was accidental. The statement does not amount to a confession and is thus inadmissible in evidence. It was observed by their Lordships of the Privy Council in Narayanaswami vs Emperor(1) that the word "confession" as used in the Evidence Act cannot be construed as meaning a statement by an accused suggesting the inference that he committed the crime. A confession must either admit in terms the offence, or at any rate substantially all the 'facts which constitute the offence. An admission of a gravely incriminating fact, even a conclusively, incriminating fact, is not of itself a confession. A statement that contains self exculpatory matter 'cannot amount to a confession, if the exculpatory statement is of some fact, which if true, would negative the offence alleged to be confessed. In this view of the law the High Court (1) (1939) 66 I.A. 66; A.I.R. 1939 P.C. 47: 105 was in error in treating the statement of Palvinder as the most important piece of evidence in support of the charge under section 201, Indian Penal ' Code. The learned Judges in one part of their judgment observed that strictly speaking exculpatory statements in which the prisoner denies her guilt cannot be regarded as confessions, but went to say that such statements are often used as circumstantial evidence of guilty consciousness by showing them to be false and fabricated. With great respect we have not been able,to follow the meaning of these observations and the learned counsel appearing at the Bar for the prosecution was unable to explain what these words exactly indicated. The statement not being a confession and being of an exculpatory nature in which the guilt had been denied by the prisoner, it could not be used as evidence in the case to prove her guilt. Not only was the High Court in error in treating the alleged confession of Palvinder as evidence in the case but it was further in error in accepting a part of it after finding that the rest of it was false. It said that the statement that the deceased took poison by mistake should be ruled out of consideration for the simple reason that if the deceased had taken poison by mistake the conduct of the parties would have been completely different, and that she would have then run to his side and raised a hue and cry and would have sent immediately for medical aid, that it was incredible that if the deceased had taken poison by mistake, his wife Would have,stood idly by and allowed him to die. The court thus accepted the inculpatory part of that statement and rejected the exculpatory part. In doing so it contravened the well accepted rule regarding the use of confession and admission that these must either be accepted as a whole or rejected as a whole and that the court is not competent to accept only the inculpatory part while rejecting the exculpatory part as inherently incredible. Reference in this connection may be made to the observations of the Full Bench of the Allahabad 106 High Court in Emperor vs Balmakund(1), with which observations we fully concur. The confession there comprised of two elements, (a) an account of how the accused killed the women, and (b) an account of his reasons for doing so, the former element being inculpatory and the latter exculpatory and the question referred to the Full Bench was: Can the court if it is of opinion that the inculpatory part commends belief and the exculpatory part is inherently incredible, act upon the former and refuse to act upon the latter ? The answer to the reference was that where there is no other evidence to show affirmatively that any portion of the exculpatory element in the confession is false, the court must accept or reject the confession as a whole and cannot accept only the inculpatory element while rejecting the exculpatory element as inherently incredible. The alleged confession of Palvinder is wholly of an ' exculpatory nature and does not admit the commission, of any crime whatsoever. The suspicious circumstances from which an inference of guilt would be drawn were contained in that part of the statement which concerned the disposal of the dead body. This part of the statement could not be used as evidence by holding that the first part which was of an exculpatory character was false when there was no evidence to prove that it was so, and the only material which it could be so hold was the conduct mentioned in the latter part of the same statement and stated to be inconsistent with the earlier part of the confession. The result therefore is that no use can be made of the statement made by Palvinder and contained in the alleged confession and which the High Court thought was the most important piece of evidence in the case to prove that the death of Jaspal was caused by poisoning or as a result of an offence having been committed. Once this confession is excluded altogether, there remains no evidence for holding that Jaspal died as a result of the administration of potas sium cyanide. (1) (193o) I.L.R. 52 All. 107 The circumstantial evidence referred to by the High Court which according to it tends to establish that Jaspal did not die a natural death is of the ' following nature: That Palvinder and Mohinderpal had a motive to get rid of the deceased as she was carrying with Mohinderpal. The motive, even if proved in the case, cannot prove the circumstances under which Jaspal died or the cause which resulted in his death. That Mohinderpal was proved to be in possession of a quantity of potassium cyanide and was in a position to administer it to the deceased is a cir cumstance of a neutral character. Mere possession of potassium cyanide by Mohinderpal without its being traced in the body of Jaspal cannot establish that his death was caused by this deadly poison. In any case, the circumstance is not of a character which is wholly incompatible with the innocence of the appellant. The other evidence referred to by the High Court as corroborating the latter part of Palvinder 's alleged confession in the view of the case that we have taken does not require any discussion because if the confession is inadmissible, no question of corroborating it arises. Mr. Sethi argued that the statements contained in the alleged confession are contradicted rather than corroborated by the evidence led by the prosecution and that the confession is proved to be untrue. It is unnecessary to discuss this matter in the view that we have taken of the case. The result, therefore, is that we are constrained to hold that there is no material, direct or indirect, for the finding reached by the High Court that the death of Jaspal wascaused by the administration of potassium cyanide. If we believe the defence version his death was the result of an accident. If that version is disbelieved,then there is no proof as to the cause of his death. The method and manner in which the dead body of Jaspal was dealt with and disposed of raise some suspicion but from these, facts a positive conclusion cannot be reached that he died an unnatural death necessarily, Cases are not unknown 108 where death is accidental and the accused has acted in a peculiar manner regarding the disposal of the dead body for reasons best known to himself. One of them might well be that he was afraid of a false case being started against him. Life and liberty of persons cannot be put in jeopardy mere suspicions, howsoever strong, and they can only be deprived of these the basis of definite proof. In this case, as found by the High Court, not only were the Sub Inspector of police and police constables and other witnesses guilty of telling deliberate lies but the prosecution was blameworthy in introducing witnesses in the case to support their lies and that being so, we feel that it would be unsafe to convict the appellant the material that is left after eliminating the perjured,, false and inadmissible evidence. For the reasons given above we allow this appeal, set aside the conviction of the appellant under section 201, Indian Penal Code, and acquit her of that charge also. Appeal allowed. [/INST] In eases depending circumstantial evidence courts should safeguard themselves against the danger of basing _their conclusions suspicions howsoever strong. Rex V. Hodge , and Nargundkar vs State of Madhya Pradesh (1952) S.C.R. 1091 referred to, 95 To establish a charge under section 201, Indian Penal Code, it is essential to prove that an offence has been committed (mere suspicion that it has been committed is not sufficient); that the accused knew or had reason to believe that such offence had been committed ; and that with the requisite knowledge and with the intent to screen the offender from legal punishment the accused caused the evidence thereof to disappear or gave false information respecting such offence knowing or having reason to believe the same to be, false. Where the evidence showed that a person had died, that his body was found in &,trunk and was discovered in a well and that the accused took part in the disposal of the body but there was no evidence to show the cause of his death or the manner or circumstances in which it came about: Held, that the accused could not be convicted for an offence under section 201. A statement that contains self exculpatory matter cannot amount to a confession, if the exculpatory matter is of some fact, which if true would negative the offence alleged to be confessed. A confession must either admit in terms the offence or at any rate substantially all the facts that constitute the offence. Narayanaswami vs Emperor (1939) 66 I.A. 66, referred to. It is a well accepted rule regarding the use of confessions and admissions that these must either be accepted as a whole or rejected as a whole and that the court is not competent to accept only the inculpatory part while rejecting the exculpatory part as inherently incredible. Emperor vs Balmukand All. 1011, followed. Where the statement made by the accused contained an admission that she had placed the dead body of her husband in a trunk and bad carried it in a jeep and thrown it into a well, but with regard to the cause of the death the statement made by her was that her husband bad accidently taken a poisonous substance which was meant for washing photos erroneously thinking it to be a medicine: Held, the statement read as a whole was exculpatory in character and the whole statement was inadmissible in evidence and the High Court acted erroneously in accepting the former part of it and rejecting the latter part as false. Judgment of the High Court of Punjab reversed. </s>

<s>[INST] Summarize the following judgement: Appeal No. 107 of 1956. Appeal by special leave from the judgment and order dated January 21, 1954, of the Madras High Court in W. P. No. 498 of 1952. With Petition No. 130 of 1958. Petition under article 32 of the Constitution of India for the enforcement of Fundamental Rights. M.R. M. Abdul Karim and K. R. Choudhri, for the appellant (in C. A. No. 107156) and Petitioner (In Petn. 130/58). K.N. Rajagopala Sastri and D. Gupta, for the respondents (in both the appeal and petition). September 21. The Judgment of the Court was delivered by AYYANGAR J. Muthappa Chettiar, the appellant in Civil Appeal 107 of 1956 was sought to be proceeded against for the recovery from him of Excess Profits Tax assessed in respect of the business of Muthappa & Co. of which he was a partner. He disputed the legality of the recovery proceedings and filed Writ Petition 498 of 1952 before the High Court of Madras for the issue of a writ of prohibition for directing the Income Tax Officer, E. P. T. Circle, Madras, not to take coercive steps against him for the recovery of the tax assessed. This petition was dismissed and Civil Appeal 107 of 1956 has been filed on special leave obtained from this Court. During the hearing by the High Court, of Writ Petition 498 of 1952, Muthappa Chettiar (referred to hereafter as the appellant) sought also to impugn the legality of the order of assessment to Excess lox 790 Profits Tax. The learned Judges held however that, such a contention was not germane to the writ of prohibition for which he had prayed, adding also that there were no merits in the grounds urged. To avoid any technical objection, the appellant has filed in this Court Petition 130 of 1958 under article 32 of the Constitution in which the prayer is for the grant of a writ of certiorari or other appropriate writ to quash the order of assessment to Excess Profits Tax, and the Appeal and the Petition being thus interrelated have been heard together. We shall first take up for consideration the matters urged in the Writ Petition, as logically having precedence over the challenge to the legality of the proceedings for the recovery of the tax. The facts necessary to appreciate the points urged are briefly these: The appellant and Thyagrajan Chettiar (impleaded as the second respondent in Civil Appeal 107 of 1956) were partners in a firm named Muthappa & Co. started in November, 1940, and the firm was the managing agent of a textile Mill called Saroja Mills Ltd., in the Coimbatore district. The assessment which is under challenge is for the Excess Profits Tax liability of this managing agency business and the relevant chargeable accounting periods are the calendar year 1942 and the broken period January 1, 1943, to March 4, 1943. The liability of the firm to Income Tax for the same periods was assessed by the Income Tax Officer by his orders dated March 15, 1948, by applying the provisions of section 23(5)(b) of the Income tax Act, 1922, arid the appellant paid, when demanded, his share of the tax and there is now no dispute about the propriety of that assessment. The income of the managing agency business was computed for Excess Profits Tax at the same figure as for assessment to Income Tax, and the assessment for the two chargeable accounting periods was completed by the Excess Profits Tax Officer by his order dated March 31, 1951, and it is the validity of this order of assessment that is challenged in Petition 130 of 1958. The first matter urged in support of the petition may be set out thus: Ail assessment to be valid must 791 be after notice to the assessee. In the present case, the assessment was admittedly completed by serving, the prescribed notices on Thyagrajan Chettiar alone, who according to the terms of the partnership between the parties was the managing partner. But it was urged that there had been a dissolution of the firm as and from March 4, 1943, that thereafter the partnership ceased to exist, and with it the mutual agency between the partners, with the result that Thyagrajan Chettiar could not represent the firm which had ceased to exist nor the appellant. On these premises it was submitted that the assessment of the business to Excess Profits Tax after notices only to Thyagrajan Chettiar could not bind the firm nor at any rate bind the appellant. In our opinion there are two answers to this submission, either of which would suffice to reject the appellant 's plea: (1) That on the facts of the present case the appellant is precluded from pleading that the firm had been dissolved at the date of the assessment in 1951 and from raising any objection to the representative character of Thyagrajan Chettiar, (2) That on a proper construction of the provisions of the Excess Profits Tax Act, 1940, even if the firm of Muthappa & Co. should be held to have been dissolved before 1951 when the order of assessment was passed, the assessment of the managing agency business to Excess Profits Tax was properly and legally effected by notice to Thyagrajan Chettiar. The facts to which we have made reference are these: Prior to the assessment year 1943 44, Thyagrajan Chettiar, as the managing partner of Muthappa & Co. was submitting returns for Income tax and was conducting the assessment proceedings on behalf of the firm. Thyagrajan Chettiar published in the newspaper " Hindu " a notice announcing the dissolution of the firm as and from March 4, 1943, and followed it up by informing the Income Tax Officer of this circumstance. Thereafter the Income Tax Officer wrote to the appellant enquiring whether the firm of Muthappa & Co. had been dissolved and if so from what date. By letter dated February 1, 1945, the appellant 792 replied " I wish to inform you that Messrs. Muthappa & Co. has been formed as per the deed of partnership dated November 4, 1940, and the rights of the partners are also retracted therein. But Mr. Thyagrajan Chettiar my partner has acted deliberately beyond the scope of the partnership deed in issuing a notice of dissolution of partnership on me on March 4, 1943, and a suit has been filed against him in the Coimbatore Sub Court and is pending. Pending disposal of the said suit regret I am unable to accept the alleged dissolution or to give the date of dissolution of partnership called for in your letter ". Taking the appellant at his word the income tax assessment was completed after notice to Thyagrajan Chettiar as the continuing managing partner. In line with the position taken up by him, disputing that the firm had been dissolved by the acts or conduct of Thyagrajan Chettiar, the appellant filed a suit in the Sub Court at Coimbatore contesting the validity of Thyagrajan Chettiar 's notice of dissolution dated March 4, 1943, praying for a declaration that the purported dissolution of the firm by Thyagrajan Chettiar was invalid and inoperative, himself seeking a decree for dissolution from a date to be specified by the Court and for rendition of accounts on foot of a subsisting partnership till the date so fixed. The Subordinate Judge upheld the validity of the dissolution by Thyagrajan Chettiar in 1943. From this judgment rendered in 1948 the appellant preferred an appeal to the High Court. This appeal was heard in 1953 when the High Court allowed the appeal and fixed the date of dissolution as on March 10, 1949. It is stated that a further appeal from this judgment of the High Court is pending in this Court, so that even now the precise date on which the firm should be held to be dissolved is a matter of uncertainty. From the above it would be seen that it has always been the case of the appellant that the firm had not been dissolved in 1943. At the date of the proceedings for the assessment to Excess Profits Tax in 1951, with which Petition 130 of 1958 is concerned, the position therefore was as follows: The assertion by the appellant that the partnership was undissolved 793 and continued its existence, contained in his letter to the Income Tax Officer in February, 1945, still held good and was backed up by the proceedings he took in the Civil Courts to maintain that stand. No doubt, his claim had not been upheld by the Subordinate Judge, but by the appeal that he filed, he rendered the matter res sub judice and till the decision of the High Court in 1953, the appellant could not obviously suggest any particular date as the date of the dissolution. The submission of learned Counsel which proceeds on the assumption that there was a dissolution of the firm on March 4, 1943 ; or on March 10, 1949 which was the date fixed by the High Court by its judgment of 1953, has to be rejected as wholly inconsistent with the contentions urged by the appellant in the Civil suit and the appeal therefrom. In the circumstances, the Income Tax Officer could not be blamed for treating the firm as in existence and similarly the Excess Profits Tax Officer also. It was common ground that at the date the Excess Profits Tax Officer started proceedings for assessment, the appellant had filed an appeal against the judgment of the Subordinate Judge in O. section 50 of 1946 and the same was pending in the High Court and that it was only in 1953 that the appeal was disposed of. The contention now urged before us was, that as the High Court had held that the firm should be treated as having been dissolved as and from March 10, 1949, the issue of any notice to Thyagrajan Chettiar as the managing partner of the firm was invalid and the assessment proceedings completed on that basis would also be illegal. If the contention of the appellant were to prevail it would mean that the validity or otherwise of the assessment order would be retrospectively determined by the result of the appellant 's appeal which was pending before the High Court, so that if the High Court had held that the firm should be treated as dissolved only on the date of its judgment in 1953, the assessment would be valid but that if the high Court bad fixed the date of dissolution on some date earlier than March 31, 1951, the assessment would be deemed invalid. This argument has only to be stated to be rejected. When this 794 aspect of the matter was put to learned Counsel for the appellant, he fairly conceded that he could not on the facts of this case maintain the position that the order of assessment to Excess Profits Tax was vitiated because of the alleged disruption of the firm of Muthappa & Co. before the date of that order. The other answer to the submission is that even assuming that the firm of Muthappa & Co. had been in fact dissolved on some date anterior to the assessment of the managing agency business to Excess Profits Tax, that would not affect the validity of an assessment order passed after notice to the person in management of the business during the chargeable accounting periods, since, it was not the firm but " the business " that was the unit of assessment. In this connection learned Counsel for the appellant drew our attention to a decision of the Madras High Court in A. O. Pandu Rao vs Collector of Madras (1), and stated that it was against him and directly covered the point and if correct would leave no scope for any further argument. In that case a firm consisting of three partners carried on business under the name of P. Nagoji Rao & Son, with one of them Gannu Rao as managing partner. The chargeable accounting periods concerned were the years from April 1, 1944 to March 31, 1946. There were quarrels among the partners which led to the filing of a suit on February 26, 1947, for dissolution and accounts by two of the partners against the managing partner. The suit was decreed on November 14, 1947, declaring the firm dissolved as and from the institution of the suit February 26, 1947. The assessment of the business to Excess Profits Tax was completed by notices issued subsequent to that date to Gannu Rao as managing partner and the order of assessment was passed on December 31, 1949, and a notice of demand under section 29 of the Income Tax Act was served on him. No demand notices were served on the other two partners, but proceedings for the recovery of the tax were taken against them on the strength of the notices served on Gannu Rao. These two partners moved the High Court (1) (1954) 26 I.T. 99. 795 under article 226 of the Constitution for the issue of writs of Certiorari to quash the orders of assessment to Excess Profits Tax and the proceedings for recovery of the tax due thereunder. The order of assessment was impugned on the around that by virtue of the decree in the suit, there had been a dissolution of the firm and that Gannu Rao having ceased to have authority to represent the firm or the other partners, the assessment could have been legally completed only by notices under section 13 of the Excess Profits Tax Act being served individually on the other partners, and that the tax could be recovered only after notices to each of them under section 29 of the Income Tax Act. The learned Judges repelled these objections by reference to the provisions of sections 8 and 13 of the Excess Profits Tax Act under which it is the " business " producing the income which is the unit of assessment for Excess Profits Tax as contrasted with the provisions of the Indian Income tax Act under which the unit of assessment is either the individual, Hindu undivided family, firm, company or association of persons, carrying on the income earning activity (vide section 3 of the Income Tax Act which has not been made applicable to the Excess Profits Tax Act under section 21 of the latter Act). Under the provisions of the Excess Profits Tax Act, where a partnership carrying on a business becomes disrupted and the Excess Profits earned by the business before its dissolution have to be assessed the assessment has to be made under section 44 of the Income tax Act as modified by the Central Board of Revenue under the power vested in that behalf by section 21 of the Act and as so modified section 44 runs: " Where any business carried on by a firm or association of persons has been discontinued, every person who was at the time of such discontinuance a partner of such firm or a member of such association shall, in respect of the profits of the firm or association, be jointly and severally liable to assessment under section 14 of the Excess Profits Tax Act, 1940, and for the amount of tax payable, and all the provisions of the said Act shall, so far as may be, apply to any such assessment. " 796 The effect of this and other cognate provisions was thus explained by the learned Judges of the Madras High Court : "The result of section 44 as amended by the Central Board of Revenue is to attract the procedure applicable to an undissolved firm to a dissolved firm, and, therefore, if two or three persons carry on business as a firm, the assessment could be made on the partnership in the partnership name and the persons, who carried on the business during the chargeable accounting period will be liable to pay the tax as provided by sub section (2) of section 14, read with section 44, Income tax Act, as modified by the Central Board of Revenue. As section 63, Income tax Act, is also made applicable to proceedings under the Excess Profits Tax Act, if, during the chargeable accounting period, the firm carried on business as an undissolved firm and even if it became subsequently dissolved, by virtue of the provisions of section 44, the assessment could be made as if it were an undissolved firm. Under the provisions of section 63, Income tax Act, notice under section 13 may be issued to and served on a partner of a firm. Section 63(2) says that " Any such notice or requisition may, in the case of a firm or a Hindu undivided family, be addressed to any member of the firm or to the manager or any adult male member of the family and in the case if any other association of persons be addressed to the principal officer thereof" So far as the assessment in the present case is concerned, even assuming that by the date notice under section 13 was issued, the firm became dissolved, the machinery provided under the Act for the service of notice under section 63 can be availed of by serving notice on the partner. Notice, therefore, to a partner is treated as notice to all. " As observed by Chakravartti, C. J., in Bose vs Manindra Lal Goswami (1): " It will thus be seen that in the case of excess profits tax, there is no difference in the method of assessment prescribed for the assessment of the profits of a running business and that prescribed for (1) , 447. 797 the assessment of the past profits of a business carried on by a firm, since dissolved. In the case of a running business too, the assessment is to be made on the persons, carrying on the business, jointly. In the case of the business of a firm which has been dissolved, it is to be made on the partners jointly and severally; and since section 44 of the Act is made applicable to the assessment of pre dissolution profits of the business of a dissolved firm, such assessment can obviously be made in the partnership name. It was obviously in view of these provisions that the learned Judge in the Madras case stated that even assuming that the firm had been dissolved by the date of the issue of the notice under section 13, still, the machinery provided for by sections 13 and 14 of the Act could be availed of and the partners would continue to be jointly and severally liable to assessment under section 14 of the Act and for the amount of tax payable after determination. " In our opinion, the passages extracted correctly express the legal position resulting from the relevant provisions of the Excess Profits Tax Act, 1940. We, therefore, hold that the notice served on Thyagrajan Chettiar was valid and was binding on the appellant and that there is no basis for challenging the legality of the assessment to Excess Profits Tax. Before leaving the question of the validity of this order of assessment dated March 31, 1951, a minor point was made to which it is necessary to advert. The business income of the managing agency of Muthappa & Co. was computed at Rs. 1,02,219 for the 1st chargeable accounting period, viz., the calender year 1942, and at Rs. 6,387 for the broken period January 1, 1943, to March 4, 1943. These figurers which were the same as those in the assessment for income tax were based on the remuneration to which the firm became entitled on its managing agency agreement, with the Saroja Mills Ltd., and with which amount the latter debited itself in its accounts. The company however did not disburse this remuneration in cash, but this would make no difference to the tax liability of the firm, since the firm 's accounts were 102 798 made on the mercantile basis. The Mills raised a dispute that the managing agents had not fulfilled certain of the obligations undertaken by them in regard to the extension of the mills by increasing the spindle age, by reason of which default they claimed to have suffered a loss of income and for. that reason carried the amount of their cross claim for damages to a suspense account, instead of crediting the entire amount of managing agency remuneration to the firm. The sum of which immediate payment was thus withheld was Rs. 89,137. At the time of the Income Tax assessment for the corresponding period, Thyagrajan Chettiar who as the managing partner of the firm participated in these proceedings, had urged the contention that as the Mills had withheld remuneration to the extent of Rs. 89 thousand odd and had not credited that amount to the managing agents, the sum could not be treated as the income of the firm for the assessment year. This objection was overruled on the ground that the Mills had never disputed that the entire amount of Rs. one lakh odd was due by them to the firm and in fact had claimed to deduct that entire sum as part of their business expenditure. The sum of Rs. one lakh odd was due by them to the firm and in fact had claimed to deduct that entire sum as part of their business expenditure. The sum of Rs. one lakh odd was therefore held to have accrued to the firm as its income and that this remained unaffected by the existence of the cross claim. The contention which was repelled by the Income Tax Officer was addressed to us as a ground for disputing the inclusion of the Rs. 89 thousand odd as the income of the firm in its Excess Profits Tax assessment. We see no substance in the point urged. Learned Counsel referred us to the decision of this Court in Commissioner of Income tax, Madras vs K. R. M. T. T. Thiagaraja Chetty & Co. (1) and to the observations at p. 261. We consider that the decision far from supporting the appellant is really against him. There are therefore no legal grounds for impugning (1) ; 799 the validity of the order of assessment to Excess Pro. fits Tax dated March 15, 195 1, and we consider that. the same is binding on the business and on the owners of that business including the appellant. As a result, Writ Petition 130 of 1958 fails and has to be dismiss. The point that next calls for consideration is the subject matter of Civil Appeal 107 of 1956 and this is whether the Excess Profits Tax assessed could be validly recovered from the appellant by resort to the machinery for collection provided by section 46 of the Income Tax Act. The argument of learned Counsel for the appellant in regard to this point ",as on the following lines: Sections 45 to 47 of the Income Tax Act, 1922, which provide for the recovery of Income tax by coercive process, no doubt apply for the recovery of Excess Profits Tax by virtue of their inclusion in section 21 of the Excess Profits Tax Act as provisions applicable to the latter Act, and by reason of the assessment on the firm of Muthappa & Co. the appellant became liable to pay the Excess Profits Tax assessed. It wag nevertheless urged that the coercive process for reco very of his tax liability under section 46(2) of the Income Tax Act could not be invoked against the appellant, the submission being rested on two propositions : (1) That the appellant was not an " assessee " but only a " person liable to pay the tax " within section 29 of the Income Tax Act which runs: "When any (tax, penalty or interest) is due in consequence of any order passed under or in pursuance of this Act, the Income tax Officer shall serve upon the assessee or other person liable to pay such (tax, penalty or interest) a notice of demand in the prescribed form specifying the sum so payable. " It was further urged that as in the present case there had been no notice of demand under section 29 of the Income Tax Act specifically addressed to and served on theappellant, he could not become an " assessee in default neither would the tax payable by him become an arrear " as to permit the invocation of the coercive process under section 46(2) for recovery. (2) 800 That the procedure for recovery enacted in sections 45 to 47 including section 46(2) were confined in their application to " assessees " and " assessees in default " and did not apply to the class of " other persons liable to pay the tax " as against whom the filing of a suit for the recovery of the tax and the execution of decrees in such Suits was the only machinery through which the tax liability of this class could be enforced. For the purposes of this case we do not consider it necessary to deal with the larger second question as to whether the expression " assessee " and " assessee in default " in sections 45 & 46 of the Income Tax Act, 1922, should be held to be confined to " assessees " as distinguished from " other persons liable to pay such tax " as these expressions occur in section 29 of the Act, or whether the expression " assessee " when it occurs in sections 45 to 47 should be understood as defined in section 2(2) as including " every person by whom income tax. . . is payable ", since we are clearly of the Opinion that the appellant was an " assessee ". Section 21 of the Excess Profits Tax Act carries a proviso which reads : "Provided that references in the said provisions to the assessee shall be construed references to a person to whose business this Act applies ". In view of this provision the appellant as the partner of the " business " to which " this Act applies " would be " an assessee "and not merely an" other person liable to pay the tax". He would also be an "assessee in default" and the amount due from him would be an arrear since the notice of demand under section 29 of the Income Tax Act was served on the managing partner Thyagrajan Chettiar, and such service would be tantamount to a notice served on the appellant himself by reason of section 63 of the Income Tax Act. Indeed the entire basis on which the assessment proceedings completed after notice to Thyagrajan Chettiar as the managing partner of Muthappa & Co. have been held by us to be binding on the appellant would preclude any argument of the type advanced to challenge the binding character of the notices served. The appellant was clearly an " assessee in default " within 801 s.46(1) of the Income tax Act and the amount of tax and penalty due from him would be " an arrear within section 46(2). We therefore hold that the proceedings for the recovery of the Excess Profits Tax could properly be taken and that the order of the High Court dismissing the appellant 's petition for the issue of a writ of prohibition was correct. The appeal fails and is dismissed with costs. The petition is also dismissed but as these two have been heard together there will be no order as to costs in the petition. Both the Appeal and the Petition dismissed. [/INST] The firm consisting of the appellant and another, carrying on managing agency business, was on March 31, 1951, assessed to excess profits tax for the year 1942 and the broken period from January, 1943 to March 4, 1943. The prescribed notices were served not on the appellant but on the other partner who, under the terms of the partnership deed, was the managing partner. On March 4, 1943, the managing partner gave notice of dissolution of the firm and thereupon the appellant sued him for dissolution from such date as might be specified by the court. The trial Court upheld the dissolution as and from the date notified by the managing partner but on appeal the High Court by its judgment rendered in 1953 fixed March 10, 1949, as the date of the dissolution. An appeal taken to the Supreme Court from this decision of the High Court was still pending. The appellant challenged the validity of the order of assessment and the consequent proceedings for recovery of the tax assessed, under article 226 of the Constitution on the grounds, (a) that there was a dissolution of the firm on March 4, 1943, and that notices served thereafter on the managing partner would not bind him, (b) that there was no demand of the tax due from him under section 29 of the Indian Income tax Act and that, consequently, the tax could not be recovered from him under section 46(2) of the Act, but the High Court dismissed his application. Held, that the appellant could not be allowed to plead a prior dissolution and the assessment was binding on him. Even assuming that the partnership stood dissolved on the date of the assessment, his position would not be different. Under the Excess Profits Tax Act, 1940, the unit of assessment was not the firm but the business, and an order of assessment passed after notice to the managing partner would be valid and binding on the appellant under section 44 of the Indian Income tax Act, 1922, as modified by the Central Board of Revenue under section 21 of the Excess Profits Tax Act, 1940. A.G. Pandu Rao vs Collector of Madras, (1954) 26 I.T. R. 99 and Bose vs Manindra Lal Goswami, , approved. 789 No separate notice of demand under section 29 of the Indian Income tax Act, specifically addressed to the appellant, was necessary in order to recover the tax by the mode prescribed by section 46(2) of the Act. Under the proviso to section 21 of the Excess Profits Tax Act, 1940, the appellant was an assessee within the meaning of section 29 of the Indian Income tax Act, 1922, and the notice of demand served on the managing partner was notice to the appellant by virtue of section 63 of the latter Act made applicable by section 21 of the former. </s>

<s>[INST] Summarize the following judgement: Appeal No. 83 of 1956. Appeal from the judgment and order dated June 30, 1954, of the Patna High Court in Appeal from Original Order No. 255 of 1952. Lal Narayan Sinha and section P. Varma, for the appellant. A. V. Viswanatha Sastri, B. K. Saran, D. P. Singh and K. L. Mehta, for the respondent. September 20. The Judgment of the Court was delivered by AYYANGAR J. The State of Bihar is the appellant in this appeal which comes before us on a certificate granted by the High Court of Patna under article 133(1) (c) of the Constitution. The principal point of law raised for decision in the appeal is whether a State is liable to be proceeded against under 0. 39, r. 2(3) of the Code of Civil Procedure, when it wilfully disobeys an order of temporary injunction passed of nomine against it. There is little controversy regarding the facts, but they have to be set out to appreciate some of the matters debated before US. 730 The Bihar Land Reforms Act, 1950 (which we shall refer to as the Act), which provided for the transference to the 'State of the interests of proprietors and ,tenure holders in estates within the State, received the assent of the President on September 11, 1950, and was published in the Bihar Gazette on September 25, 1950. Thereupon Rani Sonabati Kumari, the respondent, who was the proprietress of the Ghatwali Estate of Handwa situated within the State, instituted against the State of Bihar, in the Court of the Subordinate Judge, Dumka, on the 20th November, 1950, Title Suit 40 of 1950, inter alia for a declaration that the Act was ultra vires of the Bihar Legislature and was therefore " illegal, void, unconstitutional and inoperative " and that the defendant had " no right to issue any notification under the said Act or to take possession or otherwise meddle or interfere with the management of the estate in suit " and for a permanent injunction " restraining the defendant, its officers, servants, employees and agents from issuing any notification under the provisions of the Bihar Land Reforms Act, in respect of the plaintiff 's estate " and also " from taking possession of the said estate and from meddling or interfering in any way with the management thereof ". Along with the plaint, the respondent filed a petition for a temporary injunction in which the prayer ran: " It is therefore prayed that a temporary injunction be issued against the defendant, its officers, employees, servants or agents restraining them from issuing any notification with regard to the plaintiff 's estate under the Bihar Land Reforms Act, 1950 (Act XXX of 1950) and from meddling or interfering with the possession of the plaintiff to the properties in suit, till the disposal of this suit ". The Court issued an ex parte ad interim injunction presumably in terms of the prayer in the petition, and directed notice of the petition to be served on the State of Bihar who filed their counter affidavit on December 9, 1950, opposing the grant of any interim injunction and praying that the petition be dismissed 731 with costs. The petition was heard in the presence of both the parties on March 19, 1951, and the Subordinate Judge made the ad interim injunction absolute and the order went on to add " and it is ordered that the defendant shall not issue any notification for taking over possession of the suit properties under the Land Reforms Act and shall not interfere with or disturb in any manner the plaintiffs possession over these properties under any of the provision of the aforesaid Act until this suit is finally disposed of by this Court ". The order was appealable under 0. 43, r. (1) (r) of the Code, but the State preferred no appeal and so it became final. On May 17, 1952, an application was filed by the State for vacating the order, on the ground that the validity of the Act had been upheld by this Court in another case involving the same points and that thereafter the plaintiff had no prima facie case to sustain the injunction. Before however this application invoking the powers of the Court under 0. 39, r. 4 of the Code came on for hearing (it was actually heard on May 30, 1952, when it reserved it for orders to be pronounced on June 2, 1952) the State of Bihar issued on May 19, 1952, a notification under section 3(1) of the Act declaring that the Handwa Raj Estate belonging to the respondent, had passed to and became vested in the State under the provisions of the Act. The notification ran: "In exercise of the powers conferred by sub. section (1) of section 3 of the Bihar Land Reforms Act, 1950 (Bihar Act XXX of 1950), the Governor of Bihar is pleased to declare that the Estates described in the First Schedule and the tenures described in the Second Schedule hereto annexed belonging to the proprietor and the tenure holder named in the respective schedules have, with effect from the date of the publication of this notification in the Bihar Gazette, passed to and became vested in the State under the provisions of this Act ". The Handwa Raj Estate with the name of the respondent as the tenure holder was specified in the Second Schedule. 732 This was followed by an authentication in these terms: By order of the Governor of Bihar, K. K. Mitra, Additional Secretary to Government. " On coming to know of this notification the respondent moved the Subordinate Judge on June 2, 1952, for taking action against the defendant in the suit, for contempt under 0. 39, r. 2(3) of the Code of Civil Procedure. When notice of this petition was served on the State it submitted an answer in these terms: "That in obedience to the said order, the defendant begs to submit that in view of the Article 31B of the Constitution, the aforesaid Notification, dated 19 5 52, and published in Bihar Gazette, dated 21.5.52 is valid, legal and authorised and the publication of the same does, not constitute contempt of court. " The only matter here set out, viz., that the constitutional validity of the Act had been affirmed by an amendment of the Constitution, could obviously afford no defence to the breach of an injunction order and indeed this was not sought. to be supported before us. The learned Subordinate Judge passed an order on July 31, 1952, which ran " that in view of the notification constituting a breach of the injunction, the property of the defendant State of Bihar shall be attached to the value of Rs. 5,000. The plaintiff is directed to file the list of properties of this value and necessary requisites for issue of the attachment with in seven days of this order. " From this order the State preferred an appeal to the High Court. The appeal was, however, dismissed by the High Court by judgment rendered on June 30, 1954, and by reason of a certificate granted by the learned Judges under article '133(1)(c) the State has preferred this appeal. The arguments addressed to us by Mr. Lal Narayan Sinha who appeared for the appellant State, when closely analysed resolved themselves into five points: 733 (1) That the order of the Subordinate Judge dated March 19, 1951, did not on its ' plain language, interdict the issue of a notification under section 3(1) of the Act, but merely directed the State, not to disturb the possession of the plaintiff. It was common ground that beyond the issue of the notification, neither the State, nor its officers or servants had done anything by way of interfering with the possession of the plaintiff. (2) That at the worst the order of the Subordinate Judge, having regard to the language employed, was reasonably capable of two interpretations (a) that the direction to the State included a prohibition against issuing a notification under section 3(1), and (b) that there was no interdiction against notifications under section 3(1) but only against notifications which directly involved or authorised interference with the plaintiff 's possession of her Estate. Proceedings for, contempt even for the enforcement of orders of Civil Courts being quasi punitive in their nature, it was urged that a party who bona fide conducted himself on the basis of one of two possible interpretations could not be held guilty of contempt. (3) That the rule that the Crown or the State could not be proceeded against for a tort or wrong doing applied to the present case, since disobedience of an order of injunction is virtually a wrong for which 0. 39, r. 2(3) provides the punishment or compensation. (4) That a State is not bound by a Statute unless it is named therein expressly or by necessary implication, and as there is no mention of a State in specific terms in 0. 39, r. 2(3), a State cannot, as such, be proceeded against for disobedience of an order of Court. (5) Even if a State could be proceeded against for willful disobedience of an order, the publication of the notification under section 3(1) which was the contempt alleged, was not proved with certainty, to be an act of the State Government, and that in the absence of a definite proof of this fact, the liability of the State could not arise ; and that if the notification dated May 19, 1952, constituted the act of disobedience, 734 then only the Additional Secretary, Mr. K. K. Mitra who authenticated the notification could, if at all, be made liable. It would be convenient to deal with these 'matters in that order. The first point urged was that the order of the Subordinate Judge dated March 19, 1951, did not in terms or in substance prohibit the State from issuing a notification under section 3(1). Section 3(1) of the Act runs: " The State Government may, from time to time, by notification, declare that the estates or tenures of a proprietor or tenure holder, specified in the notification, have passed to and become vested in the State. " It was urged that the Subordinate Judge by his order directed the State " not to issue any notification for taking possession " and as the notification under section 3(1) does not proprio vigore affect or interfere with the possession of the proprietor or tenure holder, the issue of such a notification was not within the prohibition. The same argument was addressed to the High Court and was repelled by the learned Judges and in our opinion correctly. In the first place, the only "notification" contemplated by the provisions of the Act immediately relevant to the suit, was a notification under section 3(1). Such a notification has the statutory effect of divesting the owner of the notified estate of his or her title to the property and of trans ferring it to and vesting it in the State. The State is enabled to take possession of the estate and the properties comprised in it by acting under section 4, but the latter provision does not contemplate any notification, only executive acts by authorized officers of the State. Of course, if action had been taken under section 4, and the possession of the respondent had been interfered with, there would have been a further breach of the order which directed the State. not to interfere with or disturb in any manner, the plaintiff 's possession. What we desire to point out is that the order of the Court really consisted of two parts the earlier directed against the defendant publishing a notification which in the context of the relevant statutory 735 provisions could only mean a notification under section 3(1) and that which followed, against interfering with the plaintiff 's possession and the fact that the second part of the order was not contravened is no ground for holding that there had been no breach of the first part. In the next place, the matter is put beyond the pale of controversy, if the order were read, as it has to be read, in conjunction with the plaint and the application for a temporary injunction. Mr. Sinha did not seriously contend that if the order of the Court were understood in the light of the allegations and prayers in these two documents, the reference to the " notification " in it was only to one under section 3(1) of the Act, and that the injunction therefore was meant to cover and covered such a notification. We, therefore, hold that this objection must fail. (2) The second contention urged was that even if on a proper construction of the order, read in the light of the relevant pleadings, the State Government was directed to abstain from publishing a notification under section 3(1) of the Act, still, if the order was ambiguious and equivocal and reasonably capable of two interpretations, a party who acted on the basis of one of such interpretations could not be held to have wilfully disobeyed the. order. Stated in these terms, the contention appears unexceptionable. For its being accepted in any particular case, however, two conditions have to be satisfied: (1) that the order was ambiguous and was reasonably capable of more than one interpretation, (2) that the party being proceeded against in fact did not intend to disobey the order, but conducted himself in accordance with his interpretation of the order. We are clearly of the view that the case before us does not satisfy either condition. In dealing with the first contention urged by learned Counsel, we have pointed out the true construction of the order and in our opinion that is the only construction which it could reasonably bear. But this apart, even if the order was equivocal as learned Counsel puts it, still, it is of no avail to the appellant, unless the State Government understood it 94 736 in the sense, that the order was confined to acts by which the possession of the plaintiff was directly interfered with and the notification was issued on that understanding and belief. There are two pieces of conduct on the part of the State Government which are wholly inconsistent with the theory that the order was understood by them as learned Counsel suggested. The first is that before the notification under section 3(1) was issued they applied to the Court to vacate the order of injunction so that they might issue notification, and it was during the pendency of this application that the notification was issued without waiting for the orders of the Court on their petition. The second is even more significant. When notice was issued to the defendant to show cause why it should not be committed for contempt, one would naturally expect, if the point urged has any validity, the defence to be based on a denial of disobedience, by reference to the sense in which the order was understood. We have already extracted the relevant paragraph of the counter affidavit and in this there is no trace of the plea now put forward. Even in the memorandum of appeal to the High Court against the order of the learned Subordinate Judge under 0. 39, r. 2(3) there is no indication of the contention now urged and though a faint suggestion of inadvertence on the part of some officer appears to have been put forward during the stage of argument before the High Court, the point in this form was not urged before the learned Judges of the High Court, as seen from the judgment. The question whether a party has understood an order in a particular manner and has conducted himself in accordance with such a construction is primarily one of fact, and where the materials before the Court do not support such a state of affairs, the Court cannot attribute an innocent intention based on presumptions, for the only reason, that ingenuity of Counsel can discover equivocation in the order which is the subject of enforcement. The argu ment being in effect that a party who had bona fide misconstrued the order and acted on that basis, could not be held to have wailfully and deliberately disobeyed 737 the order, such a plea could obviously be urged only when it is proved that a party was in fact under a misapprehension as to the scope of the order, but this was never the plea of the Government right up to the stage of the hearing before the High Court. Besides, if the case of the State was, that acting bona fide it had committed an error in construing the order, one would expect an expression of regret for the unintentional wrong, but even a, trace of contrition is singular lacking at any stage of the proceedings. We are clearly of the opinion that there is no factual basis for sustaining the second ground urged by learned Counsel. (3) Turning to the next point urged, learned 'Counsel amplified it in these terms. No doubt, having regard to article 300 of the Constitution which practically reproduces the earlier statutory provisions in that behalf going back to 1858, States are not immune from liability to be sued. Learned Counsel added that he would not dispute that Title Suit 40 of 1950 was properly laid and that the Court had jurisdiction to entertain it, as also jurisdiction to pass the order of temporary injunction against the defendant State pending. the decision of the suit. But learned Counsel urged that it did not automatically follow that the State was amenable to proceedings, for disobedience of the injunction. Proceedings for contempt even for enforcing an order of a Civil Court, he submitted, were really a punishment for wrong doing and in essence, therefore, quasi criminal. For this reason he contended that article 300 which permitted suits to be filed against the Union and the States could not be held to authorise proceedings of such a quasi criminal nature, and that as a result the Common Law rules, that the King could do no wrong and that the Crown could not be sued for a tort, were attracted. In this connection learned Counsel invited our attention to the decisions in District Board of Bhagalpur vs Province of Bihar(1) and Tarafatullah vs section N. Maitra (2). In the first of these cases, a large number of English and Indian decisions on the liability of the Crown in (1) A.I.R. 1954 Pat. 529. (2) A.I.R. 1952 Cal. 919, 927. 738 tort were discussed. The question for consideration before the learned Judges was whether the suit before the Court against the Government could be legally maintainable and as to the scope and limits of the rule,, respondent superior" in such actions against the State but both these matters are far removed from the pale of the controversy before us. In regard to the other ruling of the learned Judges of the Calcutta High Court, learned Counsel relied not so much on the decision itself but on the following observations of Mukerji, J. (1): " A State as such cannot be said to commit contempt. In the case of the State the allegation must be against a particular officer or officers of the State. Where as in this case an order was obtained against the State. in a civil proceeding restraining certain acts of the State, and it is alleged by the complainant or the petitioner that there has been a contempt by breach of that order, the petitioner for contempt will have to take out the Rule for contempt against the particular officer or officers who has or have disobeyed that order. In such a petition for contempt the Rule must be asked against an individual and not against the State. Article 300 of the Constitution of India provides for proceedings by way of suit against the State or the Union of India and cannot be extended to apply to contempt proceedings ". In order however to appreciate the observations it is necessary to consider briefly the facts of the case. The decision was concerned with an application to commit the respondents for contempt for disobedience to an order of ad interim injunction granted by a single Judge of the High Court on a petition for the issue of a writ of Certiorari under article 226 of the Constitution. No doubt, the order of temporary injunction was issued against the Government, but the disobedience complained of was not any act of the Government as such, but of certain officers. Not with. standing this, the Secretary to Government who had been formally impleaded as representing the Government, was sought to be proceeded against personally (1) A.I.R. 1952 Cal. 927. 739 for contempt and the prayer being that he as representing the Government should be committed to prison. As Chakravartti, C. J., pertinently pointed out, a more ridiculous prayer could not be imagined. The learned Judges further found that as a fact no disobedience of the order had been proved. The question therefore whether the Government could be liable to be proceeded against for contempt for disobedience of an order which a Court has jurisdiction to pass and which bound the Government, the act constituting the contempt being unmistakably an act for which Government could not as such disclaim responsibility did not arise for consideration in that case. Having regard to the findings of fact reached by the Court, the observations regarding the scope of the liability of Government were wholly orbiter. In regard to the passage relied on we need only say that observations about the ambit of article 300 of the Constitution are too widely expressed and do not take into account, the provisions of the Civil Procedure Code 0. 21, r. 32 & 0. 21, r. 39(2)(3) which directly bear on the matter and which we shall discuss presently. Further, they cannot also apply to those cases where the disobedience takes the form of a formal Government order as in this case. In this connection we prefer the approach to the question indicated by the learned C. J., who said: " I do not say that in fit cases a writ for contempt may not be asked for against a corporation itself, or against a Government. In what form, in such a case, any penal order, if considered necessary, is to be passed and how it is to be enforced are different matters which do not call for decision in this case. In England, there is a specific rule providing for sequestration of the corporate property of the party concerned, where such party is a corporation. I am not aware of any similar rule obtaining in this country, but, I do not consider it impossible that in a fit case a fine may be imposed and it may be realised by methods analogous to sequestration which would be a distress warrant directed against the properties of the Government or the Corporation 740 Learned Counsel laid considerable stress on the proceedings under 0. 39, r. 2(3) being quasi criminal, in an attempt to establish that the State could not be proceeded against for such a criminal wrong. Though undoubtedly proceedings under 0. 39, r. 2(3), Civil Procedure Code, have a punitive aspect as is evident from the condemner being liable to be ordered to be detained in civil prison, they are in substance designed to effect the enforcement of or to execute the order. This is clearly brought out by their identity with the procedure prescribed by the Civil Procedure Code for the execution of a decree for a permanent injunction. Order 21, r. 32 sets out the method by which such decrees could be executed and cl. (1) enacts " where the party against whom a decree. . . for an injunction has been passed, has had an opportunity for obeying the decree and has willfully failed to obey it, the decree may be enforced, in the case of a decree . . . for an injunction by his detention in the civil prison, or by the attachment of his property or by both Clauses 2 and 3 of this rule practically reproduce the terms of cls. 4 and 3 respectively of 0. 39, r. 2, and the provisions leave no room for doubt that 0. 39, r. 2(3) is in essence only the mode for the enforcement or effectuation of an order of injunction. While on the provisions of 0. 21, r. 32, it may be pointed out that learned Counsel for the State does not contend that a State Government against whom a decree for a permanent injunction has been passed is not liable to be proceeded against under this provision of the Code in the event of the decree not being obeyed by them. No doubt the State Government not being a natural person could not be ordered to be detained in civil prison, On the analogy of Corporations; for which special provision is made in 0. 39, r. 5, but beyond that,, both when a decree for a permanent injunction is executed and when an order of temporary injunction is enforced the liability of the State Government to be proceeded against appears to us clear. The third point urged lacks substance and is rejected. Some point was sought to be made of the fact that 741 as the State was a juristic entity merely, the wrong which constituted the disobedience, must have been the act of some servant or agent of the Government and that except on the principle of vicarious liability the State could not be liable. This argument which is partly based on the observations of Mukherji, J., in the passage already extracted would if accepted deny that there could be any action by the State at all, is really part of the last submission and could conveniently be dealt with along with it. Besides, it need only be mentioned that the fact that officers and servants of Government could be dealt with as individuals bound by the orders passed against the defendant Government, nor the fact that they would be liable in ' contempt is no ground at all for holding that the State Government itself would not be liable for their own act. (4) The invocation of the rule of construction that the Crown was not bound by a statute unless by express words or by necessary implication the intention so to bind was manifested, was the next submission of learned Counsel, reliance being placed for the position, on the recent decision of this Court in Director of Rationing & Distribution vs Corporation of Calcutta (1). We shall proceed to consider the soundness of the contention that on a proper construction of the Civil Procedure Code the State of Bihar is not within 0. 39, r. 2(3). Article 300 of the Constitution permits suits, which before the Constitution could have been filed against the Central and Provincial Governments respectively, to be filed against the Union and the State. As already stated, there is no dispute that ' having regard to the cause of action alleged in the plaint, Title Suit 40 of 1950 could be properly laid against the State and the plaintiff could, if she was able to make good her allegations of fact and law, be entitled to be granted the reliefs prayed for in her suit including the relief for a permanent injunction restraining the State from issuing a notification under a. 3(1) of the Act and from interfering with her possession of (1) ; 742 the estate of Handwa. It is also admitted that the Subordinate Judge had jurisdiction to pass the order of temporary injunction against the State Government and that the order bound them. What is contended however is that the method of enforcing that order provided for in 0. 39, r. 2(3) of the Code is not available against the State Government, because the State Government is not named in that sub rule expressly or even by necessary implication. An examination however of the provisions of the Code and the Scheme underlying it in relation to proceedings against Government establishes that this submission is wholly untenable. The Code of Civil Procedure does not determine whether any particular suit or class of suits could be filed against the Government or not, these being matters of substantive law. But when in law a suit could be properly filed against Government be it the Union or the State, it makes a complete provision for the procedure applicable to such suits and the type of orders which Courts could pass in such suits and how these orders could be enforced. Part IV of the Code comprising sections 79 to 82, sets out the details of the pro cedure to be followed in suits against Government. Section 79 prescribes what, the cause title of suits against Government should be, the expression 'Government ' being used to designate both the Union as well as the State Governments. Section 80 provides making a special provision not applicable to suits against private parties, for a two months ' notice prior to suit. If Government were a party to a suit, it necessarily follows that where the plaintiff succeeds there might be a decree against the Government the Union or the State and section 82 lays down special rules for the execution of such decrees. In the 1st Schedule to the Code, there is a separate chapter Chapter XXVII, dealing with suits against Government, in which provision is specially made for adequate time being granted to it for conducting the various stages of the proceedings before Courts. The foregoing, in our opinion, makes it clear that the State is bound by the Code of Civil Procedure, the 743 scheme of the Code being that subject to any special provision made in that regard, as respects Governments, it occupies the same position as any other party to a proceeding before the Court. We are further satisfied that even apart from the Scheme of the Code, the State, as a party defendant is plainly within the terms of 0. 39, r. 2(3) of the Code. There is here no controversy that the Subordinate Judge had jurisdiction to pass the interim order of injunction against the State on the terms of 0. 39, r. 2(1) which reads: "In any suit for restraining the defendant from committing injury of any kind, whether compensation is claimed in it or not, the plaintiff may at any time after the filing of the suitapply to the Court for a temporary injunction to restrain the defendant from committing the injury complained of. . . . ." The reference to the " defendant " in the sub rule precludes any argument against the State being exempt from or being outside the statute. The entire argument on this part of the case was based on the difference between the language employed in cl. (1) extracted above and cl. (3) of the rule making provision for the manner in which disobedience to orders passed under cl. (1) could be dealt with. Clause (3) runs: "In case of disobedience, or of breach of any such terms, the Court granting an injunction may order the property of the person guilty of such disobedience or breach to be attached, and may also order such person to be detained in the civil prison for a term not exceeding six months, unless in the meantime the Court directs his release." Learned Counsel urged that cl. (3) discarded the use of the expression " defendant " employed in cl. (1) which would have included the " State" in cases where the State was a party defendant, and had designated the party against whom the injunction order could be enforced as "the person guilty of the disobedience " and with a further provision empowering the 95 744 Court to order the detention of such person " in Civil prison. The word " person it was urged was at the best a neutral expression, which in the absence of compelling indication, was not apt to include " a State " and particularly so in the light of the rule of Construction approved by this Court in The Director of Rationing vs Corporation of Calcutta (1). It was further pressed upon us that the construction suggested would not render injunction orders passed on the State when it was a defendant brutum fulmen, because, the State as a juristic person could act only through human agency and there would always be some officer a natural " person guilty of disobedience " in every case where orders passed against a State were disobeyed. We are clearly of the opinion that the entire argument should be rejected. We feel wholly unable to accept the construction suggested of the expression " person guilty of disobedience " in the clause. The reason for the variation in the phraseology employed in cls. (1) and (3) of 0. 39, r. 2 is not far to seek. Under the law when an order of injunction is passed, that order is binding on and enforceable not merely against the persons eo nomine impleaded as a party to the suit and against whom the order is passed but against " the agents and servants, etc." of such a party. If such were not the law, orders of injunction would be rendered nugatory, by their being contravened by the agents and servants of parties. For that reason, the law provides that in order that a plaintiff might seek to enforce an order against a servant or an agent of the defendant, these latter need not be added as defendants to the suit and an order obtained specifically against the man order against the defendant sufficing for this purpose. If such agents or servants, etc., are proved to have formal notice of the order and they disobey the injunction, they are liable to be proceeded against for contempt, without any need for a further order against them under 0. 39, r. 2(1). This legal position is brought out by the terms of an injunction order set out in Form 8 of Appendix F to the Code which (1) ; 745 reads:"The Court doth order that an injunction be awarded to restrain the defendant C. D., his servants, agents and workmen, from. . . . It is not suggested that the form which the order of the Subordinate Judge took in this case, departed from this model. If such is the scope of an order for injunction, it would be apparent that the expression " person " has in 0. 39, r. 2(3) been employed merely compendiously to designate everyone in the group " Defendant, his agents, servants and workmen " and not for excluding any defendant against whom the order of injunction has primarily been passed. It would therefore follow that in cases where the State is the defendant against whom an order of injunction has been issued, it is " expressly " named in the clause and not even by necessary implication, and the rule of construction invoked does not in any manner avail the appellant. The matter may also be approached from a broader angle. Where a Court is empowered by statute to issue an injunction against any defendant, even if the defendant be the State the provision would be frustrated and the power rendered ineffective and unmeaning if the machinery for enforcement specially enacted did not extend to every one against whom the order of injunction is directed. Apart, therefore, from a critical examination of the phraseology of 0. 39, r. 2(3), the obligation on the part of the State to obey the injunction and be proceeded against for disobedience if it should take place would appear to follow by necessary implication. As Maxwell (1) puts it " The Crown is sufficiently named in a statute when an intention to include it is manifest ". The only point remaining for consideration is as to whether the publication of the notification under section 3(1) which was treated by the Subordinate Judge to be the disobedience, had been established to be " the act " of the State. The entirety of the argument on this part of the case was rested on the terms of article 154(1) of the Constitution reading: (1) Maxwell on Interpretation of Statutes, 10th Edition, P. 140. Moore V. SMith, ; 746 " The executive power of the State shall be vested in the Governor and shall be exercised by him either directly or through officers subordinate to him in accordance with this Constitution". It was urged that the publication of the notification was " an executive act " an exercise of the executive power of the State and since such a power could be exercised either by the Governor directly or through officers subordinate to him, it could not be predicated, from the mere fact that the notification was purported to be made in the name of the Governor, in Conformity with the provisions of article 166(1) that it was the Governor who was responsible for the notification and not some officer subordinate to him. On this reasoning the further contention was, that unless the respondent proved that it was the Governor himself who had authorised the issue of the notification, the State or the State Government could not be fixed with liability therefore, so as to be held guilty of disobedience of the order of injunction. The submission of learned Counsel is correct to this extent that the process of making an order precedes and is different from the expression of it, and that while article 166(1) merely prescribes how orders are to be made, the authentication referred to in article 166(2) indicates the manner in which a previously made order should be embodied. As observed by the Privy Council in King Emperor vs Sibnath Banerji (1)with reference to the term " executive power " in Ch. 2 of Part 3 of the Government of India Act, 1935, corresponding to Part VI, Ch. 11 of the Constitution) " the term 'executive ' is used in the broader sense as including both a decision as to action and the carrying out of the decision ". Section 3(1) of the Act confers the power of issuing notifications under it, not on any officer but on the State Government as such though the exercise of that power would be governed by the rules of business framed by the Governor under article 166(3) of the Constitution. But this does not afford any assistance to the appellant. The order of Government in the (1) (1945) L. R. 72 I. A. 241 747 present case is expressed to be made " in the name of the Governor " and is authenticated as prescribed by article 166(2), and consequently " the validity of the order or instrument cannot be called in question on the ground that it is not an order or instrument made or executed by the Governor ". Authorities have, no doubt, laid down that the validity of the order may be questioned on grounds other than those set out in the Article, but we do not have here a case where the order of the Government is impugned on the ground that it was not passed by the proper authority. Its validity as an order of Government is not in controversy at all. The only point canvassed is whether it was an order made by the Governor or by someone duly authorised by him in that behalf within article 154(1). Even assuming that the order did not originate from the Governor personally, it avails the State nothing because the Governor remains responsible for the action of his subordinates taken in his name. In Emperor vs Sibnath Banerji (1), already referred to, Lord Thankerton pointing out the distinction between delegation by virtue of statutory power therefore and the case of the exercise of the Governor 's power by authorized subordinates under the terms of a. 49(1) of the Government of India Act, 1935 (corresponding to article 154(1) ), said: " Sub a. 5 of section 2 (of the Defence of India Act, 1939) provides a means of delegation in the strict sense of the word, namely, a transfer of the power or duty to the officer or authority defined in the sub. section, with a corresponding divestiture of the Governor of any responsibility in the matter, whereas under section 49(1) of the Act of 1935, the Governor remains responsible for the action of his subordinates taken in his name. " This last point also is therefore without force and has to be rejected. Before concluding, we consider it proper to draw attention to one aspect of the case. It is of the essence of the rule of law that every authority within the State (1) (1945) L.R. 72 I.A. 241. 748 'including the Executive Government should consider itself bound by and obey the Law. It is fundamental to the system of polity that India has adopted and which is embodied in the Constitution that the Courts of the land are vested with the powers of interpreting the law and of applying it to the facts of the cases which are properly brought before them. If any party to the proceedings considers that any Court has committed any error, in the understanding of the law or in its application, resort must be had to such review or appeals as the law provides. When once an order has been passed which the Court has jurisdiction to pass, it is the duty of all persons bound by it to obey the order so long as it stands, and it would tend to the subversion of, orderly administration and civil Government, if parties could disobey orders with impunity. If such is the position as regard private parties, the duty to obey is all the more imperative in the case of Governmental authorities, otherwise there would be a conflict between one branch of the State polity, viz., the executive and another branch the Judicial. If disobedience could go unchecked, it would result in orders of Courts ceasing to have any meaning and judicial power itself becoming a mockery. When the State Government obeys a law, or gives effect to an order of a Court passed against it, it is not doing anything which detracts from its dignity, but rather, invests the law and the Courts with the dignity which are their due, which enhances the prestige of the executive Government itself, in a democratic set up. We consider that on the facts of this case there was no justification, legal or otherwise for the State Government to have rushed the notification under section 3(1), when its application to modify or vacate the order for interim injunction was pending before the Subordinate Court. But more than that, when possibly by failure to appreciate their error, the notification had been published, and the propriety and legality of its action was brought up before the Court by an application under 0. 39, r. 2(3), the attitude taken up by the State Government and persisted in upto hearing before us, has been one which we can 740 hardly commend. If the Government had deliberately intended to disobey the order of the Court, because for any reason they considered it wrong, their conduct deserves the severest condemnation. If on the other hand it was merely a case of inadvertence and arose out of error, nothing would have been lost and there was everything to be gained, even in the matter of the prestige of the Government, by a frank avowal of the error committed by them and an expression of regret for the lapse, and it is lamentable that even at the stage of the hearing before us, there was no trace of any such attitude. The appeal fails and is dismissed with costs. Appeal dismissed. [/INST] The respondent sued the State of Bihar for a declaration that the Bihar Land Reforms Act, 1950, was ultra vires, void and unconstitutional and for a permanent injunction restraining the State and its officers or agents from issuing any notification thereunder in respect of her estate or taking possession thereof and on a petition filed along with the plaint obtained an order of temporary injunction against the State in terms of her prayer, pending the hearing of the suit. More than a year thereafter, the State made an application under 0. 39, r. 4 of the Code for a discharge of the order of temporary injunction on the ground that the impugned Act had in another case been declarer valid by the Supreme Court. Before that application could, however, be heard, the State of Bihar, on May 19, 1952 issued a notification under section 3(1) of the Act, authenticated by the Additional Secretary to the Government, declaring that, amongst others, the respondent 's estate had vested in the State of Bihar under the provisions of the Act. Thereupon the respondent moved the trial Court for taking action against the State under 0. 39, r. 2(3) of the Code. The contention on behalf of the State was that in view of article 31 B of the Constitution the issue of the notification was lawful and could not constitute contempt of Court. The Subordinate judge held that this was no defence to the application by the respondent and directed attachment of the appellant 's property to the value of Rs. 5,000 and the High Court on appeal affirmed that decision. Held, that the courts below took the correct view of the matter and that the appeal must be dismissed. The procedure laid down by 0. 39, r. 2(3) of the Code of Civil Procedure is remedial and essentially one for the enforcement or execution of an order of temporary injunction passed under 0. 39, r. 2(1) and is available against the State although the provision for detention may not apply to it. It is wrong to say that it is either contrary to article 300 of the Constitution or hit by the rule that no action lies against the State in tort or for a wrong doing entailing punishment or compensation. District Board of Bhagalpur vs Province of Bihar, A.I.R. 1954 729 Pat. 529 and Tarafatullah vs section N. Maitra, A.I.R. 1952 Cal. gig, distinguished. There is also no basis for the contention that the State is not expressly or by necessary implication mentioned in 0. 39, r. 2(3). The word 'person ' used by it, properly construed, includes the defendant against whom the order of injunction is primarily issued as also the defendant 's agents, servants and workmen. Since the court 's power to issue an order of temporary injunction against the State under 0. 39, r. 2(1) cannot be in doubt, disobedience of such an order when issued necessarily attracts 0. 39, r. 2(3) of the Code. Director of Rationing & Distribution vs Corporation of Calcutta, ; , held inapplicable. Held, further, that when once an order is passed which the Court has jurisdiction to pass, it is the duty of the State no less than any private party to obey it so long as it stands, and the conduct of the State Government in the instant case in issuing the notification at a time when its application for vacating the injunction was still pending and the attitude taken up by it after the application under 0. 39, r. 2(3) was made and persisted in till the end must be disapproved. </s>

<s>[INST] Summarize the following judgement: Civil Appeal No. 183 of 1956. Appeal from the judgment and order dated September 11, 1953, of the Bombay High Court, in Income tax Reference No. 23 of 1953. A. V. Viswanatha Sastri, section, N. Andley and J. B. Dadachanji, for the appellants. M. C. Setalvad, Attorney General for India, K. N. Rajagopal Sastri, and D. Gupta, for the respondent. August 4. The Judgment of the Court was delivered by DAS C. J. This is an appeal from the judgment and order of the High Court of Bombay delivered on September 11, 1953, on a reference made by the Income tax Appellate Tribunal under section 66 (1) of the Indian Income tax Act, whereby the High Court answered the referred question in the affirmative and directed the appellant to pay the costs of the respondent. The appellant, which is a registered firm and is hereinafter referred to as " the assessee firm ", was appointed the managing agent of Godrej Soaps Limited (hereinafter called the " managed company "). It has been working as such managing agent since October 1928 upon the terms and conditions recorded originally in an agreement dated October 28, 1928, 529 which was subsequently substituted by another agreement dated December 8, 1933, (hereinafter referred to as " the Principal Agreement "). Under the Principal Agreement the assessee firm was appointed Managing Agent for a period of thirty years from November 9, 1933. Clause 2 of that Agreement provided as follows: " The Company shall during the subsistence of this agreement pay to the said firm and the said firm shall receive from the company the following remuneration, that is to say: (a) A commission during every year at the rate of twenty per cent. on the net profits of the said company after providing for interest on loans, advances and debentures (if any), working expenses, repairs, outgoings and depreciation but without any deduction being made for income tax and super tax and for expenditure on capital account or on account of any sum which may be set aside in each year out of profits as reserved fund. (b) In case such net profits of the Company after providing for interest on loans, advances and debentures (if any), working expenses, depreciation, repairs and outgoings and after deduction therefrom the commission provided for by sub clause (a) shall during any year exceed a sum of rupees one lac the amount of such excess over rupees one lac up to a limit of rupees twenty four thousand. (c) In case such net profits of the Company after providing for interest on loans, advances and debentures (if any), working expenses, depreciation, repairs and outgoings and after also deducting therefrom the commission provided for by subclause (a) shall during any year exceed a sum of rupees one lac and twenty four thousand one half of such excess over rupees one lac and twenty four thousand shall be paid to the firm and the other half to the shareholders. " Some of the shareholders and directors of the managed company felt that the scale of remuneration paid to the assessee firm under cl. (2) of the Principal Agreement was extraordinarily excessive and unusual and 530 should be modified. Accordingly negotiation were started for a reduction of the remuneration and, after some discussion, the assessee firm and the managed company arrived at certain agreed modifications which were eventually recorded in a special resolution passed at the extraordinary general meeting of the managed company held on October 22, 1946. That, resolution was in the following terms: " Resolved that the agreement arrived at between the managing agents on the one hand and the directors of your Company on the other hand, that the managing agents, in consideration of the Company paying Rs. 7,50,000 as compensation, for releasing the Company from the onerous term as to remuneration contained in the present managing agency agreement should accept as remuneration for the remaining term of their managing agency ten per cent. of the net annual profits of the Company as defined in section 87C, Sub section (3) of the Indian Companies Act in lieu of the higher remuneration to which they are now entitled under the provisions of the existing managing agency agreement be and the same is hereby approved and confirmed. Resolved that the Company and the managing agents do execute the necessary document modifying the terms of the original managing agency agreement in accordance with the above agreement arrived at between them. Such document be prepared by the Company 's solicitors and approved by the managing agents and the directors shall carry the same into effect with or without modification as they shall think fit." The agreed modifications were thereafter embodied in a Supplementary Agreement made between the assessee firm and managed company on March 24, 1948. After reciting the appointment of the assessee firm as the Managing Agent upon terms contained in the Principal Agreement and further reciting the agreement arrived at between the parties and the resolution referred to above, it was agreed and declared as follows 531 " 1. That the remuneration of the Managing Agents as from the 1st day of September 1946 shall be ten per cent. of the net annual profits of the Company as defined in section 87C, sub section (3) of the Indian Companies Act, 1913, in lieu of the higher remuneration as provided in the above recited cl. (2) of the Principal Agreement. Subject only to the variations herein contained and such other alterations as may be necessary to make the Principal Agreement consistent with these presents the principal agreement shall remain in full force and effect and shall be read and construed and be enforceable as if the terms of these presents were inserted therein by way of substitution. " The sum of Rs. 7,50,000 was paid by the managed company and received by the assessee firm in the calendar year 1947 which was the accounting year for the assessment year 1948 49. In the course of the assessment proceedings for the assessment year 1948 49, it was contended by the departmental representative, (i) that though the payment of Rs. 7,50,000 had been described as compensation, the real object and consideration for the payment was the reduction of remuneration, (ii) that being the character of payment, it was a lump sum payment in consideration of the variation of the terms of employment and was, therefore, not a capital receipt but was a revenue receipt, and (iii) that there was, in fact, no break in service and the payment was made in course of the continuation of the service and, therefore, represented a revenue receipt of the managing agency business of the assessee firm. The assessee firm, on the other hand, maintained that the sum of Rs. 7,50,000 was a payment made by the managed company to the assessee firm wholly in discharge of its contingent liability to pay the higher remuneration and in order to discharge itself of an onerous contingent obligation to pay higher_ remuneration and it was, therefore, a capital expenditure incurred by the managed company and a capital receipt obtained by the assessee firm and was as such not liable to tax. 532 The Income tax Officer treated the sum of Rs. 7,50,000 as a revenue receipt in the hands of the assessee firm and taxed it as such. On appeal this decision was confirmed by the Appellate Assistant Commissioner and thereafter, on further appeal, was upheld by the Tribunal by its order dated July 23, 1952. At the instance of the assessee firm the Tribunal, under section 66(1) of the Act, made a reference to the High Court raising the following question of law: " Whether on the facts and in the circumstances of the case the sum of Rs. 7,50,000 is a revenue receipt liable to tax. The said reference was heard by the High Court and by its judgment, pronounced on September 11, 1953, the High Court answered the referred question in the affirmative and directed the assessee firm to pay the costs of the reference. The High Court, however, gave to the assessee firm a certificate of fitness for appeal to this Court and that is how the appeal has come before us. As has been said by this Court in Commissioner of Income tax and Excess Profits Tax, Madras vs The South India Pictures Ltd.(1), " it is not always easy to decide whether a particular payment received by a person is his income or whether it is to be regarded as his capital receipt". Eminent Judges have observed that " income " is a word of the broadest connotation and that it is difficult, and perhaps impossible, to define it by any precise general formula. Though in general the distinction between an income and a capital receipt is well recognised, cases do arise where the item lies on the borderline and the problem has to be solved on the particular facts of each case. No infallible criterion or test has been or can be laid down and the decided cases are only helpful in that they indicate the kind of consideration which may relevantly be borne in mind in approaching the problem. The character of payment received may vary according to the circumstances. Thus, the amount received as consideration for the sale of a plot of land may ordinarily be capital; but if the business of the recipient is to (1) ; 228. 533 buy and sell lands, it may well be his income. It is, therefore, necessary to approach the problem keeping in view the particular facts and circumstances in which it has arisen. There can be no doubt that by paying this sum of Rs. 7,50,000 the managed company has secured for itself a release from the obligation to pay a higher remuneration to the assesee firm for the rest of the period of managing agency covered by the Principal Agreement. Prima facie, this release from liability to pay a higher remuneration for over 17 years must be an advantage gained by the managed company for the benefit of its business and the immunity thus obtained by the managed company may well be regarded as the acquisition of an asset of enduring value by means of a capital outlay which will be a capital expenditure according to the test laid down by Viscount Cave, L.C., in Atherton vs British Insulated and Helsby Cables Limited(1) referred to in the judgment of this Court in Assam Bengal Cement Co. Ltd. vs Commissioner of Income tax (2). If the sum of Rs. 7,50,000 represented a capital expenditure incurred by the managed company, it should, according to learned counsel for the assessee firm, be a capital receipt in the hands of the assessee firm, for the intrinsic characteristics of capital sums and revenue items respectively are essentially the same for receipts as for expenditure. (See Simon 's Income tax, II Edn., Vol. 1, para. 44, p. 31). But, as pointed out by the learned author in that very paragraph, this cannot be an invariable proposition, for there is always the possibility of a particular sum changing its quality according as the circumstances of the payer or the recipient are in question. Accordingly, the learned Attorney General appearing for the respondent contends that we are not concerned in this appeal with the problem, whether, from the point of view of the managed company, the sum represented a capital expenditure or not but that we are called upon to determine whether this sum represented a capital receipt in the hands of the assessee firm. (1) (2) [19551 1 S.C.R. 972. 68 534 In the Resolution adopted by the managed company as well as in the recitals set out in the Supplementary Agreement this sum has been stated to be a payment "as compensation for releasing the company from the onerous term as to remuneration contained" in the Principal Agreement. It is true, as said by the High Court and as reiterated by the learned Attorney General, that the language used in the document is not decisive and the question has to be determined by a consideration of all the attending circumstances; nevertheless, the language cannot be ignored altogether but must be taken into consideration along with other relevant circumstances. This sum of Rs. 7,50,000 has undoubtedly not been paid as compensation for the termination or cancellation of an ordinary business contract which is a part of the stock in trade of the assessee and cannot, therefore, be regarded as income, as the amounts received by the assessee in The Commissioner of Income tax and Excess Profits Tax vs The South India Pictures Ltd. (1) and in The Commissioner of Income tax, Nagpur vs Rai Bahadur Jairam Valji (2) had been held to be. Nor can this amount be said to have been paid as compensation for the cancellation or cessation of the managing agency of the assessee firm, for the managing agency continued and, therefore, the decision of the Judicial Committee of the Privy Council in The Commissioner of Income tax vs Shaw Wallace and Co.(1) cannot be invoked. It is, however, urged that for the purpose of rendering the sum paid as compensation to be regarded as a capital receipt, it is not necessary that the entire managing agency should be acquired. If the amount was paid as the price for the sterilisation of even a part of a capital asset which is the framework or entire structure of the assessee 's profit making apparatus, then the amount must also be regarded as a capital receipt, for, as said by Lord Wrenbury in Glenboig Union Fireclay Co. Ltd. vs The Commissioners of Inland Revenue (4), "what is true of the whole must be equally true of part " a principle which has been adopted by (1) ; , 228. (3) (1932) L.R. 59 I.A. 206. (2) ; (4) 535 this Court in The Commissioner of Income tax, Hyderabad Deccan vs Messrs. Vazir Sultan and Sons(1). The learned Attorney General, however, contends that this case is not governed by the decisions in Shaw Wallace 's case (2) or Messrs. Vazir Sultan and Sons ' case(1) because in the present case there was no acquisition of the entire managing agency business or sterilisation of any part of the capital asset and the business structure or the profit making apparatus, namely, the managing agency, remains unaffected. There is no destruction or sterilisation of any part of the business structure. The amount in question was paid in consideration of the assessee firm agreeing to continue to serve as the managing agent on a reduced remuneration and, therefore, it bears the same character as that of remuneration and, therefore, a revenue receipt. We do not accept this contention. If this argument were correct, then, on a parity of reasoning, our decision in Messrs. Vazir Sultan and Sons ' case (1) would have been different, for, there also the agency continued as before except that the territories were reduced to their original extent. In that case also the agent agreed to continue to serve with the extent of his field of activity limited to the State of Hyderabad only. To regard such an agreement as a mere variation in the terms of remuneration is only to take a superficial view of the matter and to ignore the effect of such variation on what has been called the profit making apparatus. A managing agency yielding a remuneration calculated at the rate of 20 per cent. of the profits is not the same thing as a managing agency yielding a remuneration calculated at 10 per cent. of the profits. There is a distinct deterioration in the character and quality of the managing agency viewed as a profit making apparatus and this deterioration is of an enduring kind. The reduced remuneration having been separately provided, the sum of Rs. 7,50,000 must be regarded as having been paid as compensation for this injury to or deterioration of the managing agency just as the amounts paid in Glenboig 's case (3) (1) Civil Appeal NO. 346 of 1957, decided (2) (1932) L.R. 59 I. A. 206. on March 20, 1959 ; (3) 536 or Messrs. Vazir Sultan 's case(1) were held to be. This is also very nearly covered by the majority decision of the English House of Lords in Hunter vs Dewhurst(2). It is true that in the later English cases of Prendergast vs Cameron(3) and Wales Tilley (4), the decision in Hunter vs Dewharst(2) was distinguished as being of an exceptional and special nature but those later decisions turned on the words used in r. 1 of Sch. E. to the English Act. Further, they were cases of continuation of personal service on reduced remuneration simpliciter and not of acquisition, wholly or in part, of any managing agency viewed as a profit making apparatus and consequently the effect of the agreements in question under which the payment was made upon the profit making apparatus, did not come under consideration at all. On a construction of the agreements it was held that the payments made were simply remuneration paid in advance representing the difference between the higher rate of remuneration and the reduced remuneration and as such a revenue receipt. The question of the character of the payment made for compensation for the acquisition, wholly or in part, of any managing agency or injury to or deterioration of the managing agency as a profit making apparatus is covered by our decisions hereinbefore referred to. In the light of those decisions the sum of Rs. 7,50,000 was paid and received not to make up the difference. between the higher remuneration and the reduced remieration but was in reality paid and received as compensation for releasing the company from the onerous terms as to remuneration as it was in terms expressed to be. In other words, so far as the managed company was concerned, it, was paid for see tiring immunity from the liability to pay highser remuneration to the assessee firm for the rest of the term of the managing agency and, therefore, a capital expenditure and so far as the assessee firm was concerned, it was received as compen sation for the deterioration or injury to the managing agency by reason of the release of its rights to get higher remuneration and, therefore, a capital receipt (1) Civil Appeal No. 346 of 1957. decided on March 20, 1959; (2) (3) (4) ; 537 within the decisions of this Court in the earlier cases referred to above. In the light of the above discussion it follows, therefore, that the answer to the referred question should by in the negative. The result, therefore, is that this appeal is allowed, the answer given by the High Court to the question is set aside and the question is answered in the negative. The appellant must get the costs of the reference in the High Court and in this Court. Appeal allowed. [/INST] Under an agreement dated December 8, 1933, the appellant firm was appointed managing agent of a limited company for a period of thirty years from November 9, 1933. Clause 2 of the agreement provided for the remuneration of the managing agent. Some of the shareholders and directors of the company having felt that the scale of remuneration paid to the managing agent was extraordinarily excessive and unusual, negotiations were started for a reduction of the remuneration, and as a result the appellant and the company entered into a Supplementary Agreement on March 24, 1948, whereby in consideration of the company paying a sum of Rs. 7,50,000 " as compensation for releasing the company from the onerous term as to remuneration ", contained in the original agreement, the managing agent agreed to accept as remuneration as from September i, 1946, for the remaining term of the managing agency ten per cent. of the net annual profits of the company as defined in section 87C, sub section (3) of the Indian Companies Act, 1938 The sum of Rs. 7,50,000 was paid by the company to the appellant in 1947. For the assessment year I948 49 the Income tax Officer treated the aforesaid sum as a revenue receipt in the hands of the appellant and taxed it as such. The appellant claimed that the sum was a payment made by the company whole in discharge of its contingent liability to pay the higher remuneration and it was, therefore, a capital expenditure incurred by the company and received by the appellant as a capital receipt and was, as such, not liable to tax. The income tax authorities maintained (i) that though the payment of Rs. 7,50,000 had been described as compensation, the real object and consideration for the payment was the reduction of remuneration, (2) that it was a lump sum payment in consideration of the variation of the terms of employment and was, therefore, not a capital receipt but was a revenue receipt, and (3) that there was, in fact, no break in service and the payment was made in the course of the continuation of the service and, therefore, represented a revenue receipt of the managing agency business of the appellant. Held, that the sum of Rs. 7,50,000 was paid by the company for securing immunity from the liability to pay higher remuneration to the appellant for the rest of the term of the managing 528 agency and was, therefore, a capital expenditure ; and, so far as the appellant was concerned, it was received as compensation for the deterioration or injury to the managing agency by reason of the release of its rights to get higher remuneration and was, therefore, a capital receipt. The Commissioner of Income tax vs Vazir Sultan and Sons ; Hunter vs Dewhuyst, (1932) 16 Tax Cas. 605 and Glenboig Union Fiyeclay Co. Ltd. vs The Commissioners of Inland Revenue, , relied on. Assam Bengal Cement Co. Ltd. vs Commissioner of Income tax, [1955] i S.C.R. 972 ; The Commissioner of Income tax and Excess Profits Tax vs The South India Pictures Ltd., ; ; The Commissioner of Income tax vs Jairam Valji, and The Commissioner of Income tax vs Shaw Wallace and CO. (1932) L.R. 59 I.A. 206, considered. </s>

<s>[INST] Summarize the following judgement: Appeals Nos. 307 to 309 of 1958. Appeals from the judgment and order dated August 1, 1956, of the Orissa High Court in O. J. C. Nos. 16, 19, 137 and 61 of 1954. C.B. Aggarwala and P. C. Aggarwala, for the appellant (In C. As. 307 to 309 of 58). N.C. Chatterjee, J. H. Umrigar and T. M. Sen, for the respondents (In all the appeals). September 21. The Judgment of the Court was delivered by SHAH J. This is a group of three appeals filed with certificate of fitness under article 132 of the Constitution issued by the High Court of Judicature, Orissa. The Legislature of the Province of Orissa enacted the Orissa Agricultural Income tax Act XXIV of 1947 hereinafter referred to as the Act providing for the levy of income tax on agricultural income derived from lands situated in the Province of Orissa. This Act was brought into operation from July 10, 1947. By section 3, agricultural income tax at the rate or rates specified in the schedule was made payable for each financial year on the total income of the previous year of every person. By the proviso to that section, agricultural income of the Central Government or of the State Government or of any local authority was exempt from 'taxation. Section 2, cl. (1), defined a " person " as inclusive of a Ruler of an Indian State. The appellant in these three appeals is the former Ruler of the State of Sonepur. After 781 the establishment of the Dominion of India on August 15, 1947, the appellant as the Ruler of the State of Sonepur executed an instrument of accession to the., Dominion restricted to three subjects Defence, External Affairs and Communications. On December 15, 1947, he executed a merger agreement whereby the territory of the State of Sonepur became merged with the territory of the Dominion of India. By virtue of the merger agreement, the Government of India acquired full sovereign rights over the territory of the State, but ownership of private properties belonging to the appellant and full enjoyment thereof were under the agreement guaranteed to him under article 3. In exercise of the powers conferred by the Extra Provincial Jurisdiction Act 47 of 1947, the Government of India by notification dated March 23, 1948, delegated to the Provincial Government of Orissa full powers to administer the merged States of Orissa including the State of Sonepur. The Government of the Province of Orissa applied to the merged States section 1 of the Act as from January 19, 1949, and by notification dated April 1, 1949, the remaining provisions of the Act. In the meantime, by amendment, two new sections, section 290(A) and section 290(B) were incorporated in the Government of India Act, 1935. The Governor General of India was thereby given power to direct by order that a merged State shall be administered in all respects as if it formed part of the Governor 's Province specified in the order. The Governor General of India exercising authority under sections 290(A) and 290(B) issued on July 27, 1949, an order providing that the merged Orissa States including the State of Sonepur shall be administered in all respects as if they formed part of the Province of Orissa with effect from August 1, 1949. On December 30, 1949, the Governor of Orissa promulgated Ordinance No. IV of 1949 providing inter alia that the Agricultural Income tax Act, 1947, be applied to the merged Orissa States. This Ordinance was later replaced by the Orissa Merged States (Laws) Act, XVI of 1950. The appellant was then called upon by the Agricultural 782 Income tax Officer to furnish a return of his agricultural income. The appellant disputed his liability to pay the agricultural income tax and declined to furnish the return. The Agricultural Income tax Officer then proceeded to make enquiries about the income received from the lands held by the appellant and assessed him to pay tax for the years 1949 50 to 1953 54. He also imposed a penalty upon the appellant for failure to submit his returns for the years 1949 50 and 1950 51. Against the order assessing him to tax and directing him to pay penalty, the appellant preferred appeals to the Assistant Collector of Agricultural Income tax, Sambalpur. The appeals were dismissed by that officer. Revision applications to the Collector of Commercial Taxes, Cuttack and to the Board of Revenue were unsuccessful. The appellant filed four petitions in the High Court of Orissa, being petitions Nos. 17, 16, 19 and 137 of 1954 challenging the assessments made by the taxing authorities for the years 1949 50, 1950 51, 1951 52 and 1952 53 respectively, and two more petitions being petitions Nos. 18 and 138 of 1954 against orders imposing penalty for the years 1949 50 and 1950 51 respectively. These six petitions and certain other petitions were heard by a Division Bench of the Orissa High Court. The High Court held that by the guarantee of full ownership, use and enjoyment of the private properties under the merger agreement the Properties of the appellant were not rendered immune from liability to pay tax imposed by the Act and that in the absence of an express provision, his income from lands was liable to pay agricultural income tax. The High Court also held that even though the appellant was the Ruler of a former Orissa State, he was a " person " within the meaning of the Act and was liable to pay agricultural income tax. The learned Judges therefore dismissed the petitions challenging the liability of the appellant for the assessment years 1950 51, 1951 52 and 1952 53 to pay agricultural income tax, and they cancelled the order of assessment in respect of the year 1949 50 and the orders imposing penalty in respect of years 1949 50 and 783 1950 51. Against the orders dismissing the applications for setting aside the assessments in respect of years 1950 51, 1951 52 and 1952 53, these appeals have been preferred with certificate granted by the High Court under article 132 of the Constitution. The appellant was undoubtedly the Ruler of an Indian State before August 15. 1947, but by reason of the merger agreement executed by him on December 15, 1947, his sovereignty was extinguished. By article 1 of the terms of the merger agreement, the appellant ceded to the Dominion of India full and exclusive authority, jurisdiction and power for and in relation to the governance of the State and agreed to transfer the administration of the State on the appointed day and as from the said day, the Dominion Government became competent to exercise the power, authority and jurisdiction in relation to the governance of the State in such matters and through such agency as the Government thought fit. By article 3, the appellant remained entitled to full ownership, use and enjoyment of all private properties (but not of the State properties) belonging to him on the date of the merger. By article 5, the Dominion Government gua ranteed the succession according to law and customs, to the gadi of the State and to the personal rights, privileges, dignities and titles of the appellant. It was provided by article 4 that " the Raja, the Rani, the Rajmata, the Yuvraja and the Yuvrani shall be entitled to all personal privileges enjoyed by them whether within or outside the territories of the State, immediately before the 15th day of August, 1947 ". The appellant contends that as a Ruler of the State of Sonepur, he was, before merger of his State, immune from liability to taxation in respect of his private property both within his territory and outside. He claims that he was so immune in respect of his property within his State as a Ruler and in respect of his property outside the State by the rules of International Law which, he submits, protect from taxation the properties of a Ruler of a State, situate in a foreign State. The appellant says that by articles 4 and 5, the Dominion Government guaranteed to him all 784 his personal rights, privileges, dignities and titles enjoyed within or without the territory immediately before the 15th August, 1947, and that any attempt to tax his private property by the State of Orissa or by the Union Government violates that guarantee. The appellant submits that to give effect to this guarantee, all legislation must be interpreted in the light of the merger agreement which he claims is incorporated in article 362 of the Constitution and he must be held exempt from liability to pay tax even though no express provision in that behalf has been made by the Legislature. In our view, there is no force in the contentions raised by the appellant. The privileges guaranteed by articles 4 and 5 are personal privileges of the appellant as an ex Ruler and those privileges do not extend to his personal property. In dealing with a similar contention raised on the interpretation of article 4 of the merger agreement entered into by the Ruler of Khairagarh (which was in material terms identical with the terms of article 4 of the agreement executed by the appellant), section R. Das, J., (as he then was), observed in Visweshwar Rao vs The State of Madhya Pradesh(1): " The guarantee or assurance to which due regard is to be had is limited to personal rights, privileges and dignities of the Ruler qua a Ruler. It does not extend to personal property which is different from personal rights ". The Act imposes on the agricultural income of "every person " liability to pay agricultural income tax. By the proviso to section 3, agricultural income of the Central Government, State Government and of local authorities is exempt from tax, but this exemption is not extended to any other body or person. It is true that in the definition of the expression " person " as originally enacted in section 2, cl. (1), a Ruler of an Indian State was expressly included and by the Adaptation of Laws Order, 1950, reference to Rulers of Indian States was deleted as from January 26, 1950. But by that amendment, an intention to exclude the Rulers of Indian States from liability to pay (1) , 1054. 785 agricultural income tax was, in our judgment, not evinced. Between the dates on which the Act wag enacted and the Adaptation of Laws Order, 1950. several political events of far reaching effect had taken place, in consequence of which the appellant bad ceased to be a Ruler of an Indian State. On January 26, 1950, the date on which the Adaptation of Laws Order, 1950, became operative, there were in, existence no Indian States. The sovereign rights of the erstwhile Rulers of the Indian States were extinguished, and their territories were merged in the, Indian Union. The amendment in the definition of "person " in section 2, cl. (i), of the Act was made not with) the object of excluding the Rulers of former Indian States from liability to pay tax: it was only made to; delete a clause which, in view of political changes, had no practical significance. Liability to pay tax is imposed by the Act and there is in the Act no express exemption in favour of the appellant. The claim of the appellant to exemption on the ground that he is not a " person " cannot therefore be sustained. Article 362 of the Constitution provides: "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 bad to the guarantee or assurance given tinder any such covenant or agreement as is referred to in article 291 with respect to the personal rights, privileges and dignities of the Ruler of an Indian State ". Article 291 of the Constitution deals with the privy purse of the Rulers under any covenant or agreement entered into by the Ruler of any Indian State before the commencement of the Constitution payment whereof is free from tax as has been granted or assured by the Government of the Dominion of India. Article 362 recommends to the Parliament and the State Legislatures in making laws after the Constitution " to have due regard to the guarantee or assurance given under any covenant or agreement ". Even though article 362 is not restricted in its recommendation to agreements relating to the privy purse and 786 covers all agreements and covenants entered into by the Rulers of Indian States before the commencement of the Constitution whereby the personal rights, privileges and dignities of the Ruler of an Indian State were guaranteed, it does not import any legal obligation enforceable at the instance of the erstwhile Ruler of a former Indian State. If, despite the recommendation that due regard shall be had to the guarantee or assurance given under the covenant or agreement, the Parliament or the Legislature of a State makes laws inconsistent with the personal rights, privileges and dignities of the Ruler of an Indian State, the exercise of the legislative authority cannot, relying upon the agreement or covenant, be questioned in any court, and that is so expressly provided by article 363 of the Constitution. The plea of the appellant that he was not seeking to enforce the terms of the merger agreement and that be was merely resisting the claim made by the authority appointed by the State of Orissa to levy a tax inconsistently with the terms of the merger agreement, has no substance. In truth, the appellant sought by his petitions under article 226 of the Constitution to enforce the terms of article 4 of the merger agreement. By his petitions, the appellant contended that in enacting the Agricultural Income tax Act and in seeking to enforce it against him, the State of Orissa acted contrary to the terms of the merger agreement and he asked the High Court to enforce the terms of the merger agreement. On the grounds therefore that liability to pay agricultural income tax in respect of his private property is imposed upon the appellant by section 3 of the Act, and the immunity claimed by the appellant is not one of the personal rights or privileges within the meaning of the merger agreement and that the claim made by the appellant is not justiciable, the objection raised by the appellant to liability to pay agricultural income tax assessed under the Act cannot be sustained. Two subsidiary contentions which were sought to be raised before us may be briefly referred to. It was urged that of the forty two villages of which the 787 appellant is held by the assessing authority to be the holder, two were in the year 1945 transferred by him to the Yuvrani (the appellant 's son 's wife) and on that,, account, the income of those villages was not liable to be taxed in his hands. It appears from the assessment order that this contention was raised before the Agricultural Income tax Officer and that officer rejected the contention relying upon section 14, cl. (1), of the Act. It is unnecessary for the purpose of these appeals to decide whether the assessing officer was right in the view which he took. In the petitions filed by the appellant in the High Court, this plea was not raised and no relief was claimed by him in respect of the income of the two villages. The question was never mooted before the High Court and the State of Orissa had no opportunity of meeting the claim now sought to be made by the appellant. On the ground that the question was never raised in the High Court, we reject this contention. It was also urged that whereas the assessing officer has found that the appellant had lands in forty two villages, in the inventory of properties submitted by the appellant to the Government, only eighteen villages were set out and this inventory was accepted by the Government of India. Relying upon this premise, the appellant contends that he is liable to pay tax in respect of his income from these eighteen villages and no more. But even this plea was never raised in the High Court and we cannot, in dealing with these appeals, enter upon an enquiry into a question which was never raised on which no evidence was led, and on which no finding was given by the High Court. On the view taken by us, appeals Nos. 307, 308 and 309 of 1958 fail and are dismissed with costs. There will be one hearing fee. Appeals dismissed. [/INST] On December 15, 1947, the Ruler of the erstwhile State of Sonepur, the appellant, executed a merger agreement whereby the Government of India acquired full sovereign rights over the territory of the State, but ownership and full enjoyment of private properties belonging to the appellant and the personal rights, privileges, dignities etc., enjoyed by him immediately before August 15, 1947, were guaranteed to him under articles 4 and 5. On July 27, 1949, the Governor General of India issued an order providing that the merged Orissa States including the State of Sonepur shall be administered in all respects as if they formed part of the Province of Orissa. The Orissa Agricultural Income tax Act, 1947, had in the meantime been enacted by the Legislature of the Province of Orissa and by virtue of an Ordinance promulgated by the Governor of Orissa on December 30, 1949, the Act became applicable to the merged Orissa States. Section 2(1) of the Act defined a " person " as inclusive of a Ruler of an Indian State, but by the Adaptation of Laws Order, 195o, reference to Rulers of Indian States was deleted as from January 26, 195o. The appellant contended that he was not liable to be assessed to tax on agricultural income under the provisions of the Act because (1) as a Ruler of the State of Sonepur, he was, before merger of his State, immune from liability to taxation in respect of his private property and that his immunity from taxation was Guaranteed by articles 4 and 5 of the agreement of merger; and (2) that by virtue of the amendment of section 2, cl. (1), of the Act, he was not a "person" within the meaning of the Act and therefore he was not liable to pay agricultural income tax. Held: (i) that the amendment in the definition of "person" in section 2, Cl. (i), of the Act was made not with the object of excluding the Rulers of former Indian States from liability to pay tax, but only to delete a clause which in view of political changes which had taken place since the Act was enacted had no practical significance. The appellant could not claim exemption from taxation on the ground that he was not a " person ", in the absence of an express exemption clause in the Act. 780 (2)that the privileges guaranteed by articles 4 and 5 of the agreement of merger were only personal privileges of the appellant as an ex Ruler and that these privileges did not extend to his private property. Vishweshwar Rao vs The State of Madhya Pradesh, , followed. (3)that the claim made by the appellant of immunity from taxation relying upon the agreement of merger was not justiciable. </s>

<s>[INST] Summarize the following judgement: l Appeals Nos. 273 and 274 of 1955. Appeals from the judgment and order dated December 10, 1954, of the Patna High Court in Appeals from Original Decree Nos. 309 and 310 of 1954. L. K. Jha, J. C. Sinha, section Mustafi and R. R. Biswas, for the appellants. Lal Narayan Sinha, Bajrang Sahai and R. C. Prasad, for the respondents 1960. September 19. The Judgment of the Court was delivered by section K. DAS J. These two appeals on a certificate granted by the High Court of Patna are from the judgment and decree of the said High Court dated December 10, 1954. By the said judgment and decree the High Court dismissed two appeals which arose out of two suits, Title Suit No. 42 of 1950 and Title Suit No. 23 of 1952, which were tried together and dismissed with costs by the learned Subordinate Judge of Deoghar. The plaintiffs of those two suits are the appellants before us. One of the appellants Thakur Manmohan Deo was the holder of a ghatwali tenure commonly known as the Rohini ghatwali, situate within the subdivision of Deoghar in the district of the Santa Parjanas. The other appellant Tikaitni Faldani Kumari was the holder of the Pathrole ghatwali also situate in the same sub division. Both these ghatwali tenures were formerly known as Birbhum ghatwalis and were governed by Bengal Regulation XXIX of 1814. In the year 1950 was enacted the Bihar Land Reforms Act 697 1950 (Bihar Act 30 of 1950), hereinafter called the Act. The Act came into force on September 25, 1950. The validity of the Act was challenged in the Patna High Court on grounds of a violation of certain fundamental rights and the High Court held it to be unconstitutional on those grounds. The Constitution (First Amendment) Act, 1951, was enacted on June 18, 1951, and in appeals from the decision of the Patna High Court, this Court held in The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga (1) that the Act was not unconstitutional or void on the grounds alleged, except with regard to the provisions in section 4(b) and section 23(f) thereof The validity of the Act is, therefore, no longer open to question on those grounds, though in one of the suits out of which these two appeals have arisen, it was contended that the Act was ultra vires the Constitution. The principal issue in the two suits which now survives is issue No. 3 which said: ,Do the provisions of the Bihar Land Reforms Act, 1950, purport to acquire the plaintiffs ' ghatwalis ? If so, are they ultra vires in their application to such ghatwalis ? This issue was decided against the appellants by the learned Subordinate Judge and the decision of the learned Subordinate Judge was upheld on appeal by the High Court of Patna in its judgment and decree dated December 10, 1954, from which decision these two appeals have come to us. Three main points have been urged on behalf of the appellants. The first point is one of construction and the appellants contend that on a proper construction ,of the relevant provisions of the Act, it does not apply to ghatwali tenures like the Rohini and Pathrole ghatwalis. Secondly, it is contended that if the provisions of the Act apply to the appellants ' ghatwali tenures, then the State legislature was not competent to enact it, because ghatwali tenures like the Rohini and Pathrole ghatwalis, were of a quasi military nature and if the Act applies to them, it must be held to relate to items 1 and 2 of the Union List (List I) and, therefore, outside the competence of the State (1) 698 legislature. The third contention is that the Act does not purport to repeal Bengal Regulation XXIX of 1814 and in as much as the said Regulation deals ,With special tenures, the special law enacted with regard to such tenures would not be affected by the general law with regard to land reforms as embodied in the Act. We shall deal with these three conten tions in the order in which we have stated them. But before we do so, it is necessary to explain, briefly, the nature of these ghatwali tenures. We may quote here some of the provisions of Bengal Regulation XXIX of 1814. The Regulation says in section 1 that lands held by the class of persons denominated ghatwals in the district of Birbhum form a peculiar tenure to which the provisions of the existing Regulations are not expressly applicable; it then states that according to the former usages and constitution of the country, this class of persons are entitled to hold their lands, generation after generation, in perpetuity, subject nevertheless to the payment of a fixed and established rent to the zamindar of Birbhum and to the performance of certain duties for the maintenance of the public peace and support of the police. The Regulation then lays down certain rules to give stability to the arrangement established among the ghatwals and these rules are contained in sections 2, 3, 4 and 5. It would be enough if we quote sections 2, 3, and a part of section 5. " section 2. A, settlement having lately been made on the part of the Government with the ghatwals in the district of Birbhum, it is hereby declared that they and their descendants in perpetuity shall be maintained in possession of the lands so long as they shall respectively pay the revenue at present assessed upon them, and that they shall not be liable to any enhancement of rent so long as they shall punctually discharge the same and fulfill the other obligations of their tenure. section 3. The ghatwali lands shall be considered, as at present, to form a part of the zamindari ' of Birbhum, but the rent of ghatwals shall be paid direct to the Assistant Collector stationed at Suri, or to 699 such other public officer as the Board of Revenue may direct to receive the rents. section 5. Should any of the ghatwals at any time fail to discharge their stipulated rents, it shall be competent for the State Government; to cause the ghatwali tenure of such defaulter to be sold by public sale in satisfaction of the arrears due from him, in like manner, and under the same rules, as lands held immediately of Government, or to make over the tenure of such defaulter to any person whom the State Government may approve on the condition of making good the arrears due; or to transfer it by grants assessed with the same revenue, or with an increased or reduced assessment, as to the Government may appear meet; or to dispose of it in such other form and manner as shall be judged by the State Government proper. " In a number of decisions of the Privy Council the nature of these tenures has been explained and in Satya Narayan Singh vs Satya Niranjan Chakravarti (1) Lord Sumner thus summarised the position at pages 198 199 of the report: "In the Santal Parganas there are for practical purposes three classes of ghatwali tenures, (a) Government ghatwalis, created by the ruling power; (b) Government ghatwalis, which since their 'creation and generally at the time of the Permanent Settlement have been included in a zamindari estate and formed into a unit in its assessment; and, (c) zamindari ghatwalis, created by the zamindar or his predecessor and alienable with his consent. The second of these classes is really a branch of the first. The matter may, however, be looked at broadly. In itself 'ghatwal ' is a term meaning an office held by a particular person from time to time, who is bound to the performance of its duties, with a consideration to be enjoyed in return by the incumbent of the office. Within this meaning the utmost variety of conditions may exist. There may be a mere personal contract of employment for wages, which takes the form of the use of land or an actual estate in land, heritable and (1) I.L.R. 3 Pat. 700 perpetual, but conditional upon services certain or services to be demanded. The office may be public or private, important or the reverse. The ghatwal, the guard of the pass, may be the bulwark of a whole country side against invaders; he may be merely a sentry against petty marauders; he may be no more than a kind of gamekeeper, protecting the crops from the ravages of wild animals. Ghatwali duties may be divided into police duties and quasi military duties, though both classes have lost much of their importance, and the latter in any strict form are but rarely rendered. Again the duties of the office may be such as demanded personal competence for that discharge; they may, on the other hand, be such as can be discharged vicariously, by the creation of shikmi tenures and by the appointment and maintenance of a subordinate force, or they may be such as in their nature only require to be provided for in bulk. It is plain that where a grant is forthcoming to a man and his heirs as ghatwal, or is to be presumed to have been made though it may have been since been lost, personal performance of the ghatwali services is not essential so long as the grantee is responsible for them and procures them to be rendered (Shib Lall Singh vs Moorad Khan (1)). So much for the ghatwal. The superior; who appoints him, may also in the varying circumstances of the Organisation of Hindostan be the ruling power over the country at large, the landholder responsible by custom for the maintenance of security and order within his estates, or simply the private person, to whom the maintenance of watchmen is in the case of an extensive property, important enough to require the creation of a regular office. " It is not disputed before us that the Rohini and Pathrole ghatwalis are Government ghatwalis and admittedly they are governed by Regulation XXIX of 1814. The question now is, does the Act apply to these ghatwalis ? It is necessary now to read some of the provisions of the Act. Section 2 is the definition section, cl. (o) whereof defines a " proprietor cl. (q) (1) 701 defines a "tenure " and cl. (r) defines a " tenure holder ". The definition of the two expressions "tenure" and "tenure holder" was amended by Bihar Act 20 of 1954. The amendments were made with retrospective effect and the amending Act said that the amendments shall be deemed always to have been substituted. Now, the three clauses (o), (q) and (r) of section 2 are in these terms " section 2(o) " Proprietor " means a person holding in trust or owning for his own benefit an estate or part of an estate, and includes the heirs and successors interest of a proprietor and, where a proprietor is a minor or of unsound mind or an idiot, his guardian, committee or other legal curator; (q) "tenure" means the interest of a tenure. holder or an under tenure holder and includes (i) a ghatwali tenure, (ii) a tenure created for the maintenance of any person and commonly known as kharposh, babuana, etc., and (iii) a share in or of a tenure, but does not include a Mundari Khunt Kattidari tenancy within the meaning of the Chota Nagpur Tenancy Act, 1908, or a bhuinhairi tenure prepared and confirmed under the Chota Nagpur Tenures Act, 1869; (r) " tenure holder " means a person who has acquired from a proprietor or from any other tenure holder a right to hold land for the purpose of collecting rent or bringing it under cultivation by establishing tenants on it and includes (i) the successors in interest of persons who have acquired such right, (ii) a person who holds such right in trust, (iii) a holder of a tenure created for the maintenance of any person, (iv) a gbatwal and the successors in interest of a ghatwal, and (v) where a tenure holder is a minor or of unsound mind or an idiot, his guardian, committee or other legal curator. " The definition clauses (q) and (r) state in express terms 702 that 'tenure ' includes a ghatwali tenure and, ' tenure holder ' includes a ghatwal ' and the successors in interest of a ghatwal. The argument on behalf of the appellants is that the definition clauses should be so construed as to include zamindari ghatwalis only and not Government ghatwalis. Firstly, it is pointed out that cl. (r) in its substantive part says that a 'tenure holder ' means a person who has acquired from a proprietor or from any other tenure holder a right to hold land for the purpose of collecting rent or bringing it under cultivation by establishing tenants on it; this part, it is submitted, cannot apply to a Government ghatwal, because a Government ghatwal does not acquire from a proprietor or from any other tenure holder a right to hold land for any of the two purposes mentioned therein. In this connection our attention has been drawn to el. (o) which defines a 'proprietor ' and it is further pointed out that, as stated by Lord Sumner, Government ghatwals were either created by the ruling power or were since their creation and generally at the time of the Permanent Settlement included in a zamindari estate and formed into a unit in its assessment; therefore, it is argued that Government ghatwalis did not acquire any right from a proprietor or any other tenure holder. Secondly, it. is Submitted that sub cl. (i) of el. (q) and sub cl. (iv) of cl. (r) must be read in the light of the sub. stantive part of the two clauses, even though the subclauses state in express terms that a 'tenure ' includes a ghatwali tenure and a 'tenure holder ' includes a ghatwal. It is pointed out that a zamindari ghatwal acquires his interest from a proprietor and the substantive part of clauses (q) and (r) may apply to a zamindari ghatwal and his tenure but the substantive part.of the two clauses cannot apply to a Government ghatwal and his tenure. We are unable to accept this line of argument as correct. Where a statute says in express terms that the expression 'tenure ' includes a ghatwali tenure and the expression ' tenure holder ' includes a ghatwal and the successors in interest of a ghatwal, there must be compelling reasons to out down the amplitude of the 703 two expressions. The Bihar legislature must have been aware of the distinction between Government ghatwalis and zamindari ghatwalis and if the intention was to exclude Government gbatwalis, nothing could have been easier than to say in the two definition clauses that they did not include Government ghatwalis. On the contrary, the legislature made no distinction between Government ghatwalis and zamindari ghatwalis but included all ghatwali tenures within the definition clauses. There are no restrictive words in the definition clauses and we see no reasons why any restriction should be read into them. It is worthy of note that the two definition clauses first state in the substantive part what the general meaning of the two expressions is, and then say that the expressions shall inter alia include a ghatwali tenure and a ghatwal and the successors in interest of a ghatwal. Thus, the two definition clauses are artificially extended so as to include all ghatwali tenures and all ghatwals and their successors in interest, irrespective of any consideration as to whether they come within the general meaning stated in the substantive part of the two clauses. Such artificial extension of the two definition clauses is also apparent from sub cl. (v) of el. (r) and sub cl. (iii) of cl. Sub clause (iii) of el. (q) excludes certain tenures from the definition clause which would otherwise come within the general meaning of the expression 'tenure ' and sub cl. (v) of cl. (r) extends the expression ' tenure holder ' to guardians committees and curators. When we are dealing with an artificial definition of this kind which states " means and shall include etc. ", there is no room for an argument that even though the definition expressly states that something is included within a particular expression, it must be excluded by reason of its not coming within the general meaning of that expression. The learned Counsel for the appellants has also called to his aid certain other provisions of the Act in support of the argument that the Act does not apply to Government ghatwalis. He has referred to section 23(1) 704 (f) and section 32(4) of the Act. Section 23 deals with the computation of net income for the purpose of preparing a Compensation Assessment roll, by deducting from the gross asset of each proprietor or tenureholder, certain sums mentioned in clauses (a) to (f). It must be stated that what was el. (g) of section 23(1) before has now become el. (f), because the original el. (f) of section 23(1) was held to be unconstitutional by this Court in The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga (1). Section 23(1) so far as it is relevant for our purpose states: " section 23(1) For the purpose of preparing a Compensation Assessment roll, the net income of a proprietor or a tenure holder shall be computed by deducting from the gross asset of such proprietor or tenure holder, as the case may be, the following, namely: (a) (b) (c) (d) (e) (f) any other tax or legal imposition payable in respect of such estate or tenure not expressly mentioned in clauses (a) to (e) or the value, to be commuted in the prescribed manner, of any services or obligations of any other form to be rendered or discharged as a condition precedent to his enjoyment of such estate or tenure ". Now, the argument before us is that el. (f) of section 23(1) cannot apply to a Government ghatwal, because he can still be asked to perform the services and obligations which he had undertaken by reason of the office which he held. It is submitted that the Act does not purport to abolish the ghatwali office and as the office and the tenure are inseparably connected, the calculation referred to in el. (f) cannot be made in the case of a Government ghatwali. Our attention has also been drawn to a later decision of the Patna High Court (Election Appeals nos. 7 and 8 of 1958) of March 20, 1959, wherein a distinction was drawn (1) 705 between acquisition and resumption of a ghatwali tenure and the argument that on the acquisition of the ghatwali tenure the office lapsed was not accepted. We have been informed at the Bar that that decision is under appeal to this Court. Therefore, we do not propose to say anything about the correctness or otherwise of the view expressed therein. It is enough to point out that assuming that the argument of the appellants is correct and el. (f) of section 23(1) does not apply, it does not necessarily follow that the appellants ' ghatwali tenures cannot be acquired by the State Government under section 3 of the Act. Section 23(1)(f) provides only for the deduction of a particular item from the gross asset of the tenure holder for the purpose of computing the net income. Even if el. (f) does not apply, the statute provides for other deductions mentioned in clauses (a) to (e). Those clauses indisputedly apply to a ghatwali tenure and a Compensation Assessment roll can be prepared on their basis. It would not be correct to say that because a particular item of deduction does not apply in the case of a Government ghatwali, such ghatwali tenure must be excluded from the ambit of the Act; such a view will be inconsistent with the scheme of section 23. The scheme of section 23 is that certain deductions have to be made to compute the net income; some of the items may apply in one case and some may not apply. The section does not contemplate that all the items must apply in the case of each and every proprietor or tenure holder. We now come to section 32 of the Act. Section 32(4) states : "section 32(4) if the estate or tenure in respect of which the compensation is payable is held by a limited owner or the holder of life interest, the Compensation Officer shall keep the amount of compensation in deposit with the Collector of the district and the Collector shall direct the payment of the interest accruing on the amount of compensation to the limited owner or the holder of the life interest during his lifetime. Such amount shall remain deposited with the Collector until the amount of compensation or 706 portion thereof after making payments, if any, under the proviso to this sub section is made over to any person or persons becoming absolutely entitled thereto: Provided that nothing in this sub section shall be deemed to affect the right of any limited owner or the holder of a life interest to apply to the District Judge for the payment of a part of the amount of compensation to defray any expenses which may be necessary to meet any legal necessity. " It is argued that sub section (4) of section 32 is also not applicable to a Government ghatwali, because the expression 'limited owner ' occurring therein has been used in the sense in which it is understood in Hindu Law and the holder of a Government ghatwali is not a limited owner in that sense. Learned Counsel for the appellants has drawn our attention to the expression " legal necessity ' occurring in the proviso to sub section (4) in support of his argument that the expression 'limited owner ' has the technical sense ascribed to it in Hindu Law. On behalf of the respondent State it has been argued that the expressions 'limited owner ' and 'legal necessity ' are not used in any technical sense and may apply to persons who under the conditions on which they hold the tenure cannot alienate or divide it. Here again we consider it unnecessary to pronounce on the true scope and effect of sub section (4) of section 32. The short question before us is ' are Government ghatwalis excluded from the ambit of the Act by reason of sub.s. (4) of section 32 ? Let us assume without deciding, that sub section (4) does not apply to ghatwali tenure. What is the result ? Section 32 merely provides for the manner of payment of compensation. If sub section (4) does not apply, the payment of compensation will have to be made in accordance with sub section (1) of section 32 which says: " section 32(1). When the time within which appeals under section 27 may be made in respect of any entry in or omission from a Compensation Assessment roll has expired or where any such appeal has been made under that section and the same has been disposed of, the Compensation Officer shall proceed to make payment, in the manner provide& in this section, to the 707 proprietors, tenure ' holders and other persons who are shown in such Compensation Assessment roll as finally published under section 28 to be entitled to compensation, of the compensation payable to them in terms of the said roll after deducting from the amount of any compensation so payable any amount which has been ordered by the Collector under clause (c) of section 4 or under any other section to be so deducted. " Therefore, the result is not that Government ghatwalis; will go out of the Act, because sub section (4) does not apply. The result only is that the holders of such tenures will be paid compensation in a different manner. What rights others having a proprietary interest in a ghatwali tenure have against the compensation money does not fall for decision here. Therefore, we are of the view that neither section 23(1)(f) nor section 32(4) have the necessary and inevitable result contended for by the appellants, viz., that the appellants ', ghatwali tenures must be excluded from the operation of the Act even though the definition clauses expressly include them. This brings us to the second point urged before us. That point can be disposed of very shortly. It is contended that if the provisions of the Act apply to Government ghatwalis, then the Act falls outside the legislative competence of the State Legislature in as much as the Act then becomes legislation with regard to items 1 and 2 of the Union List. These two items are "1. Defence of India and every part thereof including preparation for defence and all such acts as may be conducive in times of war to its prosecution and after its termination to effective demobilisation. Naval, military and air forces; any other armed forces of the Union. " It is, we think, quite obvious that the Act has no con nection whatsoever with the defence of India or the armed forces of the Union. As Lord Sumner had pointed out as far back as 1923, though ghatwali duties might be divided into police duties and quasi military duties, both classes find lost their importance and the latter were rarely if ever demanded. This 708 Court had observed in The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga and Others (1): "The pith and substance of the legislation, how. ever, in my opinion, is the transference of ownership of estates to the State Government and falls within the ambit of legislative head entry 36 of List II. There is no scheme of land reform within the frame work of the statute except that a pious hope is expressed that the commission may produce one. The Bihar Legislature was certainly competent to make the law on the subject of transference of estates and the Act as regards such transfers is constitutional." (per Mahajan, J., at p. 926 of the report). We think that in pith and substance the legislation was covered by item 36 of List II (as it then stood) and it has no relation to items 1 and 2 of List I. Now, as to the last argument founded on Regulation XXIX of 1814. In our view the Act in pith and substance related to acquisition of property and consequently no question of the repeal of Regulation XXIX of 1814 arose; nor is it necessary to consider the principle that a special law relating to special tenures is not affected by a subsequent general law of land reforms. Such a principle has no application in the present case. The Act expressly includes all ghatwali tenures within its ambit and provides for the vesting of all rights therein absolutely in the State of Bihar on the issue of a notification under section 3 and under section 4 certain consequences ensue on the issue of such a notification notwithstanding anything contained is any other law for the time being in force. It is worthy of note that the Bengal Permanent Settlement Regulation, 1793 (Bengal Regulation 1 of 1793), did not stand in the way of acquisition of other permanently settled estates, and it is difficult to see how Regulation XXIX of 1814 can stand in the way of acquisition of ghatwali tenures. The point is really covered by the decision of this Court in Raja Suriya Pat Singh vs The State of U. P.(2) where it was observed : (1) (2) ; , 1078 79. 709 " The Crown cannot deprive a legislature of its legislative authority by the mere fact that in the exercise of its prerogative it makes a grant of land within the territory over which such legislative authority exists and no court can annul the enactment of a legislative body acting within the legitimate scope of its sovereign competence. If, therefore, it be found that the subject of a Crown grant is within the competence of a provincial legislature, nothing can prevent that legislature from legislating about it, unless the Constitution Act itself expressly prohibits legislation on the subject either absolutely or conditionally. " For the reasons given above, we hold that none of the three points urged on behalf of the appellants has any substance. The appeals fail and are dismissed with costs; there will be only one hearing fee. Appeals dismissed. [/INST] The appellants were holders of ghatwali tenure called Rohini and Pathrole ghatwalis and were governed by Bengal Regulation XXIX of 1814. The Bihar Land Reforms Act, 1950, was enacted by the Bihar State Legislature and came into force on September 25, 1950. In suits instituted by the appellants the question was raised as to whether under the provisions of the Act the State could acquire their ghatwalis. They claimed (1) that the Act was not applicable to the Government ghatwali tenures like Rohini and Pathrole ghatwalis which could not be acquired by the State under section 3 of the Act, in view of the definition clause in section 2 and SS. 23 (1) (f) and 32(4), (2) that the Act did not purport to repeal Bengal Regulation XXIX of 1814 and inasmuch as the said Regulation dealt with special tenures, the special law enacted with regard to such tenures would not be affected by the general law with regard to land reforms as embodied in the Act, and (3) that, in any case, ghatwali tenures, being of a quasi military nature, must be held to fall under Entries 1 and 2 of List I of the Seventh Schedule to the Constitution of India and, therefore, the Act was outside the competence of the State Legislature. Held: (i) that all ghatwali tenures including government ghatwalis came within the definition clause in section 2 of the Bihar Land Reforms Act, 1950, and that SS. 23(1) (f) and 32(4), though they might be inapplicable to the ghatwali tenures in question, did not have the effect of excluding such tenures from the operation of the other provisions of the Act; (2) that the Act in pith and substance related to acquisition of property and was covered by Entry 36, List II, Seventh Schedule to the Constitution and had no relation to Entries 1 and 2 of List I. Consequently, the State Legislature was competent to enact the Act 89 696 The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga and Others, , followed. (3) that the principle that a special law relating to special tenure is not affected by a subsequent general law of land reforms had no application to the Act which in pith and substance related to acquisition of property and no question of the repeal of Regulation XXIX of 1814 arose. Raja Suriya Pal Singh vs The State of U. P. and Another, , applied. </s>

<s>[INST] Summarize the following judgement: Appeal No. 24 of 1958. Appeal by special leave from the judgment and order dated October 4, 1956, of the former Bombay High Court in I.T.A. No. 49 of 1956. R.J. Kolah, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellant. K.N. Rajagopal Sastri and D. Gupta, for the respondent. September 22. The Judgment of the Court was delivered by S.K. DAS J. For the assessment year 1946 47 the appellant Homi Jehangir Gheesta was assessed to income tax on a total income of Rs. 87,500 under section 23(3) of the Indian Income tax Act, 1922. The circumstances in which he was so assessed were the following. The appellant 's case was that M. H. Sanjana, maternal grand father of the appellant, died on or about May 10, 1920. There was litigation between his widow Cursetbai and Bai Jerbanoo, Sanjana 's daughter by his first wife, about the validity of a will left by Sanjana. Bai Jerbanoo was the appellant 's mother. The litigation was compromised and the appellant 's mother got one third share in the estate left by Sanjana the total value of which estate was about Rs. 9,88,000. Bai Jerbanoo died in 1933, leaving her husband Jehangirji (appellant 's father), her son Homi (appellant) and a daughter named Aloo. It was stated, though there was no evidence thereof, that Bai Jerbanoo left an estate worth about Rs. 2,10,000 when she died. The appellant was a minor at the time of 772 his mother 's death. He had two uncles then, Phirozeshaw and Kaikhusroo. Phirozeshaw was the eldest member of the family. On his mother 's death the appellant 's share of the estate was Rs. 70,000. Phirozeshaw took charge of it and made investments. He died on December 12, 1945. Kaikhusroo, younger brother of Phirozeshaw and one of the executors of his will, took charge of the estate of Phirozeshaw. When he opened a safe belonging to Phirozeshaw he found a packet with the name of the appellant on it. That packet contained high denomination currency notes of the value of Rs. 87,500. On January 24, 1946, the appellant tendered those notes for encashment and made a declaration which was then necessary and in the declaration he said: "Legacy from my mother who died in 1933 when I was minor and money whereof was invested from time to time by my father and late uncle Phirozeshaw who recently died." When the appellant received a notice from the Income tax Officer to submit a return of his income for the relevant year, he submitted a return showing " nil " income. When asked about the high denomination notes which he had uncashed, he said in a letter dated January 7, 1947, that his uncle Phirozeshaw who used to manage his estate during his minority handed over to him and his father the sum of Rs. 87,500 sometime before his (i. e., Phirozeshaw 's) death in 1945. This was a story different from the one later given, about the opening of the safe by Kaikhusroo after Phirozeshaw 's death and the finding of a packet there in the name of the appellant. The appellant also filed an affidavit before the Income tax Officer on September 29, 1949, which also contained contradictory statements. On a consideration of all the materials before him, the Income tax Officer did not accept the case of the appellant but came to the conclusion that the true nature of the receipt of Rs. 87,500 was not disclosed. He treated the amount as appellant 's income from some source not disclosed and assessed him accordingly. The appellant preferred an appeal to the Assistant 773 Commissioner of Income tax. At the appellate stage the statements of the appellant 's father and uncle were taken by the Income tax Officer, D 11 Ward, Bombay, and a further statement of the appellant 's uncle Kaikhusroo was taken by the appellate authority. That authority came to the same conclusion as the Income tax Officer had come to. Then there was an appeal to the Income tax Appellate Tribunal, which again reviewed the facts of the case. The Tribunal pointed out the following important discrepancies in the case sought to be made out by the appellant: "(i) Declaration dated 24 1 1946 by the assessee says that mother 's legacy was invested " by my father and my late uncle Phirozeshaw ". His letter dated 7 1 1947 says that his uncle (i. e., Phirozeshaw) only managed his estate. The object of this variation is obviously to shield his father from inconvenient examination. The uncle had already departed for his eternal home. (ii)Assessee 's letter dated 7 1 1947 says that the uncle Phirozeshaw handed over money " to me and my father " before his death. The affidavit dated 29 9 1949 tells another story, viz., the executor Kaikhusroo handed over money to the assessee after Phirozeshaw 's death. In another part of the said affidavit it is said that the said executor handed over money to assessee 's father. The affidavit assures us that the declaration regarding high denomination notes was made on the information given him by his father. The assessee son nowhere refers to any " packet ". Indeed, the theory of " packet " was pronounced by the Executor Kaikhusroo only when he appeared before the Income tax Officer on 22 2 1952. (iii) In his statement dated 22 2 1952 Mr. Kaikhusroo says that he " found an envelope containing Rs. 87,500 1 took charge of this money and handed over the money to Homi." Before the Appellate Assistant Commissioner H. Range, the same Mr. Kaikhusroo later on said: " I handed over the packets as they were. I did 774 not count the Dotes or verify the contents. " Some of the answers given as to " receipts " and " inventory " by the executor Kaikhusroo show that he did not take even the reasonable precautions that an ordinary person would take, not to talk of an executor. " The Tribunal then expressed its conclusion thus: " We have, in these circumstances, no hesitation whatever in holding that the assessee has miserably failed to explain satisfactorily the source of the sum of Rs. 87,500. It is properly taxed as income. " It dismissed the appeal by its Order dated October 7, 1955. The appellant then moved the Tribunal to refer certain questions of law to the High Court, which questions according to the appellant arose out of the Tribunal 's order. The Tribunal held that no question of law arose out of its order dated October 7, 1955, and by its order dated March 8, 1956, dismissed the application of the appellant for a reference under section 66 of the Income tax Act, 1922. The appellant unsuccessfully moved the Bombay High Court by means of a petition under section 66(2). This petition was summarily dismissed by the High Court on October 4, 1956. The appellant then filed a petition for special leave to appeal to this Court. By an order dated December 3, 1956, this Court granted Special Leave to Appeal to this Court from the order of the Bombay High Court dated October 4, 1956, but made no order at that stage on the petition for special leave to appeal from the orders of the Tribunal dated October 7, 1955, and March 8, 1956. The present appeal has been filed pursuant to the special leave granted by this Court. The short point for consideration is this was the High Court right in summarily rejecting the petition under section 66 (2) ? In other words, did the order of the Tribunal dated October 7, 1955, on the face of it raise any question of law ? On behalf of the appellant it has been argued that the principles laid down by this Court in Dhirajlal Girdharilal vs Commissioner of Income tax, Bombay (1) apply, because though the decision of the (1) 775 Tribunal is final on a question of fact, an issue of law arises if the Tribunal arrives at its decision by consider ing material which is irrelevant to the enquiry, or by considering material which is partly relevant and partly irrelevant, or bases its decision partly on conjectures, surmises and suspicions. It is contended that on the face of it the decision of the Tribunal suffers from all the three defects mentioned above. Learned Counsel for the appellant has made a grievance of that part of the order in which the Appellate Tribunal states: " We were also not told why the deceased uncle, if he took charge of the minor 's money, did not hand it over to Bai Aloo when she became major in 1939 or even when she got married in 1944 ". It is contended that this was an irrelevant consideration, and Bai Aloo herself made a statement before the Income tax Officer, D II Ward, Bombay, on February 22, 1952, in which she indicated the cir cumstances how she also received a sum of Rs. 85,000 from her uncle Phirozeshaw before the latter 's death. She further stated that she also submitted a return to the Income tax Officer but was not subjected to any assessment on the sum received. The argument of learned Counsel for the appellant is that it was not a relevant consideration as to why Phirozeshaw did not hand over the money to Bai Aloo in 1939 or in 1944, and if Bai Aloo 's statements were to be taken into consideration, they were in favour of the appellant in as much as no assessment was made on Bai Aloo in respect of the sum she had received. We do not consider that the circumstances referred to by the Tribunal in connection with Bai Aloo 's statement were irrelevant. What the Tribunal had to consider was the correctness or otherwise of a story in which the mother was stated to have left Rs. 2,10,000 out of which the heirs got one third share each. The Tribunal had to consider each aspect of the story in order to judge of its probability and from that point of view it was a relevant consideration as to why Bai Aloo 's money was not paid when she became major or when she got married. It was also a relevant consideration as to what the father of the appellant did with his 776 share of the money and the Tribunal rightly pointed out that the father took cover tinder "mixing of investments ". These were relevant considerations for judging the probability of the story. The Tribunal also rightly pointed out that the fact that Bai Aloo was not assessed did not make the story any more probable. The Tribunal stated in its order that a summons was issued to the father by the Income tax Officer to appear before the latter on June 23, 1950. The father failed to comply with the summons. This circumstance, it is argued, should not have been used against the appellant, because the record showed that the summons was served on the father on June 22, 1950, for attendance on the next day and the father wrote a letter stating that it was not possible for him to attend on the next day and, therefore, asked for another date. We do not think that this circumstance vitiates the order of the Tribunal which was based on grounds much more substantial than the failure of summons issued against him. The father was actually examined later and his statements were taken into consideration. One point made by the Tribunal was that no explanation was forthcoming as to why the uncle took charge of the share of the appellant and his sister when their father was alive and why the father allowed himself to be effaced in the matter of custody and management of the funds belonging to his children. We consider that this circumstance was also a relevant consideration, and if the father was in a position to give an explanation, he should have done so when he made his statement before the Income tax Officer, D 11 Ward, Bombay, on February 8,1952. The Tribunal states: " We were also told that the assessee was taking his education between 1943 and 1950 and as such he bad no opportunity to earn any income. In a place like Bombay and particularly in the family of a businessman, a person may earn even when he learns. " These observations of the Tribunal has been very seriously commented on by learned Counsel for the appellant. Learned Counsel has stated that certificates from the school, college and 777 university authorities were produced by the appellant right upto 1950 which showed that the appellant was a student till 1950 and after seeing the certificates the Tribunal should not have said " We were also told etc. " According to learned Counsel this showed that, the finding of the Tribunal was coloured by prejudice. We are unable to agree. Even if it be taken that the appellant satisfactorily proved that he was a student till 1950, we do Dot think that it makes any real difference as to the main question at issue, which was whether the appellant received the sum of Rs. 70,000 from the estate of his mother, later increased by investments to Rs. 87,500 in 1945. The Tribunal rightly pointed out that no evidence was given of the value of the estate left by the mother, though there was some evidence of what the mother received from the estate of her father Sanjana; nor was there any evidence of the investments said to have been made which led to an addition to the original sum of Rs. 70,000. It has been argued that it was a mere surmise on the part of the Tribunal to say that in a place like Bombay a person may earn when be learns. Even if the Tribunal is wrong in this respect, we do not think that it is a matter of any consequence. We must read the order of the Tribunal as a whole to determine whether every material fact, for and against the assessee, has been considered fairly and with the due care; whether the evidence pro and con has been considered in reaching the final conclusion ; and whether the conclusion reached by the Tribunal has been coloured by irrelevant considerations or matters of prejudice. Learned Counsel for the appellant has taken us through the entire order of the Tribunal as also the relevant materials on which it is based. Having examined the order of the Tribunal and those materials, we are unable to agree with learned Counsel for the appellant that the order of the Tribunal is vitiated by any of the defects adverted to in Dhirajlal Girdharilal vs Commissioner of Income tax, Bombay (1) or Omar Salay Mohamed Sait vs Commissioner of Income tax, Madras(2). We must make (1) (2) 778 it clear that we do not think that those decisions require that the order of the Tribunal must be examined sentence by sentence, through a microscope as it were, so as to discover a minor lapse here or an incautious opinion there to be used as a peg on which to hang an issue of law. In view of the arguments advanced before us it is perhaps necessary to add that in considering probabilities properly arising from the facts alleged or proved, the Tribunal does not indulge in conjectures, surmises or suspicions. It has also been argued before us that even if the explanation of the appellant as to the sum of Rs. 87,500 is not accepted, the Department did not prove by any direct evidence that the amount was income in the hands of the appellant. We do not think that in a case like the one before us the Department was required to prove by direct evidence that the sum of Rs. 87,500 was income in the hands of the appellant. Indeed, we agree that it is not in all cases that by mere rejection of the explanation of the assessee, the character of a particular receipt as income can be said to have been established; but where the circumstances of the rejection are such that the only proper inference is that the receipt must be treated as income in the bands of the assessee, there is no reason why the assessing authorities should not draw such an inference. Such an inference is an inference of fact and not of law. For the reasons given above we are of the view that no question of law arose from the order of the Tribunal and we see no grounds for interference with the judgment and order of the Bombay High Court, dated October 4, 1956. The appeal accordingly fails and is dismissed with costs. Appeal dismissed. [/INST] The appellant encashed high denomination currency notes of the value of Rs. 87,5oo and was called upon by the Incometax Officer to submit a return for the relevant year. The appellant made three statements, discrepant in material particulars, at different stages as to how he received the amount. The Income tax Officer held that the true nature of the receipt had not been disclosed, treated it as income from an undisclosed source and assessed him accordingly. The Assistant Commissioner of Income tax upheld that order on appeal. On a further appeal, the Appellate Tribunal reviewed the facts, considered the discrepancies in the appellant 's case and affirmed the order of assessment. An application for a reference to the High Court having been made under section 66 of the Indian Income tax Act, the Tribunal held that no question of law arose from its order and dismissed the same. The High Court thereafter summarily dismissed the application made by the appellant under section 66(2) of the Act. Against that order of summary dismissal special leave to appeal was obtained from this court and the sole question for determination in the appeal was whether the order of the Tribunal on the face of it disclosed any question of law and if the High Court was right in summarily dismissing the application under section 66(2) of the Act. Held, that no question of law arose from the order of the Tribunal and the appeal must fail. In order to decide whether the principles laid down by this court in Dhirajlal Girdharilal vs Commissioner of Income tax, Bombay, and Omar Salay Mohamed Sait vs Commissioner of Income tax, Madras, (1959) 37 I.T.R. 151, applied to a particular case, it was necessary to read the order of the Tribunal as a whole for determining whether or not it had properly considered the material facts and the evidence, for and against, in coming to its final conclusion and whether any irrelevant consideration or matter of prejudice had vitiated such conclusion. Those decisions do not require that the order of the Tribunal must be examined sentence by sentence so as to discover a minor lapse here or an incautious opinion there and rest a question of law thereon. 771 Dhirajlal Girdharilal vs Commissioner of Income tax, Bombay, and Omar Saley Mohamed Sait vs Commis sioner of Income tax, Madras, , explained. Although a mere rejection of an explanation given by the assessee does not invariably establish the nature of a receipt. , where the circumstances of the rejection are such as to properly raise the inference that the receipt is an income, the assessing authorities are entitled to draw that inference. Such an inference is one of fact and not of law. </s>

<s>[INST] Summarize the following judgement: iminal Appeals Nos. 93 & 94/1958. Appeals by special leave from the judgment and order dated April 9, 1956, of the former Bombay High Court in Criminal Appeals Nos. 419 and 420 of 1956, arising out of the judgment and order dated October 15, 1955, of the Chief Presidency Magistrate, Bombay, in Cases Nos. 370/S and 371/S of 1955. C. K. Daphtary, Solicitor General of India, N. section Bindra and R. H. Dhebar, for the appellant (in both the appeals). section P. Varma, for respondents Nos. 1, 2 and 3 (In both the appeals). A. N. Goyal, for respondent No. 4 (In both the appeals). N. P. Nathwani, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for respondents Nos. 5 to 7 (In both the appeals). September 23. The Judgment of the Court was delivered by 803 SARKAR J. The respondents were Directors of Hirjee Mills Ltd. They were prosecuted before the Chief Presidency Magistrate, Bombay, for two offences under the Companies Act, 1913, as amended by Act XXII of 1936. The first offence was that they knowingly and wilfully authorised the failure to file the summary of share capital for the year 1953 and thereby became punishable under sub section (5) of section 32 of the Act, for a default in carrying out the requirements of that section. The second offence was that they were knowingly and wilfully parties to the failure to lay before the Company in general meeting the balance sheet and profit and loss account as at March 31, 1953 and thereby became punishable under section 133(3) of the Act for a default in complying with the requirements of section 131. There was a separate trial in respect of each offence. The learned Magistrate found that no general meeting of the company had been held in the year concerned. Following Imperator vs The Pioneer Clay and Industrial Works Ltd. (1) he acquitted the respondents, being of the view that no offence under either section could be committed till the general meeting had been held. The learned Magistrate did not go into the merits of the cases on the facts. Appeals by the appellant to the High Court at Bombay from the orders of the learned Magistrate were summarily dismissed. It has preferred the present appeals from the decisions of the High Court at Bombay with special leave granted by this Court. The appeals have been heard together and are both disposed of by this judgment. It appears that respondent No. 7, N. K. Firodia, was discharged by the learned Magistrate because it was conceded at the trial that he was not a director of the Company at any material time. He has been made a respondent to the present appeals clearly through some misapprehension. The appellant, the State of Bombay, does not and cannot proceed against him. The name of respondent Firodia should there fore be struck out from the records of this appeal. (i) I.L.R. 804 Respondent No. 5, Fateh Chand Jhunjhunwala, died while this appeal was pending in this Court. The appeal is therefore concerned with the remaining five respondents only. Sub section (1) of section 32 requires a company once at least in every year to make a list of its shareholders as on the date of the first or only ordinary general meeting in the year. Sub section (2) requires that the list shall contain a summary specifying various particulars mentioned in it. Sub section (3) states that the list and summary shall be completed within twenty. one days after the day of the first or only ordinary general meeting in the year and the company shall forthwith file a copy with the registrar together with a certificate from a director or the manager or the secretary of the company that the list and summary state the facts as they stood on the day aforesaid. Sub section (5) contains the penal provision, that " If a company makes default in complying with the requirements of this section, it shall be liable to a fine not exceeding fifty rupees for every day during which the default continues, and every officer of the company who knowingly and wilfully authorises or permits the default shall be liable to the like penalty". It is said on behalf of the respondents that there is no default in complying with the requirements of the section until a general meeting is held. That, it is said, follows from the language of the section, for it requires certain things as at the date of the meeting to be stated in the list and summary and also requires these to be filed within a certain time of the meeting. So, it is said, that, the section requires certain things to be done only after the meeting has been held and no question of performing those things arises till the meeting has been held. A contrary view has been taken in England on the corresponding provisions of the English Companies Acts of 1862 and 1908: see Gibson vs Barton(1), Edmonds vs Foster(2) and Park vs Lawton (3). It was said in these cases that a person charged with an (1) (2) (1875) 45 Law J. Rep. M.C. 41. (3) 805 offence could not rely on his own default as an answer to the charge, and so, if the person charged was responsible for not calling the general meeting, he cannot be heard to say in defence to the charge that the general meeting had not been called. It was also said that the company and its officers were bound, to perform the condition precedent if they could do that, in order that they might perform their duty. This seems to us to be the correct view to take. If the person charged with the failure to carry out the requirements of the section could have called the meeting, he cannot defeat the provisions of the section simply by not calling the meeting wilfully. It is true that under section 76 of the Act a general meeting of a company has to be held once at least in every calendar year and if a default is made, the company and every director or the manager of the company who is knowingly and wilfully a party to the default shall be liable to a fine not exceeding five hundred rupees. That however is, in our opinion, no reason for saying that a person charged with a failure to file the list and summary as required by section 32 where a meeting had not been held, could only be prosecuted under section 76 and not under section 32. Section 76 imposes an obligation to hold a meeting and attaches a penalty to a failure to perform that obligation. In the case of section 32 it is necessary that the meeting should be held in order that the requirements of that section may be carried out. It is no less necessary to call a meeting for performing the obligations imposed by section 32, because under section 76 there is an obligation to call a meeting the breach of which entails an independent penalty. The two sections deal with different matters and section 76 does not interfere with the operation of section 32. The effect of section 32 must be derived from its terms: the terms cannot have different effects depending on whether there is a provision like section 76 in another part of the Act or not. Without a provision like section 76 a delinquent officer of the company may make section 32 infructuous, and therefore, as already stated, it must be held that liability 103 806 under section 32 would be incurred where the officer has wrongly assisted in the meeting not being held. The result cannot be different because of the presence of a provision like section 76. Nor do we think that sub sec. 5 of section 32 by imposing a daily fine during the continuance of the default indicates that the default is not committed till the meeting has been held. In order that the default may continue it has no doubt first to occur. In our view, it occurs after the expiry of 21 days from the day when the meeting should have been held within the year. The respondents referred to the case of Queen vs Newton (1) where it having been proved that the general meeting was not held, the persons charged with the default were acquitted. That case however is clearly distinguishable, " because the decision proceeded on the ground that, the summons having alleged in terms that the default was made after the general meeting had been held, it became essential to prove when the meeting was held as a matter of fact, and in the absence of proof the court held that the summons was rightly dismissed ". In this case Cockburn, C. J., expressed some doubts about the correctness of the decision in Edmonds vs Foster (2). In Park vs Lawton (3) however, Lord Alverstone said that he was unable to share those doubts, and with this view, we agree. We may add that such doubts have not been shared by anyone upto now. Another case to which we were referred on behalf of the respondents was Dorte vs South African Super Aeration Ltd. (4). There a company was convicted for a failure to file the list and summary in a case where the general meeting had not been held and fined Id and Id per day upto a certain day. Subsequently a further summons against it was taken out in respect of the same default for further penalties from that day to another later day. It was held that the word " default " implied a wilful and continued neglect to do an act required and that the company could not (1) (1879) 48 Law J. Rep. M. C. 77. (2) (1875) 45 Law J. Rep. M. C. 41. (3) (4) (1004) 807 be liable to a continuing daily fine for an omission which it was impossible to remedy. The report does not set out the arguments nor the judgment and it is not clear on what grounds the decision was given. It appears, however, that Lord Alverstone was one of the Judges who decided that came. In Park vs Lawton(1), Lord Alverstone himself observed with regard to the Dorte 's case that there, " there was no question of the defendant being also in default as to the general meeting, and that decision, therefore, in no way conflicts with the earlier authorities. " We do not think, therefore, that Dorte 's case assists the respondents at all. It is authority only for the proposition that a continuing daily fine will not be exacted where, owing to no meeting having been held, it is impossible to remedy the default: see Buckley 's Company Law (13th Ed.), p. 311. Turning now to section 131, we find that it requires the directors of a company, once at least in every calendar year, to lay before the company in general meeting a balance sheet and profit and loss account of the company. Sub section (3) of section 133 makes the company and every officer of it who is knowingly and wilfully a party to the default in carrying out the provisions Of section 131, punishable with fine which may extend to five hundred rupees. As in the case of section 32 and for the same reasons, here also it is no defence to the charge for breach of section 131 to say that a meeting was not called. As regards Imperator vs Pioneer Clay and Industrial Works Ltd. (2), OD which the courts below held that the respondents must be acquitted, we find that it turned on section 134 of the Companies Act, 1913. The language of that section is to a certain extent different from the language used in sections 32 and 131. Section 134(1) says, " After the balance sheet and profit and loss account. . . have been laid before the company at the general meeting, three copies thereof. . shall be filed with the Registrar. " Sub section (4) of this section provides a penalty for breach of section 134, in terms similar to those contained in sub see. (5) of section 32. If the language of section 134(1) (1) (2) I.L R. 808 makes any difference as to the principle to be applied in ascertaining whether a breach of it has occurred or not as to which we say nothing in this case then that case can be of no assistance to the respondents. If however no such difference can be made, then we think that it was not correctly decided. We observe that Chagla, C. J., who delivered the judgment of the Court in that case, did not question the correctness of the decision in Park vs Lawton (1) which be was asked to follow. All that he said with regard to that case was that the scheme and terms of the section on which it turned were different from section 134 of the Companies Act, 1913. That may or may not be so. There is however no difference between section 26 of the English Companies Act, 1908, on which Parker 's case turned and which apparently through some mistake Chagla, C.J., cited section 36, and section 32 of the Indian Companies Act of 1913, except that the English section required the summary to include a statement in the form of a balance sheet containing certain particulars mentioned, whereas our section does Dot require that. Section 131 of our Act contains some provision about the laying of the balance sheet before the general meeting. This provision was inserted in the Act by the amending Act of 1936. The fact, that one of the requirements of the English section 26 is not present in section 32 of our Act cannot create any material difference between section 32 of our Act and section 26 of the English Act. If the principle that a person charged with an offence cannot rely on his own default as an answer to the charge is correct, as we think it is, and which we do not find Chagla, C. J., saying it is not, then that principle would clearly apply when a person is charged with a breach of section 32 of our Act. We think therefore that the appeal should be allowed. The case will now go back to the learned Presidency Magistrate and be tried on the merits according to the law as laid down in this judgment. A.p.peal allowed. Case remanded. [/INST] The respondents, directors of a company, were prosecuted under sections 32(5) and 133(3) of the Companies Act, 1913, for breaches Of sections 32 and :131 of that Act for having knowingly and wilfully authorised the failure to file the summary of share capital for the year 1953 and being knowingly and wilfully parties to the failure to lay before the company in general meeting the balance sheet and profit and loss account as at March 31, 1953. The respondents contended that there was no default in complying with the requirements of the section as no general meeting had been held in the year concerned. Held A person charged with an offence cannot rely on his default as an answer to the charge and so, if the respondents were responsible for not calling the general meeting, they cannot be heard to say in defence to the charges brought against them that the general meeting had not been called. The company and its officers were bound to perform the conditions precedent, if they could do that, in order that they might perform their duty. 802 It is no less necessary to call a meeting for performing the obligations imposed by section 32 because section 76 creates an obligation to call a meeting and imposes an independent penalty for breach of that obligation. Liability under section 32(5) or section 133(3) would be incurred where the officer has wrongfully assisted in the meeting not being held though he might also be liable at the same time to the penalty under section 76. Sub section (5) Of section 32 by imposing a daily fine during the continuance of the default does not indicate that the default is not committed till a meeting has been held. The default occurs after the expiry of twenty one days from the day when the meeting should have been held. Imperator vs The Pioneer Clay and Industrial Works Ltd., I.L.R. , Queen vs Newton, (1879) 48 Law J. Rep. M.C. 77 and Dorte vs South African Super Aeration Ltd., , distinguished. Gibson vs Bayton, , Edmonds vs Foster, (1875) 45 Law J. Rep. M.C. 41 and park vs Lawton, , approved. Doyle vs South African Super Acration Ltd., , not applicable. </s>

<s>[INST] Summarize the following judgement: Criminal Appeal No. 149/1958. Appeal from the judgment and order dated October 27, 1958, of the Allahabad High Court in Criminal Appeal No. 1154 of 1956. N. C. Chatterjee and R. L. Kohli, for the appellant. G. C. Mathur and C. P. Lal, for the respondent. September 27. The Judgment of the Court was delivered by RAGHUBAR DAYAL J. This is an appeal by Padam Sen and Shekbar Chand against the order of the Allahabad High Court dismissing their appeal against the order of the Special Judge, Meerut, convicting them of an offence under section 165 A of the Indian Penal Code. The High Court granted leave to appeal against its order. One Genda Mal, father of Shekhar Chand, appellant No. 2, sued Mithan Lal and others in the Court of the Additional Munsif, Ghaziabad, for money on the basis of promissory notes executed by the defendants in his favour. The defendants apprehending that the plaintiff would fabricate his books of account with respect to payments made by them, applied for the seizure of the account books of the plaintiff. The Additional Munsif, by his order dated March 27, 1954, appointed Sri Raghubir Pershad, Vakil, Commissioner to seize those books of account. The Commissioner accordingly seized those books and brought them to Ghaziabad. The appellants were convicted by the Special Judge under section 165 A of the Indian Penal Code for having offered bribe to the Commissioner for being allowed an opportunity to tamper with those books of account. Their conviction was upheld by the High Court. The two Courts below have found that the appellants went to the Commissioner 's Office on March 30, 1954, and offered him Rs. 900 as bribe. The appellants do not challenge these findings of fact recorded by the Courts below. Their only contention is that 113 886 Sri Raghubir Pershad, the Commissioner, was not a public servant, and therefore even on the basis of the findings of fact arrived at by the Courts below, they did not commit any offence under section 165 A of the Indian Penal Code. It has been contended for the appellants that the appointment of Sri Raghubir Pershad as Commissioner was null and void as the Additional Munsif had no power to appoint a Commissioner for the purpose of seizing the account books of the plaintiff on an application b application by the defendants, the power of a Civil Court to issue a commission being limited by the provisions of section 75 and Order XXVI of the Code of Civil Procedure (hereinafter called the Code), and the Court having no inherent power to appoint a Commissioner for any purpose not mentioned in section 75 and Order XXVI of the Code. On behalf of the State it is urged that the Court can appoint a Commissioner in the exercise of its inherent powers saved by section 151 of the Code for purposes which do not come within the provisions of section 75 and Order XXVI of the Code. It is further submitted for the State that even if the Additional Munsif had no power to appoint the Commissioner for seizing the books of account, Sri Raghubir Pershad would be deemed to be a public servant in view of Explanation 2 to section 21 of the Indian Penal Code because he was in actual possession of the situation of a public servant for he acted as Commissioner and was recognized as such by the appellants and others connected with the civil suit. Section 75 of the Code empowers the Court to issue a commission, subject to conditions and limitations which may be prescribed, for four purposes, viz., for examining any person, for making a local investigation, for examining or adjusting accounts and for making a partition. Order XXVI lays down rules relating to the issue of commissions and allied matters. Mr. Chatterjee, learned counsel for the appellants, has submitted that the powers of a Court must be found within the four corners of the Code and that when the Code has expressly dealt with the subject matter of commissions in section 75 the Court cannot 887 invoke its inherent powers under section 151 and thereby add to its powers. On the other hand, it is submitted for the State, that the Code is not exhaustive and the Court, in the exercise of its inherent powers, can adopt any procedure not prohibited by the Code expressly or by necessary implication if the Court considers it necessary, for the ends of justice or to prevent abuse of the process of the Court. Section 151 of the Code reads: " Nothing in this Code shall be deemed to limit or otherwise affect the inherent powers of the Court to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court ". The inherent powers of the Court are in addition to the powers specifically conferred on the Court by the Code. They are complementary to those powers and therefore it must be held that the Court is free to exercise them for the puposes mentioned in section 151 of the Code when the exercise of those powers is not in any way in conflict with what has been expressly provided in the Code or against the intentions of the Legislature. It is also well recognized that the inherent power is not to be exercised in a manner which will be contrary to or different from the procedure expressly provided in the Code. The question for determination is whether the impugned order of the Additional Munsif appointing Sri Raghubir Pershad Commissioner for seizing the plaintiff 's books of account can be said to be an order which is passed by the Court in the exercise of its inherent powers. The inherent powers saved by section 151 of the Code are with respect to the procedure to be followed by the Court in deciding the cause before it. These powers are not powers over the substantive rights which any litigant possesses. Specific powers have to be conferred on the Courts for passing such orders which would affect such rights of a party. Such powers cannot come within the scope of inherent powers of the Court in the matters of procedure, which powers have their source in the Court possessing all the essential powers to regulate its practice 888 and procedure. A party has full rights over its books of account. The Court has no inherent power forcibly to seize its property. If it does so, it invades the private rights of the party. Specific procedure is laid down in the Code for getting the relevant documents or books in Court for the purpose of using them as evidence. A party is free to produce such documents or books in support of its case as be relevant. A party can ask the help of the Court to have produced in Court by the other party such documents as it would like to be used in evidence and are admitted by that party to be in its possession. If a party does not produce the documents it is lawfully called upon to produce, the Court has the power to penalize it, in accordance with the provisions of the Code. The Court has the further power to draw any presumption against such a party who does not produce the relevant document in its possession, especially after it has been summoned from it. Even in such cases where the Court summons a document from a party, the Court has not been given any power to get hold of the document forcibly from the possession of the defaulting party. The defendants had no rights to these account books. They could not lay any claim to them. They applied for the seizure of these books because they apprehended that the plaintiff might make such entries in those account books which could go against the case they were setting up in Court. The defendants ' request really amounted to the Court 's collecting documentary evidence which the defendants considered to be in their favour at that point of time. it is no business of the Court to collect evidence for a party or even to protect the rival party from the evil consequences of making forged entries in those ac. count books. If the plaintiff does forge entries and uses forged entries as evidence in the case, the defendants would have ample opportunity to dispute those entries and to prove them forgeries. We are therefore of opinion that the Additional Munsif bad DO inherent power to pass the order appointing a Commissioner to seize the plaintiff 's 889 account books. The order appointing Sri Raghubir Pershad as Commissioner for this purpose was therefore an order passed without jurisdiction and was therefore a null and void order. Learned counsel for the State, Mr. Mathur, has submitted in the alternative that the impugned procedure adopted by the Additional Munsif comes within certain provisions of the Code and has referred to r. 5 of Order XXXVIII and rr. 1(b) and 7 of Order XXXIX and r. 1 of Order XL of the Code. We do not agree with this contention. The impugned order was not passed under any of these provisions. It was clearly an order which the Additional Munsif purported to pass in the exercise of the inherent powers of the Court. The order was: " It is strange that an application of this kind has been made at this late stage, after over 2 years. However, in the interests of justice, issue commission to Sri Raghubir Pershad. Ho must go and recover Bahi Khatas for the year 1951 from the plaintiff and produce the same in Court. Fees Rs. 20, plus T. A. Report within six days. Costs of the commission will not be taxed. " Further, the provisions of r. 5 of Order XXXVIII are to prevent a decree that may be passed being rendered infructuous and r. 1(b) of Order XXXIX is applicable where the defendant threatens to dispose of his property to defraud creditors. None of these provisions has any application to the facts of the present case. Rule 7 of Order XXXIX empowers the Court, on the application of any party to a suit, to make an order for the detention, preservation or inspection of any property which is the subject matter of such suit or as to which any question may arise therein. The account books of the plaintiffs were not ' property ' which were the subject matter of the suit nor such that about them a question could arise in the suit. The account books could, at best, have been piece of evidence, if the plaintiff or the defendant had cared to rely on them. We therefore hold that the Additional Munsif had no power under the Code to appoint the Commissioner for seizing the plaintiff 's books of account. 890 Lastly it was urged for the State that even if the appointment of Sri Raghubir Pershad as Commissioner was null and void as the Additional Munsif had no jurisdiction to appoint a Commissioner for seizing the account books of the plaintiff, Sri Raghubir Pershad should be treated to be a 'public servant ' in view of Explanation 2 to section 21 of the Indian Penal Code. It has not been disputed for the appellant that if the appointment Of Sri Raghubir Pershad as Commissioner bad been valid, he would have been a public servant in view of the Fourth Clause to section 21 of the Indian Penal Code. Explanation 2 to section 21 reads: "Wherever the words 'public servant ' occur, they shall be understood of every person who is in actual possession of the situation of a public servant, whatever legal defect there may be in his right to hold that situation. " The contention for the State is that though there was a legal defect in Sri Raghubir Pershad 's appointment as Commissioner on account of the Additional Munsif having no power to appoint a Commissioner for the purpose of seizing the plaintiff 's books of account, that will not affect his being a public servant as he was in actual possession of the situation of a public servant. We do not agree with this contention, and are of opinion that the Explanation applies only when there be a post in existence. The Explanation does not apply when there is no pre existing post or when the person appointing has no authority to appoint. The word 'situation ' according to Webster 's New International Dictionary of the English Language, means: position or place of employment, place, office; as a situation in a store. The apposite meaning for the purposes of this Explanation would be 'office '. 'Office ' again, according to the same Dictionary, means a special duty, trust, charge or position, conferred by an exercise of governmental authority and for a public purpose ; a position of trust or authority conferred by an act of governmental power ; a right to exercise a public function or employment and receive the emoluments (if any) thereto belonging; as, an executive or judicial office. . In a wider sense, any position or place in the employment of the 891 government, especially one of trust or authority. The Dictionary further notes the differences in the con. notations of the various words office, post, appointment, situation and place and says: Office commonly suggests a position of (especially public) trust or authority ; and situation emphasizes the idea of employment, especially in a subordinate position; as, to seek a situation as governess, as private secretary. It is therefore clear that it is necessary for the application of this Explanation that the person concerned should be in actual possession of the pre existing office of a public servant. If there be no office or post, there could be no question of any person 's being in actual possession thereof, and of the person concerned coming within the terms of this Explanation. There was no post or office of a Commissioner in existence. All that happened here was that Sri Raghubir Pershad was authorized to seize and keep certain documents in his possession. In the present case there was neither any existing office of Commissioner, nor the Additional Munsif had power to appoint Sri Raghubir Pershad as Commissioner for the purpose of seizing the plaintiff 's account books and therefore this Explanation does not apply to the appointment of Sri Raghubir Pershad as Commissioner. It follows, there. fore, that Sri Raghubir Persbad cannot be held to be a public servant. We therefore accept the contention for the appellants and hold that Sri Raghubir Pershad was not a public servant and that therefore the appellants did not commit any offence under section 165 A of the Indian Penal Code by their offering him money in order to have an opportunity to tamper with the books of account which were in his custody. We therefore allow the appeal, set aside the order of the Court below and acquit the appellants of the offence under section 165 A and direct that the fine, if paid, be refunded. The appellants are on bail and therefore the bail bonds will be cancelled. Appeal allowed. [/INST] A Munsif appointed one R as a commissioner for seizing the account books of the plaintiff in a suit and to produce them before him. R seized the account books, and while they were still in his possession the appellants offered a bribe to R for being allowed to tamper with them. The appellants were tried and convicted under section 165 A of the Indian Penal Code. The appellants contended that the Munsif had no jurisdiction to appoint a commissioner for seizing account books, that the appointment of R as a commissioner was null and void and that consequently R was not a public servant and the appellants committed no offence in offering him a bribe. The respondent urged that the Munsif had jurisdiction under his inherent powers under section 151, Code of Civil Procedure, to appoint the commissioner and that in any case as R was in actual possession of the situation of a public servant within Explanation 2 to section 21 Of the Indian Penal Code, he would be deemed to be a public servant. Held, that R was not a public servant and the appellants did not commit any offence under section 165 A of the Penal Code by offering him a bribe. The Munsif had no inherent powers to appoint a commissioner to seize account books and his order was null and void. The inherent powers under section 151, Code of Civil Procedure, were with respect to the procedure to be followed by a Court in deciding the cause before it; such powers did not extend over the substantive rights of litigants. A party had full rights over his account books and the Court had no inherent power to forcibly seize his property. Explanation 2 to section 21, Indian Penal Code, applied only to a person actually in possession of a pre existing office of a public servant. In the present case there was no post or office of a commissioner in existence which could be said to have been occupied by R. His appointment being without jurisdiction R could not be deemed to be a public servant. 885 </s>

<s>[INST] Summarize the following judgement: Appeal No. 271 of 1956. Appeal from the judgment and order dated August 2, 1955, of the former Nagpur High Court in Misc. Petition No. 249 of 1955. M. Adhikari, Advocate General for the State of Madhya Pradesh, B. K. B. Naidu and I. N. Shroff, for the appellants. R. Patnaik, for the respondent. October 3. This appeal with a certificate issued by the Nagpur High Court under article 132(1) of the Constitution raises a question about the validity of the Central Provinces and Berar Goondas 972 Act X of 1946 as amended by Madhya Pradesh Act XLIX of 1950. It appears that against the respondent Baldeo Prasad the State of Madhya Pradesh, appellant 1, passed an order on June 16, 1955, under section 4 A of the Act. Subsequently the District Magistrate, Chhindwara, appellant 2, passed another order dated June 22, 1955, communicating to the respondent the first externment order passed against him. The respondent then filed 'a writ petition in the High Court (No. 249 of 1955) under article 226 challenging the validity of the said orders, inter alia, on the ground that the Act under which the said orders were passed was itself ultra vires. The appellants disputed the respondent 's contention about the vires of the Act. The High Court, however, has upheld the respondent 's plea and has held that sections 4 and 4 A of the Act are invalid, and since the two sections contain the main operative provisions of the Act, according to the High Court, the whole Act became invalid. It is the correctness of this conclusion which is challenged before us by the appellants. It would be convenient at this stage to refer briefly to the scheme of the Act and its relevant provisions. The Act was passed in 1946 and came into force on September 7, 1946. It was subsequently amended and the amended Act came into force on November 24, 1950. As the preamble shows the Act was passed because it was thought expedient to provide for the control of goondas and for their removal in certain circumstances from one place to another. Section 2 defines a goonda as meaning a hooligan, rough or a vagabond and as including a, person who is dangerous to public peace or tranquillity. It would thus be seen that the definition of the word " goonda " is an inclusive definition, and it includes even persons who may not be hooligans, roughs or vagabonds if they are otherwise dangerous to public peace or tranquillity. Section 3(1) empowers the State Government to issue a proclamation that disturbed conditions exist or are likely to arise in the areas specified in such proclama tions if the State Government is satisfied that public peace or tranquillity in any area is disturbed or is 973 likely to be disturbed. The area in respect of which a proclamation is thus issued is described in the Act as the proclaimed area. Section 3(2) limits the operation of the proclamation to three months from its date and provides that it may be renewed by notification from time to time for a period of three months at a time. The first step to be taken in enforcing the operative provisions of the Act thus is that a proclamation has to be issued specifying the proclaimed areas, and the limitation on the power of the State Government to issue such a proclamation is that the proclamation can be issued only after it is satisfied as required by section 3(1), and its life will not be longer than three months at a stretch. Section 4 reads thus: " 4(1). During the period the proclamation of emergency issued or renewed under Section 3 is in operation, the District Magistrate having jurisdiction in or in any part of the proclaimed area, if satisfied that there are reasonable grounds for believing that the presence, movements or acts of any goonda in the proclaimed area is prejudicial to the interests of the general public or that a reasonable suspicion exists that any goonda is committing or is likely to commit acts calculated to disturb the public peace or tranquillity may make an order (i) directing such goonda to notify his residence and any change of or absence from such residence during the term specified and to report his movements in such manner and to such authority as may be specified ; (ii) directing that he shall not remain in the proclaimed area within his jurisdiction or any specified part thereof and shall not enter such area; and (iii) directing him so to conduct himself during the period specified as the District Magistrate shall deem necessary in the interests of public order: Provided that no order under clause (ii) which directs the exclusion of any goonda from a place in which he ordinarily resides shall be made except with the previous approval of the State Government: Provided further that no such order shall be 124 974 made directing exclusion of any goonda from the district in which he ordinarily resides. (2) No order under sub section (1) shall be made by a District Magistrate in respect of a goonda without giving to such goonda a copy of the grounds on which the order is proposed to be made and without giving an opportunity to be heard : Provided that where the District Magistrate is of opinion that it is necessary to make an order without any delay he may for reasons to be recorded in writing, make the order and shall, as soon as may be within ten days from the date on which the order is served on the goonda concerned, give such goonda a copy of the grounds and an opportunity to be heard. (3) After hearing the goonda, the District Magistrate may cancel or modify the order as he thinks fit. " This section confers on the District Magistrate jurisdiction to make an order against a goonda if there are reasonable grounds for believing that his presence, movements or acts in any proclaimed area is likely to be prejudicial to the interests of the general public, or it there is a reasonable suspicion that a goonda is committing or is likely to commit prejudicial acts. Sub clauses (i), (ii) and (iii) indicate the nature of the directions and the extent of the restrictions which can be placed upon a goonda by an order passed under section 4. Sub section (2) requires the District Magistrate to give the goonda a copy of the grounds on which an order is proposed to be made, and to give him an opportunity to be heard why such an order should not be passed against him. The proviso to the section deals with an emergency which needs immediate action. After hearing the goonda the District Magistrate may under sub section (3) either cancel or modify the order as he thinks fit. Section 4 A reads thus: " (1) Where the District Magistrate considers that with a view to maintain the peace and tranquillity of the proclaimed area in his district it is necessary to direct a goonda to remove himself outside the district in which the proclaimed area is comprised or 975 to require him to reside or remain in any place or within any area outside such district, the District Magistrate may, after giving the goonda an opportunity as required by sub section (2) of Section 4 forward to the State Government a report together with connected papers with a recommendation in that behalf (2) On receipt of such report the State Government may, if it is satisfied that the recommendation made by the District Magistrate is in the interests of the general public, make an order directing such goonda (a) that except in so far as he may be permitted by the provisions of the order, or by such authority or person as may be specified therein, he shall not remain in any such area or place in Madhya Pradesh as may be specified in the order; (b) to reside or remain in such place or within such area in Madhya Pradesh as may be specified in the order and if he is not already there to proceed to that place or area within such time as may by specified in the order : Provided that no order shall be made directing the exclusion or removal from the State of any person ordinarily resident in the State." Thus an order more stringent in character can be passed under this section. The safeguard provided by the section, however, is that the District Magistrate is required to give the goonda an opportunity to be heard and further required to make a report to the State Government and forward to the State Government papers connected with the recommendation which the District Magistrate makes. Sub section (2) of section 4 A then requires the State Government to consider the matter and empowers it to make an order either under cl. (a) or cl. (b) of the said sub section. The proviso to this section lays down that Do order shall be made by which the goonda would be excluded or removed from the State where he ordinarily resides. The last section to which reference may be made is section 6. It gives a goonda aggrieved by an order made against him, inter alia, under section 4 or section 4 A to make a representation to the State Government within the 976 time prescribed, and it requires the State Government to consider the representation and make such orders thereon as it may deem fit. That in brief is the scheme of the Act. At this stage it would be material to state the relevant facts leading to the writ petition filed by the respondent. Appellant 1 issued a proclamation under section 3 on August 10, 1954, specifying the limits of Police Stations Parasia and Jamai and Chhindwara Town as proclaimed area. This proclamation was renewed in November, 1954 and February, 1955. Thereafter on May 9, 1955, appellant 1 issued afresh proclamation specifying the whole of the Chhindwara District as the proclaimed area. This proclamation was to remain in force till August 8, 1955. Whilst the second proclamation was in force the second appellant received reports from the District Superintendent of Police, Chhindwara, against the respondent, and he ordered the issue of a notice to him to show cause why action should not be taken against him under section 4; this notice required the respondent to appear before the second appellant on April 29, 1955. The respondent, though served, did not appear before the second appellant. Thereupon the second appellant sent a report to appellant 1 on April 30, 1955, and submitted the case against him with a draft order for the approval of the said appellant under the first pro viso to section 4(1). In the meantime the third notification was issued by appellant 1. The second appellant then issued a fresh notice against the respondent under section 4 on May 24, 1955. The respondent appeared in person on May 30, 1955, and was given time to file his written statement which he did on June 4, 1955. The case was then fixed for hearing on June 22, 1955. Meanwhile the State Government passed an order on June 16, 1955, directing that the respondent shall, except in so far as he may be permitted by the second appellant from time to time, not remain in any place in Chhindwara District. This order was to remain in force until August 8, 1955. On June 22, 1955, the second appellant communicated the said order to the respondent and directed him to leave the District 977 before 10 a. m. on June 23, 1955. The respondent appealed to appellant 1 to cancel the order passed against him. The first appellant treated the appeal as a representation made by the respondent under section 6 and rejected it on July 9, 1955. A day before this order was passed the respondent filed his writ petition in the High Court from which the present appeal, arises. The respondent challenged the validity of the Act on the ground that it invades his fundamental rights under article 19(1)(d) and (e) and as such it becomes invalid having regard to the provisions of article 13 of the Constitution. This plea has been upheld by the High Court. On behalf of the appellants the learned Advocate General of Madhya Pradesh contends that the High Court was in error in coming to the conclusion that the restrictions imposed by the Act did not attract the provisions of article 19(5). The legislative competence of the State Legislature to pass the Act cannot be disputed. The Act relates to public order which was Entry I in List II of the Seventh Schedule to the Constitution Act of 1935. There can also be no doubt that the State Legislature would be competent to pass an act protecting the interests of the general public against the commission of prejudicial acts which disturb public peace and order. Section 3 of the Act indicates that it is only where the public peace or tranquillity is threatened in any 'given area of the State that the State Government is authorised to issue a proclamation, and as we have already noticed, it is in respect of such proclaimed areas and for the limited duration prescribed by section 3(2) that orders can be passed against goondas whose prejudicial activities add to the disturbance in the proclaimed areas. Therefore, broadly stated the purpose of the Act is to safeguard individual rights and protect innocent and peaceful citizens against the prejudicial activities of goondas, and in that sense the Act may prima facie claim the benefit of article 19(5). This position is not seriously disputed. The argument against the validity of the Act is, however, based on one serious infirmity in section 4 and 978 s.4 A which contain the operative provisions of the Act. This infirmity is common to both the sections, and so what we will say about section 4 will apply with equal force to section 4 A. It is clear that section 4 contemplates preventive action being taken provided two conditions are satisfied ; first, that the presence, movements or acts of any person sought to be proceeded against should appear to the District Magis trate to be prejudicial to the interests of the general public, or that a reasonable suspicion should exist that such a person is committing or is likely to commit acts calculated to disturb public peace or tranquillity ; and second that the person concerned must be a goonda. It would thus be clear that it is only where prejudicial acts can be attributed to a goonda that section 4 can come into operation. In other words, the satisfaction of the first condition alone would not be enough ; both the conditions must be satisfied before action can be taken against any person. That clearly means that the primary condition precedent for taking action under section 4 is that the person against whom action is proposed to be taken is a goonda; and it is precisely in regard to this condition that the section suffers from a serious infirmity. The section does not provide that the District Magistrate must first come to a decision that the person against whom he proposes to take action is a goonda, and gives him no guidance or assistance in the said matter. It is true that under section 4 a goonda is entitled to have an opportunity to be heard after he is given a copy of the grounds on which the order is proposed to be made against him; but there is no doubt that all that the goonda is entitled to show in response to the notice is to challenge the correctness of the grounds alleged against him. The enquiry does not contemplate an investigation into the question as to whether a person is a goonda or not. The position, therefore, is that the District Magistrate can proceed against a person without being required to come to a formal decision as to whether the said person is a goonda or not; and in any event no opportunity is intended to be given to the person to show 979 that he is not a goonda. The failure of the section to make a provision in that behalf undoubtedly constitutes a serious infirmity in its scheme. Incidentally it would also be relevant to point out that the definition of the word " goonda " affords no assistance in deciding which citizen can be put under that category. It is an inclusive definition and it does not indicate which tests have to be applied in deciding whether a person falls in the first part of the definition. Recourse to the dictionary meaning of the word would hardly be of any assistance in this matter. After all it must be borne in mind that the Act authorises the District Magistrate to deprive a citizen of his fundamental right under article 19(1)(d) and (e), and though the object of the Act and its purpose would undoubtedly attract the provisions of article 19(5) care must always be taken in passing such acts that they provide sufficient safeguards against casual, capri cious or even malicious exercise of the powers conferred by them. It is well known that the relevant provisions of the Act are initially put in motion against a person at a lower level than the District Magistrate, and so it is always necessary that sufficient safeguards should be provided by the Act to protect the fundamental rights of innocent citizens and to save them from unnecessary harassment. That is why we think the definition of the word " goonda " should have given necessary assistance to the District Magistrate in deciding whether a particular citizen falls under the category of goonda or not; that is another infirmity in the Act. As we have already pointed out section 4 A suffers from the same infirmities as section 4. Having regard to the two infirmities in sections 4, 4 A respectively we do not think it would be possible to accede to the argument of the learned Advocate General that the operative portion of the Act can fall under article 19(5) of the Constitution. The person against whom action can be taken under the Act is not entitled to know the source of the information received by the District Magistrate; be is only told about his prejudicial activities on which the satisfaction of the District Magistrate is based that action 980 should be taken against him under section 4 or section 4 A. In such a case it is absolutely essential that the Act must clearly indicate by a proper definition or otherwise when and under what circumstances a person can be called a goonda, and it must impose an obligation on the District Magistrate to apply his mind to the question as to whether the person against whom complaints are received is such a goonda or not. It has been urged before us that such an obligation is implicit in sections 4 and 4 A. We are, however, not impressed by this argument. Where a statute empowers the specified authorities to take preventive action against the citizens it is essential that it should expressly make it a part of the duty of the said authorities to satisfy themselves about the existence of what the statute regards as conditions precedent to the exercise of the said authority. If the statute is silent in respect of one of such conditions precedent it undoubtedly constitutes a serious infirmity which would inevitably take it out of the provisions of article 19(5). The result of this infirmity is that it has left to the unguided and unfettered discretion of the authority concerned to treat any citizen as a goonda. In other words, the restrictions which it allows to be imposed on the exercise of the fundamental right of a citizen guaranteed by article 19(1)(d) and (e) must in the circumstances be held to be unreasonable. That is the view taken by the High Court and we see no reason to differ from it. In this connection we may refer to the corresponding Bombay statute the material provisions of which have been examined and upheld by this Court. Section 27 of the City of Bombay Police Act, 1902 (4 of 1902), which provides for the dispersal of gangs and bodies of persons has been upheld by this Court in Gurbachan Singh vs The State of Bombay (1) whereas section 56 and section 57 of the subsequent Bombay Police Act, 1951 (22 of 1951), have been confirmed respectively in Bhagubhai Dullabhabhai Bhandari vs The District Magistrate, Thana (2) and Hari Khemu Gawali vs The Deputy Commissioner of Police, Bombay (3). It would be (1) ; (2) ; (3) ; 981 noticed that the relevant provisions in the latter Act the validity of which has been upheld by this Court indicate how the mischief apprehended from the activities of undesirable characters can be effectively checked by making clear and specific provisions in that behalf, and how even in meeting the challenge to public peace and order sufficient safeguards can be included in the statute for the protection of innocent ' citizens. It is not clear whether the opportunity to be heard which is provided for by section 4(2) would include an opportunity to the person concerned to lead evidence. Such an opportunity has, however, been provided by section 59(1) of the Bombay Act of 1951. As we have already mentioned there can be no doubt that the purpose and object of the Act are above reproach and that it is the duty of the State Legislature to ensure that public peace and tranquillity is not disturbed by the prejudicial activities of criminals and undesirable characters in society. That, however, cannot help the appellants ' case because, as we have indicated, the infirmities in the operative sections of the Act are so serious that it would be impossible to hold that the Act is saved under article 19(5) of the Constitution. There is no doubt that if the operative sections are invalid the whole Act must fall. In the result the order passed by the High Court is confirmed and the appeal is dismissed with costs. Appeal dismissed. [/INST] By an order passed under section 4 A of the Central Provinces and Berar Goondas Act, 1946 (X of 1946), as amended by the Madhya Pradesh Act XLIX of 950, the State of Madhya Pradesh directed the respondent to leave the district of Chhindwara, which had been specified as a proclaimed area under the Act, and the District Magistrate by another order communicated the same to the respondent. The respondent challenged the said orders under article 226 of the Constitution on the ground that the Act violated his fundamental rights under article i9(i)(d) and (e) of the Constitution and was, therefore, invalidated by article 13 Of the Constitution. The High Court held that sections 4 and 4 A of the impugned Act were invalid and since they were the 971 main operative provisions of the Act, the whole Act was in valid. Held, that when a statute authorises preventive action against the citizens, it is essential that it must expressly provide that the specified authorities should satisfy themselves that the conditions precedent laid down by the statute existed before they acted thereunder. If the statute fails to do so in respect of any such condition precedent, that is an infirmity sufficient to take the statute out of article 19(5) Of the Constitution. Although there can be no doubt that sections 4 and 4 A of the impugned Act clearly contemplated as the primary condition precedent to any action thereunder that the person sought to be proceeded against must be a goonda, they fail to provide that the District Magistrate should first find that the person sought to be proceeded against was a goonda or provide any guidance whatsoever in that regard or afford any opportunity to the person proceeded against to show that he was not a goonda. The definition of a goonda laid down by the Act, which is of an inclusive character, indicated no tests for deciding whether the person fell within the first part of the definition. Gurbachan Singh vs The State of Bombay, ; , Bhagubhai Dullabhabhai Bhandari vs The District ' Magistrate, Thana, ; and Hari Khenu Gawali vs The Deputy Commissioner of Police, Bombay, ; , referred to. Although the object of the impugned Act was beyond reproach and might well attract article 19(5) of the Constitution, since the Act itself failed to provide sufficient safeguards for the protection of the fundamental rights and the operative sections were thus rendered invalid, the entire Act must fail. </s>

<s>[INST] Summarize the following judgement: Appeal No. 84 of 1954. Appeal from the judgment and order dated September 1, 1954, of the former Madhya Bharat High Court in Civil Misc. Case No. 11 of 1952. B. Sen, P. V. Sahasrabudhe, B. K. B. Naidu and I. N. Shroff, for the appellant. M. Adhikari, Advocate General for the State of Madhya Pradesh, H. J. Umrigar and R. H. Dhebar, for the respondents. 959 1960. October 3. The following Judgment of the Court was delivered by GAJENDERGADKAR. The question of law which arises for our decision in this appeal is whether the Kalambandis under which the appellant 's right to receive Rs. 21/8/ per month by way of Bachat (balance) is guaranteed constitute an existing law within the meaning of article 372 of the Constitution. This question arises in this way. The appellant Madhaorao Phalke describes himself as an Ekkan and claims that as such Ekkan he and his ancestors have been receiving the monthly payment of Rs. 21/8/ from the State of Madhya Bharat. It appears that the appellant 's ancestors had accompanied the Scindias to Gwalior from Maharashtra about 200 years ago, and had rendered military service in conquering the territory of Gwalior. In recognition of this service the appellant 's ancestors were granted a fixed amount of money per month, and this amount has been received by the appellant 's family for several generations past. The right to receive this amount has been ' recognised by the Rulers of Gwalior in several statutes, orders, rules or regulations having the force of statutes; amongst them are the Kalambandis of 1912 and 1935. On April 18, 1952, the Government of Madhya Bharat issued an executive order terminating the said payment to the appellant; that is why the appellant had to file the present petition in the High Court of Madhya Bharat against the State of Madhya Bharat and the Government of Madhya Bharat, Revenue Department, respondents 1 and 2 respectively under article 226 of the Constitution. In this petition the appellant bad prayed for an order that a writ in the nature of mandamus, or in the alternative an appropriate direction or order be issued calling upon the respondents to forbear from giving effect to the said executive order. In his petition the appellant challenged the said order on two grounds. It was urged that since the appellant 's right to receive the specified amount had been statutorily recognised by the State of Gwalior it was not open to respondent 1 960 to extinguish that right merely by an executive order. In the alternative it was contended that the right to receive the said amount from month to month was property to which the appellant was entitled, and he could not be divested of that property without the payment of compensation under article 31 of the Constitution. These pleas were denied by the respondents. The respondents ' case was that the payment made to the appellant 's ancestors and to him was by way of emoluments for military service and did not constitute property, and that the Kalambandis on which the appellant relied did not constitute an existing law under article 372. It appears that along with the appellant ten other persons had filed similar petitions making prayers for similar writs or orders against the respondents and their pleas were similarly challenged by the respondents. All the eleven petitions were accordingly tried together. These petitions were heard by a Full Bench of the Madhya Bharat High Court consisting of Shinde, C.J. and Dixit and Newaskar, JJ. All the three learned judges agreed in holding that the Kalambandis on which the petitioners had rested their case were orders issued by the Ruler for the purpose of reorganising the scheme of administration and that they did not amount to law or regulation having the force of law. Dixit, J., gave a specific reason in support of his conclusion that the Kalambandis did not amount to a statute. He held that in Gwalior there was a well recognised law making machinery or custom, and since the Kalambandis in question did not satisfy the requirements of the forms and solemnities specified in that behalf they could not claim the status of a statute. In the result all the petitions were dismissed. The appellant then applied for and obtained a certificate from the High Court under article 133(1)(c) of the Constitution, and it is with the said certificate that he has come to this Court in the present appeal. When this appeal was heard by this Court on March 31, 1958, it was conceded by both the parties that it would be better that they should be allowed to 961 adduce additional evidence before the question of law which was undoubtedly one of general importance, was decided by this Court. In fact an application ' bad been made by the appellant before this Court for leave to adduce additional evidence and no serious objection was raised to the additional evidence by the respondents. Therefore, by consent the matter was sent back to the High Court with a direction that parties should be allowed to adduce additional evidence and the High Court should record its finding on the issue remitted to it in the light of the said additional evidence. The issue remitted to the High Court was whether the Kalambandis in question were statutes or regulations having the force of statutes in the State of Gwalior at the material time or were they merely administrative orders. After remand parties have led evidence before the ' High Court, and the High Court has recorded its finding on the issue remitted to it. Abdul Hakim Khan and Newaskar, JJ., have found in favour of the appellant and have held that the Kalambandis in question were regulations having the force of law in the State of Gwalior at the material time; Krishnan, J., has taken a contrary view. After the finding of the High Court was thus recorded papers in the case have been submitted to this Court, and the appeal has now come before us for final disposal; and so we are called upon to decide the short question of law set out by us at the commencement of this judgment. At the outset it may be relevant to refer very briefly to the historical background of the claim made by the appellant and the other petitioners in all these matters. We have already stated that the appellant claims to be an Ekkan. These Ekkans, it appears, were a class of horsemen who formed part of the Peshwa 's Cavalry along with Silledars. They were single volunteers and they brought with them their own horses and accoutrements. The other petitioners claimed to be Silledars whose ancestors formed part of the Maharatta Cavalry. These Silledars were troopers who brought in their own horses and weapons. They brought bodies of troops armed and 962 equipped at their own expense. They were also known as Paigadars. It also appears that later on an account was made as to the expenses which the Ekkan may have to bear for the maintenance of his horse, and from the total amount payable to him the amount of expenses thus determined was deducted, and that presumably left the balance Rs. 21/8/ which was paid to him as Bachat or balance. Broadly stated this appears to be the position on the pleadings of the parties in the present proceedings. The question which calls for our decision is whether the right to receive this amount is a statutory right; in other words, whether the Kalambandis on which the right is based were rules or regulations having the force of law in the St ate of Gwalior? The two Kalambandis in question were issued in 1912 A. D. and 1935 A. D. respectively. The first Kalambandi was issued by the Ruler Sir Madhavrao himself, whereas the second was issued by the Council which was then in charge of the administration of the State subsequent to the death of Sir Madhavrao which took place in 1925. It is well known that the States of Gwalior, Indore and Malwa integrated and formed a Union in 1948. After the Union was thus formed Act No. 1 of 1948 was passed for the purpose of taking over the administration of the covenanting States. Section 4 of this Act provided for the application of local laws, and as a result all laws, ordinances, rules, regulations, etc., having the force of law in any of the covenanting States were to continue to remain in force until they were repealed or amended according to law. Thus the existing laws which were in force in the State of Gwalior continued even after the union ; and according to the appellant the operation of the Kalambandis continued under section 4. On September 19, 1950, a notification was issued by the Commissioner, Jagir Inams, Court of Wards, Madhya Bharat, declaring that in the case of army personnel described in paragraph 1, question of mutation, adoption. , arising in regard to the said personnel would be dealt with by the office of the Commissioner, and Bachat and other amounts payable to 963 the said personnel would be distributed by the same office. Members of the said army, personnel were accordingly asked to claim payment in respect of their Nemnook from the office of the Commissioner. Subsequently, under the new set up which came into existence after the formation of Madhya Bharat the armies of the covenanting States were amalgamated and reorganised by the Government of India so as to fit them into the overall plans of the defence of the country. The report of the general administration of Madhya Bharat shows how this reorganisation was carried out. As a result of this reorganisation the expenditure on account of hereditary military pensions of Bachat to Silledars and Ekkans was agreed to be charged to the Muafi department of the Madhya Bharat Government; that is how the Madhya Bharat Government continued to be liable to pay the amount to the appellant from mouth to month. Then followed the impugned order passed by respondent 1 on April 18, 1952. Clauses 1 to 4 of this order made provision for the continued payment to the persons specified thereunder. Clause 5, however, declared that the distribution of amounts to Silledars and Ekkans not covered by cls. 1 to 4 would be absolutely stopped from May 1, 1952. It is this order which has given rise to the present proceedings. Before dealing with the question as to whether the Kalambandis constitute an existing law or not it may be useful to refer very briefly to the constitutional position in regard to the Government of Gwalior at the material time. It appears that in 1905 Sir Madhavrao Scindia set up an advisory council known as Majlis Khas. He was himself the President of this Council and assumed the title of Mir Majlis. This Council was constituted as a sort of law making body, but in section 5 of the Quaid Majlis Khas it was expressly provided that the acceptance or rejection of any recommendations made by the majority of the Council would depend entirely on the discretion of the President. This was followed in 1916 by the establishment of Majlis Quanun for the purpose of making laws for 964 the State. With this body were associated some nominated public citizens. Section 4(a) of the Quaid Majlis Quanun, however, made it clear that its function was merely to advise His Highness on such matters as would be placed before it, and section 4(b) left it to the absolute discretion of His Highness either to accept or not the recommendations of the body. In 1918 the Constitutional Manual describing the functions of the members of the Ruler 's Cabinet was pub lished and Majlis Am which was the House of the People was established. It consisted mainly of nominated members though some members elected from recognised public bodies also were associated with it. According to section 31(6) of the relevant law creating this body, deliberations of the body were ultimately to be submitted to His Highness for his final orders, and it was his orders which alone could be executed. It would thus be seen that though Sir Madhavrao was gradually taking steps to associate the public with the government of the State and with that object he was establishing institutions consistent with the democratic form of rule, he had maintained all his powers as a sovereign with himself and had not delegated any of his powers in favour of any of the said bodies. In other words, despite the creation of these bodies the Maharaja continued to be an absolute monarch in whom were vested the supreme power of the legislature, the executive and the judiciary. In dealing with the question as to whether the orders issued by such an absolute monarch amount to a law or regulation having the force of law, or whether they constitute merely administrative orders, it is important to bear in mind that the distinction between executive orders and legislative commands is likely to be merely academic where the Ruler is the source of all power. There was no constitutional limi tation upon the authority of the Ruler to act in any capacity he liked; he would be the supreme legislature, the supreme judiciary and the supreme head of the executive, and all his orders, however issued, would have the force of law and would govern and regulate the affairs of the State including the rights of 965 its citizens. In Ameer un Nissa Begum vs Mahboob Begum (1), this Court had to deal with the effect of a Firman issued by the Nizam, and it observed that so long as the particular Firman issued by the Nizam held the field that alone would govern and regulate the rights of the parties concerned though it would be annulled or modified by a later Firman at any time that the Nizam willed. What was held about the Firman issued by the Nizam would be equally true about all effective orders issued by the Ruler of Gwalior (Vide also: Director of Endowments, Government of Hyderabad vs Akram Ali (2) ). It is also clear that an order issued by an absolute monarch in an Indian State which had the force of law would amount to an existing law under article 372 of the Constitution. Article 372 provides for the continuance in force of the existing laws which were in force in the territories of India immediately before the commencement of the Constitution, and article 366(10) defines an existing law, inter alia, as meaning any law, ordinance, order, rule or regulation passed or made before the commencement of the Constitution by any person having a power to make such law, ordinance, order, rule or regulation. In Edward Mills Co., Ltd., Beawar vs State of Ajmer (3), this Court has held that " there is not any material difference between the expressions 'existing law. ' and the 'law in force '. The definition of an, existing law in article 366(10) as well as the definition of an Indian law contained in section 3(29) of the General Clauses Act make this position clear ". Therefore, even if it is held that the Kalambandis in question did not amount to a quanun or law technically so called, they would nevertheless be orders or regulations which had the force of law in the State of Gwalior at the material time, and would be saved under article 372. The question which then arises is whether these Kalambandis were regulations having the force of law at the material time. In support of the conclusion that they are merely administrative orders it is urged by the learned (1) A.I.R. 1955 S.C. 352. (2) A.I.R. 1956 S.C. 6o. (3) ; 123 966 Advocate General of Madhya Pradesh that Sir Madhavrao was an enlightened Ruler and was fully conscious of the distinction between executive orders and statutory provisions, and so if the Kalambandis in question did not take the form of a quanun or a statute it would be safe to infer that they were intended to operate merely as executive orders. In support of this argument reliance has been placed on the obser vations made by Sir Madhavrao, in Volume 7 which deals with Durbar Policy. " Broadly speaking says Sir Madhavrao, " all orders and directions issued by the Ruler may be regarded as laws. In the technical sense, however, the latter term signified only commands whose fulfilment is accompanied by the conferment of a particular concession and whose con travention spells punishment or the extinguishment of a right. Orders issued for the purpose of regulating the working of a department generally take the form of Rules, Manual or Kalambandi and are superscribed as such ". It may be conceded that this statement does make a distinction between laws technically socalled and Rules, Manual or Kalambandi; but it is significant that the very statement on which this argument is founded ends with the observation that the differentiation in the Dames is merely intended to indicate the group to which a given set of orders be. longs. In other words, the name given to the order would not be decisive; its character, its content and its purpose must be independently considered. Then it is urged that the Kalambandis in question were not published in the Government Gazette as other laws are; they were published only in the military gazette, and it is argued that they are not called quanun or laws as they would have been, if they were intended to operate as laws. In this connection our attention was also drawn to certain acts passed in the State of Gwalior which are described as acts or laws. On the other hand, it is clear that the distinction between Kalambandi and quanun was not always strictly observed. In regard to the jurisdiction of the High Court and the functioning of the Civil and Criminal Courts rules were issued and yet they 967 were described as a Manual. There can be no doubt that the rules contained in this Manual which govern the jurisdiction, powers and authority of Courts in the State of Gwalior had the force of law, and yet they were included in a Manual which, judging merely by the description of the document, can be distinguished from a quanun. Similarly it appears from circulars collected in a book called Majmua Circulars (1971 to 1993 Samvat) that the notification issued under the said Circular had the effect of modifying the provisions of the Customs Law. There is also another instance that amendment of statutory provisions was made by Sir Madhavrao by giving directions in that behalf though such directions did not take the form of a quanun. In fact in section 39 of the Durbar Policy, Volume 3, Sir Madhavrao has described the Kalambandi of Samvat 1969 as quayada. To the same effect is the Durbar Order No. 5 dated April 14, 1923. It would thus be clear that the decision of the question with which we are concerned cannot rest merely on the description of the order. It would not be possible to accept the argument urged by the learned Advocate General that because the Kalambandi is not described as a quanun or was not published in the government gazette therefore it should be treated as an executive order. The words used in describing the several orders issued by the Ruler can afford no material assistance in determining their character. In this connection it is necessary to recall that all orders issued by the absolute monarch had the force of law. Therefore it would be necessary to consider the character of the orders contained in these Kalambandis. The first Kalambandi which was issued in 1912 consists of 54 clauses. No doubt it begins by saying that it has been issued for the purpose of arranging for the administration of the department of irregular unit of Shiledari, but the nature of the provisions contained in this document unambiguouly impresses upon it the character of a statute or a regulation having the force of a statute. It recognises and confers hereditary rights, it provides for the adoption of a son by the widow of a deceased silledar subject to the 968 approval of the State; it also provides for the maintenance of widows out of funds specially set apart for that purpose; it contemplates the offering of a substitute when a Silledar has become old or has other. Wise become unfit to render service; it makes detailed provisions as to mutation of names after the death of a Silledar, and it also directs that the Asami being for the Shiledari service it cannot be mortgaged for a debt of any banker, and it further provides that if a decree is passed against a Silledar and the decreeholder seeks to proceed against the amount payable to him the execution has to be carried out in accordance with the manner and subject to the limitations prescribed in that behalf. It would thus be seen that the detailed provisions made by this Kalambandi deal with several aspects of the amount payable to the recipient, and considered as a whole it cannot be treated as an administrative order issued merely for the purpose of regulating the working of the administration of the department of irregular forces. The second order which was issued by the Council is substantially on the same lines as the first order. It consists of 39 clauses. Its preamble shows that as per orders of the Durbar the department of irregulars was governed by the regulations issued in that behalf in 1912 A.D., and it adds that " because the aforesaid Bedas have now been amalgamated with the regular army and are made subject to all the laws that are in force in the Gwalior army, the Regulations of 1912 are repealed and orders are issued as under ". This clearly reads like a statutory provision whereby the earlier relevant statute is repealed. The scheme of this order follows the pattern of the earlier order. It provides for succession, for the regulation of adoption, for the mutation and heirship enquiry, for a substitute being given in case the Silledar is unable to work himself, prescribes a disqualification from service where the Ismdar is convicted, and imposes a similar limitation on execution against the amount of the Asami. Clause 22 of this order says that in case there is no legal heir or the widow of the deceased Ismdar his name will be struck off and the 969 Asami will at once be given to other person. In no case will the Asami be abolished. In our opinion,. having regard to the contents of the two orders and the character of the provisions made by them in such a detailed manner it is difficult to distinguish them from statutes or laws; in any event they must be treated as rules or regulations having the force of( law. That is the finding recorded by Abdul Hakim Khan and Newaskar, JJ., and we think that the said finding is correct. After the finding was recorded and submitted to this Court the appellant has made one more application for permission to lead another piece of additional evidence. This evidence consists of a book named " Guide Book Kalambandi " of October 1, 1899. It has been printed, published and issued under the signature of the Ruler, and it relates among other things to the administration of the Revenue Department of the State of Gwalior; it is written in Hindi. It contains a preface and introduction. According to the appellant the relevant portions of this document would clearly show that Kalambandi was treated as indistinguishable from quanun or law. This position in not seriously disputed by the respondents; but they contend that the appellant should not be allowed any further opportunity to lead additional evidence because by the order of remand he was given such an opportunity and he should have produced all the evidence on which he wanted to rely before the High Court. There is some force in this contention ; on the other hand it is clear that publications like the one on which the appellant now seeks to rely would be primarily within the knowledge of respondent I and respondent I should have produced all relevant and material documents to assist the High Court in determaining the issue sent to it after remand. However, in view of the conclusion which we have reached on the material that has already been adduced on the record we do not think it necessary to consider whether the additional evidence should be allowed to be adduced. It is not disputed that if the Kalambandis on which 970 the appellant 's right is based are rules or regulations having the force of law the impugned executive order issued by respondent 1 would be invalid. The right guaranteed to the appellant by an existing law cannot be extinguished by the issue of an executive order. In fact on this point there has never been a dispute between the parties in the present proceedings. That is why the only point Of controversy between the parties was whether the Kalambandis in question amount to an existing law or not. Since we have answered this question in favour of the appellant we must allow the appeal, set aside the order passed by the High Court and direct that a proper writ or order should be issued in favour of the appellant as prayed for by him. The appellant would be entitled to his costs throughout. Appeal allowed. [/INST] The appellant was the recipient of a hereditary military pension called Bachat granted by the Rulers of Gwalior to his ancestors in recognition of military service. The right to receive the said pension was recognised by the Kalambandis of 1912 and 1935 issued by the said Rulers. When Gwalior integrated with Indore and Malwa in 1948 to form a union, section 4 Of 122 958 Act No. 1 of 1948 provided for the continuance of all laws, ordinances, rules and regulations having the force of law in the covenanting states. After the formation of the State of Madhya Bharat under the Constitution, the Government of that State, which remained liable to pay the said pension, by an executive order, terminated the right. The appellant moved the High Court against the said order under article 226 of the Constitution. and his case was that the right to receive the said pension, having been statutorily recognised by the State of Gwalior, could not be extinguished by an executive order. The Full Bench of the High Court held against him. The question was whether the Kalambandis of 1912 and 1935, on which the appellant rested his case, were existing law within the meaning of article 372 Of the Constitution. Held, that the question must be answered in the affirmative, No distinction could be made between an executive order and a legislative command made by an absolute monarch, such as the Rulers of the Indian State of Gwalior were, since they have the same force of law, passed in whichever capacity they may be, and govern the rights of the subjects. Ameer un Nissa Begum vs Mahboob Begum, A.I.R. 955 S.C. 352 and Director of Endowments, Government of Hyderabad vs Akram Ali, A.I.R. 1956 S.C. 6o, referred to. Consequently, even supposing that the Kalambandis did not amount to a quanun or law technically so called, they would nevertheless be orders or regulations having the force of law in the State at the material time and would be existing law within the meaning of article 372 Of the Constitution. Edward Mills Co., Ltd., Beawar vs State of Ajmer, ; , referred to. The contents of the two Kalambandis and the character of their provisions clearly show that they could not be mere administrative orders, and if not statutes, must, in any event, be rules and regulations having the force of law. </s>

<s>[INST] Summarize the following judgement: N: Criminal Appeal No. 26 of 1950. On appeal by special leave from the judgment and order dated the 13th November, 1950, of the High Court of Judi cature at Bombay (Bavdekar and Dixit JJ.) in Criminal Appeal No. 712 of 1950, arising out of judgment dated the 14th August, 1950, of the Court of the Sessions Judge, South Satara, SangIi, in Criminal Appeal No. 85 of 1950 and Crimi nal Case No. 614 of 1950. C.K. Daphtary, Solicitor General of India (G. N. Joshi, with him) for the appellant. B. Somayya (B. K.V. Naidu, with him)for the respondent. 1952. May 27. Fazl Ali and Bose JJ. delivered Judgment as follows: FAZL ALI J. I agree that the acquittal of the respond ent should not be disturbed, and I also agree generally with the reasoning of my brother, Bose. The question whether turmeric is foodstuff is not entirely free from difficulty. In one sense, everything which enters into the composition of food so as to make it palatable may be described as 'foodstuff ', but that word is commonly used with reference only to those articles which are eaten for their nutritive value and which form the principal ingredients of cooked or uncooked meal, such as wheat, rice, meat, fish, milk, bread, butter, etc. It seems to me desirable that the Act ShoUld be amended so as to expressly include 879 within the definition of the somewhat elastic expression "foodstuff" turmeric and such other condiments as the Legis lature intends to be treated as ' such for achieving the objects in its view. BOSE J. The question in this case is whether turmeric is a "foodstuff" within the meaning of clause 3 of the Spices (Forward Contracts Prohibition) Order, 1944, read with section 2 (a) of the Essential Supplies (Temporary Powers) Act, 1946, (Act XXIV of 1946). The respondent was charged with having contravened clause 3 of the Order of 1944 because he entered into a forward contract in turmeric at Sangli on the 18th of March, 1950, in contravention of clause 3 of the Order. He was convicted by the trial Court and sentenced to three months ' simple imprisonment together with a fine of Rs. 1,000 and in default, a further three months. But he was acquitted on appeal by the Sessions Court. An appeal to the High Court against the acquittal failed. The State of Bombay appeals here but makes it plain that it does not want to take any further steps against the respondent in this matter but merely wants to have the question of law decided as a test case as the judgment of the Bombay High Court will have far reaching effects in the State of Bombay. It will be necessary to trace the history of this legis lation. In the year 1944 the then Central Government of India promulgated the Spices (Forward Contracts 'Prohibi tion) Order, 1944, under Rule 81 (2) of the Defence of India Rules. Clauses 2 and 3 read together prohibited forward contracts in any of the "spices" specified in the first column of the schedule to that Order. Among the articles listed in the schedule was turmeric. The conviction is under that Order and it is admitted that if that Order is still valid the conviction would be good. The Defence of India Act was due to expire on the 30th of September, 1946, and with it the Spices Order of 1944. But before it expired an Ordinance called 114 880 the Essential Supplies (Temporary Powers) Ordinance of 1946 was issued. This was Ordinance No. XVII of 1946. The object of the Ordinance, as set out in the preamble, was to provide for the control of what it called "essential commod ities". It defined this to mean, among other things, "foodstuffs", and by a further definition "foodstuffs" was defined to include edible oilseeds and oils. Neither spices in general nor turmeric in particular were mentioned. Section 5 of this Ordinance embodied a saving clause which saved certain Orders which would otherwise have expired along with the Defence of India Rules. The section ran as follows: "Any order . made . under rule 81 (2) of the Defence of India Rules, in respect of any matters specified in section 3, which was in force immediately before the commencement of this Ordinance, shall, notwithstanding the expiration of the said Rules continue in force so far as consistent with th.is Ordinance and be deemed to be an order made under section 3. " The Ordinance was later replaced by the Act with which we are now concerned, the Essential Supplies (Temporary Powers) Act, 1946, (Act XXIV of 1946). The Act merely repro duces the language of the Ordinance in all material particu lars and it is conceded that if the matter falls under the Ordinance it will also fall under the Act. The appellant 's contention is that turmeric is a food stuff, therefore the Order of 1944 is saved. The respond ent 's contention is that turmeric is not a foodstuff. He contends that the Order of 1944 was limited to spices and. that turmeric was included in the term by reason of a spe cial definition which specifically included it; and as the Act of 1946 and the Ordinance are limited to "foodstUffs" the Order of 1944 dealing with turmeric was not saved. The question therefore is, is turmeric a "foodstuff"? Much learned judicial thought has been expended upon this problem what is and what is not food and what is and what is not a foodstuff; and the only conclusion I can draw from a careful consideration of all 881 the available material is that the term "foodstuff" is ambiguous. In one sense it has a narrow meaning and is limited to articles which are eaten as food for purposes of nutrition and nourishment and so would exclude condiments and spices such as yeast, salt, pepper, baking powder and turmeric. In a wider sense, it includes everything that goes into the preparation of food proper (as understood in the narrow sense) to make it more palatable and digestible. In my opinion, the problem posed cannot be answered in the abstract and must be viewed in relation to its. background and context. But before I dilate on this, I will examine the dictionary meaning of the words. The Oxford English Dictionary defines "foodstuff" as follows: "that which is taken into the system to maintain life and growth and to supply waste of tissue. " In Webster 's International Dictionary "food" is defined as: "nutritive material absorbed or taken into the body of an organism which serves for purposes growth, work or repair and for the maintenance of the vital processes. " Then follows this explanation: "Animals differ greatly from plants in their nutritive processes and require in addition to certain inorganic substances (water, salts etc.) and organic substances of unknown composition (vitamins) not ordinarily classed as foods (though absolutely indispensable to life and contained in greater or less quantities in the substances eaten) complex organic substances which fall into three principal groups, Proteins, Carbohydrates and Fats. Next is given a special definition for legal purposes, namely "As used in laws prohibiting adulteration etc. , 'food ' is generally held to mean any article used as food or drink by man, whether simple, mixed or compound, including ad juncts such as condiments etc., and often excluding drugs and natural water. " 882 The definition given of "foodstuff" is 1. Anything used as food. Any substance of food value as protein, fat etc. entering into the composition of a food. " It will be seen from these definitions that "foodstuff" has no special meaning of its own. It merely carries us back to the definition of "food" because "foodstuff" is anything which is used as "food" So far as "food" is concerned, it can be used in a wide as well as a narrow sense and, in my opinion, much must depend upon the context and background. Even in a popular sense, when one asks another, "Have you had your food ? ", one means the composite preparations which normally go to constitute a meal curry and rice, sweetmeats, pudding, cooked vegetables and so forth. One does not usually think separately of the different preparations which enter into their making, of the various condiments and spices and vitamins, any more than one would think of separating in his mind the purely nutritive elements of what is eaten from their non nutritive adjuncts. So also, looked at from another point of view, the var ious adjuncts of what I may term food proper which enter into its preparation for human consumption in order to make it palatable and nutritive, can hardly be separated from the purely nutritive elements if the effect of their absence would be to render the particular commodity in its finished state unsavoury and indigestible to a whole class of persons whose stomachs are accustomed to a more spicely prepared product. The proof of the pudding is, as it were, in the eating, and ii the effect of eating what would otherwise be palatable and digestible and therefore nutritive is to bring on indigestion to a stomach unaccustomed to to such unspiced fare, the answer must, I think, be that however nutritive a product may be in one form it can scarcely be classed as nutritive if the only result of eating it is to produce the opposite effect; and if the essence of the definition is the nutritive element, then the commodity in question must cease 883 to befood, within the strict meaning of the definition, to that particular class of persons, without the addition of the spices which make it nutritive." Put more colloquially, "one man 's food is another man 's poison. " I refer to this not for the sake of splitting hairs but to show the unde sirability of such a mode of approach. The problem must, 1 think, be solved in a commonsense way. I will now refer to the cases which were cited before us. In The San Jose, Cometa and Salerno(1) sausage skins the envelope in which sausage meat is usually con tained were held to be foodstuffs. But this was a case of conditional contraband captured during the war in pursuance of a war time measure, and the decision was given in accord ance with international law. This does not appear from the judgment but is plain from an earlier judgment of the same learned President on which his later decision was based. The earlier judgment is reported in The Kim(2). He explains there at page 27 that the law of contraband is based on "the right of a belligerent to prevent certain goods from reach ing the country of the enemy for his military use," and he states, also at page 27, that "International law, in order to be adequate well as just, must have regard to the circumstances the times, including the circumstances arising out the particular situation of the war, or the condition the parties engaged in it." One of the changing circumstances he felt he had to take into consideration is set out at page 29: "The reason for drawing a distinction between foodstuffs intended for the civil population and those for the armed forces or enemy Government disappears when the distinction between the civil population and the armed forces itself disappears. Experience shows that the power to requisition will be used to the fullest extent in order to make sure that the wants of the military are supplied, and however much goods may be im ported for civil use it is by the military that (1) (2) , 884 they will be consumed if military exigencies require it, especially now that the German Government have taken control of all the foodstuffs in the country. " It is understandable that viewed against a background like that, the word "foodstuffs" would be construed in its wider sense in order to give full effect to the object behind the law, namely the safety and preservation of the State. It is also perhaps relevant to note that the term which was under consideration in those cases occurred in a war time measure, namely a Proclamation promulgated on the 4th of August, 1914, the day on which the first world war started. There is authority for the view that war time measures, which often have to be enacted hastily to meet a grave pressing national emergency in which the very existence of the State is at stake, should be construed more liberally. in favour of the Crown or the State than peace time legisla tion. The only assistance I can derive from this case is that the term "foodstuffs" is wide enough to cover matter which would not normally fall within the definition of what I have called food proper. I do not think it is helpful in deciding whether the wider or the narrower definition should be employed here because the circumstances and background are so different. The next case to which I will refer is James vs Jones(1). That was a case of baking powder and it was held that baking powder is an article of food within the meaning of the English Sale of Food and Drugs Act, 1875. Now it has to be observed here that the object of that Act was to prevent the adulteration of food with ingredients which are injurious to health. It is evident that the definition would have to be wide so as to include not only foodstuffs strict ly so called but also ingredients which ultimately enter into its preparation, otherwise the purpose of the legisla tion, which was to conserve the health of the British peo ple, would have been defeated. (1) 885 Next comes a case relating to tea in which a narrower view was taken: Hinde vs Allmond(1). The question there was whether tea was an "article of food" within the meaning of an Order designed to prohibit the hoarding of food, namely the Food Hoarding Order of 1917. The learned Judges held it was not. But here it is necessary to note the background and at any rate some of the reasons given for the decision. The prosecution there was directed against an ordinary housewife who had in her possession a quantity of tea which exceeded the quantity required for ordinary use and con sumption in her household. The Food Hoarding Order did not specify tea or indeed any other article. It merely prohib ited generally the hoarding of any "article of food" by requiring that no person should have in his possession or under his control at any one time more than the quantity required for use and consumption in his household or estab lishment. Shearman J. said that he rested his judgment on the "commonsense interpretation of the word 'food ' in the Order, apart from its meaning in any other statute" and said : "I agree with my brother Darling that if it had been intended to include tea as food, it ought to have been expressly so provided in the Order." Darling J. explained what he meant in this case in a later decision, Sainsbury vs Saunders(2), and said that there was nothing to prevent the Food Controller from saying that a person should not have, for example, so much wine in his possession, provided he did not simply call it "food" and provided also that he let a person who was to be pun ished know what it was that he was not to do. I think it is clear that the learned Judges were influ enced in their judgment by the fact that the Order in the earlier case was one which affected the ordinary run of householders and housewives who would not have lawyers at their elbows to advise them regarding their day to day marketing. In the circumstances, they decided that the word should be given (1) (2) 886 its ordinary and popular meaning, otherwise many inno cent householders, who had no intention of breaking the law, would be trapped; and this seems to be the ratio decidendi in the decision of the Bombay High Court in Hublal Kamtapra sad vs Goel Bros. & Co. Ltd. (Appeal No. 14 of 1950) which is the decision virtually, though not directly, under appeal here, though the learned Judges also take into consideration two further facts, namely that the law should be construed in favour of the freedom of contracts and a penal enactment in favour of the subject. The English decision about tea just cited is to be contrasted with another decision, also about tea, given a few months later in the same year: Sainsbury vs Saunders(1). Two of the Judges, Darling and Avory, JJ. were parties to the earlier decision; Salter J. was not. He held that though tea had been held in the earlier case not to be a "food" for the purpose of the Food Hoarding Order of 1917, it was a "food" within the meaning of the expressions used in certain Defence of the Realm Regulations read with the New Ministries and Secretaries Act of ,1916 which empowered the Food Controller to regulate "the food supply of the country" and the "supply and consumption and production of food." Avory J. also considered that tea was an article of food for the purposes of these laws though Darling J. pre ferred to adhere to his earlier view. All three Judges also held that the provisions were wide enough to enable the Food Controller to hit at articles which were not food at all, such as sacks and tin containers (Darling J.) so long as he was able by these means even indirectly to regulate the supply of "food", but that portion of the decision does not concern us here because the laws they were interpreting were more widely phrased. Now the comparison of one Act with another is dangerous, especially when the Act used for comparison is an English Act and a war time measure, and I have no intention of falling into that error. I am concerned here with the Act before me and must (1) 887 interpret its provisions uninfluenced by expressions, howev er similar, used in other Acts. I have referred to the cases discussed above, not for purposes of comparison but to show that the terms "food" and "foodstuffs" can be used in both a wide and a narrow sense and that the circumstances and background can alone determine which is proper in any given case. Turning to the Act with which we are concerned, it will be necessary again to advert to its history. Rule 81 (2) was wide and all embracing and the Order of 1944 clearly fell within its ambit. It is also relevant to note that one of the purposes of the Order, as disclosed in its preamble, was to "maintain supplies essential to the life of the communi ty. " As turmeric was specifically included with certain other spices, it is clear that turmeric was then considered to be a commodity essential to the life of the community, that is to say. it was considered an essential commodity and not merely a luxury which at a time of austerity could be dispensed with. Then, when we turn to the Ordinance and the Act of 1946, we find from the preamble that the legislature considered that it was still necessary "to provide for the continuance . of powers to control the production, supply and distribution of, and trade and commerce in, foodstuffs. "Section 3 (1) of the Act continues this theme: "The Central Government, so far as it appears to it to be necessary or expedient for maintaining or increasing supplies of any essential commodity, or for securing their equitable distribution and availability at fair prices, may by notified order provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein. " The Ordinance is in the same terms. Now I have no doubt that had the Central Government re promulgated the Order of 1944 in 1946 after the passing of either the Ordinance of the Act of 1946, the Order would have been good. As we have seen, turmeric falls within the wider definition of "food" 1142 888 and "foodstuffs" given in a dictionary of international standing as well as in several English decisions. It is, I think, as much a "foodstuff", in its wider meaning, as sausage, skins and baking powder and tea. In the face of all that I. would find it difficult to hold that an article like turmeric cannot fall within the wider meaning of the term "foodstuffs". Had the Order of 1944 not specified turmeric and had it merely prohibited forward contracts in "foodstuffs" I would have held, in line with the earlier tea case, that that is not a proper way of penalising a man for trading in an article which would not ordinarily be consid ered as a foodstuff. But in the face of the order of 1944, which specifically includes turmeric, no one can complain that his attention was not drawn to the prohibition of trading in this particular commodity and if, in spite of that, he chooses to disregard the Order and test its validi ty in a court of law, he can hardly complain that he was trapped or taken unawares; whatever he may have thought he was at any rate placed on his guard. As I see it, the test here is whether the Order of 1944 would have been a good order had it been repromulgated after the Ordinance of 1946. In my opinion, it would, and from that it follows that it is saved by the saving clauses of the Ordinance and the Act. I have already set out section 5 of the Ordinance. In my opinion, the Order of 1944 falls within its purview, and ii it is saved by that, it is equally saved by section 17 (2) of the Act. The section is in these terms: "Any order . . deemed to be made under the said Ordinance and in force immediately before the commencement of this Act shall continue in force and be deemed to be an order made under this Act. " In my opinion, the conviction was good and the High Court was wrong in setting it aside, but though the matter has no relevance here because of the undertaking given by the learned Solicitor General not to proceed against the respondent any further in this matter, I think it right to observe that. the attitude of 889 the learned English Judges in the first tea case would not be without relevance on the question of sentence in many, cases of this kind. There can, I think, be no doubt that businessmen who are not lawyers might well be misled into thinking that the Ordinance and the Act did not intend to keep the Order of 1944 alive because the Order related to certain specified spices while the Ordinance and the Act changed the nomenclature and limited themselves to "food stuffs", a term which, on a narrow view, would not include condiments and spices. However, these observations are not relevant here because we are not asked to restore either the conviction or the sentence. In view of that, there will be no further order and the acquittal will be left as it ' stands. [/INST] The term "foodstuff" is ambiguous. In one sense it has a narrow meaning and is limited to articles which are eaten as food for purposes of nutrition and nourishment and so would exclude condiments and spices such as yeast, salt, pepper, baking powder and turmeric. In a wider sense it includes everything that goes toto the preparation of food proper (as understood in the narrow sense) to make it more palatable and digestible. Whether the term is used in a particular statute in its wider or narrower sense cannot be answered in the abstract 878 but must be answered with due regard to the background and context. Turmeric is a "foodstuff" within the meaning of cl. (3) of the Spices (Forward Contract Prohibition) Order of 1944, read with s.2 (a)of the Essential Supplies (Temporary Powers) Act (XXIV of 1946). The said order of 1944 falls within the purview of section 5 of Ordinance No. XVIII of 1946, which was later reenacted as Act XXIV of 1946, and it is equally saved by section 17 (2) of the Act. James vs Jones , Hinde vs Allmond (87 L.J. K.B. 893), Sainsbury vs Saunders referred to. </s>

<s>[INST] Summarize the following judgement: Appeal No. 6 of 1959. Appeal by special leave from the judgment and order dated March 5, 1957, of the Bombay High Court in Special Civil Application No. 3255 of 1956. Dhan Prasad Balkrishna Padhye and P. K. Chatterjee, for the appellant. H. N. Sanyal, Additional Solicitor General of India, N. P. Nathwani, K. N. Hathi and R. H. Dhebar, for the respondents. October 3. The Judgment of the Court was delivered by WANCHOO J. This appeal by special leave raises questions relating to the constitutionality and interpretation of certain provisions of the Bombay Personal Inams Abolition Act No. XLII of 1953, (hereinafter called the Act). The brief facts necessary for present purposes are these. The appellant was the holder of a personal inam which he had purchased from the original inamdar to whom a Sanad had been issued under Bombay Act No. VII of 1863. The land 953 which forms part of the inam was originally in village Athwa but is now in the suburbs of the city of Surat. The appellant was paying Rs. 7 as Salami and Rs. 6 3 0 as quit rent, the full assessment of the land being Rs. 56 8 0. In November, 1952, the City Survey Officer of Surat wanted to levy non agricultural assessment on this land under section 134 of the Bombay Land Revenue Code, 1879, (hereinafter called the Code), as the land was being used for non agricultural purpose and a large bungalow had been erected on it. The appellant objected to this and eventually in September, 1954, he was informed by the Collector that he would not be assessed under section 134 of the Code but was liable to Don agricultural assessment with effect from August 1, 1955, in view of proviso (b) to section 4 of the Act. The appellant objected to this also. The Collector decided on July 28, 1955, that the land was liable to full assessment from August 1, 1955, as non agricultural under section 52 of the Code. The appellant then went up in appeal to the Bombay Revenue Tribunal which was dismissed. He filed a writ petition in the High Court challenging the order of the Revenue Tribunal and also challenging the constitutionality of the Act. The High Court rejected the application. It relied on an earlier decision of that Court so far as the challenge to the constitutionality of the Act was concerned. It also held that the order of the Collector by which non agricultural assessment was to be levied on the applicant from August 1, 1955, was correct. The appellant then applied for a certificate to appeal to this Court which was rejected. He then filed a special leave petition in this Court and was granted special leave; and that is how the matter has come up before us. So far as the constitutionality of the Act is concerned we have considered it in Gangadharrao Narayanrao Majumdar vs State of Bombay (1) in which judgment is being delivered to day, and have upheld the Act. The only fresh point that has been urged in this connection is that in view of article 294(b) of the Constitution and in view of the fact that the holder was given (1) ; 954 a Sanad when his inam was recognized, it was not open to the State of Bombay to enact a law which would in any way vary the terms of the Sanad. This argument based on the immutability of Sanads was rejected by the Federal Court in Thakur Jagannath Baksh Singh vs The United Provinces (1) and has also been rejected by this Court in Maharaj Umeg Singh and others vs The State of Bombay and others (2). We also reject it for reasons given in the two cases cited. The challenge therefore to the constitutionality of the Act fails in the present appeal also. This brings us to the contention of the appellant that in any case the Collector 's order to the effect that the land should be assessed under section 52 of the Code as non agricultural is not correct. We are of opinion that there is no force in this contention either. Under section 4 of the Act, all personal inams have been extinguished and save as expressly provided by or under the Act, all rights legally subsisting on the said date in respect of such personal inams are also extinguished. Therefore the appellant cannot claim protection from being assessed fully after the Act came into force. Section 5 makes it clear that all inam lands shall be liable to the payment of land revenue in accordance with the provisions of the Code and would thus be liable to full assessment as provided by the Code. The appellant however relied on section 7 of the Act and contended that section 7 created an exception to sections 4 and 5 with respect to lands of inamdars used for building or for other non agricultural purposes and therefore the appellant 's inam land which was used entirely for non agricultural purposes (namely, building) could not be assessed under section 5 of the Act. As we read section 7, we find no warrant for holding that it is an exception to sections 4 and 5. As already pointed out, section 4 abolishes personal inams and the rights of inamdars with respect to such inams and section 5 makes all inam villages or inam lands subject to the payment of full assessment of land revenue in accordance with the Code. Section 7 deals with vesting of certain parts of inam lands in the State, (namely, public (1) [1946) F.C.R. III. (2) ; 955 roads, lanes and paths, all unbuilt village site lands, all waste lands and all uncultivated lands and so on); but an exception has been made so far as vesting is concerned with respect to lands used for building or other non agricultural purposes by the inamdar. The C. appellant relies on this exception and it is urged on his behalf that this exception takes out the land so excepted from the provisions of sections 4 and 5. This reading of section 7 is in our opinion incorrect. That section vests certain parts of inam lands in the Government and but for the exception even those inam lands which were used for building and non agricultural purpose would have vested in the Government. The exception made in section 7 only saves such inam lands from vesting in the Government and no more. The result of the exception is that such inam lands do not vest in the Government and remain what they were before and are thus subject to the provisions of sections 4 and 5 of the Act. The appellant therefore cannot claim because of the exception contained in section 7 that the lands excepted from vesting are not subject to sa. 4 and 5 of the Act. The argument therefore based on section 7 must fail. The next contention on behalf of the appellant is that the Collector has no power to assess this land to non agricultural assessment under section 52 read with as. 45 and 48 of the Code. Section 45 lays down that all land unless specially exempted is liable to pay land revenue. Section 48 lays down that the land revenue leviable on any land shall be assessed with reference to the use of the land (a) for the purpose of agriculture, (b) for the purpose of building and (c) for any purpose other than agriculture or building. Reading the two sections together it is obvious that the assessment depends upon the use to which the land is put and is to be made according to the rules framed under the Code. In the present case it is not disputed that the land of the appellant is not being used for agriculture and is actually being used for non agricultural purposes, namely, for the purpose of building; therefore, if the land is to be assessed, as it must now be assessed in view of section 5 of the Act to full assess 956 ment, it can only be assessed as non agricultural. For the purpose of such assessment it is immaterial when the non agricultural use of the land started. It was in a special category being a personal inam land and was upto the time the Act came into force governed by the law relating to personal inams. The personal inams; and all rights thereunder were abolished by the Act and the land is now to be assessed for the first time to full assessment under section 5 of the Act read with the provisions of the Code; it can only be assessed as non agricultural land for that is the use to which it is being put now when the assessment is to be made. Section 48 makes it clear that the assessing officer when assessing the land should look to the use to which it is being put at the time of the assessment and assess it according to such use. As the assessment is to be made after the coming into force of the Act it has to be on non agricultural basis for that is the use for which the land is being put at the time of assessment. Lastly, it is urged that section 52 which gives power to the Collector to make assessments of lands not wholly exempt from the payment of land revenue does not apply to this case because here the assessment has been fixed under the provisions of Ch. VIII A of the Code and section 52 only applies when no assessment has been fixed under Ch. VIII A. Reference was also made to section 117 R which appears in Ch. VIII A. That Chapter was introduced in the Code in 1939 and deals with assessment and settlement of land revenue on agricultural lands. Section 117 R is a deeming provision and lays down that all settlements of land. revenue heretobefore made and introduced and in force before the commencement of the Bombay Land Revenue Code (Amendment) Act, 1939, by which this Chapter was introduced in the Code shall be deemed to have been made and introduced in accordance with the provisions of this Chapter and shall notwithstanding anything contained in section 117 E (which deals with the duration of a settlement) be deemed to continue in force until the introduction of a revision settlement. The argument is that because of this deeming 957 provision, the settlement on which this land was held as inam land must be deemed to have been made under this Chapter and therefore it cannot be said that no assessment has been fixed under the provisions of Ch. VIII A in this case. We are of opinion that there is no force in this argument. Section 117 R of the Code is a deeming provision. Section 52 on the other hand when it says that that section will not apply where assessment has been fixed under Ch. VIII A, refers to actual assessment under Ch. VIII A and not to what is deemed to be an assessment under that Chapter by virtue of section 117 R. It is not in dispute that there has in fact been no assessment under Ch. VIII A in this case. We are therefore of opinion that as the land in this case was not wholly exempt from revenue and as in fact no assessment has been fixed on this land under Ch. VIII A, section 52 would apply and the Collector would have power to make an assessment in the manner provided by that section. There is therefore no force in this appeal and it is hereby dismissed with costs. Appeal dismissed. [/INST] The appellant was the holder of a personal inam which he had purchased from the original inamdar to whom a Sanad had been issued under Bombay Act No. VII of 1863. He was paying Rs. 7 as salami and Rs. 6 3 0 as quit rent, the full assessment of the land being Rs. 56 8 0. The land which formed part of the inam was originally in a village but subsequently became a part of the suburbs of the city of Surat and as the land was being used for non agricultural purpose and a large bungalow had been erected on it, the Collector decided that it was liable to non agricultural assessment under section 52 Of the Bombay Land Revenue Code, 1879, with effect from August 1, 1955, in view of proviso (b) to section 4 Of the Bombay Personal Inams Abolition Act, 1952. The appellant challenged the constitutionality of the Bombay Personal Inams Abolition Act, 1952, on the grounds, inter alia, (i) that the Act was not protected by article 31 A of the Constitution of India as the property which bad been dealt with under the Act was not an estate and no compensation had been. provided in the Act for taking away the property of the appellant, and (2) that in view of the fact that the holder of the inam was, given a Sanad when his inam was recognised, it was not open to the State of Bombay to enact a law which would in any way vary the terms of the Sanad. The appellant also contended that, in any case, the Collector 's order to the effect that the land should be assessed under section 52 Of the Bombay Land Revenue Code, 1879, as non agricultural was incorrect because (1) section 7 Of the Act created an exception to sections 4 and 5 with respect to lands of inamdars used for building or for other non agricultural purposes and therefore the appellant 's inam land which was used entirely for non agricultural purposes could not be assessed under section 5 of the Act, (2) that section 52 Of the Code which gave power to the Collector to make assessments of lands not wholly exempt from the payment of land revenue did not apply to this case because here the assessment had been fixed under the provisions of Ch. VIII A of the Code and section 52 only applied when no assessment had been fixed under Ch. VIII A. 952 Held: (i) that the Bombay Personal Inams Abolition Act, 1952, was valid and was protected by article 31 A of the Constitution of India. Gangadharrao Narayanrao Majumdar vs State of Bombay, ; , Thakur jagannath Baksh Singh vs United Provinces, [1946] F.C.R. III and Maharaj Umeg Singh vs The 'State of Bombay; , , followed. (2) that the exception made in section 7 Of the Act only saved such inam lands as were used for building or other non agricultural purposes by the inamdar from vesting in the Government, but they remained subject to the provisions Of sections 4 and 5 of the Act. (3) that section 52 of the Bombay Land Revenue Code, 1879, when it said that the section would not apply where assessment had been fixed under Ch. VIII A of the Code, referred to actual assessment under the Chapter and not to what was deemed to be an assessment under that Chapter by virtue of section 117 R, and that as the land in the present case was not wholly exempt from revenue and as in fact no assessment had been fixed on the land under Ch. VIII A, section 52 would apply and the Collector would have power to make an assessment in the manner provided by that section. </s>

<s>[INST] Summarize the following judgement: Appeal No. 153 of 1956. Appeal from the judgment and order dated November 3, 1954, of the Punjab High Court in Civil Writ No. 253 D of 1954. Veda Vyasa, section K. Kapur, K. K. Jain and Ganpat Rai, for the appellant. H. N. Sanyal, Additional Solicitor General of India, H. R. Khanna and T. M. Sen, for the respondents. 935 1960. October 3. The Judgment of the Court was delivered by SUBBA RAO J. This appeal by certificate is directed against the order of the High Court of Judicature of the State of Punjab dismissing the petition filed by the appellant under article 226 of the Constitution. The facts giving rise to this appeal may be briefly stated. The appellant is at present a resident of Barmer in the State of Rajasthan. But before 1947 he was living in a place which is now in Pakistan. On June 22, 1951, the Deputy Superintendent, Land Castoms Station, Barmer, conducted a search of the appellant 's house and recovered therefrom the following ten articles : Articles seized. Weight Estimated value. Rs. 1. Silver slab. 2600 tolas 5,200/ 2. 29 Sovereigns 2,262/ (King Ed. VII). 3. 9 pieces of gold bullion 201 tolas and 9 mashas. 22,193/ 4. 4 pieces of silver bullion 114 tolas. 230/ 5. Uncurrent silver coins numbering 575. 865/ 6. Gold bars. 49 tolas and 9 mashas 5,475/ 7. 255 Phials of liquid gold. 9,875/ 8. Torches 23. 9. Playing cards 3 Dozens 400/ 10.Glass beads 48 packets. Total. 46,500/ On July 14, 1951 the Assistant Collector, Ajmer, gave notice ' to the appellant to show cause and explain why the goods seized from him should not be confiscated under section 167(8) of the Sea Customs Act and section 7 of the . The appellant in his reply 936 stated that items to 5 supra were brought by him from Pakistan after the partition of the country in 1947 and that items 6 to 10 were purchased by him bonafide for value in Barmer. On October 27, 1951, the appellant appeared before the Collector of Central Excise, who made an enquiry, and admitted before him that items 6 to 10 were smuggled goods from Pakistan, but in regard to the other items be reitera ted his plea that he originally brought them from Pakistan in the year 1947. The Collector of Central Excise held that the appellant bad failed to establish that items 1 to 5 had been brought by him to India in the year 1947 and he also did not accept the plea of the appellant in regard to items 6 to 10 that he was a bonafide purchaser of them. In the result he held that all the goods were imported into India in contravention of, (i) section 3 of the Import Export Control Act read with sections 19 and 167(8) of the Sea Customs Act, (ii) sections 4 and 5 of the read with section 7 thereof. He made an order of confiscation of the said articles under section 167(8) of the Sea Customs Act and section 7 of the ; but under section 183 of the Sea Customs Act he gave him an option to redeem the confiscated goods within four months of the date of the order on payment of a sum of Rs. 25,000. In addition he imposed a penalty of Rs. 1,000 and directed the payment of import duty leviable on all the items together with other charges before the goods were taken out of customs control. Aggrieved by the said order, the appellant preferred an appeal to the Central Board of Revenue. The Central Board of Revenue agreed with the Collector of Central Excise that the onus of proving the import of the goods in question was on the appellant. In regard to items 1 to 5, it rejected the plea of the appellant mainly on the basis of a statement alleged to have been made by him at the time of seizure of the said articles. In the result the appeal was dismissed. The revision filed by the appellant to the Central Government was also dismissed on August 28, 1953. Thereafter the appellant filed a writ petition under article 226 of the Constitution in the High Court 937 of Punjab but it was dismissed by a division bench of the High Court on November 3, 1954. Hence this appeal. It would be convenient to deal with this appeal in two parts one in regard to items 1 to 5 and the other in regard to items 6 to 10. The decision in regard to items 1 to 5 turns purely on the question of onus. The Collector of Central Excise as well as the Central Board of Revenue held that the onus of proving the import of the goods lay on the appellant. There is no evidence adduced by the customs authorities to establish the offence of the appellant, namely, that the goods were smuggled into India after the raising of the customs barrier against Pakistan in March 1948. So too, on the part of the appellant, except his statement made at the time of seizure of the goods and also at the time of the inquiry that he brought them with him into India in 1947, no other acceptable evidence has been adduced. In the circumstances, the question of onus of proof becomes very important and the decision turns upon the question on whom the burden of proof lies. This Court has held that a customs officer is not a judicial tribunal and that a proceeding before him is not a prosecution. But it cannot be denied that this relevant provisions of the Sea Customs Act and the are penal in character. The appropriate customs authority is empowered to make an inquiry in respect of an offence alleged to have been committed by a person under the said Acts, summon and examine witnesses, decide whether an offence is committed, make an order of confiscation of the goods in respect of which the offence is committed and impose penalty on the person concerned ; see sections 168 and 171A of the Sea Customs Act and sections 5 and 7 of the . To such a situation, though the provisions of the Code of Criminal Procedure or the Evidence Act may not apply except in so far as they are statutorily made applicable, the fundamental principles of criminal jurisprudence and of natural justice must necessarily apply. If so, the burden of proof is on the customs authorities and they have to 938 bring home the guilt to the person alleged to have committed a particular offence under the said Acts by adducing satisfactory evidence. In the present case no such evidence is forthcoming; indeed there is no tittle of evidence to prove the case of the customs authorities. But it is said that the onus shifted to the appellant for three reasons, namely, (i) by reason of the provisions of section 178A of the Sea Customs Act; (ii) by reason of section 5 of the ; and (iii) by reason of section 106 of the Evidence Act. Section 178A of the Sea Customs Act does not govern the present case, for that section was inserted in that Act by Act No. XXI of 1955 whereas the order of confiscation of the goods in question was made on January 18, 1952. The section is prospective in operation and cannot govern the said order. Nor does section 5 of the apply to the present case. Under section 5(1) of the said Act, "Every person desiring to pass any goods by land, out of or into any foreign territory shall apply in writing for a permit for the passage thereof, to the Land Customs Officer incharge of a land customs Station By sub section (2) of section 5 of the said Act, if the requisite duty has been paid or the goods have been found by the Land Customs Officer to be free of duty, the Land Customs Officer is empowered to grant a permit. Under sub section (3) thereof, " Any Land Customs Officer, duly empowered by the Chief Customs authority in this behalf, may require any person in charge of any goods which such Officer has reason to believe to have been imported, or to be about to be exported, by land from, or to, any foreign territory to produce the permit granted for such goods; and any such goods which are dutiable and which are unaccompanied by a permit or do not correspond with the specification contained in the permit produced, shall be detained and shall be liable to confiscation." This section has no bearing on the question of onus of proof. This section obviously applies to a case where a permit is required for importing goods by land from a foreign country into India and it empowers the Land Customs Officer, who has reason to believe that any 939 goods have been imported by land from any foreign territory, to demand the permit and to verify whether the goods so imported correspond with the specification contained in the permit. If there was no permit or if the goods did Dot correspond with the specification contained in the permit, the said goods would be liable to be detained and confiscated. The application of this section is conditioned by the legal requirement to obtain a permit. If no permit is necessary to import goods into India, the provisions of the section cannot be attracted. In the present case the customs barrier was established only in March, 1948, that is, after the said items of goods are stated by the appel lant to have been brought into India. We cannot also accept the contention that by reason of the provisions of section 106 of the Evidence Act the onus lies on the appellant to prove that he brought the said items of goods into India in 1947. Section 106 of the Evidence Act in terms does not apply to a proceeding under the said Acts. But it may be assumed that the principle underlying the said section is of universal application. Under that section, when any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. This Court in Shambu Nath Mehra vs The State of Ajmer (1), after considering the earlier Privy Council decisions on the interpretation of section 106 of the Evidence Act, observed at p. 204 thus: "The section cannot be used to undermine the well established rule of law that, save in a very exceptional class of case, the burden is on the prosecution and never shifts." If section 106 of the Evidence Act is applied, then, by analogy, the fundamental principles of criminal jurisprudence must equally be invoked. If so, it follows that the onus to prove the case against the appellant is on the customs authorities and they failed to discharge that burden in respect of items 1 to 5. The order of confiscation relating to items 1 to 5 is set aside. Before closing this aspect of the case, some observations have to be made in respect of the manner in (1) ; 940 which the statement given by the appellant when the goods were seized was used against him by the customs authorities. It would be seen from the order of the Collector of Central Excise as well as that of the Central Board of Revenue that they had relied upon the statement alleged to have been made by him at the time the search was made in his house in order to reject his case that he brought some of the items of goods into India in the year 1947. The appellant in his reply to the show cause notice complained that his statement was taken in English, that he did not know what was recorded and that his application for inspection and for the grant of a copy of his statement was not granted to him. It does not appear from the records that he was given a copy of the statement or that he was allowed to inspect the same. In the circumstances we must point out that the customs authorities were not justified to rely upon certain, alleged discrepancies in that statement to reject the appellant 's subsequent version. If they wanted to rely upon it they should have given an, opportunity to the appellant to inspect it and, at any rate, should have supplied him a copy thereof. Coming to items 6 to 10, we have no reason to reject, as we have been asked to do, the statement made in the order of the Collector of Central Excise dated October 27, 1951, that the appellant accepted that items 6 to 10 were smuggled goods from Pakistan. It would have been better if the customs authorities had taken that admission in writing from the appellant, for that would prevent the retraction of the concession on second thoughts. That apart, it is more satisfactory if a body entrusted with functions such as the customs authorities are entrusted with takes that precaution when its decision is mainly to depend upon such admission. But in this case, having regard to the circumstances under, and the manner in, which the said concession was made, we have no reason to doubt the correctness of the statements of fact in regard to this matter made in the orders of the customs authorities. If so, it follows that the finding of the customs authorities that the appellant purchased the said items, which were smuggled goods, should 941 prevail. The order of confiscation of these five items will, therefore, stand. Even so, it is contended by the learned counsel for the appellant that the customs authorities went wrong in imposing a penalty on him under section 167(8) of the Sea Customs Act. The said section reads: " If any goods, the importation or exportation of which is for the time being prohibited or restricted by or under Chapter IV of this Act, be imported into or exported from India contrary to such prohibition or restriction. . such goods shall be liable to con fiscation; and any person concerned in any such offence shall be liable to a penalty not exceeding three times the value of the goods, or not exceeding one thousand rupees." The appellant 's argument is that though he purchased the said smuggled goods he is not concerned with the importation of the goods contrary to the prohibition or restriction imposed by or under Ch. IV of the Sea Customs Act. The 'offence consists in importing the goods contrary to the prohibition and, therefore, the argument proceeds, a person, who has purchased them only after they were imported, is not hit by the said section. There is some force in this argument, but we do not propose to express our final view on the matter as the appellant is liable to the penalty under section 7(1)(c) of the . The said section reads: " Section 7 (1): Any person who (c)aids in so passing or conveying any goods, or, knowing that any goods have been so passed or conveyed, keeps or conceals such goods, or permits or procures them to be kept or concealed, shall be liable to a penalty not exceeding, where the goods are not dutiable, fifty or, where the goods or any of them are dutiable, one thousand rupees, and any dutiable goods in respect of which the offence has been committed shall be liable to confiscation. " In this case the finding is that the appellant with the 120 942 knowledge that the goods had been smuggled into India kept the goods, and, therefore, he was liable to penalty under that section. We hold that the penalty was rightly imposed on him. It is then contended that the Collector of Central Excise had no jurisdiction to impose conditions for the release of the confiscated goods. The Collector of Central Excise in his order says, " In addition the import duty leviable on all these items together with other charges, if any payable, should be paid and necessary formalities gone through before the goods can be passed out of Customs Control ". In Shew. pujanrai Indrasanrai Ltd. vs The Collector of Customs (1), a similar question arose for consideration of this Court. There by an impugned order the Collector of Customs imposed two conditions for the release of the confiscated goods, namely, (1) the production of a permit from the Reserve Bank of India in respect of the gold within four months from the date of despatch of the impugned order, and (2) the pay ment of proper customs duties and other charges leviable in respect of the gold within the same period of four months. This Court held, agreeing with the High Court, that the Collector of Customs had no jurisdiction to impose the said two conditions. The learned Additional Solicitor General concedes that the said decision applies to the present case. We do not, therefore, express any view whether that decision can be distinguished in its application to the facts of the present case. On the basis of the concession we hold that the conditions extracted above, being severable from the rest of the order, should be deleted from the said order of the Collector of Central Excise. Learned counsel for the appellant then argues that the option given in the said order to the appellant to redeem the confiscated goods for home consumption within four months of the order on payment of Rs. 25,000 was based upon the validity of the confiscation of all the ten items and, as this Court now holds that confiscation was bad in respect of items 1 (1) ; 943 to 5, the amount of the penalty of Rs. 25,000 should proportionately be reduced. There is justification for this contention. But we cannot reduce the amount, as under section 183 of the Sea Customs Act the amount has to be fixed by the concerned officer as he thinks fit. But as the basis of the order partially disappears, we give liberty to the appellant to apply to the customs authorities for giving him an option to redeem the confiscated goods on payment of a lesser amount, having regard to the changed circumstances. In the result, the appeal is allowed in part and the order of the Collector of Central Excise is accordingly modified in terms of the finding given by us. As the parties succeeded and failed in part, they are directed to bear their own costs. Appeal partly allowed. [/INST] The appellants house was searched on June 22, 1951, by the Customs authorities and ten articles were recovered therefrom. In the inquiry before the Collector the appellant stated that the first five articles had been brought by him in 1947 from Pakistan after partition and that with respect to the other five articles he was a bona fide purchaser thereof. The Collector held that the appellant had failed to establish his case and held that the goods were imported into India in contravention Of section 3, Import Export Control Act read with sections 19 and 167(8), Sea Customs Act and sections 4 and 5 Land Customs Act read with section 7 thereof. This decision was upheld on appeal by the Central Board of Revenue and by the Central Government on revision. The appellant contended that: (i) the onus of proving that the first five articles were smuggled goods was on the department which it had failed to discharge, and (2) even if the other five articles which he purchased were smuggled goods he was not concerned with their importation. Held, that the onus was on the authorities to establish that the first five articles were imported into India after March 1948, when the customs barrier was put up for the first time between India and Pakistan, and that the authorities having failed to adduce any evidence to prove this fact the appellant could not be held guilty of any of the offences charged. The onus did not shift by virtue Of section 178A, Sea Customs Act or section 5, Land Customs Act, as the former section was not in operation at the relevant time and the latter section was not applicable to the facts of this case ; nor did the onus shift by virtue of section 106, Evidence Act, as that section could not be used to undermine the well established rule that the burden was on the prosecution and never shifted. Shambu Nath Mehra vs The State of Ajmer, ; , followed. With respect to the other five articles even if the appellant was right in his contention that he was not concerned in their importation he was liable to the penalty under section 7(1)(c), , for keeping the articles knowing them to be smuggled goods. </s>