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Civil Appeal Nos. 1280, 1279, 1327 1330 of 1978 and 35 of 1979. Appeals by special leave from the Judgment and Order dated 2 8 1978 of the Andhra Pradesh High Court in Writ Petition Nos. 718, 5505, 3618, 5506, 5518, of 1975 and 604/78 and 4814/1975. L. N. Sinha, K. Srinivasa Murthy, Naunit Lal and M. Panduranga for the Appellants in CA Nos. 1279, 1280, 1327 1330/78. section N. Kackar, Sol. Genl., Venkatarao and G. N. Rao for R. 1 in CA 1280, RR 1 3 in CAs. 1327 & 1329 and RR 1 & 2 in 1328 & 1330. H. section Gururaja Rao and section Markendaya for RR 2 3 in CA 1280 and R. 4 in CA 1279. K. M. K. Nair for R. 4 in CA 1329 section Balakrishnan for R. 8 in CA 1329 G. Narasimhulu for R. 3 in CA 1330 B. Parthasarthi for the Appellant in CA 35/79. B. Kanta Rao for the RR 4 5 in CA 35/79. The following Judgments were delivered CHANDRACHUD, C.J. Article 30(1) of the Constitution provides: All minorities, whether based on religion or language, shall have the right to establish and administer educational institutions of their choice. The question which arises in these appeals is whether certain provisions of the Andhra Pradesh Recognised Private Educational Institutions Control Act, 11 of 1975, offend against the fundamental right 933 conferred on minorities by article 30 (1). The appellants are unquestionably minority educational institutions, having been established by members of the Christian community. My learned Brothers, Murtaza Fazal Ali and Kailasam, have examined the authorities bearing on the question before us. The reasons which impelled me to write a separate judgment are my inability to agree wholly with the various observations made by Justice Fazal Ali and with some of the propositions which he has formulated as emerging from the decisions referred to by him, as also with the conclusion to which Justice Kailasam has come. I do not consider it necessary to examine all the decisions of this Court in which article 30(1) has received a full and careful consideration. These decisions are reported in Re Kerala Education Bill 1957, Rev. Sidhajbhai Sabhai vs State of Bombay Rev. Father W. Proost vs The State of Bihar State of Kerala vs Very Rev. Mother Provincial D. A. V. College vs State of Punjab The Ahmedabad St. Xaviers College Society vs State of Gujarat Gandhi Faizeam College Shahajahanpur vs University of Agra and Lilly Kurian vs Sr. Lewina Almost each succeeding judgment has considered and analysed the previous judgment or judgments. I regard the matter arising before us as well settled, especially after the 9 Judge Bench decision in Ahmedabad St. Xaviers College Society (supra) and the recent judgment of the Constitution Bench in Lilly Kurian, All that we have to do in this case is to apply the law laid down in these decisions. These decisions show that while the right of the religious and linguistic minorities to establish and administer educational institutions of their choice cannot be interfered with, restrictions by way of regulations for the purpose of ensuring educational standards and maintaining the excellence thereof can be validly prescribed. For maintaining educational standards of an institution, it is necessary to ensure that it is competently staffed. Conditions of service which prescribe minimum qualifications for the staff, their pay scales. their entitlement to other benefits of service and the laying down of safeguards which must be observed before they are removed or dismissed from service or their services are terminated are all permissible measures 934 of a regulatory character. As observed by Das C.J., in Re: Kerala Education Bill, (supra) "Right to administer cannot obviously include the right to mal administer", and in the words of Shah J., in Rev. Sidhajbhai, (supra) "The right is subject to reasonable restrictions in the interest of efficiency of instruction, discipline, health, sanitation, morality, public order and the like". Hidayatullah C.J. said in Very Rev. Mother Provincial (supra) that "Standards of education are not a part of management as such", that the "minority institutions cannot be permitted to fall below the standard of excellence expected of educational institutions" and that "the right of the State to regulate education, educational standards and the allied matters cannot be denied". Justice Jaganmohan Reddy, in D. A. V. College (supra) reiterated while upholding clause 18 of the Guru Nanak University, Amritsar Act, 1961 that regulations governing recruitment and service conditions of teachers of minority institutions, which are made in order to ensure their efficiency and excellence do not offend against their right to administer educational institutions of their choice. In the case of institutions that receive State aid, it is the duty and obligation of the Government which grants aid to see that public funds are usefully and properly expended. If the expenditure incurred for paying the emoluments of the staff is subsidised or financed from out of State funds, it becomes the duty of the State to see that no one who does not possess the minimum qualifications is appointed on the staff, the pay and other emoluments of the staff are guaranteed and their service conditions secured. Minority institutions which receive State aid cannot complain of conditions subject to which the aid is granted, so long as such conditions do not amount to discrimination against them on the ground of language or religion and so long as the aid is not made to depend upon the performance or observance of conditions which amount to deprivation of the right guaranteed by article 30(1). There is also no doubt that minority institutions cannot be discriminated against in the matter of granting State aid. No institution, minority or majority, has a fundamental right to recognition by the State or affiliation to the University, but since recognition and affiliation are indispensable for an effective and fruitful exercise of the fundamental right of minorities to establish and administer educational institutions of their choice, they are entitled to recognition and affiliation if they agree to accept and comply with regulatory measures which are relevant for granting recognition and affiliation, which are directed to ensuring educational excellence of 935 the institution concerned and which, largely and substantially, leave unimpaired the right of administration in regard to internal affairs of the institution. The impugned Act, by reason of section 1 (3), applies to all private educational institutions, whether or not they are established by minorities. The appellants ' contention is that several provisions of the Act violate the guarantee contained in article 30(1) by permitting or compelling interference with the internal administration of private educational institutions established by minorities. The appellants are particularly aggrieved by the provisions of sections 3 to 7 of the Act, the validity whereof in challenged on the ground that they deprive the appellants of their right to administer the affairs of minority institutions by vesting the ultimate administrative control in an outside authority. These contentions having been rejected by the High Court of Andhra Pradesh, the appellants have filed these appeals by special leave. Section 3 (1) of the Act provides that, subject to any rule that may be made in this behalf, no teacher employed in any private educational institution shall be dismissed, removed or reduced in rank nor shall his appointment be otherwise terminated, except with the prior approval of the competent authority. The proviso to the section says that if any educational institution contravenes the aforesaid provision, the teacher affected by the contravention shall be deemed to be in service. Section 3 (2) requires that where the proposal to dismiss, remove or reduce in rank or otherwise terminate the appointment of any teacher employed in any private educational institution is communicated to the competent authority, that authority shall approve the proposal, if it is satisfied that there are adequate and reasonable grounds for the proposal. For appreciating their true meaning and effect, sections 3 (1) and 3 (2) have to be read together. The requirement of prior approval of the competent authority to an order of dismissal, removal, etc. may not by itself be violative of article 30 (1) because it may still be possible to say, on a reasonable construction of the provision laying down that requirement, that its object is to ensure compliance with the principles of natural justice or the elimination of mala fides or victimisation of teachers. But I find it difficult to read down section 3 (1) so as to limit its operation to these or similar considerations. In the first place, the section does not itself limit its operation in that manner; on the contrary, it gives an unqualified mandate that no teacher shall be dismissed, removed, etc. except with 936 the prior approval of the competent authority. Under the proviso contravention of the section results in a total invalidation of the proposed action. If the section is contravened the teacher shall be deemed to be in service. Secondly, section 3 (1) not only applies to cases in which a teacher is, what is generally termed as 'punished ', by an order of dismissal, removal or reduction in rank, but it also applies to cases in which an appointment is otherwise terminated. An order of termination simpliciter which involves no stigma or aspersion and which does not result in any evil consequences is also required to be submitted for the prior approval of the competent authority. The argument that the principles of natural justice have not been complied with or the argument of mala fides and victimisation has seldom any relevance if the services are terminated in accordance with the terms of a contract by which the tenure of the employment is limited to a specified period. This shows that the true object of section 3 (1) is not that which one could liberally assume by reading down the section. Section 3 (1) is subject to any rules that may be made in behalf of the matter covered by it. If the State Government were to frame rules governing the matter, there would have been some tangible circumstances or situations in relation to which the practical operation of section 3(1) could have been limited. But in the absence of any rules furnishing guidelines on the subject, it is difficult to predicate that, in practice, the operation of the section will be limited to a certain class of cases only. The absence of rules on the subject makes the unguided discretion of the competent authority the sole arbiter of the question as to which cases would fall within the section and which would fall outside it. Any doubt as to the width of the area in which section 3(1) operates and is intended to operate, is removed by the provision contained in section 3 (2), by virtue of which the competent authority "shall" approve the proposal, "if it is satisfied that there are adequate and reasonable grounds" for the proposal. This provision, under the guise of conferring the power of approval, confers upon the competent authority an appellate power of great magnitude. The competent authority is made by that provision the sole judge of the propriety of the proposed order since it is for that authority to see whether there are reasonable grounds for the proposal. The authority is indeed made a judge both of facts and law by the conferment upon it of a power to test the validity of the proposal on the vastly subjective touch stone of adequacy and reasonableness. Section 3 (2), in my opinion, leaves no scope for reading down the provisions of section 937 3 (1). The two sub sections together confer upon the competent authority, in the absence of proper rules, a wide and untrammeled discretion to interfere with the proposed order, whenever, in its opinion, the order, is based on grounds which do not appear to it either adequate or reasonable. The form in which Section 3 (2) is couched is apt to mislead by creating an impression that its real object is to cast an obligation on the competent authority to approve a proposal under certain conditions. Though the section provides that the competent authority "shall" approve the proposed order if it is satisfied that it is based on adequate and reasonable grounds, its plain and necessary implication is that it shall not approve the proposal unless it is so satisfied. The confernment of such a power on an outside authority, the exercise of which is made to depend on purely subjective considerations arising out of the twin formula of adequacy and reasonableness, cannot but constitute an infringement of the right guaranteed by article 30 (1). I find it difficult to save sections 3 (1) and 3 (2) by reading them down in the light of the objects and reasons of the impugned Act. The object of the Act and the reasons that led to its passing are laudable but the Act, in its application to minority institutions, has to take care that it does not violate the fundamental right of the minorities under article 30(1). Sections 3(1) and 3(2) are in my opinion unconstitutional in so far as they are made applicable to minority institutions since, in practice, these provisions are bound to interfere substantially with their right to administer institutions of their choice. Similar provisions were held to be void in Very Rev. Mother Provincial, D. A. V. College and Lilly Kurian. (supra) There is no distinction in principle between those provisions and the ones contained in sections 3 (1) and 3 (2). For these reasons, I am in agreement with Brother Fazal Ali that Sections 3 (1) and 3 (2) of the impugned Act cannot be applied to minority institutions, since to do so will offend against Article 30 (1). Section 3 (3) (a) provides that no teacher employed in any private educational institution shall be placed under suspension except when an inquiry into the gross misconduct of such teacher is contemplated. Section 3 (3) (b) provides that no such suspension shall remain in force for more than a period of two months and if the inquiry is not completed within that period the teacher shall, without prejudice to the inquiry, be deemed to have been restored as 938 a teacher. The proviso to the sub section confers upon the competent authority the power, for reasons to be recorded in writing, to extend the period of two months for a further period not exceeding two months if, in its opinion, the inquiry could not be completed within the initial period of two months for reasons directly attributable to the teacher. With respect, I find it difficult to agree with Brother Fazal Ali that these provisions are violative of article 30 (1). The question which one has to ask oneself is whether in the normal course of affairs, these provisions are likely to interfere with the freedom of minorities to administer and manage educational institutions of their choice. It is undoubtedly true that no educational institution can function efficiently and effectively unless the teachers observe at least the commonly accepted norms of good behaviour. Indisciplined teachers can hardly be expected to impress upon the students the value of discipline, which is a sine qua non of educational excellence. They can cause incalculable harm not only to the cause of education but to the society at large by generating a wrong sense of values in the minds of young and impressionable students. But discipline is not to be equated with dictatorial methods in the treatment of teachers. The institutional code of discipline must therefore conform to acceptable norms of fairness and cannot be arbitrary or fanciful. I do not think that in the name of discipline and in the purported exercise of the fundamental right of administration and management, any educational institution can be given the right to 'hire and fire ' its teachers. After all, though the management may be left free to evolve administrative policies of an institution, educational instruction has to be imparted through the instrumentality of the teachers; and unless, they have a constant assurance of justice, security and fair play it will be impossible for them to give of their best which alone can enable the institution to attain the ideal of educational excellence. Section 3 (3) (a) contains but an elementary guarantee of freedom from arbitrariness to the teachers. The provision is regulatory in character since it neither denies to the management the right to proceed against an erring teacher nor indeed does it place an unreasonable restraint on its power to do so. It assumes the right of the management to suspend a teacher but regulates that right by directing that a teacher shall not be suspended unless an inquiry into his conduct is contemplated and unless the inquiry is in respect of a charge of gross misconduct. Fortunately, suspension of teachers is not the order of the day, for which reason I do not think that these restraints which bear a reasonable nexus with the attainment of educational excellence can be considered to be violative of the right given 939 by article 30 (1). The limitation of the period of suspension initially to two months, which can in appropriate cases be extended by another two months, partakes of the same character as the provision contained in section 3 (3) (a). In the generality of cases, a domestic inquiry against a teacher ought to be completed within a period of two months or say, within another two months. A provision founded so patently on plain reason is difficult to construe as an invasion of the right to administer an institution, unless that right carried with it the right to maladminister. I therefore agree with Brother Kailasam that sections 3 (3) (a) and 3 (3) (b) of the Act do not offend against the provisions of article 30 (1) and are valid. Section 4 of the Act provides that any teacher employed in a private educational institution (a) who is dismissed, removed or reduced in rank or whose appointment is otherwise terminated; or (b) whose pay or allowances or any of whose conditions of service are altered or interpreted to his disadvantage, may prefer an appeal to such authority or officer as may be prescribed. This provision in my opinion is too broadly worded to be sustained on the touchstone of the right conferred upon the minorities by article 30 (1). In the first place, the section confers upon the Government the power to provide by rules that an appeal may lie to such authority or officer as it designates, regardless of the standing or status of that authority or officer. Secondly, the appeal is evidently provided for on all questions of fact and law, thereby throwing open the order passed by the management to the unguided scrutiny and unlimited review of the appellate authority. It would be doing no violence to the language of the section to interpret it to mean that, in the exercise of the appellate power, the prescribed authority or officer can substitute his own view for that of the management, even in cases in which two views are reasonably possible. Lastly, it is strange, and perhaps an oversight may account for the lapse, that whereas a right of appeal is given to the aggrieved teacher against an order passed by the management, no corresponding right is conferred on the management against an order passed by the competent authority under section 3 (2) of the Act. It may be recalled that by section 3 (1), no teacher can be dismissed, removed, etc. except with the prior approval of the competent authority. Section 3 (2) confers power on the competent authority to refuse to accord its approval if there are no adequate and reasonable ground for the proposal. In the absence of the provision for an appeal against the order of the competent authority refusing to approve the action proposed by the management, the management is placed in a gravely disadvantageous position vis a vis 940 the teacher who is given the right of appeal by section 4. By reason of these infirmities I agree with the conclusion of my learned Brothers that section 4 of the impugned Act is unconstitutional, as being violative of article 30 (1). Section 5 is consequential upon section 4 and must fall with it. Section 6 provides that where any retrenchment of a teacher is rendered necessary consequent on any order of the Government relating to education or course of instruction or to any other matter, such retrenchment may be effected with the prior approval of the competent authority. With respect, I find myself unable to share the view of Brother Fazal Ali that retrenchment of teachers is a purely domestic affair of minority institutions and that the decisions of the management in the matter of retrenchment of teachers is beyond the scope of statutory interference by reason of article 30 (1). Section 6 aims at affording a minimal guarantee of security of tenure to teachers by eschewing the passing of mala fide orders in the garb of retrenchment. As I look at the section, I consider it to be implicit in its provisions that the limited jurisdiction which it confers upon the competent authority is to examine whether, in cases where the retrenchment it stated to have become necessary by reason of an order passed by the Government, it has in fact so become necessary. It is a matter of common knowledge that Governmental orders relating to courses of instruction are used as a pretence for terminating the services of teachers. The conferment of a guided and limited power on the competent authority for the purpose of finding out whether, in fact, a retrenchment has become necessary by reason of a Government order, cannot constitute an interference with the right of administration conferred by article 30 (1). Section 6 is therefore valid. I would, however, like to add that in the interests of equal justice, the legislature ought to provide for an appeal against the orders passed by the competent authority under section 6. If and when the provision for an appeal is made, care must be taken to ensure that the appeal lies to an officer not below the prescribed rank. Section 7 provides that the pay and allowances of a teacher shall be paid on or before such day of a month, in such manner and by or through such authority, officer or person, as may be prescribed. I agree with my learned Brothers that this provision is regulatory in character and is, therefore, valid. These are all the sections the validity of which was questioned in the Writ Petitions filed in the High Court. It is therefore not neces 941 sary to consider whether the other provisions of the Act are valid or not. I concur in the final order proposed by Brother Kailasam that we need not go into the merits of each of the Writ Petitions filed in the High Court. Learned counsel appearing for the schools sought the decision of the High Court on the constitutional issue only. He specifically asked the High Court not to decide each case on its merits. That may, accordingly, be left to the High Court to decide in the light of the majority opinion rendered by us. We have, by a majority, held that sections 3 (3) (a), 3 (3) (b), 6 and 7 are valid while sections 3 (1), 3 (2), 4 and 5 are invalid in their application to minority education institutions. It must follow that such institutions cannot be proceeded against for violation of provisions which are not applicable to them. In conclusion, all the Civil Appeals before us will go back to the High Court of Andhra Pradesh for final disposal on merits in the light of our decision. There will be no order as to costs. FAZAL ALI, J.: This batch of civil appeals by special leave is directed against the judgment of the Andhra Pradesh High Court before whom the appellants filed writ petitions under Article 226 of the Constitution challenging the constitutional validity of several sections of the Andhra Pradesh Recognised Private Educational Institutions Control Act, 1975, hereinafter referred to as the Act which contained 21 sections in five Chapters and was brought into force with effect from 5th October, 1974. This Act was also applicable to 19 Educational Institutions situated in the State of Andhra Pradesh and the appellants being admittedly minority educational institutions within the meaning of Article 30 of the Constitution of India have challenged the vires various sections of the Act which we shall indicate later. Some of the appeals have been filed by Christian Schools established by Roman Catholic Church and some by Christian Colleges established by the Christian community: The main grounds of challenge are that the provisions of the Act directly interfere with the internal management of the institutions and has completely curbed the constitutional freedom which has been guaranteed to them by Article 30(1) of the Constitution of India and being violative of Article 30(1) of the Constitution are ultra vires and therefore, wholly inapplicable to the appellants institutions. It is now well settled by a long course of decisions of this Court that our Constitution which seeks to establish a secular State contains 942 sufficient checks and balances, safeguards and guarantees to protect the rights of the minorities, the establishment of educational institutions being one of them. Article 46 which contains the constitutional directive to promote educational and economic interests of the weaker sections runs thus: "46. Promotion of educational and economic interests of Scheduled Castes, Scheduled Tribes and other weaker sections: The State shall promote with special care the educational and economic interests of the weaker sections of the people, and, in particular, of the Scheduled Castes and the Scheduled Tribes, and shall protect them from social injustice and all forms of exploitation. Article 30(1) confers a fundamental rights on the minorities to establish and administer educational institutions of their choice. Article 30(2) enjoins on the State that in granting aid to the educational institutions it shall not discriminate against any educational institution on the ground that it is under the management of a minority, whether based on religion or language. Thus, it would appear that Article 30(2) extends the guarantee contained in Article 30(1) even in the matter of receiving aid by the educational institution established by the minority community. While adverting to this aspect of the matter this Court in Re: Kerala Education Bill, 1957 observed as follows: "Nevertheless, in determining the scope and ambit of fundamental rights relied on by or on behalf of any person or body the court may not entirely ignore these directive principles of State policy laid down in Part IV of the Constitution but should adopt the principle of harmonious construction and should attempt to give effect to both as much as possible". Another important factor which has to be noticed is that the terms in which Article 30 is couched are absolute and unconditional as compared to Article 19 which is hedged in by reasonable restrictions which may be imposed by the State in public interest. Thus, in a way the fundamental right contained in Article 30 is more effective and wider than the fundamental rights contained in Part III of the Constitution. This, however, does not mean that the State is completely deprived of even the right to regulate the working of the minority institutions and to make rules in order to improve the standards 943 of education imparted therein so as to achieve excellence and efficiency in the educational standards of these institutions. Regulatory measures cannot in any sense be regarded as placing restrictions or curbing the administrative autonomy of the institutions concerned. But care must be taken by the State to see that in passing regulatory measures it does not transcend its limits so as to interfere with the internal administration of the management of the institutions concerned so as to violate the spirit and policy of Article 30. The question of the scope and ambit of Article 30 of the Constitution of India was very exhaustively considered as far back as in 1959 in Re: Kerala Education Bill (Supra). This case arose when the President of India called for the opinion of the Supreme Court on a Reference being made to it under Article 143(1) of the Constitution of India. The Reference was heard by 7 Judges of this Court out of which 6 of them excepting Venkatarama Aiyar, J. gave a unanimous opinion regarding various clauses of the Bill. The provisions of the Kerala Education Bill are not pari materia with the provisions of the Act with which we are concerned in this case, but this Court while delivering its opinion has laid down a number of salutary principles which throw a flood of light on the scope and interpretation of Article 30 of the Constitution of India. I would, therefore, like to extract certain important passages from the opinion of the Court which dealt with the scope and application of Article 30. I would, however, like to mention that some of the principles laid down by this Court in the aforesaid case may not apply to the present day conditions because there have been numerous changes in all aspects of life and even the concept of equality has undergone a revolutionary change. But the observations made by this Court would afford a very valuable guideline to determine the question in controversy in the present case. While indicating the width of the right conferred on the minority institutions by Article 30(1) this Court pointed out that the right to administer does not envisage a right to indulge in mal administration. In this connection, Das, C.J. speaking for the majority observed as follows: "The right to administer cannot obviously include the right to maladminister. The minority cannot surely ask for aid or recognition for an educational institution run by them in unhealthy surroundings, without any competent teachers, possessing any semblance of qualification, and which does not maintain even a fair standard of teaching or which teaches matters subversive of the welfare of the scholars. It stands to reason, then, that the constitutional right to ad 944 minister an educational institution of their choice does not necessarily militate against the claim of the State to insist that in order to grant aid the State may prescribe reasonable regulations to ensure the excellence of the institutions to be aided". Again, while sounding a note of caution to the Government that no step should be taken by it which amounts to the institution surrendering its personality merely because the institution is receiving aid from the State, said the Chief Justice thus: "No educational institution can in actual practice be carried on without aid from the State and if they will not get it unless they surrender their rights they will, by compulsion of financial necessities, be compelled to give up their rights under Article 30(1). . . The State Legislatures cannot, it is clear, disregard or override those provisions merely by employing indirect methods of achieving exactly the same result. Even the Legislature cannot do indirectly what it certainly cannot do directly". Considering the provisions of the Kerala Education Bill particularly Clauses 6, 7, 9, 10, 11, 12, 14 and 15 the Court held that although these provisions constitute serious inroads on the right of administration of the institution and appear perilously near violating that right, yet in view of the peculiar facts of that case and having regard to the fact that clauses 9, 11 and 12 were designed to give protection and security to the ill paid teachers who are engaged in rendering service to the nation and protect the backward classes the Court as at present advised may treat these clauses as permissible regulations. These observations were based on the peculiar circumstances of the provisions of the Education Bill and the objects which they sought to sub serve may not be applicable to the present case where the circumstances are quite different because admittedly most of the appellant institutions are not receiving any aid from the Government. Even so, this Court found it impossible to support clauses 14 and 15 which according to them were totally destructive of the rights guaranteed by Article 30(1). In this connection, the Court observed as follows: "But considering that those provisions are applicable to all educational institutions and that the impugned parts of clauses 9, 11 and 12 are designed to give protection and 945 security to the ill paid teachers who are engaged in rendering service to the nation and protect the backward classes, we are prepared, as at present advised, to treat those clauses 9, 11(2) and 12(4) as permissible regulations which the State may impose on the minorities as a condition for granting aid to their educational institutions. We, however, find it impossible to support cls. 14 and 15 of the said Bill as mere regulations. The provisions of those clauses may be totally destructive of the rights under Article 30(1)". The Court had made it very clear that the observations extracted above applied to those categories of educational institutions which had sought not only recognition but also aid from the State. In the instant case. however, most of the appellant institutions have been established by mustering their own resources and have not been receiving substantial aid from the Government. Similarly, the Court made it clear that although the minority institutions had no fundamental right to recognition by the State yet to deny recognition on terms which may amount to complete surrender of the management of the institution to the Government would be violative of Article 30(1) of the Constitution. In this connection, Das, C.J. Observed as follows: "There is, no doubt, no such thing as fundamental right to recognition by the State but to deny recognition to the educational institutions except upon terms tantamount to the surrender of their Constitutional right of administration of the educational institutions of their choice is in truth and in effect to deprive them of their rights under Article 30(1). We repeat that the legislative power is subject eto the fundamental rights and the legislature cannot indirectly take away or abridge the fundamental rights which it could not do directly and yet that will be the result if the said Bill containing any offending clause becomes law" Again dwelling on the special character of the minority institutions Das, C.J. speaking for the Court observed thus: "It is obvious that a minority community can effectively conserve its language, script or culture by and through educational institutions and, therefore, the right to establish and maintain educational institutions of its choice is a necessary concomitant to the right to conserve its distinctive language, script or culture and that is what is conferred on all minorities by Article 30(1) which has hereinbefore been quoted in full. " 946 Describing the nature of the fundamental rights enshrined in Article 30 the Court observed as follows: "There can be no manner of doubt that our Constitution has guaranteed certain cherished rights of the minorities concerning their language, culture and religion. These concessions must have been made to them for good and valid reasons. Article 45, no doubt, requires the State to provide for free and compulsory education for all children, but there is nothing to prevent the State from discharging that solemn obligation through Government and aided schools and Article 45 does not require that obligation to be discharged at the expense of the minority communities. So long as the Constitution stands as it is and is not altered, it is, we conceive, the duty of this Court to uphold the fundamental rights and thereby honour our sacred obligation to the minority communities who are of our own." Similarly, Venkatarama Aiyer, J. who gave a dissenting opinion agreed however with the scope of Article 30 as expounded by the majority opinion. In this connection, the learned Judge observed as follows: "Article 30(1) belongs to the same category as articles 25, 26 and 29, and confers on minorities, religious or linguistic, the right to establish and maintain their own educational institutions without any interference or hindrance from the State. The true intention of that Article is to equip minorities with a shield whereby they could defend themselves against attacks by majorities, religious or linguistic, and not to arm them with a sword whereby they could compel the majorities to grant concessions. " Various shades and aspects of the matter were again considered by this Court in the case of Rev. Sidhajbhai Sabhai and Ors. vs State of Bombay & Anr. In this case it appears that the Government of Bombay issued an order directing the concerned institution which was controlled by the United Church of Northern India to reserve 80% of the seats in the training colleges run by the institution for teachers in non Government training colleges. These teachers, were to be nominated by the Government. Accordingly, the Educational Inspector ordered the Principal of the Training College not to admit without specific permission of the Education Department private students in excess of 20% of the total strength in each class. The institution took 947 serious exception to this order of the Government as amounting to A direct interference in the management of the affairs of the institution. The institution filed a writ petition under Article 32 of the Constitution before this Court which was heard by 6 Judges who after considering the facts of the case and the nature of the order passed by the Government observed as follows: "Unlike Article 19, the fundamental freedom under clause (1) of Article 30, is absolute in terms; it is not made subject to any reasonable restrictions of the nature the fundamental freedoms enunciated in Article 19 may be subjected to. All minorities, linguistic or religious have by Article 30(1) an absolute right to establish and administer educational institutions of their choice; and any law or executive direction which seeks to infringe the substance of that right under Article 30(l) would to that extent be void. This, how ever, is not to say that it is not open to the State to impose regulations upon the exercise of this right. Regulation made in the true interests of efficiency of instruction, discipline, health, sanitation, morality, public order and the like may undoubtedly be imposed. Such regulations are not restrictions on the substance of the right which is guaranteed; they secure the proper functioning of the institution, in matters educational". This Court refused to uphold the order of the Government on the ground, that this was only a regulatory measure. The Court pointed out that the regulation in order to be valid must satisfy a dual test, namely, (1) that it should be reasonable, (2) that it should be purely regulative of the educational character of the institution so as to make the institution an effective vehicle of education for the minority community. This Court observed thus : "The right established by Article 30(1) is a fundamental right declared in terms absolute. Unlike the fundamental freedoms guaranteed by Article 19, it is not subject to reasonable restrictions. It is intended to be a real right for the protection of the minorities in the matter of setting up of educational institutions of their own choice. The right is intended to be effective and is not to be whittled down by so called regulative measures conceived in the interest not of the minority educational institution, but of the public or the nation as a whole. If every order which while maintaining the formal character of a minority institution destroys the power of administration is held justifiable 948 because it is in the public or national interest, though not in its interest as an educational institution, the right guaranteed by Article 30(1) will be put a "teasing illusion", a promise of unreality. Regulations which may lawfully be imposed either be legislative or executive action as a condition of receiving grant or of recognition must be directed to making the institution while retaining its character as a minority institution effective as an educational institution. Such regulation must satisfy a dual test the test of reasonableness, and the test that it is regulative of the educational character of the institution and is conducive to making the institution an effective vehicle of education for the minority community or other persons who resort to it. " On an examination of the provisions of the impugned Act in the instant case, it is manifest that the Act contains provisions harsher and more offensive than the order passed by the Government of Bombay in the Bombay case (supra) referred to above. In the case of Rev. Father W. Proost & Ors. vs The State of Bihar and Ors. Hidayathullah, C. J. speaking for the Court observed as follows: "In our opinion, the width of Article 30(1) cannot be cut down by introducing in it consideration on which Article 29(1) is based. The latter article is a general protection is given to minorities to conserve their language, script or culture. The former is a special right to minorities to establish educational institutions of their choice. This choice is not limited to institution seeking to conserve language, script or culture and the choice is not taken away if the minority community having established an educational institution of its choice also admits members of other communities. That is a circumstance irrelevant for the application of Article 30 (1) since, no such limitation is expressed and none can be implied. The two Article create two separate rights, although it is possible that they may meet in a given case. " The extent to which the State could interfere with the administrative autonomy of the minority institutions in view of the guarantee contained in Article 30(1) of the Constitution was again fully discussed and explained in the case of State of Kerala etc. vs Very Rev. Mother Provincial etc. In this case the Court was considering the 949 constitutionality of certain provisions of the Kerala University Act, 1969 which was passed with a view to reorganise the University of Kerala and establish a teaching, residential and affiliating University of private Colleges including institutions founded by the minority community. The Court was concerned only with some of the pro visions of the aforesaid Act and struck down the offending provisions as amounting to a blatant interference with the rights guaranteed to the minorities under Article 30(1) of the Constitution. Before analysing the facts of that case, I might indicate that in the instant case it is not disputed by the parties that all the appellants are minority institutions and had a governing body of their own. It is also not disputed that apart from the Christians others were also admitted to the institutions and received education. Even some of the members of the staff were also non Christians. In the background of these facts. I have to see how far the decision of this Court referred to above applies to the present appeals. While explaining the scope and ambit of management or administration Hidayatullah, C.J. speaking for the Court observe as follows: "Administration means 'management of the affairs ' of the institution. This management must be free of control so that the founders or their nominees can mould the institution as they think fit, and in accordance with their ideas of how the interests of the community in general and the institution in particular will be best served. No part of this management can be taken away and vested in another body without an encroachment upon the guaranteed right. There is, however, an exception to this and it is that the standards of education are not a part of management as such. These standards concern the body politic and are dictated by considerations of the advancement of the country and its people. Therefore, if universities establish syllabi for examinations they must be followed, subject however to special subjects which the institutions may seek to teach, and to a certain extent the State may also regulate the conditions of employment of teachers and the health and hygiene of students. Such regulations do not bear directly upon management as such although they may indirectly affect it. Yet the right of the State to regulate education, educational standards and the allied matters cannot be denied. The minority institutions cannot be allowed to fall below the standards of excellence expected of educational institutions, of under the guise of exclusive right of management, to decline to 950 follow the general pattern. While the management must be left to them, they may be compelled to keep in step with others". These observations, therefore, establish three important tests which would determine whether or not the action of the Government amounts to interference with the management of the institution (1) In order that the management of the institution is free from outside control, the founders must be permitted to mould the institution as they think fit; (2) no part of the management could be taken away by the Government and vested in another body without an encroachment upon the guaranteed right enshrined in Article 30(1) of the Constitution; (3) There is however an exception to. this general rule which is that the Government or the University can adopt regulatory measures in order to improve the educational standards which concern the body politic and are dictated by considerations of the advancement of the country and its people, so that the managing institution may not under the guise of autonomy or exclusive right of management be allowed to fall below the standard of excellence that is required of educational institutions. Having laid down these tests the Court proceeded to analyse some of the offending sections of the Kerala Act and came to the conclusion that according to some of the sections the governing body set up by education society was to consist of 11 members and the Managing Council of 21 members. 11 members of the government body were (i) the principal of the private college, (ii) the manager of the private college, (iii) a person nominated by the University in accordance with the provisions in that behalf contained in the statute (iv) a person nominated by the Government and (v) a person elected in accordance with the procedure laid down on the Act. Sub section (2) had the effect of making these bodies into bodies corporated having perpetual succession and a common seal. Sub section (6) laid down the powers and functions of the governing body, the removal of members thereof and the procedure to be followed by it, including the delegation of its powers to persons prescribed by the Statutes. Sub section (7) laid down that the decision in either of the two bodies shall be taken at the meetings on the basis of simple majority of the members present and voting. Thus, if these provisions were to apply to the minority institutions, it is manifest that it would amount to a direct interference in the internal management of the institution and would tantamount to the institution surrendering its educational personality. In other words, the governing body appointed by the University would replace the governing body of the founders of the institutions and thus the founders 951 would have no right to administer the institution in any way they like. A Adverting to this aspect of the matter Hidayatullah, C.J. Observed as follows : "These sections were partly declared ultra vires of Article 30(1) by the High Court as they took away from the founders the right to administer their own institution. It is obvious that after the election of the governing body or the managing council the founders or even the community has no hand in the administration. The two bodies are vested with the complete administration of the institutions. These bodies have a legal personality distinct from the educational agency or the corporate management. They are not answer able to the founders in the matter of administration The Constitution contemplates the administration to be in the hands of the particular community. However desirable it might be to associate nominated members of the kind mentioned in sections 48 and 49 with other members , of the governing body or the managing council nominees, it is obvious that their voice must play a considerable part in management Situations might be conceived when they may have a preponderating voice. In any event, the administration goes to a distinct corporate body which is in no way answerable to the educational agency or the corporate management. The founders have no say in the selection of the members nominated by them. It is, therefore, clear that by the force of sub sections (2), (4) and (6) of sections 45 and 49 the minority community loses the right to administer the institution it has founded. Sub section (S) also compels the governing body or the managing council to follow the mandates of the University in the administration of the institution. " Their Lordships then proceeded to consider the vires of sub sections (2) and (4) of section 56 which laid down the conditions of service of the teachers of private colleges. Sub section (2) provided that no teacher of a private college could be dismissed, removed or reduced in rank by the governing body or managing council without the previous sanction of the Vice Chancellor or placed under suspension by the governing body or managing council for a continuous period exceeding fifteen days without such previous sanction. Further sub section (4) provided that a teacher against whom disciplinary action is taken shall have a right of appeal to the Syndicate, and the Syndicate shall have, power to order reinstatement of the teacher in cases of wrongful removal or dismissal and to order such other reme 952 dial measures as it deems fit, and the governing body or managing council, as the case may be, shall comply with the order. It is thus obvious that in view of the provisions of sub sections (2) and (4) of section 56 the managing body had no discretion in the matter and the right of the management was completely taken away and vested in some other body. In the instant case, although the Act does not at all provide any rules or regulations by which the conditions of service of the teachers are to be governed yet it prohibits dismissal or removal of teachers without prior sanction of a competent authority to be declared by the Government. Similarly, it provides for an appeal to an appellate authority without laying down any guidelines and no right of appeal is given to the management. These provisions are contained in section 3, sub sections (2), (3) and (4) and section 4. This Court also considered the effect of section 58 of the Kerala Act by which a teacher of a college who was elected as a member of the Legislative Assembly or Parliament could not be debarred on his election, but would be allowed to continue. Upholding the decision of the High Court and commenting on the constitutionality of section 56 sub sections (2) and (4) and section 58 this Court observed as follows: "These provisions clearly take away the disciplinary action from the governing body and the managing council and confer it upon the University." "This enables political parties to come into the picture of the administration of minority institutions which may not like this interference. When this is coupled with the choice of nominated members left to Government and the University by sub s.1(d) of sections 48 and 49 it is clear that there is much room for interference by persons other than those in whom the founding community would have confidence." In the end while making it clear that there was no element of malafides in the Act passed by the Legislature, the provisions of the Act unfortunately robbed the founders of their right of administration and were, therefore, hit by Article 30(1) of the Constitution. In this connection, the Court observed as follows: "We have no doubt that the provisions of the Act were made bona fide and in the interest of education but unfortunately they do affect the administration of these institutions and rob the founders of that right which the Constitution desires should be theirs. The provisions, even if salutary, cannot stand in the face of the constitutional guarantees". 953 In the case of D.A.V. College etc. vs State of Punjab & Ors this Court was considering the provisions of Chapter V Clauses 2(1)(a), 17 and 18 read with clauses 1(2) and (3). Clause 2(1) (a) provided that a college applying for admission to the privileges of the University had to send a letter of application to the Registrar and would have to satisfy the Senate (1) that the College shall have a regularly constituted governing body consisting of not more than 20 persons approved by the Senate (2) that among those persons there should be two representatives of the University and the Principal of the College Exofficio. Clause 17 provided that any staff initially appointed shall be approved by the Vice Chancellor and any subsequent changes made must be reported to the University for approval. It was also provided that in the case of training institutions the teacher pupil ratio shall not be less than 1:12. The constitutional validity of these provisions was challenged before this Court on the ground that it violated Article 30(1) of the Constitution because the College was a minority institution being a College established by the Arya Samaj. On a consideration of these provisions, this Court upheld the contention of the appellants and observed thus: "It will be observed that under clause 1(3) if the petitioners do not comply with the requirements under 1 (a) their affiliation is liable to be withdrawn. Similarly it is stated that clause 17 also interferes with the petitioners right to administer their College as the appointment of all the staff has to be approved by the Vice Chancellor and that subsequent changes will also have to be reported to the University for Vice Chancellor 's approval. We have already held that the Petitioners institutions are established by a religious minority and therefore under Article 30 this minority has right to administer their educational institutions according to their choice. Clause 2(a) (a) and 17 of Chapter in V our view certainly interfere with that right. " The matter was again fully considered by this Court by a Bench consisting of 9 Judges in all its aspects. In the case of The Ahmedabad St. Xaviers College Society & Anr. vs State of Gujarat & Anr and this is the leading case on the subject. This case has been relied on by counsel for both the parties in support of their respective Contentions. In this case it appears that certain provisions of the Gujarat University Act 1949 were challenged. Section 5 of the Act provided 954 that no educational institution situated within the University could be associated in any way with or seek admission to any privilege of any other University save and except with the sanction of the State Government. Section 33A(1)(a) of the Act provided that every college other than a Government college or a college maintained by the Government shall be under the management of a governing body which includes among others, the Principal of the College, a representative of the University nominated by the Vice Chancellor and (ii) in the case of selection of a member of the teaching staff of the College a selection committee would be constituted consisting of the Principal and a representative of the University nominated by the Vice Chancellor. Subsection (3) of the section provided that the provisions of section 33A (1) shall be deemed to be a condition of affiliation of every College referred to in that sub section. In other words, according to this provision, even the Colleges which were minority institutions would fall within the mischief of the section. Section 39 provided that within the University area all post graduate instruction, teaching and training shall be conducted by the University or by such affiliated College or institution and in such subjects as may be prescribed by statutes. Section 40(1) enacted that Court of the University may determine that all instructions, teaching and training in the courses of studies in respect of which the University was to hold examination shall be conducted by the University and shall be imparted by the teachers of the University. Section 41(1) stated that all Colleges within the University area which were admitted to the privilege of the University under section 5(3) and all Colleges within the said area which may hereafter be affiliated to the University shall be constituent colleges of the University, and their relations with the University would be governed by statutes made by the University in that behalf. As regards the conditions of service of the teachers appointed by the University section 51A(a) (b) enacts that no member of the teaching or other academic and non teaching staff of an affiliated college shall be dismissed, or removed or reduced in rank except after an enquiry in accordance with the procedure prescribed in clause (a) and the penalty to be inflicted on him is to be approved by the Vice Chancellor or any other officer of the University authorised by the Vice Chancellor in this behalf. Section 52A(1) provided that any dispute between the governing body and any member of the teaching staff shall on a request of the governing body or of the member concerned be referred to a Tribunal or arbitration consisting of one member nominated by the governing body of the college, one member nominated by the member concerned and an umpire appointed by the Vice Chancellor. In view of the provisions referred to above, 955 the question that felI for consideration in that case was whether these k provisions interfere with the internal management of the minority institutions so as to compel them to surrender all their administrative powers to the University or the Vice Chancellor or the officers nominated by the Vice chancellor. There can be no doubt that if these provisions are construed against the background of the objective of the Act the idea was not to leave any controlling voice either in the courses of studies or in the matter of disciplinary action against the staff and the teacher in the management of the institution but to take over the entire management by the University authorities giving nominal representation to the management of the institution. Before we analyse the decision in St. Xaviers case (supra) we must note that as far back as 1959 in Re Kerala education Bill this Court had clearly pointed out that while the minority institution had no constitutional right to be affiliated to any college or University the right to be affiliated flowed from the language of Article 30(1) of the Constitution and the University concerned could not either refuse affiliation or impose such conditions which may result in complete surrendering of the management of the minority institution. Thus, the central question to be decided in this case was whether by virtue of the provisions of the Act set out above, Article 30(l) had been violated and if so to what extent. So far as the question of affiliation was concerned the entire court held that although there was no fundamental right to affiliation but recognition or affiliation was necessary for meaningful exercise of the right to establish and administer educational institution conferred on the minority institutions under Article 30(l) of the Constitution. In this connection, the Court observed as follows: "The consistent view of this Court has been that there is no fundamental right of a minority institution of affiliation. An explanation has been put upon that statement of law. It is that affiliation must be a real and meaningful exercise for minority institutions in the matter of imparting general secular education. Any law which provides for affiliation on terms which will involve abridgement of the right of linguistic and religious minorities to administer and establish educational institutions of their choice will offend Article 30(1). The educational institutions set up by minorities will be robbed of their utility if boys and girls cannot be trained in such institutions for University degrees. Minorities will virtually lose their right to equip their children for ordinary careers if affiliation be on terms which wouId 956 make them surrender and lose their rights to establish and administer educational institutions of their choice under Article 30. . . . . The establishment of a minority institution is not only ineffective but also unreal unless such institution is affiliated to a University for the purpose of conferment of degrees n on students". Relying on the previous decision in the case of State of Kerala etc. vs Very Rev. Mother Provincial etc. (supra) Ray, C.J. reiterated the principles laid down by the previous case and observed as follows: "when minority applies for affiliation, it agrees to follow the uniform courses of study. Affiliation is regulating the educational character and content of the minority institutions. These regulations are not only reasonable in the interest of general secular education but also conduce to. the improvement in the stature and strength of the minority institutions. . . . . . . . . . . Affiliation mainly pertains to the academic and educational character of the institution. Therefore, measures which will regulate the courses of study, the qualifications and appointment of teachers, the conditions of employment of teachers, the health and hygiene of students, facilities for libraries and laboratories are all comprised in matters germane to affiliation of minority institutions. These regulatory measures for affiliation are for uniformity, efficiency and excellence in educational courses and do not violate any fundamental right of the minority institutions under Article 30". Thus, to a limited extent affiliation of the minority institution to the University or Colleges concerned was held to be a regulatory measures provided it was aimed at improving the educational standards and laying down the conditions of employment of the teachers. This Court repeated that the minority institutions have the right to administer the institution and shorn of some checks and balances in the shape of regulatory measures the right to administer cannot be tampered with. In this connection, Ray, C.J. Observed as follows: "The minority institutions have the right to administer institutions. The right implies the obligation and duty of the minority institutions to render the very best to the students. In the rights of administration, checks and balances 957 in the shape of regulatory measures are required to ensure the appointment of good teachers and their conditions of service. The right to administer is to be tempered with regulatory measures to facilitate smooth administration. The best administration will reveal no trace or colour of minority. A minority institution should shine in exemplary eclectism in the administration of the institution. . . Regulations which will serve the interest of the students, regulations which will serve the interests of the teachers are of paramount importance in good administration. Regulations in the interest of efficiency of teachers, discipline and fairness in administration are necessary for pre serving harmony among affiliated institutions". C As regards the provision of the Act concerned by which the minority institution became a constituent College this was expressly struck down by this Court where Ray, C.J. speaking for the Court observed as follows: "once an affiliated college becomes a constituent college within the meaning of section 41 of the Act pursuant to a declaration under section 40 of the Act it becomes integrated to the university. A constituent college does not retain its former individual character any longer. The minority character of the college is lost. Minority institutions become part and parcel of the university. The result is that section 40 of the Act cannot have any compulsory application to minority institutions because it will take away their fundamental right to administer the educational institutions of their choice". Explaining what the concomitants of an autonomy in administration meant Ray, C.J. observed as follows: "Autonomy in administration means right to administer effectively and to manage and conduct the affairs of the institutions. The distinction is between a restriction on the right of administration and a regulation prescribing the manner of administration. The right of administration is day to day administration. The choice in the personnel of management is a part of the administration. The university will always have a right to see that there is no maladministration. If there is maladministration, the university will take steps to cure the same. There may be control and check on administration in order to find out whether the 958 minority institutions are engaged in activities which are not conducive to the interest of the minority or to the requirements of the teachers and the students . . . . The provisions contained in section 33A(1) (a) of the Act have the effect of displacing the management and entrusting it to a different agency. The autonomy in administration is lost. New elements in the shape of representatives of . different type are brought in. The calm waters of an institution will not only be disturbed but also mixed. These provisions in section 33A(1)(a) cannot therefore apply to minority institution". It follows from what had been held in the aforesaid case was that there should be no interference in the right of day to day administration of the institution of in the choice of the personality of the managing committee or governing body of the institution. This Court struck down section 33A(1) (a) of the Gujarat Act on the ground that the management of the college was completely displaced and was substituted by the university authorities. In other words, the position appears to be that although the university to which the minority institution was affiliated may exercise supervision in so far as the syllabi or the courses of studies are concerned, it cannot be allowed to be associated with the managing committee or the governing body of the institution so as to have a controlling voice in the matters at issue and thereby destroy the very administrative autonomy of the minority institution. This appears to be the main reason why Ray, C.J. was of the opinion that section 33A(1)(a) was violative of Article 30(1), and, therefore, not applicable to the minority institutions. The Court then dealt with the provisions of sections 51A and 52A of the Gujarat Act. Under section 51A no member of the teaching, other academic and non teaching staff of an affiliated college should be dismissed, removed or reduced in rank except after an enquiry in which he has been informed of the charges and given a reasonable opportunity of being heard and until he had been given a reasonable opportunity of making a representation on any such penalty proposed to be inflicted on him and the penalty to be inflicted on him was to be approved by the Vice Chancellor or any officer o ' the University authorised by him. This Court held that this is a blanket power given to the Vice Chancellor without any guidance, and observed as follows: "The approval of the Vice Chancellor may be intended to be a check on the administration. The provision contained in section 51A, clause (b) of the Act cannot be said to be a permissive regulatory measure inasmuch as it confers f ' 959 arbitrary power on the Vice Chancellor to take away the A right of administration of the minority institutions, Section 51A of the Act cannot, therefore, apply to minority institutions. " Dealing with the provisions contained in Section 52A of the Gujarat Act which contemplated a reference of any dispute between the governing body and any member of the teaching or academic and non teaching staff of an affiliated college which was connected with the conditions of service of such member to a. Tribunal of Arbitration consisting of one member nominated by the governing body of the college, one member nominated by the member concerned and an Umpire appointed by the Vice Chancellor, the learned Chief Justice was of the opinion that the introduction of such an arbitration to a Tribunal would start a spate of fruitless litigation and was likely to impair the excellence and efficiency maintained by the educational institution concerned. In this connection, the learned Chief Justice observed as follows: D "These references to arbitration will introduce an area of litigious controversy inside the educational institution. The atmosphere of the institution will be vitiated by such proceedings. The governing body has its own disciplinary authority. The governing body has its domestic jurisdiction. This jurisdiction will be displaced. A new jurisdiction will be created in administration. The provisions contained in section 52A of the Act cannot, therefore, apply to minority institution." Jaganmohan Reddy, J. agreeing with the majority judgment delivered by the Hon 'ble Chief Justice endorsed his conclusions regarding the constitutional validity to sections 40, 41, 33A(1) (a), 33A(1) (b), 51A and 52A of the Act and observed thus: "We agree with the Judgment of Hon 'ble the Chief Justice just pronounced and with his conclusions that sections 40, 41, 33A(1) (a), 33A(1) (b), 51A and 52A of the Act violate the fundamental rights of minorities and cannot, therefore, apply to the institutions established and administered by them." Dwelling on the importance of the fundamental right enshrined in Article 30, the learned Judge held that the right under Article 30 7 138 SCT/80 960 could not be exercised in vacuo, and in this connection observed as follows: . "The right under Article 30 cannot be exercised m vacuo. Nor would it be right to refer to affiliation or recognition as privileges granted by the State. In a democratic system of Government with emphasis on education and enlightenment of its citizens, there must be elements which give protection to them. The meaningful exercise of the right under Article 30(l) would and must necessarily involve recognition of the secular education imparted by the minority institutions without which the right will be a mere husk. This Court has so far consistently struck down all attempts to make affiliation or recognition on terms tentamount to surrender of its rights under Article 30(l) as 1, abridging or taking away those rights. Again as without affiliation there can be no meaningful exercise of the right under Article 30(l), the affiliation to be given should be consistent with that right, nor can it indirectly try to achieve what it cannot directly do. " Similar view was taken by Khanna, J. who also held that management of a minority institution should be kept free from governmental or other interference because the wonds "of their choice" appearing in Article 30 have special significance and would actually lose their value and utility if too much interference or unnecessary curbs are placed in the administration of the affairs of the minority institution. The learned Judge observed thus: "Administration connotes management of the affairs of the institution. The management must be free of control so that the founders or their nominees can mould the institution as they think; fit and in accordance with their ideas of how the interest of the community in general and the institution in particular will be best served. The words "of their choice" qualify the educational institutions established and administered by the minorities need not be of some particular class; the minorities have the right and freedom to establish and administer such educational institutions as they choose". Similarly, explaining the scope and ambit of Articles 29 and 30 the learned Judge observed as follows: "The broad approach has been to see that nothing is done to impair the rights of the minorities in the matter of their 961 educational institutions and that the width and scope of A the provisions of the Constitution dealing with those rights are not circumscribed. The principle which can be discerned in the various decisions of this Court is that the Catholic approach which led to the drafting of the provisions relating to minority rights should not be set at naught by narrow judicial interpretation. The minorities are as much children of the soil as the majority and the approach has been to ensure that nothing should be done as naught deprive the minorities of a sense of belonging, of a feeling of security, of a consciousness of equality and of the awareness that the conservation of their religion, culture! language and script as also the protection of their educational institutions is a fundamental right enshrined in the Constitution. The same generous, liberal and sympathetic approach should weigh with the courts in construing Articles 29 and 30 as marked the deliberations of the Constitution makers in drafting these Articles and making them part of the fundamental rights". The learned Judge held that although it was permissible for the authority concerned to prescribe regulations but such regulations should not impinge upon the right conferred on the minority institutions under Article 30(l). A just balance had to be struck between the two objectives, namely, passing of regulatory measures and preserving the fundamental rights of the minority institutions. The learned Judge observed as follows: "It is, therefore, permissible for the authority concerned to prescribe regulations which must be complied with before an institution can seek and retain affiliation and recognition. Question can arise whether there is any limitation on the prescription of regulations for minority educational institutions. So far as this aspect is concerned, the authority prescribing the regulations must bear in mind that the Constitution has guaranteed a fundamental right to the minorities for establishing and administering their educational institutions. Regulations made by the authority concerned should not impinge upon that right. Balance has, therefore, to be kept between the two objectives, that of ensuring the standard of excellence of the institution and that of preserving the right of the minorities to establish and administer their educational institutions. Regula 962 tions which embrance and reconcile the two objectives can be considered to be reasonable." The learned Judge further held that any law which interferes with the minorities choice of a governing body would be violative of Article 30(1 ) and observed thus : "In the light of the above principles, it can be stated that a law which interferes with the minorities choice of a governing body or management council would be violative of the right guaranteed by Article 30(l). " Criticising the constitutional validity of Section 52A of the Gujarat Act Khanna, J. shared the view taken by Ray, C.J. which has been referred to above. The learned Judge observed as follows: "The provisions of section 52A would thus not as a spoke in the wheel of effective administration o f an educational institution. It may also be stated that there is nothing objectionable to selecting the method of arbitration for settling major disputes connected with conditions of service of staff of educational institutions. It may indeed be a desideratum. What is objectionable, apart from what has been mentioned above, is the giving of the power to the Vice Chancellor to nominate the Umpire. Normally in such disputes there would be hardly any agreement between the arbitrator nominated by the governing body of the institution and the one nominated by the concerned member of the staff. The result would be that the power would vest for all intents and purposes in the nominee of the Vice Chancellor to decide all disputes between the governing body and the member of the staff connected with the latter conditions of service. The governing body would thus be hardly in a position to take any effective disciplinary action against a member of the staff. This must cause an inroad in the right of the governing body to administer the institution. Section 52A should, therefore, be held to be violative of Article 30(l) so far as minority educational institutions are concerned. " Similarly, while striking down sections 40 and 41 of the Gujarat Act, the learned Judge found that the affiliated colleges would become constituent colleges as a result of the provisions of these sections and held that these provisions could not apply to the minority institutions. In this connection, Khanna, J. Observed as follows: "A provision which makes it imperative that teaching in , under graduate courses can be conducted only by the Uni 963 versity and can be imparted only by the teachers of the University plainly violates the rights of minorities to establish and administer their educational institution. Such . a provision must consequently be held qua minority institutions to result in contravention of Article 30(1). I would, therefore, strike down section 40 so far as minority educational institutions are concerned as being violative of Article. 30(1)". Mathew, J. while striking down the constitutional validity of section 33A(1) of the Gujarat Act observed as follows: "The heart of the matter is that no educational institution established by a religious or linguistic minority can claim total immunity from regulations by the legislature or the university if it wants affiliation or recognition; but the character of the permissible regulations must depend upon their purpose. In every case, when the reasonableness of a regulation comes up for consideration before the court, the question to be asked and answered is whether the regulation is calculated to subserve or will in effect sub serve the purpose of recognition or affiliation, namely, the excellence of the institution as a vehicle for general secular education to the minority community and to other persons who report to it. The question whether a regulation is in li: the general interest of the public has no relevance, if it does not advance the excellence of the institution as a vehicle for general secular education as, ex hypothesi, the only permissible regulations are those which secure the effectiveness of the purpose of the facility, namely, the excellence of the educational institutions in respect of their educational standards. " Similarly, the learned Judge took strong exception to the provisions of section 33A which required that the college should have a governing body which should include persons other than those who are members of the society of Jesus, struck provisions of section 33A and observed as follows: "We think that the provisions of sub sections (1) (a) and (l)(b) of section 33A abridge the right of the religious minority to administer educational institutions of their choice. The requirement that the college should have a governing body which shall include persons other than those who are members of the governing body of the society of Jesus 964 would take away the management of the college from the governing body constituted by the Society of Jesus and vest it in a different body. The right to administer the educational institution established by a religious minority is vested in it. It is in the governing body of the Society of Jesus that the religious minority which established the college has vested the right to administer the same. The requirement that the college should have a governing body including persons other than those who constitute the governing body of the Society of Jesus has the effect of divesting that body of its exclusive right to manage the educational institution The learned Judge further pointed out that under the guise of preventing mal administration the right of the governing body to manage the affairs of the minority institution should not be take away and in the same token observed as follows: "Under the guise of preventing mal administration, the right of the governing body of the college constituted by the religious minority to administer the institution cannot be taken away. The effect of the provision is that the religious minority virtually loses its right to administer the institution it has founded. "Administration" means 'management of the affairs ' of the institution. This management must be free of control so that the founders or their nominees can mould the institution according to their way of thinking and in accordance with their idea of how the interests of the community in general and the institution in PARTICULAR will be best served. No part of this management can be taken away and vested in another body without an encroachment upon the guaranteed right." Similarly, analysing various provisions of the Gujarat Act like sections 51A(1) (a) and 51A(l) (b) etc. the learned Judge observed as follows: "The relationship between the management and a teacher is that of an employer and employee and it passes one 's understanding why the management cannot terminate the services of a teacher on the basis of the contract of employment. Of course, it is open to the State in the exercise of its regulatory power to require that before the services of a teacher are terminated he should be given an opportunity of being heard in his defence. But to require 965 that for terminating the services of a teacher after all inquiry has been conducted, the management should have the approval of an outside agency like the Vice Chancellor or of his nominee would be an abridgement of its right to administer the educational institution. No guide lines are provided by the legislature to the Vice Chancellor for the exercise of his power. The fact that the power can be delegated by the Vice Chancellor to any officer of the university means that any petty officer to whom the power is delegated can exercise a general power of veto. There is no obligation under the sub sections (1) (b) and (2) (b) that the Vice Chancellor or his nominee should give any reason for disapproval. As we said a blanket power without any guideline to disapprove the action of the management would certainly encroach upon the right of the management to dismiss or terminate the services of a teacher after an enquiry. " Beg, J. speaking in the same strain observed as follows : "It is true that, if the object of an enactment is to compel a minority institution even indirectly, to give up the exercise of its fundamental rights, the provisions which have this effect will be void or inoperative against the minority institution. The price of affiliation cannot be a total abandonment of the right to establish and administer a minority institution conferred by Article 30(1) of the Constitution. This aspect of the matter, therefore, raises the question whether any of the provisions of the Act are intended to have that effect upon a minority institution. Even if that intention is not manifest from the express terms of statutory provisions, the provisions may be vitiated if that is their necessary consequence or effect. " Even Dwivedi, J. who had sounded a discorded note held that so far as section 33A(1) (a) was concerned it was obnoxious to Article 30(1) of the Constitution. In the case of Gandhi Faizeam College Shahajahanpur vs University of Agra and Anr. the majority judgment consisting of V. R. Krishna Iyer and A.C. Gupta, JJ. Observed as follows: "What is the core of the restriction clamped down by Statute 14 A? What is the conscience and tongue of Article 30 ? If the former is incongruous with the latter, it 966 withers as void; otherwise, it prevails and binds. That is the crux of the controversy. " "The thrust of the case is that real regulations are desirable, necessary and constitutional but, when they operate on the 'administration ' part of the right, must be confined to chiselling into shape, not cutting down out of shape, the individual personality of the minority." Mathew, J. who gave a dissenting opinion and whose opinion follows the principles laid down by the Court in St. Xavier 's case (supra) observed as follows: "The determination of the composition of the body to administer the educational institution established by a religious minority must be left to the minority as that is the core of the right to administer. Regulations to prevent maladministration by that body are permissible. As the right to determine the composition of the body which will and minister the educational institution is the very essence of the right to administer guaranteed to the religious or linguistic minority under Article 30(1), any interference in that area by an outside authority cannot be anything but an abridgement of that right. The religious or linguistic minority must be given the freedom to constitute the agency through which it proposes to administer the educational institution established by it as that is what Article 30(l) guarantees. The right to shape its creation is one thing: the right to regulate the manner in which it would function after it has come into being is another. Regulations arc permissible to prevent maladministration but they can only relate to the manner of administration after the body which is to administer has come into being. " The entire case law as fully reviewed by this Court recently in the case of Lilly Kurian vs Sr. Lewin & ors. In this case, Sen, J. speaking for the court and after a deep dichotomy and adroit analysis of St. Xavier 's case (supra) and the case which preceded that case summed up the law thus: "An analysis of the judgments in St. Xaviers College 's case (supra) clearly shows that seven out of nine Judges held that the provisions contained in clauses (b) of sub sections (1) and (2) of section 51A of the Act were not applicable to an educational institution established and managed by 967 religious or linguistic minority as they interfere with the disciplinary control. Of the management over the staff of its educational institutions. The reasons given by the majority were that the power of the management to terminate the ser vices of any members of the teaching or other academic and non academic staff was based on the relationship between an employer and his employees and no encroachment could be made on this right to dispense with their services under the contract of employment, which was an integral part of the right to administer, and that these provisions conferred on the Vice Chancellor or any other officer of the University authorised by him, uncanalised, unguided and unlimited power to veto the actions of the management." "The power of appeal conferred on the Vice Chancellor under ordinance 33(4) is not only a grave encroachment on the institution 's right to enforce and ensure discipline in its administrative affairs but it is uncanalised and unguided in the sense that no restrictions are placed on the exercise of the power. The extent of the appellate power of the Vice Chancellor is not defined; and, indeed, his powers arc unlimited. The grounds on which the Vice Chancellor can interfere in such appeals are also not defined. He may not only set aside an order of dismissal of a teacher and order his reinstatement, but may also interfere with any of the punishments enumerated in items (ii) to (v) of ordinance 33(2); that is to say, he can even interfere against the infliction of minor punishments. In the absence of any guidelines, it cannot be held that the power of the Vice Chancellor under ordinance 33 (4) was merely a check on maladministration. As laid down by the majority in St. Xavier College 's case (supra) such a blanket power directly interferes with the disciplinary control of the managing body of a minority educational institution over its teachers". Thus, on an exhaustive analysis of the authorities of this Court and the views taken by it from time to time during the last two decades on various aspects, shades and colours, built in safeguards, guarantees, scope and ambit of the fundamental right enshrined in Articles 30(1), the principles and propositions that emerged may be summarised as follows: 1. That from the very language of Article 30(1) it is clear that it enshrines a fundamental right of the 968 minority institutions to manage and administer their educational institutions which is completely in consonance with the secular nature of our democracy and the Directives contained in the Constitution itself. That although unlike Article 19 the right conferred on the minorities is absolute, unfettered and unconditional but this does not mean that this right gives a free licence for maladministration so as to defeat the avowed object of the Article, namely, to advance excellence and perfection in the field of education. While the State or any other statutory authority has no right to interfere with the internal administration or management of the minority institution, the State can certainly take regulatory measures to promote the efficiency and excellence of educational standards and issue guidelines for the purpose of ensuring the security of the services of the teachers or other employees of the institution. At the same time, however, the State or any University authority cannot under the cover or garb of adopting regulatory measures tend to destroy the administrative autonomy of the institution or start interfering willy nilly with the core of the management of the institution so as to render the right of the administration of the management of the institution concerned nugatory or illusory. Such a blatant interference is clearly violative of Article 30(1) and would be wholly inapplicable to the institution concerned. Although Article 30 does not speak of the conditions under which the minority educational institution can be affiliated to a college or University yet the section by its very nature implies that where an affiliation is asked for, the University concerned cannot refuse the same without sufficient reason or try to impose such conditions as would completely destroy the autono mous administration of the educational institution. The induction of an outside authority however high it may be either directly or through its nominees in the governing body or the managing committee of the minority institution to conduct the affairs of the institution would be completely destructive of the fundamental right guaranteed by Article 30(1) of the 969 Constitution and would reduce the management to a helpless entity having no real say in the matter and thus destroy the very personality and individuality of the institution which is fully protected by Article 30 of the Constitution. Perhaps there may not be any serious objection to the introduction of high authorities like the Vice Chancellor or his nominee in the administration particularly that part of it which deals with the conditions of service of the teachers yet such authorities should not be thrust so as to have a controlling voice in the matter and thus over shadow the powers of the managing committee. Where educational institutions have set up a particular governing body or the managing committee in which all the powers vest, it is desirable that such powers should not be curbed or taken away unless the Government is satisfied that these powers are grossly abused and if allowed to continue may reduce me efficacy or the usefulness of the institution. It is, therefore, open to the Government or the University to frame rules and regulations governing the conditions of service of teachers in order to secure their tenure of service and to appoint a high authority armed with sufficient guidance to see that the said rules are not violated or the members of the staff are not arbitrarily treated or innocently victimised. In such a case the purpose is not to interfere with the internal administration or autonomy of the institution, but it is merely to improve the excellence and efficiency of the education because a really good education can be received only If the tone and temper of the teachers are so framed as tc make them teach the students with devotion and dedication and put them above all controversy. But while setting up such an authority care must be taken to see that the said authority is not given blanket and uncanalised and arbitrary powers so as to act at their own sweet will ignoring the very spirit and objective of the institution. It would be better if the authority concerned associates the members of the governing body or its nominee in its deliberation so as to instil confidence in the founders of the institution or the committees constituted by them. 970 8. Where a minority institution is affiliated to a University the fact that it is enjoined to adopt the courses of study or the syllabi or the nature of books prescribed and tho holding of examination to test the ability of the students of the Institution concerned does not violate the freedom contained in article 30 of the Constitution. While there could be no objection in setting up a high authority to supervise the teaching staff so as to keep a strict vigilance on their work and to ensure the security of tenure for them, but the authority concerned must be provided with proper guidelines under the restricted field which they have to cover. Before coming to ally decision which may be binding on the managing committee, the Head of the institution or the senior members of the managing committee must be associated and they should be allowed to have a positive say in the matter. In some cases the outside authorities enjoy absolute powers in taking decisions regarding the minority institutions without hearing them and these orders are binding on the institution. Such a course of action is not constitutionally permissible so far as minority institution is concerned because it directly interferes with the administrative autonomy of the institution. A provision for an appeal or revision against the order of the authority by the aggrieved member of the staff alone or the setting up of an Arbitration Tribunal is also not permissible because Ray, C.J. pointed out in St. Xaviers case (supra) that such a course of action introduces an arena of litigation and would involve the institution in unending litigation, thus imparing educational efficiency of the institution and create a new field for the teachers and thus draw them out of purely educational atmosphere of the minority institutions for which they had been established. In other words, nothing should be done which would seek to run counter to the intentions of the founders of such institutions. These are some of the important principles that have been clearly laid down by the Supreme Court in the cases discussed above. I shall now endeavour to examine the provisions of the impugned Act in the light of the principles enunciated above. I shall point out hereafter that some of the provisions of the Act are so harsh and arbitrary and 971 confer uncanalised powers on some of the authorities appointed under the Act so as to amount to a direct and thoughtless interference with the management of the institution Coming to the provisions of the Act one significant feature may be noticed here. Unlike other Acts passed by some of the States the impugned Act, while it takes within its sweep even the minority institutions, does not at all lay down any rules, regulations governing the conditions of service of the teachers of the institution, nor does it provide any guidelines on the basis of which the rules could be made, nor does it contain a mandate directing the minority institution to frame proper rules and conditions of service of its teachers. Mr. Lal Narayan Sinha appearing for the appellants submitted that this is a most serious lacuna in the Act which makes it completely violative of Article 30 of the Constitution and other provisions read in the light of this lacuna also lose their legal sanctity. Section 1(3) provides that the Act applies to all private educational institutions that is to say including minority institutions. In the instant case all the appellants are institutions established by the Christian community. Sub section (4) of section 1 says that the Act shall be deemed to have come into force on the 5th October, 1974. Sections 2 is the definition clause which defines various terms used in the Act and it is not germane for our purpose to deal with the various definitions which is more or less a formality. Learned counsel appearing for the appellants has challenged the constitutional validity of sections 3, 4, 5, 6, 7, 10, 11, 12, 16 and 17 of the Act. Section 3(1) of the Act may be extracted thus: "3(1) Subject to any rule that may be made in this behalf, no teacher employed in any private educational institution shall be dismissed removed or reduced in rank nor shall his appointment be otherwise terminated, except with the prior approval of the competent authority.; Provided that if any educational management, agency or institution contravenes the provisions of this sub section, the teachers affected shall be deemed to be in service". A perusal of this section would clearly reveal that while no rules regulating the conditions of service of the teachers employed in private institutions had been made, the power to do so has been reserved with the Government. The proviso enjoins that any contravention of the provisions would not affect the teachers who would be deemed to be in service. It is manifest that in the absence of any rules the proviso would have no application. Even if the proviso applies it would 972 amount to a serious inroad on the fundamental right of the minority institutions to administer or manage their own affairs. Thus section 3(1) as also the proviso is clearly violative of own affairs article 30 is wholly inapplicable to the minority institutions. Serious exception on has been taken by counsel for the appellants to sub sections (2), (3) and (4) of section 3. Section 3(2) may be extracted thus : "3 (2) Where me proposal to dismiss, remove or reduce in rank or otherwise terminate the appointment of any teacher employed in any private educational institution is communicated to the competent authority that authority shall, if it is satisfied that there are adequate and reasonable grounds for such proposal, approve such dismissal, removal, reduction in rank or termination of appointment". This sub section seeks to control the power of the institution concern ed in the matter of dismissal, removal or reduction in rank or termination of the appointment of any teacher employed by any private educational institution and enjoins that any action taken against the teacher will be of no consequence unless it is approved by the said competent authority. It will be rather interesting to note that the competent authority has not been given any guidelines under which it can act. The Solicitor General (Mr. section N. Kacker) submitted that the word 'satisfy ' as used in the section is a strong term and regulates the powers of the competent authority and the words "adequate and reasonable grounds" contain sufficient guidelines to exclude exercise of any arbitrary power. I am, however, unable to agree with this contention. In the first place, it was the inherent and fundamental right of the institution to deal with its employees or teachers and take necessary action against them. If the State wanted to regulate the conditions of service of the teachers it should have taken care to make proper rules giving sufficient powers to the management in the manner in which it was to act. Secondly, the induction of an outside authority over the head of the institution and making its decision final and binding on the institution was a blatant interference with the administrative autonomy of the institution. Sub section (2) does not contain any provision that while giving approval the competent authority was to ascertain the views of the governing body or the managing committee so as to know their view point and the reason why action has been taken against a particular teacher or teachers. Similarly, the words "adequate and reasonable" are too vague and do not lay down any objective standard to judge the discretion which is to be exercised by the competent authority whose order will be binding on the institution. Thirdly, 973 while section 4 gives a right to the aggrieved teacher to file an appeal before the appellate authority, no such right has been given to the management to file an appeal against the order of the competent authority if it refuses to grant sanction to the order of the managing committee of the institution. Thus, in my opinion, sub section (2) suffers from the Vice of excessive delegation of powers and confers undefined, uncanalised, absolute and arbitrary powers to grant or to refuse sanction to any action taken by the managing committee and almost reduces the institution to a helpless position. Such a provision, therefore, not only interferes with the right of the management of the institution but is completely destructive of the right conferred on the institution under Article 30(1) of the Constitution. Even C the competent authority mentioned in the sub section is merely the District Educational officer and it appears from the record that it is not a very high authority such as, the Director of Public Instruction or the Vice Chancellor which may be presumed to act objectively and reasonably. Another material defect in section 3(2) is that no time limit has been fixed by the statute within which the competent authority is to give its approval. If the competent authority either due to over work endeavours or some other reason chooses to sit over the matter for a pretty long time a stalemate would be created which will seriously impair the smooth running of the institution. Indeed if sub section (2) would have been cast in a negative form so as to provide that the sanctioning authority was bound to give approval to any action taken by the institution against its teachers unless it was, after hearing the teacher and the management of the institution, satisfied that the order passed by the institution or the action taken by it was in violation of the principles of natural justice, against the statutory provisions of law or tainted with factual or legal malice no objection could be taken. If the section would have been worded in this manner, then its validity could have been upheld on the ground that it was a sound regulatory measure which does not destroy the administrative autonomy of the institution but is meant to ensure the security of tenure of the teaching staff of the institution. But as this is not so, the validity of the provision cannot be supported. For these reasons, therefore, I am satisfied that subsection (2) is unconstitutional being violative of Article 30(1) of the Constitution and would have no application to any minority institution Sub section (3) of section 3 runs thus: "3 (3) (a) No teacher employed in any private educational institution shall be placed under suspension, except 974 when an inquiry into the gross misconduct of such teacher is contemplated. (b) No such suspension shall remain in force for more than a period of two months from the date of suspension and if such inquiry is not completed within that period, such teacher shall, without prejudice to the inquiry, be deemed to have been restored as teacher. Provided that the competent authority may, for reasons to be recorded in writing, extend the said period of two months, for a further period not exceeding two months, if, in the opinion of such competent authority, the inquiry could not be completed within the said period of two months for reasons directly attributable to such teacher". These provisions deprive the minority institution of the power to suspend any teacher unless an inquiry into the gross misconduct of such teacher is contemplated. One could understand if the word 'misconduct ' alone was used in sub section (3) (a) but as it is qualified by the adjective gross, it almost destroys the power of suspension which the minority institution might possess. Even so, sub section (3) (b) makes it clear that no suspension shall remain in force for a period of more than two months from the date of suspension and if no inquiry is completed within this period, the teacher would have to be reinstated. This is indeed a most peculiar provision and gives an unqualified right to a teacher in the matter of suspension. Even a Government servant to whom Article 311 of the Constitution or the statutory rules apply does not enjoy such a liberal facility. Moreover, the rules make a mockery of any order of suspension passed pending an inquiry. It is very difficult to predicate how long an inquiry would last and yet to limit the period of suspension to two months irrespective of the nature, length and the scope of the inquiry to only two months is really to completely curb the power of suspension. The proviso to section 3 (3) again empowers the competent authority to extend the period of suspension. Thus the cumulative effect of sub sections (3)(a), 3(b) and the proviso is to interfere with the internal administration of the minority institution and curb the power of suspension and thus deprive the institution of the right of or taking any disciplinary action against the teacher to such an extent that the institution becomes almost a figure head. Such a provision, therefore, cannot be upheld as it is clearly violative 975 Of Article 30(1) of the Constitution of India. It is obvious that whenever an institution suspends a teacher, it is bound to pay subsistence allowance and any express provision like sub section (4) of section 3 is wholly unnecessary and makes a serious inroad on the internal autonomy of the institution. Thus, in our opinion, section 3 in its entirety is ultra vires as being violative of Article 30(1) of the Constitution and is wholly inapplicable to the appellants who are admittedly minority institutions. Section 4 of the Act may be quoted thus: "4. Any teacher employed in any private education institution (a) who is dismissed, removed or reduced in rank or whose appointment is otherwise terminated; or (b) whose pay or allowances or any of whose conditions or service are altered or interpreted to his disadvantage, by any order; may prefer an appeal against the order to such authority or officer as may be prescribed; and different authorities or officers may be prescribed for different classes of private educational institutions. Explanation: In this section, the expression 'order ' includes any order made on or after the date of the commencement of this Act in any disciplinary proceeding which was pending on that date". This section gives a right of appeal to a teacher who is dismissed, removed or reduced in rank and whose services are terminated. No guideline are provided in which manner this power is to be exercised nor does it contain any provision which may entitle the minority institution to be heard by the appellate authority. No principles or norms are laid down on the basis of which the order passed by the institution could be examined by the appellate authority. Even what would amount to misconduct has not been defined or qualified in sections 2, 3 or 4. It is, therefore, difficult to understand how the appellate . court would exercise this power in deciding whether or not the teacher was guilty of misconduct and what is the correlation between the degree of misconduct and the appropriate punishment which may have been awarded by the institution and approved by the competent authority. The conferment of such an 8 138 SCI/80 976 absolute and unguided power on the appellate authority which if passed against the management it cannot even file a civil suit to set aside this order amounts not only to a direct interference with the right enshrined in Article 30(l) of the Constitution but makes the minority institution a limp, lifeless and powerless body incapable of effective teaching and/or attaining excellence in the standards of education. such a course of action is bound to hurt the feelings of the founders of the institution. For these reasons, therefore, I and of the opinion that section 4 is also ultra vires as violative of Article 30 of the Constitution and would, therefore, have no application to the minority institutions who are appellants in this case. Section 5 merely provides for transfer of an appeal pending before any authority to the appellate authority and if section 4 falls and is inapplicable to the minority institution section 5 also follows the same fate and will not apply to the minority institution. Section 6 runs thus: "6. Where any retrenchment of any teacher employed in any private educational institution is rendered necessary consequent on any order of the Government relating to education or course of instruction or to any other matter, such retrenchment may be effected with the prior approval of the competent authority". I This section deals with the contingencies under which the institution may be compelled to retrench any teacher employed in the school. Whatever be the position in other private educational institutions so far as the minority institution is concerned, this is purely a domestic matter of the institution and cannot be interfered with by any statute. The words "administer educational institutions of their choice" clearly indicate that the institution has an absolute right to select teachers, retain them or retrench them at its sweet will according to the norms prescribed by the institution or by the religious order which has founded the institution. As almost all the minority institutions in the present case are not receiving any substantial aid from the Government but have established the institution by their own moneys and are bearing all the expenses themselves, it is none of the business of any outside authority to interfere with or dictate to the institution as to which member of the staff should be retrenched and which should be retained. The provisions of section 6 directly interfere with this valuable right of the institution by providing that the retrenchment shall be made with the approval of the competent authority. The power is uncanalised and unguided and , suffers from the same vices as has been pointed out in the case of 977 section 3 of the Act. For these reasons, therefore, section 6 will have no application to the institution. Section 7 may be extracted thus: "7. l he pay and allowances of any teacher employed in any private educational institution shall be paid on or before such day of every month, in such manner and by or through such authority, officer or person, as may be prescribed". This is purely an innocuous provision which is meant for the benefit of the institution itself by providing how the salaries of the employees of the institution should be paid and is purely a regulatory measure which does not at all touch or effect the administrative autonomy of the minority institution. So far as sections 8 and 9 are concerned, they would obviously not apply to the minority institutions because these institutions do not receive any aid from the Government and are, therefore, not liable to maintain or furnish accounts to the University authorities or to the Government, nor the prescribed authority has any right to inspect or pass audit of the accounts kept by the institution. For these reasons, sections 8 and 9 also do not apply to the minority institutions. Section 10 relates to the inspection or inquiry in respect or private educational institution, its buildings, laboratories etc. , or any other matter connected with the institution which may be necessary. Subsections (2), (3) and (4) of section 10 provide the mode in which the inspection or inquiry is. to be made and a report submitted to the concerned authority. These provisions are also in the nature of sound regulatory measures and appear to be in the larger interest of the functioning of the institution itself and, therefore, do not offend Article 30 of the Constitution. Section 11 runs thus: "11. Every educational agency shall, within such time or within such extended time as may be fixed by the competent authority in this behalf, furnish to the competent authority such returns statistics and other information as the competent authority may, from time to time require. " This section also contains purely a regulatory measure and is in the best interest of the institution and cannot be said to violate Article 30( 1) of the Constitution. 978 Section 12 and 13 relate to penalties for contravention of the provisions of the Act which have been held by me to be violative of Article 30 and, therefore, inapplicable to the appellants because that would amount to destroying the very foundation and personality of the minority institution. These sections are also not applicable to the minority institution except n respect of provisions of the Act which have been upheld by me. Section 15 contains the revisional power and provides that the Government may delegate its powers, or make rules regarding the exercise of such a power. I have already pointed out that the setting up of a competent authority to sanction or approve the order passed by the institution in respect of a member of the staff where sufficient guidelines and grounds for approval have been prescribed is purely a regulatory measure and does not attract article 30 of the Constitution. The conferment of a right of revision against any order of the minority institution under the Rules framed which provide sufficient guidelines and allow the minority institutions an opportunity to be heard, is an innocuous provision and does not impinge on the autonomy of the minority institution. I am, therefore, of opinion that such a provision is in the best interests of the institution and does not in any way harm the personality of the institution or destroy the image so as to interfere with its autonomous functioning. I, therefore, hold that section 15 is constitutionally valid and I might hasten to add that its constitutionality was not challenged before this Court. Section 16 bars a civil court from deciding the questions which fall under this Act and section 17 contains an indemnity clause. As I have held that almost all the operative and important provisions of this Act are ultra vires, these sections also would have no application to the minority institution. In fact, section 16 suffers from a serious defect, viz., that if it was held by me that the provision regarding appeal to the appellate authority was valid then section 16 completely bars the right of the management to file a suit to challenge the validity of the order of the appellate authority. To this extent, therefore, this Section makes a serious inroad on the fundamental right of the minority institution and must be held to be inapplicable to the minority institution. I have gone through the judgment of the High Court which does not appear to have considered the various aspects and features of the matter set out by me, hor has it properly applied the propositions summarised by me as culled out from the various decisions of this 979 Court starting from 1959 (Re: Kerala Education Bill 's case) (supra) to 1979 (Lily Kurian 's case) (supra). For these reasons, I hold the sections 3 (alongwith its sub section, 4, 5, 6, 8, 9, 12, 13, 16 and 17 are violative of Article 30 of the Constitution and have no application to the appellants which are minority institutions and which fall within the protection guaranteed by the Constitution under Article 30. I accordingly allow all these appeals, set aside the order of the High Court and quash all the directions which may have been issued by the Government or other authorities under the Act to the appellants except such steps as are taken under those provisions of the Act which have been upheld by me, viz., sections 7, 10, 11, 14 and 15. In the peculiar circumstances of the case, I leave the parties to bear their own costs. KAILASAM, J. These appeals are by special leave against the judgment of the High Court of Judicature at Andhra Pradesh. Several writ petitions questioning the validity of certain provisions of the Andhra Pradesh Recognised Private Educational Institutions Control Act, 1975 (hereinafter called the Act) were heard. These writ petitions were disposed of by a common judgment by the Andhra Pradesh High Court. Aggrieved by the judgment of the High Court helding that the impugned sections of the Act is intra vires of the Constitution, not void and operative on schools and institutions of the minorities, the present appeals by special leave have been preferred. The purpose of the legislation is set out in the Statement of objects and Reasons to the Bill. It is stated : "Of late. several instances have come to the notice of the State Government regarding the various irregularities committed by the managements of private educational institutions in matters relating to suspension, dismissal, removal or other wise termination, of members of the teaching staff on flimsy grounds without framing charges and without giving an opportunity to explain. The said managements are also flouting the orders or instructions of Director of Public Instruction or the Universities or the Government in respect of such matters. Having regard to the above circumstances, the Government have decided to regulate the service conditions of teachers employed in the private educational institutions to ensure security of service of the said teachers, and also to exercise certain control on such institutions in the matter of their accounts, etc., by undertaking suitable legislation in this regard. " 980 The salient features of the Bill are given as under: (i) to safeguard the service conditions of teaching staff in the recognised private educational institutions in the matter of suspension, removal, dismissal and retrenchment; (ii) to make it compulsory for the private managements to obtain the prior permission of the competent authority before a teacher is visited with any of the aforesaid major penalties; (iii) to provide that the suspension of a teacher pending enquiry, should be for a period of two months only after which the teacher should be deemed to have been restored to duty, unless the competent authority extends the suspension period by another two months; thereby making it specific that in any case the teachers shall not be under suspension for more than four months; (iv) to provide that no teacher should be retrenched with out the prior permission of the competent authority; (v) to provide for payment of salaries to teachers on the specified day of the month in such manner and by or through such authorities, officer or persons, as may be laid down in the rules; (vi) to provide for conducting enquiries into the affairs of the recognised private educational institutions and also for issue of suitable directions to the managements of such institutions based on such enquiry, which shall be binding on the managements. The writ petitions challenged the validity of sections 3 to 7 of the Act. Sections 3 to 7 occur in Chapter II relating to terms and conditions of service of teachers. It is necessary to set out the impugned sections : "Dismissal, removal or reduction in rank or suspension of teachers employed in private educational institutions. Subject to any rule that may be made in this behalf, no teacher employed in any private educational institution shall he dismissed, removed or reduced in rank nor shall his appointment be other wise terminated, except with the prior approval of the competent authority. 981 Provided that if any educational management, agency or institution contravenes the provisions of this sub section, the teachers affected shall be deemed to be in service. (2) Where the proposal to dismiss, remove or reduce in rank or otherwise terminate the appointment of any teacher employed in any private educational institution is communicated to the competent authority, that authority shall, if it is satisfied that there are adequate and reasonable grounds for such proposal, approve such dismissal, removal, reduction in rank or termination of appointment. (3a) No teacher employed in any private educational institution shall be placed under suspension, except when an inquiry into the gross misconduct of such teacher is contemplated. (b) No such suspension shall remain in force for more than a period of two months from the date of suspension and if such inquiry is not completed within that period, such teacher shall, without prejudice to the inquiry, be deemed to have been restored as teacher. Provided that the competent authority may, for reasons to be recorded in writing, extend the said period of two months for a further period not exceeding two months, if, in the opinion of such competent authority, the inquiry could not be completed within the said period of two months for reasons directly attributable to such teacher. (4) Every such teacher as is placed under suspension under subsection (3) shall be paid subsistence allowance at such rates as may be prescribed during the period of his suspension. Appeal against orders of punishment imposed on teachers employed in private educational institutions. Any teacher employed in any private educational institution (a) who is dismissed, removed or reduced in rank or whose appointment is otherwise terminated; or (b) whose pay or allowances or any of whose conditions of service are altered or interpreted to his disadvantage, by any order; may prefer an appeal against the order to such authority or officer as may be prescribed; and different authorities or officers may be prescribed for different classes of Private educational institutions. Explanation In this section, the expression 'order ' includes any order made on or after the date of the commencement of this Act in any disciplinary proceeding which was pending on that date. Special provision regarding appeal in certain past disciplinary cases. 982 5. (1) If, before the date of the commencement of this Act, any teacher employed in any private educational institution has been dismissed or removed or reduced in rank or his appointment has been otherwise terminated and any appeal preferred before that date (a) by him against such dismissal or removal or reduction in rank or termination; or (b) by him or the educational agency against any order made before that date in the appeal referred to in clause (a); is pending on that date, such appeal shall stand transferred to the appellate authority prescribed under section 4 (2) If any such appeal as is preferred in sub section (1) has been disposed of before the date of the commencement of this Act, the order made in any such appeal shall be deemed to be an order made under this Act and shall have effect accordingly. Retrenchment of teachers. Where any retrenchment of any teacher employed in private educational institution is rendered necessary consequent on any order of the Government relating to education or course of instruction or to any other matter, such retrenchment may be affected with the prior approval of the competent authority. Pay and allowances of teachers employed in private educational institution to be paid in the prescribed manner. The pay and allowances of any teacher employed in any private educational institution shall be paid on or before such day of every month, in such manner and by or through such authority, officer or person, as may be prescribed. " The object of the legislation in general and the impugned provisions in particular is to regulate the service conditions of the teachers and to ensure their security of service. The main attack on the validity of the impugned sections is that the provisions are violative of the rights conferred on the minorities to establish and administer their institutions under articles 29 and 30 of the Constitution. The plea is that their right to administer their institutions is taken away by imposing unjustified and complete control with the authorities specified in the Act. Before considering the provisions of each of the sections impugned it is necessary to refer to the nature of the right conferred on the minorities. The relevant article is article 30 of the Constitution and it is necessary to refer to the article and the important decisions rendered by this Court under the Article. 983 "Right of minorities to establish and administer educational institutions. article 30. (1) All minorities, whether based on religion or language, shall have the right to establish and administer educational institutions of their choice. (2) The State shall not, in granting aid to educational institutions, discriminate against any educational institution on the ground that it is under the management of a minority, whether based on religion or language. " The educational institutions established and administered by the minorities in the exercise of the rights conferred under article 30 may be classified into 3 categories (1) those which do not seek either aid or recognition from the State or affiliation from the University; (2) those which seek aid and (3) those that seek either recognition or affiliation but not aid. We are not concerned with institutions which do not seek either aid or recognition from the State or affiliation from the University. The institutions which require aid may again be classified into two classes namely those which are by constitution expressly made eligible for receiving grants and (2) which are not entitled to any grant by virtue of the express provisions of the Constitution. Here again we are not concerned with the first category. We are only concerned with the institutions which are not entitled to any grant by any express provision in the Constitution. Articles 28(3), 29(2) and 30(2) deal with educational institutions receiving aid out of State Funds. Certain restrictions are placed a obligations cast on institutions recognised by the State or receiving aid article 28(3) provides "No person attending any educational institutional recognised by the State or receiving aid out of State funds shall be required to take part in any religious instructions that may be imparted in such institutions or to attend any religious worship that may be conducted in such institution or in any premises attached thereto unless such person or, if such person is a minor, his guardian has given his consent thereto. Under the sub article a person attending an institution recognised by the State or receiving aid cannot be compelled by the institution to take part in any religious instruction or to attend religious worship without his consent. article 29(2) provides that no citizen shall be denied admission into any educational institution maintained by the State or receiving aid out of State funds on grounds only of religion, race, caste, language or any of them. Under article 29(2) institutions receiving aid, a citizen is entitled to seek admission and the institutions is forbidden tn deny admission to a citizen on grounds of 984 religion, race, caste or language. While article 28(3) and 29(2) impose certain restrictions on institutions receiving aid, article 30(2) forbids the State from discriminating against any educational institution in granting aid on the ground that it is under the management of a minority, whether based on religion or language. The Constitution does not confer any right on the institution to receive any aid. It however forbids the State in granting aid to educational institutions from discriminating an educational institution on the ground that it is under the management of a minority whether based on religion or language. This would imply that the State has right to grant or not to grant aid. It may be that the State is not in a position to grant aid to education institutions. In such circumstances nobody can force the State to grant aid. But if the State grants aid to educational institutions there should not be any discrimination. It is open to the State to prescribe relevant conditions and insist on their being fulfilled before any institution becomes entitled to aid. No institution which fails to conform to the requirements thus validly prescribed would be entitled to any aid. Educational institutions receiving aid whether they are managed and administered by minority or not have to conform to the requirements prescribed by the State in order to enable the institutions to receive aid. The requirements prescribed shall not be discriminatory on the ground that it is under the management of a minority whether based on religion or language. The character of the minority institution should not also be destroyed. The right of the State to ensure that its funds are properly spent cannot be denied. In Re: Kerala Education Bill, at p. 1062 Chief Justice Das ruled that "the minority cannot surely ask for aid or recognition for an educational institution run by them in unhealthy surroundings, without, any competent teachers possessing any semblance of qualification, and which does not maintain even a fair standard of teaching or which teaches matters subversive of the welfare of the scholars. " The learned Chief Justice proceeded to observe : "It stands to reason, then, that the constitutional right to administer an educational institution of their choice does not necessarily militate against the claim of the State to insist that in order to grant aid the State may prescribe reasonable regulations to ensure the excellence of the institution to be aided. " The scope of the reasonable regulations that can be imposed is clearly explained by the question framed by the Attorney General and the answer furnished by the Court at p. 1063. The State cannot say "I 985 have money and I shall not give you any aid unless you surrender to me your right of administration" (emphasis supplied) The Court held that regulations prescribed under the various clauses except sub clause (5) of Cl. 3 which made the educational institution subject to clauses 14 and 15, valid. The Kerala Education Bill which was referred to this Court for the n purpose of opinion contained several clauses. A summary of the clauses is given in the judgment from pages 1023 to 1030 of the Reports, Clauses 6, 7 9, 10, 11, 12, 14, 15 and 20 relate to the management of aided schools. The Court expressed its view that the provisions in clauses 7, 10, 11(1), 12(1), (2), (3) and (S) may easily be regarded as reasonable regulations or conditions for the grant of aid. (Vide p. 1064). Clause 7 is extracted at p. 1025. It confers powers enumerated in the clause on the managers. Clause 10 requires the Government to prescribe the qualifications to be possessed by persons for appointment as teachers in Government Schools and in private schools which by the definition means aided or recognised schools. The State Public Service Commission is empowered to select candidates for appointment as D. teachers in Government and aided schools according to the procedure laid down in cl. 11. Clause 12 prescribes the conditions of service of the teachers of aided schools obviously intended to afford some security of tenure to the teachers of aided schools. It provides that the scales of pay applicable to the teachers of Government schools shall apply to all the teachers of aided schools whether appointed before or after the commencement OF this clause. Rules applicable to the teachers of the Government schools arc also to apply to certain teachers of aided schools as mentioned in sub cl. Sub cl. (4) provided that no teachers of an aided school shall be dismissed, removed or reduced in rank or suspended by the Manager without the previous sanction of the authorised officer. With regard to sub cl. 12(1) (2) and (3) which related to conditions of service and security of tenure, the Court held that the purpose may easily be regarded as reasonable regulations or conditions for grant of the aid. It was submitted that clauses 9, 11(2) and (4) went beyond the permissible limit as by taking over the collections of fees, etc. and by undertaking to pay the salaries of the teachers and other state the Government is in reality confiscating the school fund and under cl. l l the power of management is taken away by providing that the appointment of a teacher should be out of the panel to be prepared by the Public Service Commission. Similarly it was submitted that by requiring previous sanction by the authorised officer before dismissal, removal or reduction in rank of a teacher, the H. right to administer was taken away. Chief Justice Das observed at p. 1064 of the Reports: "These are no doubt serious inroads on the right 986 of administration and appear perilously near violating that right. But considering that those provisions are applicable to all educational institutions and that the impugned parts of cls. 9, 11 and 12 are designed to give protection and security to the ill paid teachers who are engaged in rendering service to the nation and protect the backward classes, we are prepared, as at present advised, to treat these clauses 9, 11(2) and 12(4) as permissible regulations which the State may impose on the minorities as a condition for granting aid to their educational institutions. " It is clear that so far as aided institution are concerned conditions similar to those that are mentioned can be validly imposed on the institutions. The only prohibiting is that the conditions should not be of such a nature as to deprive the character of the minority institutions in their exercise of the rights conferred on them as minority institutions. So long as there are rules for the purpose of maintaining the excellence of educational institutions and not discriminating against the minority educational institutions they will be valid. The decisions rendered subsequent to the Kerala Education Bill case may now be referred to see how for the views expressed had been modified. In Rev. Sidhajbhai Sabhai & Ors. vs State of Bombay & Anr.(1) a Bench of 6 Judges held that the order of the Government directing that 80% of seats in the training colleges should be reserved for Government nominee with a threat that if the order was disobeyed, grant and recognition would be withdrawn. was invalid. The Court laid down that reasonable restrictions in the interest of the efficiency of instruction, discipline, health, sanitation and the like may be imposed as those regulations will not be restrictions on the substance of the right guaranteed, for they secured the proper functioning of the institution in educational matters. The Court held that "if every order which while maintaining the formal character of a minority institution destroys the power of administration is held justifiable because it is in the public or national interest, though not in its interest as an educational institutions, the right guaranteed by article 30(l) will be but a "teasing illusion", a promise of unreality. Regulations which may lawfully be imposed either by legislative or executive action as a condition of receiving grant or of recognition must be directed to making the institution while retaining its character as a minority institution elective as an educational institution. The dual test prescribed is the test of reasonableness and the test that is regulative of the educational character of the institution and is conducive to making the institution an effective vehicle of the education of the minority community or the persons who resort to it. The requirements of reservation of 80% of the seats will 987 destroy the right to management as a minority institution and as such cannot be imposed even in the case of institutions receiving aid. Conditions of such a nature that would result in surrender of the fundamental right to administer cannot be imposed. After referring to the decision in the Kerala Educational Bill case, the Court observed that it did not decide that a regulation would be deemed unreasonable only if it was totally destructive of the right of the minority to administer n the educational institution. This view was affirmed in the St. Xavier 's College case ; The test laid down requires that the regulation must be for regulating the educational institution for the minority committee as well other persons who resort to it. (emphasis supplied) The case of Rev. Father W. Proost and ors. vs The State of Bihar and Ors.(1) relates to affiliation. This Court was considering the validity of section 48 A of the Bihar University Act. Under section 48 A a University Service Commission for affiliated Colleges was established. It was provided amongst others that subject to the approval of the University, appointments, dismissals, removals, termination of service or reduction in rank of teachers of an affiliated college not belonging to the State Government shall be made by the governing body of the College on the recommendation of the Commission. While the petition was pending before this Court the Governor of Bihar promulgated an ordinance by inserting Sec. 48 B which exempted Colleges established and administered by the minorities from the operation of the provisions of clauses (6), (7), (8), (9), (10) and (11) of section 48 A. After the introduction of section 48 B the petitioners before this Court claimed protection under section 48 B and submitted that affiliated Colleges established by minorities are exempt from the operation of the impugned provisions of section 48 A. It may be noted that under section 48 B the governing body of an affiliated college established by a minority shall be entitled to make appointments, dismissals, removals, termination of service or reduction in rank of teachers or take other disciplinary action subject only to the approval of the Commission and the Syndicate of the l university. The petitioners did not challenge the provisions which provided that appointments, dismissals, removals, termination of service and reduction in rank of teachers or other disciplinary measures will be subject to the approval of the Commission and the Syndicate of the University. What was objected to was the provisions under section 48 A which established an University Service Commission on whose recommendations alone appointments, dismissals, removals, terminations of service or reduction in rank of teachers of an affiliated college 988 can be effected. A provision requiring prior approval of the Commission or Syndicate was not challenged as objectionable. In State of Kerala vs Very Rev. Mother Province(1), the constitutional validity of certain provisions were challenged on the ground that they interfered with the rights of the minority institutions. The Kerala University Act, 1979 was passed to reorganise the University of Kerala with a view to establishing a teaching, residential and affiliating University for the Southern Districts of the State of Kerala. Ss. 48 and 49 dealt with the Governing Bodies of private colleges. The Educational Agency of a private College was required to set up a Governing Body for a private College or a managing council for private colleges under one corporate management. The section provided for the composition of two bodies so as to include Principal:; and Managers of private colleges, nominees of the University and Government as well as elected representatives of teachers. Sub section (2) provided that the new bodies would be having corporate perpetual succession and the members would hold office for four years. Sub section cast a duty on the new governing body or the managing council to administer the private college or colleges in accordance with the pro visions of the Act. The provisions of section 53, sub sections (1), (2), (3) and (9) conferred on the Syndicate of the University power to veto the decision of the Governing Council. A right of appeal was provided for any person aggrieved. Section 56 conferred ultimate power on the University and the Syndicate in disciplinary matters in respect of teachers. This Court held that sub section (2) and (4) of Ss. 48 and 49 as ultra vires. The Court agreed that the High Court was right in declaring that sub sections (1) and (2), (9) and of section 53, sub sections (.2) and (4) of section 56 as ultra vires. In D.A.V. College etc. vs State of Punjab & ors(2) the validity of cl. 18 which required that non governmental Colleges shall comply with the requirements laid down in the ordinances governing service of teachers in non governmental Colleges as may be framed by the University was considered. Clause 18 so far as it is applicable to the minority institutions empowered the University to prescribe by regulation governing the service of teachers which is enacted in the larger interest of the institution to ensure their efficiency and excellence. Tho Court held: "It may for instance issue an ordinance in respect of age of superannuation or prescribe minimum qualifications for teachers to be employed by such institutions either generally or in particular sub 989 jects. Uniformity in the conditions of service and conduct of teachers A in all non Government Colleges would make for harmony and avoid frustration. " A reading of the decisions referred to above make it clear that while the right to establish and administer a minority institution cannot be interfered with restrictions, by way of regulations for the purpose of maintaining the educational standards of the institution can be validly imposed. For maintaining the educational standard of the institution as a whole it is necessary to ensure that it is properly staffed. Conditions imposing the minimum qualifications of the staff, their pay and other benefits, their service conditions, the imposition of punishment will all be covered and regulations of such a nature have been held to be valid. In the case of institutions that receive aid it is the duty of the Government who grants aid to see that the funds are properly utilised. As the Government pays for the staff it is their bounden duty to see that well qualified persons are selected their pay and other emoluments are guaranteed and service conditions secured. So far as the institutions receiving aid are concerned if the regulations are made for the purpose of safeguarding the rights of the staff the validity cannot be questioned as long as the regulations do not discriminate the minority institution on the ground of religion or language. The minority institutions have no fundamental right to demand recognition by the State or affiliation by the University but as recognition and affiliation is necessary for the effective exercise of the fundamental right of minorities to establish and administer their institutions, they are entitled to recognition and affiliation if reasonable conditions that are imposed by the Government or the University relevant for the purpose of granting recognition or affiliation are complied with. Before granting recognition or affiliation it is necessary that the concerned Government or the University is satisfied that the institution keeps up with the required minimum standard. As has been held by Das C.J., "Right to administer cannot obviously include the right to mal administer" and in the words of Shah, J. "The right is subject to reasonable restrictions in the interest of efficiency of instruction, discipline, health, sanitation and the like." Justice Jaganmohan Reddy has made it clear in upholding cl. 18 of the Guru Nanak University, Amritsar Act, 1961 that regulations relating to the recruitment and service conditions of the teachers of the institution are valid. The decision of 9 Judges ' Bench in The Ahmedabad St. Xaviers College Society & Anr. vs State of Gujarat & Anr. ( ') may now 990 be considered. All the 9 Judges were unanimous that the right to aid or recognition was not a fundamental right but that aid or recognition cannot be offered on conditions which would involve a surrender of those rights. But the rights of recognition and affiliation are subject to regulations which are necessary for maintenance of the educational institutions. In the St. Xaviers College case (supra), section 33A(1) was challenged. It provided that every college was to be under the management of a governing body which must include a representative of the University and representatives of teachers, non teaching staff and students of the college. Eight of the nine Judges held that section 33A (1)(a) violated article 30(l) and could not be applied to minority institutions. This Court in a subsequent decision in G.F. College Shahajahanpur vs University of Agra and Anr.(l) held that it would not be unconstitutional to direct that the Principal and the Senior Teacher appointed by the Governing body itself be taken into the managing committee. The Court in St. Xavier 's College case also considered the validity of section 51 A(l) (a), (2) (a) and 51 A(1) (b) . Section 51 A(1)(a) and (2)(a) provided that no member of the teaching?, other academic and non teaching staff was to be dismissed, removed or reduced in rank except after an inquiry in which he had been informed of the charges against him and had been given a reasonable opportunity of being heard and making a representation on the penalty proposed to be inflicted. No termination of service not amounting to dismissal or removal was to be valid unless, such member had been given a reasonable opportunity of showing cause against the proposed termination. The two clauses were held to be valid, as being reasonable. However, the Court held that section 51 A(l)(a) and (2)(b) as violative of article 30(l). Section 51 A(l)(b) provided that the penalty to be inflicted on him must be approved by the Vice Chancellor or any other officer of the University authorised by the Vice Chancellor in this behalf. Similarly, section 51 A(2) (b) provided that "such termination is approved by the Vice Chancellor or any officer of the University authorised by the Vice Chancellor in this behalf." Section 51 A(1) (b) required the approval of the Vice Chancellor, or other officer authorised by him. for the penalty to be inflicted under sub s l (a), and section 51 A(2) (b) required similar approval for the termination of service under sub section (2) (a). The Court also held that section 52 A which required that any dispute between the governing body and any member of the teaching, other academic and non teaching staff of an affiliated college? connected with the terms of service of such member. must be referred to a Tribunal of Arbitration consisting of one member each appointed by the governing body and by the member of the 991 staff and an umpire appointed by the Vice Chancellor was not valid. A Seven out of 9 Judges held that section 52 A violated article 30(l) and could not be applied to minority institution. Minority institutions seeking affiliation will have to follow statutory measures intended to regulate the conduct of the educational institution. Ray, C.J. p. 193 held : "With regard to affiliation a minority institution must follow the statutory measures regulating educational standards and efficiency the prescribed courses of study, courses of instructions and the principles regarding the qualification of teachers educational qualifications for entry of students into educational institutions etc. When a minority institution applies to a University to be affiliated, it expresses its choice to participate in the system of general education and courses of instruction prescribed by that University: * * * * * * There fore, the measures which will regulate the courses of study the qualifications and appointment of teachers, the condition of employment of teachers,* * * * * * * are all comprised in matters germane to affiliation of minority institutions. These regulatory measures for affiliation arc for uniformity efficiency and excellence in educational] courses and do not violate any fundamental right of the minority institutions under article 30" (emphasis supplied) Ray C.J. held that section 51A(1) (b) and section 51A(2) (b) is not applicable to minority institutions as they "cannot be said to be permissive regulatory measures in as much as it confers arbitrary power on the Vice Chancellor to take away the right of administration of the minority institutions . " Agreeing with the view of the Chief Justice, regarding his conclusion about section 51A(1) (a) and (2) (b), Khanna, J. at p. 243 observed : "Although disciplinary control over the teachers of a minority educational institution would be with the governing council, regulations in my opinion, can be made for ensuring proper conditions of service of the teachers and for securing a fair procedure in the matter of disciplinary action against the teachers. Such provisions which are calculated to safe guard the interest of teachers would result in security of tenure and thus inevitable attract competent persons for the posts of teachers. * * * * * Regulations made for this 9 138 SCI/80 992 purpose should be considered to be ill the interests of minority educational institutions and as such they would not violate article 30(1)". (emphasis supplied) Regarding section 51A, the learned Judge while holding that provisions under. (a) of sub sections (1) & (2) of section 51A which make provision R for giving a reasonable opportunity of showing cause against a penalty to be proposed on a member of the staff would be valid. (b) of the sub section which gives a power to the Vice Chancellor and officer of the University authorised by him to veto the action of the managing body of an educational institution in awarding punishment to a member of the staff, interferes with the disciplinary control of the managing body over its teachers. He was of the view that the power conferred on the Vice Chancellor or other officer is a blanket power and no guide lines were laid down for the exercise of that power and it is not provided that the approval is to be withheld only in case the dismissal, removal, reduction in rank or termination of service is mala fide by way of victimisation or other similar cause. The conferment of such blanket power on the Vice Chancellor or other officers authorised for vetoing the disciplinary action of the managing body of a educational institutional made serious inroads on the right of the managing body to administer an educational institution. Mathew, J. in dealing with section 51A(1)(a) and (b) at p. 273 observed: The exact scope of the power of the Vice Chancellor or of the officer of the University authorised by him in this sub section is not clear. If the purpose of the approval is to see that the provisions of sub section 51A(1)(a) are complied with, there can possibly be no objection in lodging the power of approval even in nominee of the Vice Chancellor. But an uncanalised power without any guideline to withhold approval would be a direct abridgement of the right of the management to dismiss or remove a teacher or inflict any other penalty after conducting an enquiry." (emphasis sup plied) The learned Judge proceeded to observe: "Of course it is open to the State in the exercise of its regulatory power to require that before the service of a teacher are terminated, he should be given opportunity of being heard in his defence. But to require that for terminating the services of a teacher after 993 an enquiry has been conducted, the management . should have the approval of an outside agency like the Vice Chancellor or of his nominee would be an abridgement of its right to administer the educational institution. No guidelines are provided by the legislature to the Vice Chancellor for the exercise of his power. The fact that the power can be delegated by the Vice Chancellor to any officer of the university means that any petty officer to whom the power is delegated can exercise a general power of veto. There is no obligation under the sub sections 1(b) and 2(b) that the Vice Chancellor or his nominee should give any reason for disapproval. As we said a blanket power with out any guideline to disapprove the action of the management would certainly encroach upon the right of the management to dismiss or terminate the services of teacher after an enquiry". The extracts from the judgments of Ray, J. Khanna, J. and Mathew, J. show that regulations can be made for ensuring the pro per conditions of service of the teachers and for securing fair procedure in the matter of disciplinary action against them. Prescribing uniformity in the conditions of service and conduct of teachers in all non governmental colleges would promote harmony, avoid frustration and is permissible. It is thus seen that the university or the authority granting recognition can prescribe the conditions of service of teachers providing them with security of service. The rules may require that no Principal of the teaching or non teaching staff of a recognised or a approved institution shall be dismissed, removed or reduced in rank except after an enquiry in which he has been informed the charges against him and given a reasonable opportunity of being heard in respect of those charges and making representation on any penalty proposed to be inflicted on him. The Government which grants recognition or the University which gives affiliation are entitled to sec that proper conditions of service of the teachers are ensured and fair procedure is observed by the institutions when disciplinary action is taken against them. If the regulations require the approval by the competent authority for safeguarding the rights of the teachers and for securing the procedure there could be no objection. Such authority can also interfere with the decision of the private institutions when the punishment is awarded mala fide or by way of victimisation or for similar causes. In Kerala Education Bill, 1957 Cl. 14(4) provided that no teacher of an aided school shall be dismissed, removed or reduced in rank or 994 suspended by the Manager without the previous sanction of the authorised officer. This requirement of sanction related to schools that sought aid from the Government. While upholding the validity of cl. 14, Das C.J. Observed that there could be no doubt that these are serious inroads in the right of the administration and appear perilously near violating that right. But considering that those provisions are applicable to all educational institutions and that the impugned parts of cls. 9, 11 and 12 are designed to give protection and security to the ill paid teachers who are engaged in rendering service to the nation and protect the backward classes we are prepared, "as at present advised to treat clauses 9, 11 (2) and 12 (4) as permissible regulations the State may impose on the minorities as a condition for granting aid to their educational institutions. Ray C.J. in St. Xavier College case, observed that though the opinion was given in Kerala Education Bill on an order of reference under article 143 is not binding on this court in any subsequent matter wherein a concrete case the infringement of the rights under any analogous; provision may be called in question, it is entitled to great weight. Ray C.J. proceeded to observe that nonetheless the exposition of the various facets of the rights under article 29(1) and 30 by Das, C.J. speaking for the majority, with utmost clarity, great perspicuity and wisdom has been the text from which Court has drawn its sustenance in the subsequent decisions. To the extent that this Court has applied these principles to concrete cases there can be no question of there being any conflict with what has been observed by Das, C.J. Ray, C.J. was of the view that similar provisions were held to be invalid as they fell with section 48 and 49 of the Kerala Education Act, which was similar to cl. 12(4) was held invalid. Mathew, J. was of the view that though in the Kerala Education Bill case, the Court upheld the provisions similar to those in section 51A(1) (b) and 51 (A) (2) (b), the subsequent decisions of this Court left no doubt that the. requirement of subsequent approval for dismissing or terminating the services of teachers would be offending article 30. (Learned Judge referred to D.A.V. College case). In the Kerala Education Act case (supra), the validity of sub sections 2 & 4 of section 48, section 49, section 53, Sub sections 1 9 and sub sections 2 and 4 of section 56 were challenged. Hidayatullah, C.J. speaking for the Court observed that after the erection of the Governing Body of the Managing Council, the founders or even the minority community had no hand in the administration. The two bodies were vested with the complete administration of the institution and were not answerable to the founders in this respect. Sub sections (2), (4) and (5) and (6) of sections 48 and 49 clearly 995 vest the management and administration in the hands of the two bodies with mandates from the university. Coupled with this is the power of the Vice Chancellor and the Syndicate under sub sections (2) and (4) of section 56 to have the final say in respect of disciplinary proceedings against the teachers. In striking down clauses (2) and (4) of section 56, the Learned Chief Justice at p. 746 stated that the result was that sub sections (2) and (4) of section 56 are ultra vires as they fail with sections 48 and 49. The Scheme of the Act was that a Governing Body or Managing Council was to be set up for private colleges and it was provided that the composition of the bodies were to include Principals, Managers of private Colleges and nominees of the University and Government as well as elected representatives of the teachers. This out side body was entrusted with the administration. These two sections 48 and 49 which provide for administration by the Governing Body or the Managing Council was held to be ultra vires. Apart from it, the powers were conferred on the Syndicate of the University to veto the decision of the Governing Council. Regarding disciplinary matters, section 56 conferred ultimate power on the University and the Syndicate in respect of teachers. As the power to take disciplinary action was taken away from the Private or the Minority Institutions and conferred on the Governing Body or the Managing Council constituted under the Act and a provision was made requiring the previous sanction on the Vice Chancellor and provided an unrestricted right to the Syndicate. It will be noted that the Chief Justice found Ss. 56(2) and (4) ultra vires as they had to fail alongwith Ss. 48 and 49 which deprived the institution of the right to manage its own affairs. In the case of D.A.V. College vs State of Punjab (supra), cl. 17 provided that the staff initially appointed shall be approved by the Vice Chancellor and all subsequent changes shall be reported to the University for Vice Chancellor 's approval. section 17 does not, in fact, confer on the Vice Chancellor the power to veto the disciplinary action taken by the private institution. In St. Xavier College case, also the management of the institution was completely taken away under Ss. 40 and 41 of the Act. The Private Institution was required to be a constituent College of the University and was to be governed by the Statutes that may be framed by the University. 31A (1) (a) set up a Governing Body which to include amongst its Principals the representatives of the University nominated by the Vice Chancellor and representatives of the reachers of the non teaching staff and students of the college. In the circumstances, the Court held that the right to administer and to conduct the affairs of the institution, were taken away from the institution. The 996 disciplinary proceedings which were to be conducted against the teachers was required to obtain approval of the Vice Chancellor or any other officer of the University authorised by the Vice Chancellor. Apart from the objection to the power conferred on the Vice Chancellor to nominate any of its subordinate, the power conferred on the Vice Chancellor was found to be unconstitutional as it was a blanket power unguided and uncanalised. In Lilly Kurian vs Sr. Lewina and ors. , the provisions of ordinance 33, Chapter 67 of the ordinances framed by the Syndicate of the University of Kerala, under section 19 (1) of the Kerala University Act, 1957 was challenged. section 33 (1) provided that the management may at any time place a teacher under suspension where a disciplinary proceedings against him is contemplated or is pending. He shall be paid subsistence allowance and other allowances by the Management during the period of suspension at such rates as may he specified by the university. The teacher shall have the right to appeal against the order of suspension to the Vice Chancellor of the University within a period of two months from the date on which he receives the order of suspension. Cl. 4 of ordinance 33 provided that the teacher shall be entitled to appeal to the Vice Chancellor of the University against any order passed by the Management in respect of the penalties referred to in items (ii) to (v). Ordinance 33(4) conferred a right of appeal on the teacher to prefer an appeal against the order of Management to the Vice Chancellor in respect of the penalties imposed on him. Ordinances 33(1) and 33(4) were struck down by this Court on the ground that the conferment of right of appeal an outside authority like the Vice Chancellor under ordinance 33(4) took away the disciplinary power of the minority institution. The Vice Chancellor was given power to veto the disciplinary control which amounted to clear interference with disciplinary power of the minority institution. It was found to be a fetter on the right of administration conferred under article 30(t). The main ground on which the powers were found to be violative of the right conferred under article 30 was that the right of appeal was provided without defining the scope of the appellate authority. In the cases referred to, namely, Very Rev. Mother Provincial, D.A.V. College and Lilly Kurian, the powers conferred on the Vice Chancellor were held to be blanket power, unguided and uncanalised. The back ground of the decisions was that the minority institutions were deprived of the powers of administration by forming a body which deprived the institution of all its powers. In such circumstances, it was found that the power was uncanalised. In the case of Rev. Father W. Proost and 997 Ors. (supra), section 48 was enacted providing that the minority institution shall be entitled to make appointments, dismissal, removal, termination of service and reduction in rank of teachers, subject only to the approval of the Syndicate of the University, which was not challenged. The institution claimed exemption under section 48B. Bearing the facts of the cases set out above, we have to consider the impugned Act and determine whether the impugned provisions infringe the rights conferred on the minority institutions under article 30. The statements of object and reasons and the salient features of the bill as stated in the objects and reasons and the impugned sections have been set out in full at the beginning of the judgment. The main object of the legislation is to regulate the service conditions of the teachers in the private educational institutions and for ensuring the security of service of the teachers. It is further stated that private institution were punishing teachers on flimsy grounds without framing charges and without giving an opportunity to explain. In the preamble it is also stated that the Act is to provide for terms and conditions of service of teachers and to control of the recognised private educational institution. section 3 of the Act provides that no teacher employed in any private educational institution shall be dismissed, removed or reduced in rank nor shall his appointment be otherwise terminated except with the prior approval of the competent authority. section 3 (2) will have to be read alongwith section 3 (1) which provides that when a proposal to dismiss, remove or reduced in rank or otherwise terminate the appointment of any teacher employed in any private educational institution is communicated to the competent authority, the competent authority shall if it is satisfied that there are adequate and reasonable grounds for such proposal, approve such dismissal, removal, reduction in rank or termination of appointment. The Proviso to section 3(1) states that if any educational management, agency or institution contravenes the provisions of this sub section, the teacher affected shall be deemed to be in service. This section was challenged as conferring a power of taking disciplinary proceedings on an outside authority and as such it should be held as violative of the rights conferred on the minority institutions. If the power of approval conferred on the competent authority is a blanket power uncanalised and without guidelines, it will have to be held as invalid. The question, therefore, arises whether the section provides sufficient guidelines for the exercise of the power by the competent authority. In the State of West Bengal vs Subodh Gopal Bose and ors. it was held that the statement of objects and reasons could be referred to 998 for the limited purpose of ascertaining the conditions prevalent at the time which actuated the sponsor of the bill to introduce the same and the extent of urgency and the evil which he sought to remedy since these matters were relevant for deciding whether the restrictions were reasonable within the meaning of article 19(2) to (6). The object and reasons for the legislation make it very clear that the legislation was intended to regulate the service conditions of teachers employed in private educational institutions and for the security of service of the said teachers. The preamble is also an aid in construing the provisions of the Act. The House of Lords in Att. Gen. vs H.R.H. Prince Earnest Augustus of Hanover, held that when there is a preamble it is generally in its recitals that the mischief to be remedied and the scope of the Act are described. It is, therefore, permissible to have recourse to it as an aid to construing the enacting provisions. The preamble states that the Act it to provide for terms and service conditions of teachers. If the power conferred under section 3 (1) and section 3(2) is restricted to regulating the service conditions of teachers and for ensuring their security of service, the power conferred would be valid. It was submitted by Mr. Lal Narain Sinha the learned counsel for the appellants that the power is uncanalised because the approval can be withheld even on merits which would in fact deprive the disciplinary powers of the minority institutions. It is a well settled rule that in interpreting the provisions of a statute, the court will presume that the legislation was intended to be intra vires and also reasonable. The rule followed is that the section ought to be interpreted consistent with the presumption which imputes to the legislature an intention of limiting the direct operation of its enactment to the extent that is permissible. Maxwell on interpretation of Statutes, Twelfth Edn., P. 109 under the Caption: "Restriction of operation" States: "Sometimes to keep the Act within the limits of its scope, and not to disturb the existing law beyond what the object requires, it is construed as operative between certain persons, or in certain circumstances, or for certain purposes only, even though the language expresses no such circumscription of the field of operation. " The following passage in Bidie vs General Accident, Fire and Life Assurance Corporation was cited with approval in Kesavananda Bharti vs State of Kerala : 999 "The first thing one has to do, I venture to think, in construing words in a section of an Act of Parliament is not to take those words in vacue, so to speak, and attribute to them what is sometimes called their natural or ordinary meaning. Few words in the English language have a natural or ordinary meaning in the sense that they must be so read that their meaning is entirely independent of their context. The method of construing statutes that I prefer is not to take particular words and attribute to them a sort of prima facie meaning which may have to displace or modify. It is to read the statute as a whole and ask oneself the question: "In this state, in this context, relating to this subject matter, what is the true meaning of that word ?" According to Holmes, J. in Towne vs Eigner, a word is not crystal, transparent and unchanged; it is the skin of living thought and may vary greatly in colour and content according to the circumstances and the time in which it is used. Gwyer, J. in Central Provinces and Berar Act, held: "A grant of the power in general terms, standing by itself, would no doubt be construed in the wider sense; but it may be qualified by other express provisions in the same enactment, by the implication of the context, and even by the considerations arising out of what appears to be the general scheme of the Act." To the same effect are the observations of this Court in Kedar Nath Singh vs State of Bihar : "It is well settled that in interpreting an enactment the Court should have regard not merely to the literal meaning of the words used, but also take into consideration the antecedent history of the legislation, its purpose and the mischief it seeks to suppress. (The Bengal Immunity Co. Ltd. vs The State of Bihar and R.M.D. Chamaurbaugwalla vs The Union of India ; cited with approval." This Court has in several cases adopted the principle of reading down the provisions of the Statute. The reading down of a provision of a statute puts into operation the principle that so far as it is reason 1000 ably possible to do so, the legislation should be construed as being within its power. It has the principle effect that where an Act. is expressed in language of a generality which makes it capable, if read literally, of applying to matters beyond the relevant legislative power, the Court will construe it in a more limits sense so as to keep it within power. Applying the principles laid down in the cases cited above, the power conferred under section 3 (1) and (2) of the impugned Act will have to be construed. This Court has in St. Xavier 's College case (supra) held that the provisions of section 51A (1) of the impugned Act in that case which provided that no member of the other academic and non teaching staff of an affiliated college and recognised or approved institution shall be dismissed, or removed or reduced in rank except after an enquiry in which he has been informed of the charges against him and given a reasonable opportunity of being heard in respect of those charges and until he has been given a reasonable opportunity of making representation on any such penalty proposed to be inflicted on him, as a valid condition. Mathew, J. affirmed that if the purpose of the approval is to see that the provisions of sub sec. 51 (A) (1) (a) are complied with, there can possibly be no objection in lodging the power of approval even in nominee of the Vice Chancellor. Khanna, J. has held that if the power is confined only to cases of dismissal, removal or reduction in rank or termination of service as mala fide and by way of victimisation, the power would be valid. Regarding the power of interference with the conclusion of a domestic tribunal in disciplinary matters, this Court has held that the decision can be interfered with if there is want of good faith or when there is victimisation or when the management has been guilty of basic error or violation of principles of natural justice or when the material findings are completely baseless or perverse (Indian Iron and Steel Co. Ltd. vs Their Workmen. It has also been held that the authority interfering is not a Court of Appeal and cannot substitute its own judgment. The impugned legislation was passed in the year 1975. It must be presumed that the legislature was conscious of the limitations of the power which the competent authority can have in granting or withholding approval in the case of disciplinary proceedings conducted by private institution. 12(4) of the Kerala Education Bill (supra) was held to be valid on the ground that it was designed to give protection and security to the ill paid teachers who are engaged in rendering service to the nation and protect the backward classes. If the power is 1001 constrused as conferring unrestricted power and if the provisions are held invalid, it will result in considerable mischief and would result in depriving the protection that is available to the poor teacher regarding their security of service. The legislation was for the specific purpose of regulating the service conditions and providing security of service and for preventing teachers from being punished on flimsy grounds without framing charges and without giving an opportunity to explain. lt is very different from other cases, in which the legislation was aimed at depriving the minority institutions of all its powers. The only aim of the impugned legislation is to provide security of service. As pointed out there are sufficient guidelines in the objects and reasons in the legislation as well as in the preamble. In the circumstances, it is not only reasonable but proper that a restricted meaning is given to the power of prior approval conferred on the competent authority under s.3. S.3(1) and (2) will have to be read together. The procedure contemplated is that when the educational institution proposes to dismiss, remove or reduce in rank or otherwise terminate the appointment of any teacher it should communicate to the competent authority its proposal. The latter part of S.3(2) mentions that the competent authority shall if it is satisfied that there are adequate and reasonable grounds for such proposal approve such dismissal, removal, reduction in rank or otherwise termination of appointment. The approval of an order of dismissal or removal etc. will have to be read alongwith S.3(1) which provides that no teacher shall be dismissed etc. without the previous approval of the competent authority. When a domestic enquiry has been conducted and the teacher is given an opportunity to rebut the charges and show cause against the punishment proposed and when fair procedure has been followed and the authority comes to the conclusion that the disciplinary action should be taken against the teacher the proposal will have to be sent to the competent authority. The competent authority will examine the proposal alongwith the procedure adopted by the institution and such dismissal, removal or reduction in rank or termination of appointment. s(2) requires the competent authority to approve such a proposal if it is satisfied that there are adequate and reasonable grounds for such proposal. The two words "adequate and reasonable" in our opinion furnish sufficient guidelines. The competent authority can interfere if there are no material at all for sustaining the order of punishment or when on the materials found the charge is completely baseless and perverse. The word "adequate" in sub section will have to be understood as being confined to such examination of the proposal. The word "reasonable" would indicate the power of the competent authority is confined to the power of an authority to inter 1002 fere with the enquiry and conclusions arrived at by the domestic Tribunal. The competent authority may satisfy itself that the rules of natural Justice has been satisfied, that the teacher was given an opportunity to defend the charges against him and to show cause against the punishment proposed to be awarded to him and that a fair procedure has been observed. The authority may also be entitled to interfere when the punishment was imposed by the institution due to mala fides or with a view to victimised him or such like grounds. The word "reasonable" cannot be understood as conferring a power to interfere with the enquiry by the domestic tribunal as a Court of Appeal on merits. The law relating to the circumstances under which the proceedings of the tribunal can be interfered with has been clearly laid down. Sufficient guidelines are discernible from the Statements of objects and reason which state that the enactment was for the purpose of preventing private institutions from laking disciplinary action on flimsy grounds without framing charges and without giving an opportunity to explain and for regulating the service conditions of teachers and for ensuring their security of service. We are satisfied that sufficient guidelines are indicated in the Act. The words "adequate and reasonable" should be given a restricted meaning so as to validate the provisions of the section. Thus, understood, the objection raised by Mr. Lal Narain Sinha, learned counsel for the appellant, that S.3(1) and (2) lack guidelines and have conferred a blanket power, cannot be upheld. It was next contended by Mr. Lal Narain Sinha that no question of principles of natural justice arised when the conditions of service between the institution and the teacher are regulated by contract. We are unable to accept this contention for the legislature is competent to enact provisions limiting the power of dismissal and removal. The Legislature has given security of service to employees in industries and in other institutions. It was submitted by the learned counsel that the offence of misconduct has not been classified in the Act and that no procedure for conducting disciplinary enquiry has been prescribed. Such details are not essential. It is within the jurisdiction of the institution to conduct an enquiry and impose punishments. It is also the right of the competent authority to withhold approval on adequate and reasonable grounds. The plea that the competent authority may be any petty officer cannot also be upheld as the competent authority is defined under section 2(1) as meaning any authority, officer or person authorised by notification performing the functions of competent authority under this Act. The competent authority or officers of the educational department who are incharge of administration of educational institutions in the area, cannot be called petty officers. 1003 Section 3(3)(a) and 3(3)(b) relate to suspension of a teacher Sub. section 3(a) requires that a teacher employed in a private institution shall not be placed under suspension. Without an enquiry into the gross misconduct of such teacher is contemplated and sub. s.3(b) requires that the period of suspension shall not exceed two months. If it exceeds two months and the enquiry is not completed within that period, such teacher shall, without prejudice to the enquiry, be deemed to have been restored as teacher. But the proviso enables the authority to extend the period of suspension for another two months if in his opinion the enquiry could not be completed within the period of two months. ss.(a) & (b) of section 3 which relate to suspension are regulatory in nature and are intended to safeguard the teachers from being suspended for unduly long periods without there being an enquiry into gross misconduct. We are unable to say that these provisions interfere with the right of administration of the private institutions. S.3(4) states that every teacher placed under suspension shall be paid subsistence allowance at such rates as may be prescribed during the period of his suspension. This sub section is purely regulatory in nature and unobjectionable. section 4 confers a right of appeal against the order of punishment imposed on teachers employed in private educational institutions. A teacher who is dismissed, removed or reduced in rank or whose appointment is otherwise terminated or whose pay and allowances or any of the whose conditions o service are altered or interpreted to his disadvantage may prefer an appeal to such authority as may be prescribed. This section was challenged by Mr. L. N. Sinha, learned counsel, on the ground that the right of appeal conferred is a blanket power without any restriction. In any event, the submission that the right of appeal is conferred only on the teacher and not on the institution. Though no restriction are placed on the appellate power, we feel it may be possible to read down the section. But the learned counsel is on firm ground when he submits that the right of appeal is confined only to the teachers and not available to institution. This infirmity invalidates S.4. Section 5 is consequential of S.4 in which power is conferred on the competent authority to hear appeal in certain past disciplinary cases. S.5 also will have to fail alongwith S.4. S.6 relates to retrenchment of teachers under certain conditions. It provides that when any retrenchment is rendered necessary, consequent on any order of the Government relating to educational institutions or course of instruction or any other matter such retrenchment may be effected with the prior approval of the competent authority. This section is also intended to provide security of service of the teachers and is regulatory in nature and 1004 the validity of which cannot be questioned. section 7 requires the pay and allowances of any teacher employed in any private educational institution shall be paid on or before such day of every month, in such manner and by or through such authority, officer or person as may be prescribed. This section is also regulatory in nature and is intended for securing regular payment of the teachers. The validity of other sections was not questioned in the writ petitions, and, therefore, it is not permissible to go into it. In the view we have taken, we do not think that we should go into the merits of each of the cases. In C.A. No. 1280 of 1978 The All Saints High School Hyderabad vs The Govt. of Andhra Pradesh and ors. the learned counsel appearing for the school before the High Court sought the decision only on the legal issues and the questions emanating from the provisions of the Act and specifically requested the court not to decide the merits of the case. In some of the petition the facts have been gone into but we would refrain from going into the facts for it has to be decided as to whether the competent authority has acted within the restricted jurisdiction which have been stated with in our judgment. If the competent authority had exceeded its jurisdiction, it would be open to the aggrieved institution to question the validity of such action. These matters will have to be decided on merits. In the circumstances. we remit all the Civil Appeals to the High Court for disposal on merits in the light of this judgment. ORDER In the view of the majority, sections 3(3) (a), 3(3) (b), 6 and 7 of the Andhra Pradesh Recognised Private Educational Institutions Control Act, 1975 are valid while sections 3(1), 3(2), 4 and 5 of the Act are invalid in their application to minority educational institutions. It must follow that such institutions cannot be proceeded against for violation of provisions which are not applicable to them. The matters are remanded to the High Court of Andhra Pradesh for final disposal on merits in the light of the judgments. There will be no order as to costs.

The purported object of the Andhra Pradesh Recognised Private Educational Institutions Control Act 1975 was to regulate the service conditions of teachers in private educational institutions and for ensuring the security of service of the teachers. Section 3(1) of the Act provides "Subject to any rule that may be made in this behalf, no teacher employed in any private educational institution shall be dismissed, removed or reduced in rank nor shall his appointment be otherwise terminated except with the prior approval of the competent authority". The proviso to this sub section states that if any educational management etc. contravenes the provisions of this sub section, the teacher affected shall be deemed to be in service. Where a proposal to dismiss etc. any teacher is communicated to the competent authority, according to sub section (2) of this section, that authority shall, if satisfied that there are adequate and reasonable grounds for such proposal, approve such dismissal, removal or reduction in rank or termination of appointment. Clause (a) of sub section (3) of this section states that no teacher employed in any private educational institution shall be placed under suspension, except when an enquiry into the gross misconduct of such teacher is contemplated. Clause (b) provides that no such suspension shall remain in force for more than a period of two months from the date of suspension and if such inquiry is not completed with that period, such teacher shall, without prejudice to the inquiry, be deemed to have been r restored as teacher. The proviso states that the competent authority may, for reasons to be recorded in writing, extend the said period of two months for a further period not exceeding two months, if in his opinion, the inquiry could not be completed within the said period of two months for reasons directly attributable to each teacher. Section 4 gives a right of appeal to teachers employed in private educational institutions against orders of punishment imposed on them. Section 5 deals with special provisions regarding appeal in certain past disciplinary cases. Section 6 which deals with retrenchment of teachers provides that where retrenchment of any teacher is rendered necessary consequent on any order of the Government relating to education or course of instructions or to any other matter, such retrenchment may be effected with the prior approval of the competent authority. Section 7 provides for payment of pay and allowances to teachers in the prescribed manner. 925 The appellants who were minority educational institutions established by members of the Christian community filed writ petitions before the High Court impugning various provisions of the Act as being violative of the guarantee contained in Article 30(1) of the Constitution by permitting or compelling interference with the internal administration of their private educational institutions. In particular they challenged the provisions of sections 3 to 7 of the Act on the ground that they deprive them of their right to administer the affairs of minority institutions by vesting the ultimate administrative control in an outside authority. The contentions having been rejected by the High Court they filed appeals by special leave. ^ HELD s Permajority (Chandrachud, C.J., and Fazal Ali, J. Kailasam,J., dissenting.): Sub sections (1) and (2) of section 3 are invalid and cannot be applied to minority institutions. Per majority (Chandrachud, C.J., and Kailasam J. Fazal Ali, J. dissenting). Clauses (a) and (b) of section 3(3) do not offend against article 30(1) and are valid. By the Court: Sections 4 & 5 are unconstitutional as being violative of article 30(1). Per majority (Chandrachud, C.J., and Kailasam J Fazal Ali, J, dissenting). Section 6 is valid. By the Court: Section 7 is valid. Per Chandrachud, C.J. Section 3(1) and 3(2) are unconstitutional in so far as they are made applicable to minority institutions since in practice these provisions are bound to interfere substantially with their right to administer institutions of their choice. [937E] 1. (a) Section 3(1) gives an unqualified mandate that no teacher shall be dismissed etc. except with the prior approval of the competent authority. Under the proviso, contravention of the section results in a total invalidation of the proposed action. If the section is contravened the teacher shall be deemed to be in service. Secondly, the sub section applies not only to cases in which the teacher is punished by an order of dismissal etc. but to cases in which the appointment is otherwise terminated. An order of termination simpliciter is also required to be submitted for the prior approval of the competent authority. All this shows that the true object of the sub section is not that which one could liberally assume by reading down the section. [935H; 936AB] (b) In the absence of any rules furnishing guidelines on the subject, it is difficult to predicate that in practice the operation of the section would be limited to a certain class of cases only. The absence of rules on the subject makes the unguided discretion of the competent authority the sole arbiter of the question as to which cases would fall within the section and which would fall outside it. [936 E F] (c) Section 3(2), under the guise on conferring the power of approval, confers upon the competent authority an appellate power of great magnitude. That authority is made a judge both of facts and on law by the conferment upon 926 it of a power to test the validity of the proposal on the vastly subjective touchstone of adequacy and reasonableness. The sub section leaves no scope for reading down the provision of section 3(1). The two sub sections together confer upon the competent authority, in the absence of proper rules, a wide and untrammeled discretion to interfere with the proposed order whenever in its opinion the order is based on grounds which do not appear to it either adequate or reasonable. [936G H; 937A] (d) Though the section provides that the competent authority "shall" approve the proposed order if it is satisfied that it is based on adequate and reasonable grounds, its plain and necessary implication is that it shall not approve the proposal unless it is satisfied. The conferment of such a power on an outside authority, the exercise of which is made to depend purely on subjective consideration arising out of twin formula of adequacy and reasonableness, cannot but constitute an infringement of the right guaranteed by article 30(1). [937C] State of Kerala vs Very. Rev. Mother Provincial ; , D.A.V. College vs State of Punjab [1971] Suppl. S.C.R. 688 and Ahmedabad st. Xaviers College Society vs State of Gujarat ; ; referred to. (a) Section 3(3)(a) and 3(3)(b) of the Act do not offend against the provisions of article 30(1) and are valid. [939B C] (b) Clause (a) contains but an elementary guarantee of freedom from arbitrariness to the teachers. The provision is regulatory in character since it neither denies to the management the right to proceed against an erring teacher nor does it place an unreasonable restraint on its power to do so. It assumes the right of the management to suspend a teacher but regulates that right by directing that a teacher shall not be suspended unless an inquiry into his conduct is contemplated and unless the inquiry is in respect of a charge of gross misconduct. These restraints which bear a reasonable nexus with attainment of educational excellence cannot be considered to be violative of the right given by article 30(1). The limitation of the period of suspension initially to two months, which can in appropriate cases be extended by another two months, as provided in clause (b) and its proviso, partakes of the same character as the provisions contained in clause (a). A provision founded so patently on plain reason is difficult to construe as an invasion of the right to administer an institution unless that right carried with it the right to maladminister. [938 G H] 3. Section 4 is unconstitutional as being violative of article 30(1) of the constitution. The section confers upon the government the power to provide by rules that an appeal might lie to such authority or officer as it designates, regardless of the standing or status of that authority or officer. Secondly an appeal is provided for on all questions of fact and law, thereby throwing open the order passed by the management to the unguided scrutiny and unlimited review of the appellate authority, which would mean that, in the exercise of the appellate power, the prescribed authority or officer can substitute his own view for that of the management even in cases in which two views are reasonably possible. Lastly, while a right of appeal is given to the aggrieved teacher against the order passed by the management, no corresponding right is conferred on the management against the order passed by the competent authority under section 3(2) of the Act. In the absence of a provision for appeal against the order of the competent autho 927 rity refusing to approve the action proposed by the management, the management is pleased in a gravely disadvantageous position vis a vis the teacher who is given the right of appeal by section 4. [939D H] Section 5 must fall with section 4. [940B] 4. Section 6 is valid. The section aims at affording a minimal guarantee of security of tenure to teachers by eschewing the passing of mala fide orders in the garb of retrenchment. It is implicit in the provisions of this section that the limited jurisdiction which it confers upon the competent authority is to examine whether, in cases where the retrenchment is stated to have become necessary by reason of an order passed by the Government, it has in fact so become necessary. The conferment of a guided and limited power on the competent authority for the purpose of finding out whether, in fact the retrenchment has become necessary by reason of a Governmental order cannot constitute an interference with the right of administration conferred by article 30(1). [940D F] Section 7 is regulatory in its character and is valid. [940H] Per Fazal Ali, J. On an exhaustive analysis of the authorities of this Court on the various aspects of the fundamental right enshrined in article 30(1) of the Constitution the following propositions of law emerge: (i) Article 30(1) enshrines the fundamental right of the minority institutions to manage and administer their educational institutions. [967H] (ii) Although, the right conferred by this article is absolute, unfettered and unconditional, it does not mean that it gives a licence for maladministration so as to defeat the avowed object of the article, namely to advance excellence and perfection in the field of education. [968B] (iii)While the State or any other statutory authority has no right to interfere with the internal administration of the minority institution, it could take regulatory measures to promote the efficiency and excellence of educational standards and issue guidelines for ensuring the security of the services of the teachers and other employees of the institution. [968C] (iv) Under the garb of adopting regulatory measures, the State or any other authority cannot destroy the administrative autonomy of the institution or interfere with the management of the institution so as to render the right of administration of the management of the institution illusory. [968E] (v) By its very nature article 30 implies that where an affiliation is asked for, the university cannot refuse the same without sufficient reason or try to impose such conditions as would completely destroy the autonomous administration of the educational institution. [968G] (vi) Induction of an outside authority in the governing body of the minority institution to conduct the affairs of the institution would be completely destructive of the fundamental right under article 30(1), where a high authority like the Vice Chancellor or his 928 nominee is appointed in the administration, such authorities should not be thrust so as to have a controlling voice in the matter overshadowing the powers of the managing committee. [968H] (vii)It is open to the Government or the University to frame rules and regulations governing the conditions of service of teachers in order to secure their tenure of service and to appoint a high authority to see that the rules are not violated or the members of the staff are not victimised. In such cases the purpose is not to interfere with the autonomy of the institution but merely to improve the excellence and efficiency of education. Even so, an authority should not be given a blanket uncanalised and arbitrary powers. [969E F] (viii)Where a minority institution affiliated to a university is enjoined to adopt courses of study of the syllabi or the nature of books prescribed and the holding of examination to test the ability of the students of the institution, it does not follow that the freedom contained in article 30(1) of the Constitution is violated. [970A] (ix) Where a high authority is appointed to exercise vigilance on the work of the teachers and to ensure security of tenure for them the authority must be given proper guidelines. Before coming to any decision which may be binding on the managing committee the head of the institution or the senior member of the managing committee must be associated and they should be allowed to have a say in the matter. [970C] Kerala Education Bill, 1957; , ; Sidhajbhai Sabhai and Ors. vs State of Bombay and Anr. ; ; Rev. Father W. Proost & Ors. vs State of Bihar ; ; State of Kerala etc. vs Veru Rev. Mother Provincial etc. ; ; D.A.V. College etc. vs State of Punjab & Ors. and The Ahmedabad St. Xaviers College Society & Anr. vs State of Gujarat ; ; referred to. (a) Section 3 in its entirety is ultra vires as being violative of article 30(1) and is wholly inapplicable to the appellants who are minority institutions. [975B] (b) The proviso enjoins that any contravention of the provisions would not affect the teachers who would be deemed to be in service. It is manifest that in the absence of any rules the proviso would have no application and even if it applied it would amount to a serious inroad on the fundamental right of the minority institutions to administer or manage their own affairs. [971H] (c) Sub section 2 of section 3 is unconstitutional as being violative of article 30(1). It suffers from the vice of excessive delegation of powers and confers undefined, absolute and arbitrary powers to grant or to refuse sanction to any action taken by the managing committee and almost reduces the institution to a helpless position. [973B C] (d) If the State wanted to regulate the conditions of service of the teachers, it should have taken care to make proper rules giving sufficient 929 powers to the management in the manner in which it was to act. Induction of an outside authority into the institution and making his decision final was a blatant interference with the autonomy of the institution. The words "adequate and reasonable" are too vague and do not lay down any objective standard to judge the discretion to be exercised by the competent authority whose order would be binding on the institution. [972F G] (e) While section 4 gives a right of appeal to the aggrieved teacher no such right has been given to the management to file an appeal against the order of the competent authority if it refuses to grant sanction to the order of the Managing Committee of the institution. The competent authority is only the District Educational Officer who is not a very high authority such as a Director of Public instruction or Vice Chancellor of a University. No time limit has been fixed by the statute within which the competent authority is to give its approval. The cumulative effect of clause (a) and (b) of section 3(3) and the proviso is to interfere with the internal administration of the minority institutions and curb the power of suspension. It deprives the institution of the right of taking any disciplinary action against a teacher. The adjective "gross" before the term "misconduct in clause (a) destroys the power of suspension which the minority institution possesses. The provision contained in clause (b) of section 3(3) providing that no suspension shall remain in force for a period of more than two months from the date of suspension and if no inquiry is completed within this period the teacher would have to be reinstated, gives an unqualified right to a teacher in the matter of suspension which even a government servant does not enjoy. [973A, 974D E] 2. Section 4 is ultra vires and is violative of article 30 of the Constitution. It does not contain any guidelines as to the manner in which the power could be exercised, nor does it contain any provision which may entitle the minority institution to be heard by the appellate authority. The conferment of an absolute and unguided power on the appellate authority would amount to a direct interference with the right enshrined in article 30(1) and makes the minority institution a powerless body. [976B; 975G] 3. If section 4 is inapplicable to the minority institution Section 5 also follows the same fate. [976C] 4. Section 6 which contains an un canalised and unguided power suffers from the same vice as in the case of section 3. The words "administer educational institutions of their choice" in article 30 clearly indicate that the institution has an absolute right to select teachers, retain them or retrench them at its sweet will according to the norms prescribed by the institution or by the religious order which has founded the institution. [976H] 5. Section 7 is an innocuous provision and is valid. [977C] 6. Sections 8, 9, 12 and 13 are inapplicable to the minority institutions. [977D, 978B] 7. Section 16 suffers from a serious defect namely that the provision regarding appeal to the appellate authority was valid then it completely bars the right of the management to file a suit to challenge the validity of the order of the appellant. To this extent the section makes serious inroad on the fundamental right of the minority institutions and is inapplicable to the minority institutions. [978G] Section 17 is inapplicable. [978F] 930 Per Kailasam, J. 1. A reading of the various decisions rendered by this Court on the interpretation of article 30(1) of the Constitution makes it clear that while the right to establish and administer a minority institution cannot be interfered with, restrictions by way of regulations for the purpose of maintaining the educational standards of the institution can be validly imposed. For maintaining the educational standards of the institution as a whole, it is necessary to ensure that it is properly staffed. Conditions imposing the minimum qualifications of the staff, their pay and other benefits, their service conditions, the imposition of punishment will all be covered and regulations of such a nature are valid. In the case of institutions that receive aid it is the duty of the government who grants aid to see that the funds are properly utilised. Regulations can be made by the government for ensuring the proper conditions of service of the teachers and for securing fair procedure in the matter of disciplinary action against them. Prescribing uniformity in the conditions of service and conduct of teachers in all non governmental colleges would promote harmony, avoid frustration and, therefore, is permissible. Rules prescribed by the university or other authority may require that no member of the teaching or non teaching staff of a recognised or approved institution shall be dismissed etc., except after a proper enquiry. If the regulations require the approval of the competent authority for safeguarding the rights of the teachers and for securing the procedure there can be no objection. Such authority can also interfere with the decision of the private institutions when the punishment awarded is malafide or by way of victimisation or for similar causes. [989B; 993D G] Kerala Education Bill [1959] SCR, 995, Rev. Sidhajbhai Sabhai & Ors. ; , Rev. Father W. Proost and Ors. vs State of Bihar & Ors. ; , State of Kerala vs Very. Rev. Mother Provincial ; , D.A.V. College etc. vs State of Punjab & Ors. [1971] Suppl. S.C.R. 688 and Ahmedabad St. Xaviers College Society and Anr. vs State of Gujarat ; , referred to. 2. It is not only reasonable but proper that a restricted meaning is given to the power of prior approval conferred on the competent authority under section 3 of the Act. It is a well established principle of interpretation that the statement of objects and reasons could be referred to for the limited purpose of ascertaining the conditions prevalent at the time which actuated the sponsor of the Bill to introduce the same and the extent of urgency and the evil sought to be remedied. Clearly the legislation was intended to regulate the service conditions of teachers employed in the private educational institutions and for the security of service of the teachers. The power contained in section 3(1) and 3(2) is restricted to regulating the service conditions of teachers and for ensuring their security of service. [1001C; 998A B] 3. While interpreting a provision of law the Court will presume that the legislation was intended to be intra vires and also reasonable. The section ought to be interpreted consistent with the presumption which imputes to the legislature an intention of limiting the direct operation of its enactment to the extent that is permissible. A reading down of a provision of a statute puts into operation the principle that so far as it is reasonably possible to do so, the legislation should be construed as being within its power. It has the principle effect 931 that where an Act is expressed in language of generality, which makes it capable, if read literally, of applying to matters beyond the relevant legislative powers, the Court will construe it in a more limited sense so as to keep it within power. [998E F] The State of West Bengal vs Subhodh Gopal Bose and Ors. ; , Att. vs HRH Prince Earnest Augstas of Hanover, , Keshavananda Bharti vs State of Kerala , 101, Towns vs Bigner 245 U.S. , 376 and Kedar Nath Singh vs State of Bihar ; ; referred to. In the instant case it must be presumed that the legislature was conscious of the limitations of the power which the competent authority can have in granting or withholding approval in the case of disciplinary proceedings conducted by private institutions. The object of the legislation in this case was very different from other cases in which the legislation was aimed at depriving the minority institutions of all their powers. Its only aim is to provide security of service. There are sufficient guidelines in the objects and reasons as well as in the preamble. [1001 B C] 4. (a) The contention that section 3(1) and (2) lack guidelines and have conferred a blanket power cannot be accepted. Section 3(1) and (2) must be read together. The words "adequate and reasonable" should be given a restricted meaning so as to validate the provisions of the section. The approval of an order contemplated by sub section (2) will have to be read with sub section (1). Sub section (2) required the competent authority to approve such a proposal if it is satisfied that there are adequate and reasonable grounds for such proposal. The words "adequate and reasonable" furnish sufficient guidelines. The competent authority can interfere if there are no materials at all for sustaining the order of punishment or when on the materials found the charge is completely baseless and preserve. The word "adequate" will have to be understood as being confined to such examination of the proposal. The word "reasonable" would indicate that the power of the competent authority is confined to the power of an authority to interfere with the enquiry and the conclusions arrived at by the domestic tribunal. It cannot be understood as conferring absolute power to interfere with the enquiry by the tribunal as a Court of appeal on merits. [1002E; 1001G H] (b) The plea that the "competent authority" may be any petty officer cannot be upheld because it is defined in section 2(1) to mean "any authority, officer or person authorised by notification performing the functions of competent authority". The officers of the educational department who are incharge of the administration of educational institutions in the area cannot be called petty officers. [1002H] (c) Clauses (a) and (b) of sub section (3) cannot be said to interfere with the right of administration of the private institutions. The two clauses are regulatory in nature and are intended to safeguard the teachers from being suspended for unduly long periods without there being an enquiry into "gross mis conduct." [1003C] (d) Sub section (4) of section 3 which states that every teacher placed under suspension shall be paid subsistence allowance at such rates as may be 932 prescribed during the period of his suspension is purely regulatory in nature and, therefore, unobjectionable. [1003D] 5. Section 4 is invalid. The vice contained in this section is that the right of appeal which is confined only to the teachers is not available to institutions. [1003F] 6. Section 5 which confers power on the competent authority to hear appeals in certain past disciplinary cases will have to fall along with section 4. [1003G] 7. Section 6 is also regulatory in nature and its validity cannot be questioned. [1003H] 8. Section 7 is regulatory in nature and is intended for securing regular payment to the teachers. [1004A]

tition (Crl.) No. 8193A of 1981. (Under Article 32 of the Constitution of India) R. K Garg, V. J. Francis, Sunil Kumar Jain and D. K Garg for the Petitioner Ranga 59 R. K. Jain and P K. Jain for the Petitioner Billa. N. C. Talukdar and R. N. Poddar for Respondent No. 1. L. N. Sinha, Attorney General and Miss A. Subhashini for Attorney General. K. Parasaran, Solicitor General, M. K. Banerji, Additional Solicitor General and Miss A. Subhashini for Union of India. N. Nettar for the State of Karnataka. Raju Ramachandran for Applicant/intervener Chhaganlal Aggarwal. The Judgment of the Court was delivered by CHANDRACHUD C. J. The question as regards the scope of the power of the President under article 72 of the Constitution to commute a sentence of death into a lesser sentence may have to await examination on an appropriate occasion. This clearly is not that occasion because in so far as this case is concerned, whatever be the guidelines observed for the exercise of the power conferred by article 72, the only sentence which can possibly be imposed upon the petitioner is that of death and no circumstances exist for interference with that sentence. Therefore we see no justification for saying that in refusing to commute the sentence of death imposed upon the petitioner into a lesser sentence, the President has in any manner transgressed his discretionary power under article 72. Undoubtedly, the President has the power in an appropriate case to commute any sentence imposed by a court into a lesser sentence and as said by Chief Justice Taft in James Shewan & Sons v United States, the "executive clemency exists to afford relief from undue harshness or evident mistake in the operation or enforcement of the criminal law" and that the administration of justice by the courts is not necessarily or certainly considerate of circumstances which may properly mitigate guilt. But the question as to whether the case is appropriate for the exercise of the power conferred by Article 72 depends upon the facts and circumstances of each particular case. The necessity or the justification for exercising that power has therefore to be judged from case to case. In fact, we do not see what useful purpose will be achieved by the petitioner by 60 ensuring the imposition of any severe, judicially evolved constraints on the wholesome power of the President to use it as the justice of a case may require. After all, the power conferred by Article 72 can be used only for the purpose of reducing the sentence, not for enhancing it. We need not, however, go into that question elaborately because in so far as this case is concerned, we are quite clear that not even the most liberal use of his mercy jurisdiction could have persuaded the President to interfere with the sentence of death imposed upon the petitioner, in view particularly of the considerations mentioned by us in our judgment in Kuljeet Singh @ Ranga vs Union of India & Anr. We may recall what we said in that judgment that "the death of the Chopra children was caused by the petitioner and his companion Billa after a savage planning which bears a professional stamp", that the "survival of an orderly society demands the extinction of the life of persons like Ranga and Billa who are a menace to social order and security", and that "they are professional murderers and deserve no sympathy even in terms of the evolving standards of decency of a mature society". The petition is accordingly dismissed. We have heard Shri R. K. Jain as amicus on behalf of the accused Billa. We see no substance in Shri Jain 's contentions also. The order of stay of execution of the death sentence which we had passed in favour of the accused Ranga and Billa as also the general order of stay are hereby vacated If in any specific case or cases there is an express order of stay, it will not be affected by the order which we are passing today. S.R. Petition dismissed.

Dismissing the petition, the Court ^ HELD: 1. Whatever be the guidelines observed for the exercise of the power conferred by Article 72 of the Constitution. the only sentence which can, possibly be imposed upon the petitioner in The instant case, is that of death and no circumstances exist for interference with that sentence. Not even tho most liberal use of his mercy jurisdiction could have persuaded tho President to interfere with the sentence of death imposed upon the petitioner in view particularly of the considerations mentioned in KS. Ranga vs Union of India and Anr., [1981] 3 S.C R. 512. Therefore, in refusing to commute the sentence the death imposed upon the petitioner into a lesser sentence the President has not in any manner transgressed his discretionary power under Article 72. [59 D E, 60 B C] 2. Undoubtedly, the President has the power in an appropriate case to commute any sentence imposed by Court into a lesser sentence. But tho question as to whether the case is appropriate for the exercise of the power conferred by Article 72 depends upon the facts and circumstances of each particular case. [59 E, G] 3. After all the power conferred by Article 72 can be used only for the purpose of reducing the sentence, not for enhancing it. Therefore, no useful purpose will be achieved by the petitioner by ensuring the imposition of any severe, judicially evolved constraints on the wholesome power of the President to use it as the justice of a case may require. [59 H, 60 A] James Shewan & Sons vs United Stares, ; at 535, referred to.

ppeal No. 209 of 1962. Appeal by special leave from the judgment and order dated October 10, 1961, of the Gujarat High Court in Civil Revision Application No. 378 of 1960. R. Ganapathy Iyer, B.R.G.K. Achar and K.L, Hathi, for the appellant. M. section K. Sastri and M. section Narasimhan, for respondents. 314 1962. May 4. The judgment of the Court was delivered by RAGHUBAR DAYAL, J. This appeal, by special, leave, is against the judgment and decree of the High Court of Gujarat. The appellant was a tenant of certain residential premises situate at Anand, and belonging to the respondents landlords. Under a contract between the parties, he held them at Rs. 75/ per mensem according to Indian Calendar. In 1951 the appellant applied for fixation of standard rent. On March 31, 1954, the standard rent was fixed at Us. 25/. per mensem. The appellant did not pay the arrears of rent from July 27, 1949, to July 5, 1954. On October 16, 1954, the landlords gave him notice to quit the premises stating therein 'that rent for over six months was in arrears and that he was to quit on the last day of the month of tenancy which was Kartak Vad 30 of Samvat Year 2011. The appellant neither paid the arrears of rent nor vacated the premises. (in December 16, 1954, the respondents filed the suit for ejectment basing their claim for ejectment on the provisions of section 12(3) (a) of the Bombay Rents, Hotel and Lodging House rates Control Act, 1947 (Bom. LVII of 1947), hereinafter called the Act. Within two months of the institution of the suit, the appellant deposited an account of Rs. 1,075/ in Court, towards arrears of rent and, with the permission of the Court, the respondents withdrew a sum of Rs. 900/ which was the amount due for arrears up to that time. The Trial Court decreed the suit for ejectment together with arrears of rent for three years and costs. An appeal against the decree for ejectment was dismissed by the appellate Court. The revision to the High Court was also uusuccessful, and, it is 315 against the order in revision that this appeal has been preferred. Four points were urged before the High Court: (1) That the month of tenancy was not by the Indian Calendar, but was by the British Calendar and that the Courts below had ignored evidence in that regard. (2) Assuming that the month of tenancy was by the Indian Calendar according to the lease, it would be deemed to be by the British Calendar in view of the provision of section 27 of the Act. (3) As the arrears of rent had been paid within two months of the institution of the suit, the appellant be deemed to be ready and willing to pay the rent and that therefore the landlord was not entitled to recover possession of the premises. (4) It is discretionary with the Court to pass a decree for ejectment in a. case under section 12(3) (a) of the Act, as the expression, used in that subclause is 'the Court may pass a decree for eviction in any such suit for recovery of possession. ' The High Court held that the findings of the Courts below that the month of tenancy was by the Indian Calendar was based on a consideration of the evidence on the record and therefore was binding. It also held that it could not be deemed to be by the British Calendar in view of section 27 of the Act which provided that the rent would be recovered according to the British Calendar, notwithstanding anything contained in any contract and did not provide for the tenancy to be by the month according to the British Calendar even if the tenancy under the Contract was by a different Calendar. The High Court also held that the tenant 's depositing arrears of rent within two months of the institution of the suit would not justify holding that the tenant was ready and willing to pay the amount of standard rent and that therefore the .landlord was not entitled to recover possession 316 of the premises in view of sub s.(1) of section 12 of the Act. Lastly, the High Court held that the Court is bound to pass a decree for ejectment under section 12 (3) (a) if it be proved that the rent was payable by the month, that ' it had been in arrears for a period of six months and that the tenant failed to make payment of the arrears until the expiration of the period of one month after the service of notice referred to in sub.s. (2) of that section. , As a result, the revision was dismissed. Two points have been urged for the appellant in this Court. One is that the month of the tenancy was to be by the British Calender in view of section 2 7 of the Act and r. 4 framed thereunder, and that there could be no forfeiture of the tenancy when the arrears of rent had been paid within two months of the institution of the suit. The significance of the first question is that if the appellant 's tenancy was to be by the month of the British Calendar, notice to quit was a bad notice as it did not comply with the requirements of s.106 of the Transfer of Property Act and that therefore there had been no determination of the tenancy which is a condition precedent for the landlord being entitled to possession and, coin. sequently, for instituting a suit for ejectment on any ground whatsoever, including the ground of rent being in arrears. The first point to determine, therefore, is whether it is a condition precedent for the institution of a suit by a landlord for the recovery of possession from a tenant who has been in arrears of rent that there had been first a determination of the contractual tenancy. If it is not a condition precedent; it will not be necessary to determine whether the month of the tanancy continued to be according to the Indian Calendar according to the contract, or had been according to the British 317 Calendar in view of a. 27 of the Act, when a tenancy is created under a contract between the landlord and the tenant, that contract must hold good and continue to be in force till, according to law or according to the terms of contract, it comes to an end. Section III of the Transfer of Property Act states the various circumstances in which a lease of immovable property determines. Clause (b) provides for the determination of the lease on the expiration of a notice to determine the lease, or to quit, or of intention to quit, the property leased, duly given by one party to the other. There is nothing in the act which would give a right to the landlord to determine the tenancy and thereby to got the right to( evict the tenant and recover possession. This Act was enacted for the purpose of controlling the rents and repair of certain premises and of evictions due to the tendency of landlords to take advantage of the extreme scarcity of premises compared to the demand for them. The Act intended therefore to restrict the rights which the landlords possessed either for charging excessive rents or for. evicting tenants. A tenant stood in no need of protection against eviction by the landlord so long as he had the necessary protection under the terms of the contract between him and the landlord. He could not be evicted till his tenancy was determined according to law and therefore there was no necessity for providing any further protection in the Act against his eviction so long as his tenancy continued to exist under the contract. Sub section(1) of section 12 of the Act provides that a landlord shall not be entitled to the recovery of possession of any premises so long as the tenant pays, or is ready and willing to pay, the amount of the standard rent and permitted increases, if any, and observes and performs the other conditions of the tenancy, in so far as they are consistent with the 318 provisions of the Act. It creates a restriction on the landlords right to the recovery of possession. When the landlord will have such a right is not provided by it. Ordinarily, the landlord will have a right to recover possession from the tenant when the tenancy had determined. The provisions of this section therefore will operate against the landlord after the determination of the tenancy by any of the modes referred to in a. III of the Transfer of property Act. What this section of the Act provides is that even after the determination of the tenancy, a landlord will not be entitled to recover possession, though a right to recover possession gets vested in him, so long as the tenant complies with what he is required to do by this section. It is this extra protection given by this section which will be useful to the tenant after his tenancy has determined. The section does. not create a new right in the landlord to evict the tenant when the tenant does not pay his rent. It does not say so, and therefore, it is clear that a landlords right to evict the tenant for default in payment. of rent will arise only after the tenancy is determined, and the continued possession of the tenant is not account of the contractual terms but on account of the statutory right conferred on him to continue in possession so long as he complies with what sub s.1 requires of him. The landlord is restricted from evicting the tenant till the tenant does not do what he is required to do for peaceful possession under sub s.(1) of section 12. We are therefore of opinion that where a tenant is in possession under a lease from the landlord, he is not to be evicted for a cause which would give rise to a suit for recovery of possession under s.12 if his 'tenancy has not been determined already. It follows that whenever a tenant acts in a way which would remove the bar on the landlord 's right to evict him it is necessary for the landlord to serve him with. a notice 319 determining his tenancy and also serve him with a notice under sub s.(2) of section 12 of the Act. In this connection reference may be made to what wag stated in Dr. K. A. Dhairyawan vs J. R. Thakur .(1). In that case, the landlord granted a lease of a parcel of land to the lessees for a certain period. The lessee was to construct a building on that land. On the termination of the lease, the lessees were to surrender and yield up the demised promises including the building to the lessors. After the expiry of the period of the lease, the lessor sued for a declaration that they were entitled to the building and were entitled to claim possession of the same. The lessees pleaded that they were also lessees of the building and were protected from eviction therefrom by the provisions of the Bombay Rents, Hotel and lodging House Control Act, 1947, and that the covenant for delivering possession of that building could not be enforced as the lease in respect of the land could not be terminated on account of the protection given by the Act. It was held that under the lease there was a demise only of the land and not of the building, and, consequently, the provisions of the Act dit not apply to the contract of delivery of possession of the building. It was contended that even in such a case, possession of the building could not be given until the lease bad been determined, which in law, could not be determined so long as the respondents could not be evicted from the demised land of which they were tenants within the meaning of the Act. This contention was repelled. It was said at p. 808: "This contention is without force as the provisions of the Act do not provide for the continuation of a lease beyond the specified period stated therein. All that the Act does is to give to the person who continues to (1) ; 320 remain in possession of the land, although the period of the lease had come to an end, the status of a statutory tenant. That is to say, although the lease had come to an end but the lessee continued to remain in possession without the consent of the lessor, he would nonetheless be a tenant of the land and could not be evicted save as provided by the Act. " This means that the provisions of the Act did not affect the terms of the lease according to which the lease came to an end after the expiry of the period for which it was given. The lessee 's possession after the expiry of the lease was by virtue of the provisions of the Act and not by virtue of the extension of the period of the lease. It is a necessary consequence of this view that the restriction on the landlord 's right to recover possession under section 12 of the Act operates after he has determined the tenancy and that till then the rights between the parties with respect to eviction would be governed by the Ordinary law. It was said in Ragbubir Narayan Lotlikar vs Fernandez (1). Rents, Hotel and Lodging House Rates Control Act (Bom Act LVII of 1947): ,, 'In our opinion, s.28 applies only to those suits between a landlord and a tenant where a landlord has become entitled to possession or recovery of the premises demised. Under the Transfer of Property Act a landlord becomes entitled to possession when there is a determination of tenancy. A tenancy can be determined in any of the modes laid down in section 111; and once the tenancy is determined, under s.108 (q) the lessee is bound to put the lessor into possession of the property. It (1) , 511. 321 is, therefore, only on the determination of the lease or the tenancy that the landlord be comes entitled to the possession of the pro perty, and when he has so becomes entitled to possession, if he files a suit for a decree for possession, then section 28 applies and such a suit can only be filed in the Small Causes Court. " Again it was said at the same page: "Section 12 postulates the fact that landlord is entitled to recovery of possession and he is only entitled to possession under the provisions of the Transfer of Property Act. It is only when he so becomes entitled that the Legislature steps in and prevents the enforcement of his right by the protection which it gives to the tenant. No question of the application of section 12 can arise if a landlord is not entitled to possession at all. " A similar view was expressed in Karsandas vs Karsanji (1) It was said: ". that a tenancy must be duly determined either by a notice to quit or by efflux of time or under one or the other of the clauses of section III, T. P, Act before a landlord can one to, evict his tenant on any of the grounds contained in the clauses of s 13 (1) of the Bombay Rent Act as applied to Saurashtra. Therefore a notice determining the tenancy and calling upon the tenant to quit was in this case a necessary prerequisite to the institution of the suit. " The cases reported as Rai Brij Raj Krishna vs section K. Shaw and Brothers (2) and Shri Hem Chand vs Shrimati Sham Devi (3) are distinguishable. In, the former case, s.11 of the Bihar Buildings (1) A.I.R. (1953) Sau. 113, 118. (2) ; ,150. (3) I.L.R. (1955) Punj. 322 (Lease, Rent and Eviction) Control Act, 1947, (III of 1947), came for interpretation by this Court and, in that connection it was said "Section II beings with the words 'Not withstanding anything contained in any agree ment or law to the contrary ', and hence any attempt to import the provisions relating to the law of transfer of property for the inter pretation of the section would seem to be out of place. Section 11 is a self contained sec tion, and it is wholly unnecessary to g o outside the Act for determining whether a tenant is liable to be evicted or not, and under what conditions he can be evicted. It clearly provides that a tenant is not liable to be evicted except on certain conditions, and one of the conditions laid down for the eviction of a month to month tenant is non payment of rent. " In the present case, section 12 of the Act is differently worded and cannot therefore be said to be a complete Code in itself. There is nothing in it which overrides the provisions of the Transfer of Property Act. Shri Hem Chand 's Case (1) dealt with the provisions of s.13(i) of the Delhi and Ajmer Merwara Rent Control Act XXXVIII of 1952. This section provided that no decree or order for the recovery of possession of any promises shall be passed by any court in favour of the landlord against a tenant, notwithstanding anything to the contrary contained in any other law or any con tract. It was held that the Rent Control Act provided the procedure for obtaining the relief of ejectment and that being so the provisions of section 106 of the Transfer of property Act had no relevance, in considering an application for ejectment (1) I.L.R. (1955) Punj 36. 323 made under that Act. There is nothing in the Act corresponding to the provisions of section 13(1) of the Delhi Ajmer Merwara Act. It is unnecessary for us to consider whether Shri Hem Chand 's case was rightly decided or not. In Meghji Lakhamahi and Brothers V. Furniture Workshop (2) the Privy Council dealt with an application for possession under section 16 of the Increase of rent (Restriction) Ordinance, No. 23 of 1949 (Kenya) whose relevant portion is : "(1) No order for the recovery of possession of any premises to which this Ordinance applies, or for the ejectment of a tenant therefrom, shall be made unless . (k) the landlord requires possession of the premises to enables the reconstruction or rebuilding thereof to be carried out. " It was said : "In the present case the only question is whether section 16(i) (k) is so framed as to envisage or make provision for such an order. An application for possession under section 16 presupposes that the contractual tenancy of the demised premises has been determined. It is not possible to determine it as to part and keep it in being as to the remainder. In the present case the tenancy of the entire demised premises had been determined. " The right to possession is to be. distinguished from the right to recover possession. The right to possession arises when the tenancy is determined. The right to recover possession follows the right to possession, and arises when the person in possession does not make over (1) I.L.R. (1955) Punj. (2) ,90. 324 possession as he is bound to do under law, and there arises a necessity to recover possession through Court. The cause of action for going to Court to recover possession arises on the refusal of the person in possession, with no right to possess, to deliver possession. In this context, it is clear that the provisions of section 12 deal with the stage of the recovery of possession and not, with the stages prior to it and that they come into play only when the tenancy is determined and a right to possession has come in existence. Of course, if there is not contractual tenancy and a person is deemed to be a tenant only on account of a statute giving him right to remain in possession, the right to possession arises on the person in possession acting in a manner which, according to the statute, gives the landlord right to recover possession, and no question for the determination of the tenancy arises, as really speaking, there was no tenancy in the ordinary sense of that expression. It is for the sake of convenience that the right to possession, by virtue of the provisions of a statute, has been referred to as statutory tenancy. In Ebner vs Lascelles (1) It was said, dealing with the provisions of Increase of Rent and Mortgage Interest (Restrictions) Act, 1920 (10 and 11 Geo. 5, c. 17) : "It has been truly said that the main rights conceded to a tenant under these Acts are, first a right to hold over or 'status of irremovability, ' and, next, a right not to have his rent unduly raised. The right to hold over is a right that comes into existence after the expiration of the contractual tenancy. During the contractual tenancy the tenant, being in possession under the protection of his contract, has no need of the protection of the Act to enable him to retain possession, but (1) ,497. 325 during that tenancy the Act protects him in regard to rent by providing that, notwith standing any other agreements which he may make with his landlord as to rent, he is not to be charged a higher rent than the law allows, and if he is charged a higher rent than that he can have it reduced. The right to hold over after the termination of the con tractual tenancy. and the right to protection during the contractual tenancy are two right s which must be kept distinct from each other. " It may be mentioned that section 5 of the aforesaid Act of 1920 provided that no order or judgment for the recovery of possession of any dwelling house to which the Act applied or for the ejectment of a tenant therefrom would be made or given unless the case fell within one of the clauses mentioned in sub. s.(1). We are therefore of opinion that so long as the contractual tenancy continues, a landlord cannot sue for the recovery of possession even if s.12 of the Act does not bar the institution of such a suit, and that in order to take advantage of this provision of the Act he must first determine the tenancy in accordance with the provisions of the Transfer of Property Act. It is now necessary to determine whether a notice served on the appellant to quit the tenancy on October 16, 1954, the last date of the month according to the Hindu Calendar, as October 16 happened to be Kartik Vad 30 of section Y. 2011, the tenancy having commenced from Kartik Sud 1 of S.Y. 1963. It is not disputed that originally the tenancy was according to the Hindu Calendar. The contention for the appellant is that this month to month tenancy, according to the Hindu Calendar, was 326 converted to a similar tenancy according to the British Calendar in view of the provisions of s.27 of the Act and r. 4 of the Rules framed under the Act. Section 27 of the Act reads: "(1) Notwithstanding anything contained in any law for the time being in force or any contract, custom or local usage to the contrary, rent payable by the month or year or portion of a year shall be recovered according to the British Calendar. (2) The State Government may prescribe the manner in which rent recoverable according to any other calendar before the coming into operation of this Act shall be calculated and charged in terms of the British Calendar. " Rule 4 of the Bombay Rents, Hotel and Lodging House hates Control Rules, 1948, hereinafter called the Rules, reads: "Calculation of rent according to British Calender. If, before the Act comes into force, the rent in respect of any premises was chargeable according to a calendar other than the British Calendar, the landlord shall recover from the tenant rent for the broken period of the month, year or portion of the year immediately preceding the date on which the Act comes into force, proportionate amount according to the aforesaid Calendar month, year or portion of the year at which the rent was then chargeable. After such date the landlord shall recover rent according to the British Calendar. The rent chargeable per month according to the British 327 Calendar shall not exceed the rent which was chargeable per month according to the other calendar followed immediately before such date. " There is nothing irk the aforesaid rule or the section about the conversion of the month of the tenancy from the month according to the Hindu calendar to the month according to the British Calendar. They only provide for the recoverability of the rent according to the British Calendar. Since the enforcement of the Act on February 13, 1948, the monthly rent would be for the month according to the British Calendar. The monthly rent could be recovered after the expiry of a month from that date or the rent for the period from the 13th February to the end of the month could be recovered at the monthly rate and thereafter after the expiry of each Calendar month. There is nothing in the section or the rule in regard to the date from which the month for recovery of rent should commence. This provision was made probably, as a corollary, to the statute providing for standard rents. Standard rents necessitate standard months. There are a number of calendars in use in this country. The Hindus themselves use several calendars. The Muslims use a different one. Some calendars are used for particular purposes. It appears to be for the sake of uniformity and standardisation that a common calendar was to govern the period of the month of the tenancy and the date for the recovery of the rent. Rule 4 provided a procedure for adjustment of the recovery of the rent according to a calendar other than the British Calendar, and further provided that the rent chargeable per month, according to the British Calender, would not exceed the rent which was chargeable per month according to the other calendar followed immediately before that date. In the absence of any specific provision in the Act with respect to any alteration to be made in the period of the month of the 328 tenancy, it cannot be held merely on the basis of an alteration in the period for the recovery of rent that the monthly period of tenancy had also been changed. The tenancy can be from month to month and the recoverability of the rent may not be from month to month and may, under the contract, be based on any period say, a quarter or half year or a year. There is nothing in law to make the month for the period of recovering rent synchronize with the period of the month of the tenancy. The tenancy must start on a particular date, and, consequently, its month would be the month from that date, according to the calendar followed. The month of tenancy according to that calender are settled by contract from the commencement of, the tenancy. The tenancy under a lease for a certain period starts from a certain date, be it according to the British Calendar or any other Calendar. The period of, lease. and consequently the tenancy, comes to an end at the expiry of that period according to the calendar followed by the parties in fixing the commencement of the tenancy. A lease, even according to the British Calendar, can start from any intermediate date of the calendar month. There is nothing in section 27 to indicate that the month of the tenancy to such a lease will start from the first of a regular month. Section 27 simply states that the rent would be recovered according to the British Calendar without fixing the first date of the month as the date from which the month, for the purposes of the recovery of the rent, would be counted. It follows that the month of the tenancy which commences on the 14th of a month, would be from the 14th to the 13th of the next month, according to the British Calendar. The rent would be recoverable with respect .to this period of a month. No interference with any such term of the contract has been made by any provision of the Act and therefore we hold that the provisions of section 27 of the Act and r. 4 of 329 the Rules, do not in any way convert the month of the tenancy according to the Indian Calendar to the month of the British Calendar. The High court said in his judgment that Mr. Parghi, who was appearing for the appellant, was unable to cite any decision in support of the contention raised by him. Our attention, however, has been drawn to two cases decided by the Bombay High Court. They are Civil Revision Applications Nos. 247 of 1956 and 1583 of 1960 decided by Dixit and Tendolkar, JJ and Patwardban J., on February 22, 1957, and August 16, 1961, respectively. The latter decision had to follow the earlier one. In the earlier case, the notice to quit required the tenant to give possession on May 1, 1953. The tenancy had commenced according to the Hindu Calendar. The notice was given according to the British Calendar. The High Court held the notice to be valid, agreeing with the contention that . the effect of the provisions of a. 27 of the Act was lo make the tenancy which was originally according to the Hindu Calendar, a tenancy according to the British Calendar. The ratio of the decision, in the words of the learned Judges, is : "Now rent is payable for occupation by the defendant and therefore, the tenancy must be deemed to be one according to the British Calendar from the first of the month to the end of the month. . . . Here is a local law which by section 27 makes the tenancy as one according to the British Calendar". We are of opinion that this view is wrong. We, therefore, hold that the notice to quit issued to the appellant was therefore a valid notice as held by the Court below and determined the tenancy of the appellant. 330 The second contention that, the appellant 's having paid the arrears of rent within 2 months of the institution of the suit, there would be no forfeiture of the tenancy has no force in view of the provisions of section 12 of the Act. Sub section (2) permits the landlord to institute a, suit for the eviction of a tenant on the ground of non payment of rent after the expiration of one month from the service of the notice demanding the arrears of rent, and cl. (a) of sub s.(3) empowers the Court to Pass a decree in case the rent had been payable by the month, there was no dispute about the amount of standard rent, the arrears of rent, had been for a period of six months and the tenant had neglected to make the payment within a month of the service of the notice of demand. The tenant 's paying the arrears of rent after the institution of the suit therefore does not affect his liability to eviction and the Court 's power to pass a decree for eviction. It is true that the expression used in el. (a) of sub s.(3) is 'the Court may pass a decree for eviction in any such suit for recovery of possession ', but this does not mean as contended for the appellant, that the Court has discretion to pass or not to pass a decree for eviction in case the other conditions mentioned in that clause are satisfied. The landlord became entitled to recover possession when the tenant failed to pay rent and this right in him is not taken away by any other provision in the Act. The Court is therefore bound in law to pass the decree when the requirements of sub s (2) of s.12 are satisfied. This is also clear from a comparison of the language used in cl. (a) with the language used in cl. (b) of sub section (3) which deals with a suit for eviction which does not come within cl.(a) and provides that no decree for eviction shall be passed in such a suit if on the first day of hearing of the suit or on or before such other date as the Court may fix, the tenant pays or tenders in Court the 331 standard rent then due and thereafter continues to pay or tender in Court regularly such rent till the suit is finally decided and also pays costs of the suit as directed by the Court. It is clear that where the legislature intended to give some benefit to the tenant on account of the payment of the arrears during the pendency of the suit, it made a specific provision. In the circumstances, we are of opinion that the Court has no discretion and has to pass a decree for eviction if the other conditions of sub.s. (2) of section 12 of the Act are satisfied. The result therefore is that this appeal fails, and is accordingly dismissed with costs. Appeal dismissed.

The appellant was a tenant of the respondents in respect of certain residential premises. The tenancy was by the Indian Calendar. The appellant did not pay arrears of rent for about 5 years and the landlords gave him notice to quit as he was in arrears of rent for more than six months and asked him to quit on the last day of the Indian month. On the appellant 's failure to comply the landlords filed a suit for ejectment under section 12 (3) (a) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947. Within two months of the institution of the suit the appellant deposited the arrears of rent. The suit for ejectment was decreed. The appellant contended that in view of section 27 of the Act and r. 4 the tenancy was deemed to be by the British Calendar and the notice to quit expiring with the end of the Indian month was invalid and that he should have been relieved against forfeiture. The landlords contended that no notice to quit was necessary for filing the suit, that the notice given was valid and that there could be no relief against forfeiture. Held, that the suit for ejectment was rightly decreed. it was incumbent upon the landlords to determine the contractual tenancy by a proper notice before they could file a suit for the ejectment of the tenant on the ground of non. payment of arrears under section 12(3) (a) of the Act. The Act did not create a new right in the landlord to evict the tenant for nonpayment of rent; the right to evict was dependent upon a proper termination of the tenancy. The Act gave extra protection to the tenant which he could avail of after his tenancy was determined. There was nothing in section 12 of the Act which overrode the provisions of the transfer of Property Act. The right to possession had to be distinguished from 313 the right to recover possession. The right to possession arose on the determination of the tenancy and the right to recover possession arose under the Act after the right to possession had arisen. Dr. K.A. Dhairyawan, vs J.R. Thakur, ; , Baghubir Narayan Lotlikar vs Fernandiz, (1952) Bom. L.R. 505, Karsandas vs Karsanji, A.I.R. (1953) Sau. 113, Meghji Lakhamahi vs Furniture Workshop, and Ebner vs Lascelles, , referred to. Bai Brij Bai Krishna vs S.K. Shaw and Bros. [1951] S.C.R. 145 and Shri Hem Chand vs Shrimati Sham Devi, I.L.R. 1955) Punj. 36, distinguished. The notice to quit was a valid notice. The original tenancy was according to the Indian Calendar and there was nothing in section 27 of the Act or in r.4 which converted it into a tenancy according to the British Calendar. Section 27 and r. 4 merely provided for the recoverability of rent according to the British Calendar. In view of the provisions of section 12 there could be no relief against forfeiture in the present case. Section 12(3)(a) empowered the court to pass a decree for eviction in case of rent payable month by month if the arrears of rent had been for a period of six months and the tenant had neglected to make the payment within a month of the service of the notice of demand. The payment of arrears after institution of the suit did not affect his liability to eviction and the court 's power to pass the decree. The Court was bound to pass the decree when the requirments of the section were satisfied.where the ' legislature intended to give relief against forfeiture it made a specific provision.

Civil Appeal No. 2686 of 1979. From the Judgment and order dated 27 8 1979 of the Delhi High Court in Civil Writ Petition No. 844/78. R.K. Garg and C. M. Nair for the Appellant. H.S. Marwah for the Respondent No. 6. V.M. Tarkunde and P. P. Juneja for Respondent No. 7. Lal Narain Sinha Att. Genl., Abdul Khader and Miss A. Subhashini for the Union of India. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. The judgment in this appeal is really an appendix to the judgment pronounced by us in Civil Appeal No. 2112 of 1979. The relevant facts may be gathered from that judgment. The further events requiring to be mentioned are these: While the Writ Petition filed by Ahluwalia in the High Court of Himachal Pradesh was pending, some of the respondents to the Writ Petition and one R. R. Verma all direct recruits, chose to file a Writ Petition in the Delhi High Court questioning the notice dated June 29, 1979, calling upon them to submit representations against the year of allotment proposed to be allotted to Sahney, Dhaliwal and Ahluwalia. After the Writ Petition of Ahluwalia was allowed, and after the Central Government passed the order dated July 27, 1979, pursuant to the direction issued by the High Court of Himachal Pradesh, the Delhi High Court dismissed the Writ Petition filed by the direct recruits as infructuous. The High Court, however, granted a certificate of fitness to appeal to this Court under Article 133 of the Constitution. Therefore, this appeal. The Writ Petition having been dismissed as infructuous we do not see how a certificate under Article 133 could have been granted. But, we do not want to dismiss the appeal on that preliminary ground. Shri R. K. Garg, learned counsel for the appel 481 lants challenged the order of the Central Government dated July 27, 1979 on three grounds: (1) Rule 3 of the All India Services (Conditions of Service residuary matters) Rules, offended Article 14 of the Constitution and was ultra vires as it conferred arbitrary and uncanalised power upon the Central Government to grant relaxation whenever it pleased it to do so. (2) The discretion to relax the rules was wrongly exercised in the present case. (3) The Central Government was powerless to review its earlier orders as such a power of review was not expressly conferred by the rules. The second question has already been considered by us in Civil Appeal No. 2112 of 1979 and we have held that this was a fit case for the exercise of the power of the Central Government to relax the rules. The first question is about the Constitutional validity of rule 3 of the All India Services (Conditions of Service residuary matters) Rules 1960. Rule 3 is as follows: "3. Power to relax rules and regulations in certain cases Where the Central Government is satisfied that the operation of (i) any rule made or deemed to have been made under the All India Services Act, 1951 (61 of 1951), or (ii) any regulation made under any such rule, regulating the conditions of service of persons appointed to an All India Service causes undue hardship in any particular case, it may, be order, dispense with or relax the requirements of that rule or regulation, as the case may be, to such extent and subject to such exceptions and conditions, as it may consider necessary for dealing with the case in a just and equitable manner". The submission of Shri Garg was that the rule conferred upon the Central Government absolute and arbitrary discretion, a discretion left entirely to the satisfaction of the Government, Government with no prescribed objective standards or guidelines. It is true that the rule is couched in a language suggestive of near autocratic power reminiscent of "bad old days" of the Imperial Raj but, we have no doubt that the rule is not meant to vest the Central Government with power to pass any order they like with a view to promote the interests 482 of a favoured Civil servant. It is really meant to relax, in appropriate cases, the relentless rigour of a mechanical application of the rules, so that civil servants may not be subjected to undue and undeserved hardship. Sufficient guidance can be had from the very rule and from the scheme of the various statutory provisions dealing with the conditions of service of Members of the All India Service. Section 3 of the All India Services Act enables the Central Government in consultation with the Governments of the States concerned to make rules for the regulation of recruitment, and the conditions of service of persons appointed to an All India Service. Pursuant to the power given by Section 3 of the All India Services Act the Central Government has made innumerable sets of rules, some common to all the All India Services and some applicable separately to each of the All India Services. The All India Services (Leave) Rules, the All India Services (Conduct) Rules, the All India Services (Discipline and Appeal) Rules, the All India Services (Travelling Allowance) Rules, and the All India Services (Conditions of Service residuary matters) Rules are examples of rules made under Section 3 of the All India Services Act which are common to all the All India Services. The Indian Police Service (Cadre) Rules, the Indian Police Service (Recruitment) Rules, the Indian Police Service (Probation) Rules, the Indian Police Service (Regulation of Seniority) Rule are examples of rules made under section 3 of the All India Services Act applicable to a single All India Service namely, the Indian Police Service. The rules, as may be seen, deal with countless matters which concern a civil servant, such as creation of cadres, fixation of Cadre Strength, recruitment, seniority, promotion, leave, allowances, conduct, discipline and appeal, and a host of such other matters. The golden thread, if we may so call it, which runs through the entire complex fabric of rules is the securing of honest and competent civil servants. Integrity and efficiency are the hall marks of any civil service anywhere and they are what are contemplated and aimed at by the wide range of rules. The interest to be served is always the public interest and not individual interest. Public interest, in the matter of the conditions of service of civil servants, is best served by rules which are directed towards efficiency and integrity. Now, very wide as the range covered by the rules is, the rules can never be exhaustive. Unforeseen and complex situations often arise as will be obvious even from a bare perusal of the cases reported in the Law Journals arising out of "service controversies". Very often it is found that an all too strict application of a rule works undue hardship on a civil servant, resulting in injustice and inequity, causing disappointment and frustration to the civil 483 servant and finally leading to the defeat of the very object aimed at by the rules namely efficiency and integrity of civil servants. Hence it is that the Central Government is vested with a reserve power under rule 3 to deal with unforeseen and unpredictable situations, and to relieve the civil servants from the infliction of undue hardship and to do justice and equity. It does not mean that the Central Government is free to do what they like, regardless of right or wrong; nor does it mean that the Courts are powerless to correct them. The Central Government is bound to exercise the power in the public interest with a view to secure civil servants of efficiency and integrity, and when and only when undue hardship is caused by the application of the rules, the power to relax is to be exercised in a just and equitable manner but, again, only to the extent necessary for so dealing with the case. We do not have to add that the exercise of the power of relaxation like all other administrative action affecting rights of parties is subject to judicial review on grounds now well known. Viewed in this light we do not think that Rule 3 is unconstitutional on the ground that it vests an unfettered discretion in the Government. The last point raised by Shri Garg was that the Central Government had no power to review its earlier orders as the rules do not vest the Government with any such power. Shri Garg relied on certain decisions of this Court in support of his submission : Patel Narshi Thakershi & Ors. vs Pradvamunsinghji Arjunsinghji, D. N. Roy and section K. Bannerjee & Ors. vs State of Bihar & Ors. , and State of Assam & Anr. vs J. N. Roy Biswas. All the cases cited by Shri Garg are cases where the Government was exercising quasi judicial powers vested in them by statute. We do not think that the principle that the power to review must be conferred by statute either specifically or by necessary implication is applicable to decisions purely of an administrative nature. To extend the principle to pure administrative decisions would indeed lead to untoward and startling results. Surely, any Government must be free to alter policy or its decision in administrative matters. If they are to carry on its their daily administration they cannot be hide bound by the rules and restrictions of judicial procedure though of course they are bound to obey all statutory requirements and also observe the principles of natural justice where rights of parties may be affected. Here again, we emphasise that if administrative decisions are reviewed, the decisions 484 taken after review are subject to judicial review on all grounds on which an administrative decision may be questioned in a Court. We see no force in this submission of the learned counsel. The appeal is, therefore, dismissed. S.R. Appeal dismissed.

One Sri Ahluwalia a senior member of the Indian Police Service sought to quash the decision of the Union of India dated 26 6 1976 whereby his year of allotment was fixed as 1965. When the Writ Petition of Sri Ahluwalia was pending in the High Court of Himachal Pradesh, some of the respondents in that Writ Petition and one R. R. Verma all direct recruits, choose to file a Writ Petition in the Delhi High Court questioning the notice dated June 29, 1973 calling upon them to submit representations against the year of allotment proposed to be allotted to M/s. Sahney, Dhaliwal and Ahluwalia. After the Writ Petition of Ahluwalia was allowed, and after the Central Government passed the order dated July 27, 1979, pursuant to the direction issued by the High Court of Himachal Pradesh to Union of India to refix the seniority and year of allotment to Sri Ahluwalia, the Delhi High Court dismissed the Writ Petition filed by the direct recruits as infructuous. The High Court, however granted a certificate of fitness to appeal to this Court under Article 133 of the Constitution. Dismissing the appeal, the Court ^ HELD: 1. The Writ Petition having been dismissed as infructuous it is not proper on the part of the High Court to grant a certificate of fitness under Article 133 of the Constitution. [480G H] 2. Rule 3 of the All India Services (Conditions of Service residuary matters) Rules, 1960 is couched in a language suggestive of near autocratic power reminiscent of "bad old days" of the Imperial Raj but, the rule is not ment to vest the Central Government with power to pass any order they like with a view to promote the interests of a favoured Civil servant. It is really meant to relax. In appropriate cases, the relentless rigour of a mechanical application of the rules, so that civil servants may not be subjected to undue and undeserved hardship. Sufficient guidance can be had from the very rule and from the scheme of the various statutory provisions dealing with the conditions of service of Members of the All India Service. [481G H, 482A B] 3. Rule 3 is not unconstitutional on the ground that it vests an unfettered discretion in the Government. Section 3 of the All India Services Act enables 479 the Central Government in consultation with the Governments of the States concerned to make rules for the regulation of recruitment, and the conditions of service of persons appointed to an All India Service. Pursuant to the power given by Section 3 of the All India Services Act the Central Government has made innumerable sets of rules, some common to all the All India Services and some applicable separately to each of the All India Services. The All India Services (Leave) Rules, the All India Services (Conduct) Rules, the All India Services (Discipline and Appeal) Rules, the all India Services (Travelling Allowance) Rules, and the All India Services (Conditions of Service residuary matters) Rules are examples of rules made under Section 3 of the All India Services Act which are common to all the All India Services. The Indian Police Service (Cadre) Rules, the Indian Police Service (Recruitment) Rules, the Indian Police Service (Probation) Rules, the Indian Police Service (Regulation of Seniority) Rules are examples of rules made under section 3 of the All India Services Act applicable to a single All India Service, namely, the Indian Police Service. The rules deal with countless matters which concern a civil servant, such as creation of cadre, fixation of Cadre Strength, recruitment, seniority, promotion, leave, allowances, conduct, discipline and appeal, and a host of such other matters. The golden thread, which runs through the entire complex fabric or rules is the securing of honest and competent civil servants. Integrity and efficiency are the hall marks of any Civil service anywhere and they are what are contemplated and aimed at by the wide range of rules. The interest to be served is always the public interest and not individual interest. Public interest, in the matter of the conditions of service of civil servants, is best served by rules which are directed towards efficiency and integrity. [482B G & 483D] Now very wide as the range covered by the rules is, the rules can never be exhaustive. Unforeseen and complex situations often arise. Very often it is found that all too strict application of a rule works undue hardship on a civil servant. resulting in injustice and inequity, causing disappointment and frustration to the civil servant and finally leading to the defeat of the very objects aimed at by the rules namely efficiency and integrity of civil servants. Hence it is that the Central Government is vested with a reserve power under rule 3 to deal with unforeseen and unpredictable situations, and to relieve the civil servants from the infliction of undue hardship and to do justice and equity. It does not mean that the Central Government is free to do what they like, regardless of right or wrong; nor does it mean that the Courts are powerless to correct them. The Central Government is bound to exercise the power in the public interest with a view to secure civil servants of efficiency and integrity, and when and only when undue hardship is caused by the application of the rules, the power to relax is to be exercised in a just and equitable manner but, again, only to the extent necessary for so dealing with the case Moreover, the exercise of the power of relaxation like all other administrative action affecting rights of parties is subject to judicial review on grounds now well known. [482G H, 483A C] 4. It is not correct to say that the principle that the power to review must be conferred by statute either specifically or by necessary implication is applicable to decisions purely of an administrative nature. To extend the principle to pure administrative decisions would indeed lead to untoward and startling re 480 sults. Surely, any Government must be free to alter its policy or its decision in administrative matters. If they are to carry on their daily administration they cannot be hide bound by the rules and restrictions of judicial procedure though of course they are bound to obey all statutory requirements and also observe the principles of natural justice where rights of parties may be affected. Again, if administrative decisions are reviewed, the decisions taken after review are subject to judicial review on all grounds on which an administrative decision may be questioned in a Court. [483F H, 484A] Patel Narshi Thakershi and Ors. vs Pradvamunsinghji Arjunsinghji, AIR 1970 SC 1273; D. N. Roy and section K. Banerjee and Ors. vs State of Bihar and Ors. , ; and State of Assam and Anr. vs J. N. Roy Biswas [1976] 2 S.C.R. 128, distinguished.

Civil Appeal No. 5742 of 1983 Appeal by Special leave from the judgment and order dated the 7th May, 1983 of the Assam High Court in Civil Rule No. 1292 of 1982. K.K. Venugopal, Ms. Laxmi Venugopal, A.K Bordelay, C.S. Vaidyanathan and Praveen Choudhary for the Appellants. S.S. Ray, A.S. Pundir, Vijay Hansaria, Sunil Kumar Jain, Mukesh Advani and Ms. Mridula Ray for Respondent Nos. 1 & 2. S.K.Nandy for the Respondents 3 & 5. N.R. Choudhary for the Intervener. The Judgment of the Court was delivered by 828 SEN, J. This appeal by special leave is directed against the judgment and order of the Assam High Court dated November 4, 1982 concerns the propriety of the grant of a liquor licence. By the judgment the High Court quashed an order of the Board of Revenue dated February 11,.1982 affirming the grant of licence in respect of Jorhat Country Spirit Shop No. 1 made by the Deputy Commissioner Sibsagar, Jorhat, by his order dated August 28, 1981, and instead of remitting the matter to the Board of Revenue for a decision afresh, the High Court had directed the Deputy Commissioner to settle the liquor shop with respondents Nos. 1 and 2 for the remaining period of the grant upto March 31, 1984. The short question that arises in the appeal is whether it was proper exercise of jurisdiction by the High Court under article 226 of the Constitution to have issued a writ of mandamus ordaining the Deputy Commissioner to grant the licence. Further, a question arises whether it was impermissible for the High Court to have embarked upon an inquiry into the facts and on a reappraisal of the evidence come to a finding contrary to that reached by the Board of Revenue based on appreciation of evidence that one set of rival claimants i.e. Parag Saikia and Prafulla Barua, respondents Nos. 1 and 2 were entitled to grant of such privilege in preference to the appellant under the note beneath r. 223(2) of the Assam Excise Rules, 1945 (for short 'Rules '). The facts of this case present a rather disturbing feature. Jorhat Country Spirit Shop No. 1 is a big excise shop within the meaning of r. 232 of the Rules. Under cl.(a) thereof, the settlement of such a country liquor shop has to be made with a pair of tenderers constituting two or more, partners. Five joint tenders were received in response to the notification issued by the Deputy Commissioner, Sibsagar, Jorhat calling for tenders of the country liquor shop for the financial year 1983 84. The Deputy Commissioner, Sibsagar, Jorhat in consultation with the Advisory Committee constituted for that purpose as required under r. 208 by his order dated August 28, 1981 settled the shop with the two appellants Bishnu Ram Borah and Bipin Chandra Borah. One set of the unsuccessful tenderers were respondents Nos. 1 and 2 Parag Saikia and Prafulla Barua. Of them, Parag Saikia respondent No. 1 herein was held by the Deputy Commissioner to be a mere benamidar of a prominent businessman of Dibrugarh while respondent No. 2 Prafulla Barua was a student studying for his B.Sc. degree and stying in a hostel at Golaghat, which is a place some 30 miles away from Jorhat. The Board of 829 Revenue, Assam by its order dated February 11, 1982 upheld the settlement of the country liquor shop with the appellants. Being aggrieved by the decision of the Board, two sets of unsuccessful tenderers viz, respondents Nos. 1 and 2 and the interveners Daya Ram Borah and Prabin Kumar Borah filed petitions under article 226 of the Constitution before the Assam High Court being Civil Rule Nos. 215 of 1982 and 1163 of 1982. The High Court instead of taking up both the writ petitions together, heard and decided the writ petition filed by respondents Nos. 1 and 2 and by its judgment dated November 4, 1982 quashed the order of the Board of Revenue and remitted the appeal to the Board for a decision afresh in the light of the observations made by it. The Board however by its order dated December 3, 1982 maintained the settlement of the country liquor shop with the appellants. Thereupon, respondents Nos. 1 and 2 again moved the High Court under article 226 for appropriate writ, direction or order in the matter of grant of the liquor licence. The High Court by its judgment dated May 7, 1983 quashed the order of the Board of Revenue and instead of remitting the matter to the Board for a decision afresh, issued a writ of mandamus by which it directed the Deputy Commissioner to settle the liquor shop with respondents Nos. 1 and 2 for the remaining period of the grant upto March 31, 1984. While making the direction the High Court observed that 'in case it was found that respondents Nos. 1 and 2 were benamidars of anybody, it would be open to the settling authority i.e. the Deputy Commissioner to cancel the liquor licence '. Further, it observed that 'the grant ' would be subject to the result of the decision in the writ petition filled by the interveners i.e. Civil Rule No. 1163 of 1982 '. Before proceeding further, it is necessary to refer to certain provisions of the Assam Excise Act, 1910 (for short 'Act ') and the Assam Excise Rules, 1945 (for short 'Rules ') as amended from time to time. Section 18(1) of the Act provides: "18 (1). Prohibition of sale without licence, and the exceptions to such prohibitions No intoxicant shall be sold except under the authority and in accordance with the terms and conditions of a licence granted by the Authority prescribed in the rules framed under this Act. " Rule 208 provides as follows: "Advisory Committee The Collectors should make settlements in consultation with an advisory committee. " 830 Rule 223(2) provides: "In making settlement to any person preference shall always be given to the educated unemployed youths or to co operatives and co opt firms formed by such educated unemployed youth. Preference shall also be given to the persons belonging to the more backward classes. " Note: The term 'educated unemployed youth ' as mentioned in sub rule (2) of Rule 223 means a person not exceeding 35 years of age who has passed the H.S.L.C. or its equivalent examination and is without any employment." A few facts have to be stated. Before the Board of Revenue passed its earlier order dated February 11, 1982 upholding the grant of licence by the Deputy Commissioner by his order dated August 28, 1981, the Board had called a report from the Deputy Commissioner, Sibsagar, Jorhat and had also before it a parawise comment of the Deputy Commissioner. On an evaluation of the comparative merits and demerits and after eliminating the other sets of competitors ' the Board upheld the grant of licence made by the Deputy Commissioner in favour of the appellants. On a careful consideration of the material on record and in the light of the confidential report made by the Deputy Commissioner, the Board held that respondent Nos. 1 and 2 were not suitable for the grant of licence for the country liquor shop. As regards respondent No.1 Parag Saikia, the Board relying upon the report of the Deputy Commissioner held that he was a mere benamidar of a prominent businessman of Dibrugarh who was trying to corner big liquor shops at Jorhat and that it was evident from the report that he mostly resides at Gauhati enjoying the pay and perquisites provided by this businessman and that he was apparently not an unemployed person as he was resorting to highly expensive litigation for getting a liquor shop licence. Further, the Board observed that he had the means not only to prefer appeals before the State Government and the Board of Revenue but that he had also repeatedly moved the High Court for the grant of appropriate writ, direction or order in the matter of settlement of a country liquor shop which showed that he had some strong financier behind him. As regards respondent No.2 Prafulla Barua who was still a student studying for his B.Sc. degree and staying in a hostel at Golaghat, the Board held that he could not be treated as an 'educated unemployed youth ' within the meaning of the note beneath r.223 of the Rules. 831 In reaching the conclusion that it did, the Board of Revenue observed: "In an excise settlement apart from the finance, there is also the question of general suitability of the tenders for a particular shop. It came out during the hearing that this is one of the Sibsagar District. As such substantial revenue of the State is involved in this shop and the suitability of the lessee has therefore to be examined very closely. Under Rule 232 of the Excise Rules, no distinction can be drawn between the legal liabilities of the two partners who will be jointly and severally responsible for the management of the shop. It is implicit in this Rule that the partners have to be more or less equal partners. It is also implicit that the settling authority should be satisfied about their respective role, responsibilities, investments and involvements. On a total consideration of the tender, the memo of appeal and the various affidavits and other documents filed on behalf of the appellant Parag Saikia, it appears doubtless that he is the dominant partner and his associate appears more as a show boy than even as a sleeping partner. " The Board then went on to say: "Reverting to the partnership of the appellants it is observed that their respective financial investment and physical involvement as well as the sharing of the profit or loss is not known. Indeed for the two persons living in two different Sub divisional Head quarter towns and having a substantial difference in age and present status, it is difficult to be definite that they have the needed concord and compatibility or unity and understanding for operating a major shop like this. Again, in a double lessee shop what is needed is not just a second helping hand to a lessee but it requires persons of a minimum calibre from the point of intelligence, experience and businessman. Parag Saikia by his own admission found that the firm set up by him or joined by him had failed or were non starters. These considerations might have weighed with the Advisory Committee and the District Collector in not setting with Parag Saikia even any of the smaller shops for which he is known to have tendered 832 and Prafulla Barua being still an undergraduate student might have been considered unsuitable on that ground as well among others. " The Board of Revenue accordingly held that respondent No. 1 Parag Saikia was a mere benamidar and therefore ineligible for the grant of licence while respondent No. 2 Prafulla Barua being still a student studying for his B.Sc. degree was not suitable for grant of such privilege, and at any rate, he could not be encouraged when educated unemployed youths and other suitable tenderers were available. It found considerable force in the submission that the Board should adopt it as a policy to discourage students from entering into liquor business. Regrettably, the High Court while allowing the writ petition preferred by respondent Nos. 1 and 2 passed certain strictures which, in our opinion, should have been avoided. It found fault with the Board of having acted on the report of the Deputy Commissioner observing that 'the Board could not act on the ipse dixit of the Deputy Commissioner '. Further, the High Court held that there was no basis for the Board to adopt a policy to discourage students from entering into liquor business when there was no such legal bar. Still further, it observed that merely because respondent No. 2 Prafulla Barua was a student of B.Sc. class and was staying at a hostel at Golaghat which was about 30 miles away, it would not be difficult for him to carry on a partnership business at Jorhat where his cousin lives and further that he answers the description of 'educated unemployed youth ' envisaged in the note beneath r.223 of the Rules. It recorded that respondent No. 2 Prafulla Barua had given an undertaking that he would give up his studies if the settlement of the liquor shop was made in his favour. There was no warrant for any of these observations made by the High Court and the High Court was not entitled to enter into a question of fact as to whether or not respondent No. 1 Parag Saikia was a mere benamidar. It is somewhat strange that the High Court should have taken an undertaking from respondent No. 2 Prafulla Barua that he would give up his studies if the settlement was made in his favour and observed that there was nothing in law to discourage students still undergoing their studies from entering into the liquor business and that he falls within he category of 'educated unemployed youth ' within the note beneath r.223 of the Rules 833 On remand, the Board of Revenue by its order dated December 2, 1982 reacted sharply to the observations and went on to say that the observations were uncalled for. That apart, the Board observed that since the observations were on questions of fact, they could not be taken as binding on the Board. It reaffirmed its earlier order upholding the grant of the licence to the appellants by the Deputy Commissioner. As regards respondents Nos. 1 and 2, the Board relying on the report of the Deputy Commissioner held them to be unsuitable for the grant of licence. It held that respondent No. 1 Parag Saikia was a mere benamidar of a mahaldar of Dibrugarh district who had cast his net far and wide in the Jorhat sub division and that respondent No. 2 Prafulla Barua who was still undergoing his studies for the B.Sc. degree could not be regarded as falling within the category of educated unemployed youth appearing in the note beneath r.223 of the Rules. Thereupon, respondents Nos. 1 and 2 again moved the High Court under Art.226 of the Constitution for appropriate writ, direction or order in the matter of grant of the liquor licence. As was expected, the High Court strongly deprecated the action of the Board of Revenue defying the directions made by the High Court in exercise of its jurisdiction under article 226 of the Constitution and held that the Board had no other alternative but to decide the matter afresh in the light of the directions given by the High Court and expressed its regret that it had not done so at all observing: "Such an effort of subordinate tribunal is fraught with grave danger to the administration of justice known to the people of this country and had to be duly taken note of with great concern by all." The High Court then went on to observe that the Board had thrown all judicial decorum and discipline to the winds by disregarding its judgment. It further observed: "A perusal of the impugned judgment shows that though the petitioners are entitled to preference under r.223(2) of the Assam Excise Rules, 1945, hereinafter the Rules, whereas the respondents land 2 are not, they have not been found suitable for settlement for these reasons; (i) Parag, one of the petitioners, is a benamidar; 834 (ii) the partnership in question is sham; and (iii) the petitioners are not financially sound to run the shop. " After adverting to the well settled principles relating to the power of the High Courts under Art.226 of the Constitution to issue a writ of certiorari and observing that it was conscious of its own limitations in the matter, the High Court nonetheless observed that 'it could definitely set aside the order of an inferior tribunal like the Board of Revenue founded even on some factual conclusions if they were based on irrelevant or extraneous materials or be such which no reasonable person could have reached or if they were grounded on a total misconception of law '. It held that a finding reached by the Board by disregarding the directions given to it by the High Court was in excess of jurisdiction. It is regrettable that the Board of Revenue failed to realize that like any other subordinate tribunal, it was subject to the writ jurisdiction of the High Court under Art.226 of the Constitution. Just as the judgments and orders of the Supreme Court have to be faithfully obeyed and carried out throughout the territory of India under Art.142 of the Constitution, so should be the judgments and orders of the High Court by all inferior courts and tribunals subject to their supervisory jurisdiction within the State under Art.226 and 227 of the Constitution. We cannot but deprecate the action of the Board of Revenue in refusing to carry out the directions of the High Court. In Bhopal Sugar Industries Limited vs Income tax Officer Bhopal, the Income tax Officer had virtually refused to carry out the clear and unambiguous directions which a superior tribunal like the Income tax Appellate Tribunal had given to him by its final order in exercise of its appellate powers in respect of an order of assessment made by him. The Court held that such refusal was 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 the hierarchy of courts. The facts of the present case are more or less similar and we would have allowed the matter to rest at that but unfortunately the judgment of the High Court directing the issue of a writ of mandamus for the grant of a liquor licence to respondents Nos. 1 and 2 cannot be sustained. The High Court dealt with the finding of the Board as to whether or not the alleged partnership between respondents Nos.1 835 and 2 was genuine. As regards the suitability in their ages which, according to the Board, would stand in the way of needed. concord and compatibility, it felt that it was for respondent No.2 Prafulla Barua to decide whether respondent No.1 Parag Saikia was a suitable person with whom he should enter into a partnership. Secondly, the High Court observed that it would not be difficult for respondent No.2 Prafulla Barua although he was a student studying for his B.Sc. degree and staying in a hostel at Golaghat which was some 30 miles away from Jorhat to carry on the liquor business in partnership. Thirdly, the High Court went into the question whether they had the requisite financial capacity to fulfil the requirements of r.346. From all this, it is quite evident that the High Court was oblivious of the limitations of its own powers under Art.226 of the Constitution in the matter of grant of a writ of certiorari. It was impermissible for the High Court to have embarked upon an inquiry into the facts to adjudge the suitability or otherwise of the rival pairs of claimants and upon a reappraisal of the evidence come to a finding contrary to that reached by the Board of Revenue. There was nothing on record to show that the Board had acted in excess of jurisdiction or there was an error apparent on the face of the record which resuited in manifest injustice. That apart, it was not a proper exercise of jurisdiction under Art.226 of the Constitution for the High Court to have issued a writ of mandamus ordaining the Deputy Commissioner to grant the liquor licence to respondents Nos.1 and 2 in preference to the appellants. Although a writ of mandamus may be a necessary adjunct to a writ of certiorari, in the High Court was satisfied that a writ of certiorari had to be issued to quash the impugned order of the Board of Revenue on the ground that its order was vitiated by an error apparent on the face of the record, the proper course for the High Court to adopt was to have issued a writ of mandamus to hear and redetermine the appeal according to law: H.W.R. Wade 's Administrative Law, 5th edn., p.638. The High Court was also in error in holding that the earlier order passed by the High Court remanding the case to the Board of Revenue contained a direction requiring the Board not to act upon the report of the Deputy Commissioner. The fact that the Board had in the past in some other case viz. for the grant of liquor licence for Melan Country Spirit Shop not acted upon the report of the Deputy Commissioner against respondent No.1 Parag Saikia was not 836 a ground sufficient for ignoring the adverse report of the Deputy Commissioner against him in the present case. It would be apposite to quote the report which reads as follows: "Jorhat town country spirit shop No.1 (with which shop we are concerned) is meant for joint lessee. Just after the submission of the tender on 21.8.81 secret information was received to the effect that Shri Parag Saikia (one of the petitioners in the case) is in the private employment of a prominent businessman of Dibrugarh district who is also said to be benamidar of important C.S. shops and Shri Saikia resides in Gauhati for the greater part of the year enjoying all the perquisites of the employer, The secret information further indicates that the said benamidar of Dibrugarh district was trying to grab important shops of Jorhat Sub Division through Parag Saikia. The matter was discussed in the Advisory Board which rejected the tender of the joint appellant. " Further, the High Court had observed that the Board could not have relied upon the report of the Deputy Commissioner unless respondents Nos.1 and 2 were confronted with the same and respondent No.1 was allowed to have his say in the matter. The responding of the High Court can hardly be supported. In the first place, the Deputy Commissioner is the head of the administration of the district and is conversant with the local situation and has secret sources of information. Normally the Board is entitled to rely upon the word of the Deputy Commissioner. It is expected that the Deputy Commissioner would always act with a sense of responsibility. Secondly, the report of the Deputy Commissioner was confidential in nature. There was no question of the Board disclosing the contents of the report to respondents Nos. 1 and 2. Further, respondents Nos.1 and 2 never made a demand for a copy of the report, and even if such a request was made the Board would have been fully justified in not furnishing the same. Such a refusal would not amount to denial of natural justice for the obvious reason that the rules of natural justice must necessarily vary with the nature of the right and the attendant circumstances. The grant of a liquor licence was not a matter of right but merely in the nature of privilege, Furthermore, the Board was entitled to call for a report of the Deputy Commissioner in an appeal of this nature. 837 We cannot also subscribe to the view expressed by the High Court that respondent No.2 Prafulla Barua who is a student of B.Sc. class still undergoing his studies falls within the description of 'educated unemployed youth ' appearing in the note beneath r.223 of the Rules. In our judgment, the expression 'educated employed youth has definite legal connotation. It denotes a class of citizens who after completing their education are faced with unemployment R.223(2) read with the note embodies a rule of preference. The question of grant of preference under the note beneath r.223(2) can only arise when other conditions as regards suitability of the rival tenderers is equal Besides, the construction placed by the High Court on the expression 'educated unemployed youth ' is manifestly erroneous. By no stretch of imagination can a student still under going his studies in the university be regarded as having completed his education or being 'unemployed ' youth. When a person is still pursuing his course of studies in a university, we fail to see any basis for treating him as an 'educated unemployed youth '. The judgment of the High Court directing the issue of a licence to respondents Nos.1 and 2 being based on the rule of preference contained in the note beneath r.223 of the Rules cannot therefore be supported. The judgment of the High Court also suffers from a serious infirmity. As already stated, instead of remitting the matter to the Board of Revenue, the High Court issued a mandamus directing the Deputy Commissioner to make a grant of the licence to respondents Nos.1 and 2. While doing so, the High Court made a direction that the grant of licence would be subject to the result of the inquiry as to whether respondent No.1 Parag Saikia was a benamidar and therefore not entitled to such grant. Moreover, the High Court made the grant subject to the result of the writ petition filed by the interveners Daya Ram Borah and Prabin Kumer Borah which was still pending before it against the earlier order, of the Board dated February 11, 1982. We fail to appreciate the making of a grant in favour of respondents No. 1 and 2 subject to the result of the inquiry as to whether respondent No.1 Parag Saikia was a mere benamidar. If that were to be so, it would affect the validity of the grant itself. Further, the procedure adopted by the High Court in separately dealing with the writ petition filed by respondents Nos.1 and 2 making a grant of the licence to them for the country spirit shop in question while the earlier writ petition filed by the interveners was still pending was not in consonance with law and rules of fairplay and justice. 838 Before parting with the case we must express our deep sense of anguish that there should have been this unseemly tussle between the High Court and the Board of Revenue, particularly the lack of restraint in the language used by the Board in its order dated December 3, 1982. We also feel that the High Court was not right in criticizing the Board of Revenue in such strong language. The use of harsh language does not redound to the credit of anyone. There must be restraint at all levels as otherwise there can be no rule of law and our entire system of administration of justice will fail. For these reasons, we set aside the judgment and order of the High Court, as a consequence whereof the order of the Board of Revenue dated December 3, 1982 will stand restored. We hope and trust that the High Court will be able to dispose of the writ petition as expeditiously as possible. The writ petition filed by the interveners shall also be heard and disposed of by the High Court along with this writ petition according to law. There shall be no order as to costs. H.S.K. Appeal remanded.

The Board of Revenue on a consideration of the material on record as to the suitability or otherwise of the rival pairs of claimants upheld the grant of a liquor licence made by the Deputy Commissioner in favour of the appellants. It held that respondent No. 1 was a mere benamidar of a prominent businessman and respondent No. 2 being still a student studying for his B.Sc. degree could not be treated as an 'educated unemployed youth ' within the meaning of the note beneath r. 223 of the Assam Excise 'Rules, 1945. The respondent Nos. 1 and 2 and the interveners separately moved the High Court under article 226 of the Constitution. The High Court instead of taking up both the petitions together: took: the writ petition filed by respondents Nos. 1 and 2 and on a reappraisal of the evidence came to the conclusion contrary to that reached by the Board. It accordingly quashed the order of the Board of Revenue and remanded the matter to the Board for a decision afresh, in the light of the directions made by it. The Board took serious exception to certain observations made by the High Court and held that the directions issued were nothing but mere observations and therefore it was not bound by it. After hearing the parties, the Board maintained its earlier order confirming the settlement of the liquor shop by the Deputy Commissioner with the appellants. Respondents Nos. 1 and 2 again moved the High Court under article 226. The High Court passed strictures on the Board of Revenue for not having complied with its directions and on a consideration of the facts appearing came to the same 826 conclusion as before and quashed the order of the Board but instead of remanding the matter to the Board for complying with its earlier orders issued a writ of mandamus directing him to settle the country liquor shop with respondents Nos. 1 and 2 on condition that the grant would be subject to an inquiry as to whether respondent No. 1 was a mere be subject and also subject to the result of earlier writ petition filed by the interveners which was still pending. In appeal, the two questions which arose were :(1) whether it was impermissible for the High Court to have embarked upon an inquiry into facts and on a reappraisal of the evidence come to a finding contrary to that reached by the Board of Revenue and upon that basis issue a writ of certiorari under article 226 quashing the order of Board. And (2) Whether it was a proper exercise of jurisdiction by the High Court under article 226 to have issued a writ of mandamus ordaining the Deputy Commissioner to settle the country liquor shop with respondents Nos. 1 and 2. Answering the first question in the affirmative and the second in the negative. ^ HELD : 1. The High Court clearly exceeded its jurisdiction while issuing a writ of certiorari under article 226 of the Constitution in quashing the impugned order of the Board of Revenue to have embarked upon an inquiry into the facts and upon a reappraisal of the evidence come to the conclusion contrary to that reached by the Board of Revenue viz. whether or not respondent No. 1 was a mere benamidar. [837 F G] 2. It was also not a proper exercise of jurisdiction under article 226 for the High Court to have issued a writ of mandamus directing the Deputy Commissioner to grant the liquor licence to respondents Nos. 1 and 2 in preference to the appellants. Although a writ of mandamus may be a necessary adjunct to a writ of certiorari, if the High Court was satisfied that a writ of certiorari had to be issued to quash the impugned order of the Board of Revenue on the ground that its order was vitiated by an error apparent on the face of the record, the proper course for the High Court to adopt was to issue a writ of mandamus to the Board to hear and redetermine the appeal according to law. [835 E F] HWR Wade 's Administrative Law, 5th edn., p. 638, referred to. The construction placed by the High Court on the meaning of the expression 'educated unemployed youth ' appearing in the note beneath r. 223 of the Rules is apparently erroneous. When a person is still pursuing his course of studies in a university, one fails to see any basis for creating him as an 'educated unemployed youth. The expression 'educated unemployed youth, in the note beneath r. 223 has a definite legal connotation. It denotes a class of citizens, who after completing their education, are faced with the growing problem of unemployment. [837 B D] 827 4. The direction made by the High Court while issuing a writ of mandamus to the Deputy Commissioner ordaining him to grant the liquor licence to respondents Nos. 1 and 2 that the grant would be subject to the result of an inquiry as to whether respondent No. 1 was a mere benamidar and also subject to the result of the writ petition which was filed by the interveners and still pending, appears to be unwarranted. If that were to be so, it would affect the validity of the grant itself. It was also irregular for the High Court to have taken an undertaking from respondent No. 2 who was a student still undergoing his studies for B.Sc. degree in a university that he would give up his studies in case he was given the liquor licence. The procedure adopted by the High Court in separately hearing the writ petition filed by respondents Nos. 1 and 2, while the writ petition filed by the interveners was still pending, and in not taking up both the writ petitions together, and directing the Deputy Commissioner to issue a liquor licence to respondents Nos. 1 and 2, was not in consonance with the procedure established by law and clearly in denial of rules of fairplay and justice. The Board of Revenue was bound to comply with the directions made by the High Court and it was not open to it to say that they were mere observations and not directions issued. The refusal of the Board to comply with the directions of the High Court issued under article 226 was in effect a denial of justice and also destructive of one of the basic principles in the administration of justice based as it is in this country on a hierarchy of Courts. Bhopal Sugar Industries Limited vs Income tax Officer, Bhopal. [1961] 1 S C.R. 474 relied on.

Writ Petition NOS. 2656 60. 2935 40, 2941 46, 2947 52, 3402, 3467, 3595, 3600 03, 3608, 3632, 3653, 3661, 3821, 3890 93, 4590 93,. 4613 15, 5222, 5576, 5600 02, 5726 27, 7410. 8459 62, 8825, 8944 of 1981, 1325 of 1982, 470 72 of 1984. T C. Nos. 23 of 1983 and 23 of 1984. AND Writ Petitions Nos. 3114 17 of 1981 WITH Writ Petitions Nos. 3393 93 of 1981 WITH Writ Petitions No. 3853 of 1981 WITH Writ Petitions Nos. 6446 47 of 1181 (Under Article 32 of the Constitutions of India) A.K. Sen, A.B. Divan, F.S. Nariman, K.K. Venugopal, B.R. Agarwala, Miss Vijay Lakshmi Menon, A.K Ganguli P.H. Parekh, C.S. Vaidyanalingam, D.N. Mishra, Pravin Kumar, KR. Nambiar, M.C. Dhingra, Miss Sieta Vaidyalingam, P.C. Kapur, Pramod Dayal, CM 300 Nayar, S.S, Munjral, KK .Jain, S.K. Gupta, A.l). Sangar, Ranjan Mukherjee, Sudip Sarkar, P.K. Ganguli, Miss Indu Malhotra, PR. Seetharaman and V. Shekhar for the petitioners. K. Parasaran, Attorney General of India, Krishna Iyer, P.A. Francis, A. Subba Rao, Dalveer Bhandari and R.N. Poddar for the respondents. F.S. Nariman, section Dholakia, Soli J. Sorabjee, Anil B. Divan J.B. Dadachandji section Sukumaran, D.N. Mishra, KP. Dhanda pani, R.C. Bhatia, P.C. Kapur, A.N. Haksar, O.C. Mathur, Miss Meera Mathur, Dr. Roxna Swamy, Arun Jetley, P.H. Parekh, Miss Divya Bhalla and Pinaki Misra for the intervener The Judgment of the Court was delivered by VENKATARAMIAH, J. I Pleadings The majority of Petitioners in these petitions filed under Article 32 of the Constitution are certain companies, their share holders and their employees engaged in the business of editing, printing and publishing newspapers, periodicals, magazines etc Some of them are trusts or other kinds of establishments carrying on the same kind of business. They consume in the course of their 5 activity large quantities of newsprint and it is stated that 60% of the expenditure involved in. the production of a newspaper is utilised for buying newsprint, a substantial part of which is import ed from abroad. They challenge in these petitions the validity of the imposition of import duty on newsprint imported from abroad under section 12 of the (Act 52 of 1962) read with section 2 and Heading No. 48/01/21 Sub heading No. (2) in the First Schedule to the (Act 51 of 1975) and the levy of auxiliary duty under the Finance Act, 1981 on newsprint as modified by notifications issued under section 25 of the with effect from March 1, 1981. The first set of writ petitions challenging the above levy was filed in May, 1981. At that time under the read with the , customs duty of 40 '% ad valorem was payable on newsprint. Under the Finance Act, 1981 an auxiliary duty of 30% ad valorem was payable in addition to the customs duty. But by notifications issued under section 25 of the , the customs duty had been reduced to 10% 301 ad valorem and auxiliary duty had been reduced to 5% ad valorem in the case of newsprint used for printing newspapers, books and A periodicals. During the pendency of these petitions while the was amended levying 40% ad valorem plus Rs. 1,000 per MT as customs duty on newsprint, the auxiliary duty payable on all goods subject to customs duty was increased to 50% ad valorem. But by reason of notifications issued under section 25 of the customs duty at a flat rate of Rs. 550 per MT and auxiliary duty of Rs. 275 per MT are now being levied on newsprint i.e. in all Rs. 825 per MT is now being levied. The petitioners inter alia contend that the imposition of the import duty has the direct effect of crippling the freedom of speech and expression guaranteed by the Constitution as it has led to the increase in the price of newspapers and the inevitable consequence of reduction of their circulation. It is urged by them that with the growth of population and literacy in the country every newspaper is expected to register an automatic growth of at least 5% in its circulation every year but this growth is directly impeded by the increase in the price of newspapers. It is further urged that the method adopted by the and the in determining the rate of import duty has exposed the newspaper publishers to the Executive interference. The petitioners contend that there was no need to impose customs duty on news print which had enjoyed total exemption from its payment till March 1, 1981, as the foreign exchange position was quite comfortable. Under the scheme in force, the State Trading Corporation of India sells newsprint to small newspapers with a circulation of less than 15,000 at a price which does not include any import duty, to medium newspapers with a circulation between 15,000 and 50,000 at a price which includes 5% ad valorem duty (now Rs. 275 per MT) and to big newspapers having a circulation of over 50,000 at a price which includes the levy of 15% ad valorem duty (now Rs. 825 per MT). It is stated that the classification of newspapers into big, medium and small newspapers is irrational as the purchases on high seas are sometimes effected by a publisher owning many newspapers which may belong to different classes. The petitioners state that the enormous increase in the price of newsprint subsequent to March 1, 1981 and the inflationary economic conditions which have led to higher cost of production have made it impossible for the industry to bear the duty any longer. Since the capacity to bear the duty is an essential element in determining the reasonableness 302 Of the levy, it is urged, that the continuance of the levy is violative of Article 19(1)(a) and Article 19(1)(g) of the Constitution. It is suggested that the imposition of the levy on large newspapers by the Executive is done with a view to stifling circulation of news. papers which are highly critical of the performance of the administration. Incidentally the petitioners have contended that the classification of newspapers into small, medium and big for purposes of levy of import duty is violative of Article 14 of the Constitution. The petitioners have appended to their petitions a number of annexures in support of their pleas. On behalf of the Union Government a counter affidavit is filed. The deponent of the counter affidavit is R. section Sidhu, Under Secretary to the Government of India, Ministry of Finance, Department of Revenue. In paragraph 5 of the counter affidavit it is claimed that the Government had levied the duty in the public interest to augment the revenue of the Government. It is stated that when exemption is given from the customs duty, the Executive has to satisfy itself that there is some other corresponding public interest justifying such exemption and that in the absence of any such public interest, the Executive has Do power to exempt and that it has to carry out the mandate of Parliament which has fixed the rate of duty by the . It is also claimed that the classification of newspapers for purposes of granting exemption is done in the public interest having regard to the relevant considerations. It is denied that the levy suffers from any malafides. It is pleaded that since every section of the society has to bear its due share of the economic burden of the State, levy of customs duty on newsprint cannot be considered to be violative of Article 19 (1) (a) of the Constitution. But regarding the plea of P the petitioners that the burden of taxation is excessive, the counter affidavit states that the said fact is irrelevant to the levy of import duty on newsprint. In reply to the allegation of the petitioners that there was no valid reason for imposing the duty as the foreign exchange position was quite comfortable, the Union Government has stated that the fact that the foreign exchange position was quite comfortable was no bar to the imposition of import duty. It is further pleaded that since the duty imposed is an indirect tax which would be borne by the purchaser of newspaper, the petitioners cannot feel aggrieved by it. II A Brief History of the levy of Customs Duty on Newsprint In order to appreciate the various contentions of the parties 303 it is necessary to set out briefly the history of the levy of customs A duty on newsprint in India. Even though originally under the Indian Tariff Act, 1934, there was a levy of customs duty on imported paper, exemption had been granted for import of white, grey or unglazed newsprint from the levy of any kind of customs duty in excess of 1.57 per cent ad valorem but subsequently a specific import duty of Rs. 50 per MT used to be levied on newsprint imports upto 1966. The question of levy of customs duty on newsprint was examined by the Inquiry Committee on Small Newspapers. In its Report submitted in 1965 that Committee recommended total exemption of newsprint from customs duty because in 90x/Q of the countries in the world no such levy was being imposed because newspapers played a vital role in a democracy. On the basis of the said recommendation, the Government of India abolished customs duty on newsprint altogether in the year 1966 in exercise of its power under section 25 of the . The price of newsprint was Rs. 725 per MT during the year 1965 66 but there was a sudden spurt in its price in 1966 67 when it rose to Rs. 1155 per MT. During the period 1966 71 although almost all imported goods suffered basic regulatory and auxiliary customs duty, there was no such levy on newsprint in spite of severe foreign exchange crisis which arose on the devaluation of the Indian Rupee in 1966. But on account of the financial difficulties which the country had to face as a consequence of the Bangladesh war in 1971, a regulatory duty of 2 1.2% was levied on newsprint imports to meet the difficult situation by the Finance Act of 1972. The price of newsprint in the year 1971 72 was Rs. 1134 per MT. The above 2 1/2% ad valorem regulatory duty was abolished by the Finance Act of 1973 P and was converted into 5% auxiliary duty by the said Act. This levy of 5% was on all goods including newsprint imported into India. On April 1, 1974 under the Import Control order issued under section 3 of the Imports and Exports Control Act, 1947, import of newsprint by private parties was banned and its import was canalised through the State Trading Corporation of India. In 1975, the came into force. By this Act the Indian Tariff Act, 1934 was repealed. Under section 2 read with Heading No. 48.01/ 21 of the First Schedule to the , a levy of basic customs duty of 40% ad valorem was imposed on newsprint. But in view of the exemption granted in the year 1966 which remained in force, the imposition made by 304 the did not come into force. Only 5% auxiliary duty which was levied from April 1, 1973 continued to be in operation. In the budget proposals of July, 1977, the 5% auxiliary duty was reduced to 2 1/2% but it was totally abolished by a notification issued under section 25 of the on July 15, 1977. The notification dated July IS, 1977 read as follows: "NOTIFICATION CUSTOMS GSR No. In exercise of the powers conferred by sub section (1) of section 25 of the (52 of 1962) and in supersession of the notification of the Government of lndia in the Department of Revenue and Banking No. 72 Customs dated the 18th June 1977, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts newsprint, falling under sub heading (2) of Heading No. 48.01 21 of the First Schedule to the (51 of 1975), when imported into India, from the whole of that portion of the duty of customs leviable thereon, which is specified in the said First Schedule. sd/ (Joseph Dominic) Under. Secretary to the Government of India. " The price of newsprint during the year 1975 76 was Rs. 3676 per MT. The total exemption from customs duty imposed on newsprint was in force till March 1, 1981. In the meanwhile the Central Government notified increased salaries and wages to k employees of newspaper establishments in December, 1980 on the recommendations contained in the Palekar Award. On March 1, 1981, the notification dated July 15, 1977 issued under section 25 (1) of the granting total exemption from customs duty was superseded by the issue of a fresh notification which stated that the Central Government had in the public interest exempted newsprint imported into India for printing of newspapers, books and periodicals from so much of that portion of the duty of customs leviable thereon as was in excess of 10 per cent ad valorem. The effect of the said notification was that publishers of newspapers had to pay ten per cent ad valorem customs duty on imported newsprint. By another notification issued at about the same time auxiliary 305 duty imposed by the Finance Act of 1981 above 5 per cent ad valorem was exempted in the case of newsprint. The net result . was that a total duty of IS per cent ad valorem came to be imposed on newsprint for the year 1981 82. The explanation given by the Government in support of the above notification was as follows: "Customs duty on newsprint: Originally, import of newsprint did not attract any customs duty. The Government of India abolished the . customs duty on newsprint after the devaluation of the rupee on the recommendation of the Inquiry Committee on Small Newspapers (1965). The Committee had mentioned in its report that 80% of the newsprint in international trade was free from customs duty and had recommended complete abolition of customs duty on newsprint. However, during the Bangladesh crisis in 1971, a2.1/2% ad valorem regulatory duty was imposed on newsprint imports. Subsequently, this was abolished on April 1,1973 and in its place a 5% auxiliary customs duty on newsprint imports was proposed in the Union Budget Proposals for 1973 74. While no customs duty was levied on newsprint because of the exemption granted by Customs Notification No. 235/F.No.527/1/76 CUS (TU) dated August 2,1976 of the Department of Revenue and Banking, 5% auxiliary duty was continued to be levied on imported newsprint till July 15,1977 when the Ministry of Finance, Department of Revenue by its Notification No. 148/F.No. Bud (2) Cus/77 dated July l5,1977 exempted newsprint from the whole of duty of customs. Prior to this the Ministry of Finance, Department of Revenue vide its Customs Notification No. 72/F. No. Bud. (2) Cus/77 dated June 18,1977 had reduced the auxiliary duty to 2 1/2%. In the Budget proposals for the current year, the Minister of Finance has proposed a customs duty of 15% on newsprint imports which has become effective from March 1,1981 because of the Customs Notification No. 24/F. No. Bud (Cus)/81 dated March 1,1981. This 15% customs duty constitutes 10% basic duty and 5% auxiliary duty. " 306 The price of imported newsprint in March 1,1981 was A Rs. 4,560 per MT. The extract from the speech of the Finance Minister in support of the imposition of a total 15% of duty (10% basic duty and 5% auxiliary duty) on newsprint is given below; "The levy of 15 per cent customs duty on newsprint has understandably attracted a good deal of comment both within the House and outside. As it has been explained in the Budget speech, this levy is intended to promote a measure of restraint in the consumption of imported newsprint and thus help in conserving foreign exchange. In the light of the observations made by the Hon. Members in the course of the General Debate on the Budget I had assured the House that I would try to work out a scheme of providing relief to small and medium newspapers about which Members had voiced their special concern. We have now worked out the modalities of a scheme for affording relief to small and medium newspapers. Under this Scheme, the State Trading Corporation would sell imported newsprint to small newspapers at a price which would not ! include any amount relatable to import duty. Medium newspapers will get their newsprint at a price which, would include an amount relatable to import duty 'of S per cent ad valorem. Big newspapers would, however, pay a price which will reflect the full duty burden of 15 per cent ad valorem. There is a definition of small, medium and big newspapers in the Press Council. At the moment the present definition is that these which have a circulation of 15,000 or less are classified as small, those with a circulation of more than 15,000 but less than 50,000 are classified as medium and those with a circulation of over 50,000 are called big newspapers. Therefore, the small newspapers with a circulation of 15,000 and less will not pay any customs duty those with a circulation between 15,000 and 50,000 will pay customs duty of 5 per cent and with a circulation of over 50,000 will pay 15 per cent. Suitable financial arrangements will be worked out as between ' Government and the State Trading Corporation to enable the STC to give effect to these concessions. As Hon. Members are aware, the categorisation of newspapers as small, medium and big in 307 terms of circulation is already well understood in the A industry and is being followed by the Ministry of Information and Broadcasting for purposes of determining initial allocation of newsprint and for setting the rates of growth of consumption of newsprint by various newspapers from year to year. The State Trading Corporation will, for purposes of the present scheme, follow, the same categorisation of newspapers into small, medium and big. These arrangements will. in effect, provide a relief of about Rs. 5.86 crores to small and medium newspapers. " The relevant provisions of the laws imposing customs duty and auxiliary duty on newsprint which arise for consideration are these: Section 12 of the reads: "12. Dutiable goods. (1) Except as otherwise provided n in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the (5l of 1975), or any other law for the time being in force, on goods imported into or exported from India. (2). . , Section 2 of the reads: "2. Duties specified in the Schedules to levied. The rates at which duties of customs shall be levied under the , are specified in the First and Second Schedules. " The relevant part of Chapter 48 of the First Schedule to the which deals with import tariff read in 1981 thus: "Heading Sub heading No. Rate of duty Duration No. and description Standard Preferential when of article Areas rates of duty are protective 308 (1) (2) (3) (4) (5) 48.01/21. . . . . . . . . (2) Newsprint containing mechanical wood pulp amounting to not less than 70 per cent of the fibre content 40% (excluding chrome, marble, flint, poster, stereo and art paper) . . . . . . . . . " Newsprint used by the petitioners falls under Sub heading (2) of Heading No. 48.O1/21 by Which 40% ad valorem customs duty is levied on it. By the Finance Act of 1982 in sub heading No. (2) of Heading No. 48.O1/21, for the entry in column (3), the entry "40% plus Rs. 1,000 per tonne was substituted. The relevant part of section 44 of the Finance Act, 1982 which levied an auxiliary duty of customs read thus: "44. (1) In the case of goods mentioned in the First Schedule to the , or in that Schedule, as amended from time to time, there shall be levied and collected as an auxiliary duty of customs an amount equal] to thirty per cent of the value of the goods as determined in accordance with the provisions of section 14 of the (hereinafter referred to as the ). . . . . . . . . . " The above rate of auxiliary duty was to be in force during the financial year 1982 83 and it was open to the Government to grant exemption from the whole or any part of it under section 25 of the . Section 45 of the Finance Act, 1983 imposed fifty per cent of the value of the goods as auxiliary duty in the place of thirty per cent imposed by the Finance Act, 1982. 309 But by notifications issued on February 28,1982 under section A 25 (2) of the , which were issued in supersession of the notification dated March 1, 1981, Rs. 550 per tonne was imposed as customs duty on newsprint and auxiliary duty was fixed at Rs. 275 per tonne. In all Rs. 825 per tonne of newspaper has to be paid as duty. The high sale price of newsprint had by that time gone up above Rs. 5,600 per tonne. What is of significance is that when the Government was of the view that the total customs duty on newsprint in the public interest should be not more than 15 per cent and when these writ petitions questioning even that 15 per cent levy were pending in a this Court, Parliament was moved by the Government specifically to increase the basic customs duty on newsprint by Rs. 1,000 per tonne by the Finance Act, 1982. Hence today if the Executive Government withdraws the notifications issued under section 25 of the , a total duty of 90 per cent plus Rs. 1000 per tonne would get clamped on imported newsprint. D The effect of the imposition of 15 per cent duty may to some extent have led to the increase in the price of newspapers in 1981 and it resulted in the fall in circulation of newspapers. On this point the Second Press Commission has made the following observations in its Report (Vol. 1 page 18): E "Fall in circulation during 1981. To examine recent trends in, circulation and their relationship to recent trends in the economic environment, the Commission 's office undertook an analysis of the Audit Bureau of Circulations (ABC) certificates for the period July 1980 to June 1981. It was found that there was a decline in circulation in the period January June 1981 compared to the previous six month period in the case of dailies and periodicals. " The two important events which had taken place during the period between July, 1980 to June, 1981 were the enforcement of the Palekar Award regarding the wages and salaries payable in the newspaper industry and the imposition of the customs duty of 15% on the imported newsprint. Under the newsprint policy of the Government there are three sources of supply of newsprint (i) high 310 seas sales, (ii) sales from the buffer stock built up by the State A Trading Corporation which includes imported newsprint and (iii) newsprint manufactured in India. Imported newsprint is an important component of the total quantity of newsprint utilised by any newspaper establishment. III The Importance of Freedom of Press in a Democratic society and the Role of Courts. Our Constitution does not use the expression 'freedom of press ' in Article 19 but it is declared by this Court that it is included in Article 19(1)(a) which guarantees freedom of speech and expression. (See Brij Bhushan & Anr. vs The State of Delhi(l) and Bennett coleman & Co. & Ors. vs Union of lndia & ors.(2) . The material part of Article 19 of the Constitution reads: "19. (1) All citizens shall have the right (a) to freedom of speech and expression; . . . . . . . . . . (g) to practise any profession, or to carry on any occupation, trade or business, (2) Nothing in sub clause (a) of clause (1) shall affect the operation of any existing law, or prevent the State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the right conferred by the said sub clause in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to contempt of court, defamation or incitement to an offence. . . . . . . (6) Nothing in sub clause (g)of the said said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law impos (1) ; (2) ; 311 ing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub clause. . . " The freedom of press, as one of the members of the Constituent Assembly said, is one of the items around which the greatest and the bitterest of constitutional struggles have been waged in all countries where liberal constitutions prevail. The said freedom is attained at considerable sacrifice and suffering and ultimately it has come to be incorporated in the various written constitutions. James Madison when he offered the Bill of Rights to the Congress in 1789 is reported as having said: 'The right of freedom of speech is secured, the liberty of the press is expressly declared to be beyond the reach of this Government '. '(See 1 Annals of Congress (1789 96) p. 141). Even where there are no written constitutions, there are well established constitutional conventions or judicial pronouncements securing the said freedom for the people The basic documents of the United Nations and of some other international bodies to which reference will be made hereafter give prominence to the said right. The leaders of the Indian independence movement attached special significance to the freedom of speech and expression which included freedom of press apart from other freedoms. During their struggle for freedom they were moved by the American Bill of Rights containing the First Amendment to the Constitution of the United States of America which guarnteed the freedom of the press. Pandit Jawaharlal Nehru in his historic resolution containing the aims and objects of the Constitution to be enacted by the Constituent Assembly said that the Constitutions should guarantee and secure to all the people of India among others freedom of thought and expression. He also stated elsewhere that "I would rather have a completely free press with all the dangers involved in the wrong use of that freedom than a suppressed or regulated press" (See D.R. Mankekar: The Press under Pressure (1973) p. 25). The Constituent Assembly and its various committees and sub committees considered freedom of speech and expression which included freedom of press also as a precious right. The Preamble to the Constitution says that it is intended to secure to all citizens among others liberty of thought, expression, and belief. It is significant that in the kinds of restrictions that may be imposed on the freedom of speech and expression any reasonable restriction impossible in the public interest is not one enumerated in clause (2) 312 of Article 19. In Romesh Thappar vs The State of Madras and Brij Bhushan 's case (supra) this Court firmly expressed its view that there could not be any kind of restriction on the freedom of speech and expression other than those mentioned in Article 19(2) and thereby made it clear that there could not be any interference with that freedom in the name of public interest. Even when clause (2) of Article 19 was subsequently substituted under the Constitution (First Amendment) Act, 1951 by a new clause which permitted the imposition of reasonable restrictions on the freedom of speech and expression in the interests of sovereignty and integrity of India, the security of the State, friendly relations with foreign states, public order, decency or morality in relation to contempt of court, defamation or incitement to an offence, Parliament did not choose to include a clause enabling the imposition of reasonable restrictions in the public interest. Article 19 of the Universal Declaration of Human Rights, 1948 declares very one has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers '. Article 19 of the International Covenant on Civil and Political Rights, 1966 reads: "Article 19 1. Everyone shall have the right to hold opinions without interference. Everyone shall have the right to freedom of expression; this right shall include freedom to seek, receive and impart information and ideas of all kinds, regardless of frontiers, either orally, in writing or in print, in the form of art, through any other media of his choice. The exercise of the rights provided for in Paragraph 2 of this Article carries with it special duties and responsibilities. It may therefore be subject to certain restrictions, but these shall only be such as are provided by law and are necessary: 313 (a) For respect of the rights or reputations of others; (b) For the protection of national security or of public order (order public), or of public health or morals. " Article 10 of the European Convention on Human Rights reads: "Article 10 1. Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. This Article shall not prevent States from requiring the licensing of broadcasting, television or cinema enterprises. The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalities as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary. " The First Amendment to the Constitution of the United States of America declares: "Amendment I Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech or of the press, or the right of the people peaceably to assemble, and to petition the government for a redress of grievances." Frank C. Newman and Karel Vasak in their article on 'Civil 314 and Political Rights ' in the International Dimensions of Human Rights (Edited by Karel Vasak) Vol. I state at pages 155 156 thus: "(ii) Freedom of opinion, expression, information and communication. A pre eminent human right, insofar as it allows everyone to have both an intellectual and political activity, freedom of expression in the broad sense actually includes several specific rights, all linked together in a "continuum" made increasingly perceptible by modern technological advance. What is primarily involved is the classic notion of freedom of opinion, that is to say, the right to say what one thinks and not to be harassed for one 's opinions. This is followed by freedom of expression, in the limited sense of the term, which includes the right to seek, receive and impart information and ideas, regardless of frontiers, either orally, in writing or in print, in the form of art, or through any other media of one 's choice When freedom of expression is put to use by the mass media, it acquires an additional dimension and becomes freedom of information. A new freedom is being recognised which is such as to encompass the multiform requirements of these various elements, while incorporating their at once individual and collective character, their implications in terms of both "rights" and "responsibilities": this is the right to communication, in connection with which Unesco has recently undertaken considerable work with a view to its further elaboration and implementation." "Many Voices, One World" a publication of UNESCO which contains the Final Report of the International Commission for the study of Communication Problems, presided over by Sean Mac Bride, in part V thereof dealing with 'Communication Tomorrow ' at page 265 emphasizes the importance of freedom of speech and press in the preservation of human rights in the following terms: "IV. Democratization of Communication. Human Rights Freedom of speech, of the press, of information and of assembly are vital for the realization of human rights 315 Extension of these communication freedoms to a broader individual and collective right to communicate is an evolving principle in, the democratization process. Among the human rights to be emphasized are those of equality for women and between races. Defence of all human rights is one of the media 's most vital tasks. We recommend: 52. All those working in the mass media should contribute to the fulfilment of human rights, both individual and collective, in the spirit of the Unesco Declaration on the mass media and the Helsinki Final Act, and the International Bill of human Rights. The contribution of the media in this regard is not Only to foster these principles but also to expose all infringements, wherever they occur, and to support those whose rights have been neglected or violated. Professional associations and public opinion should support journalists subjected to pressure or who suffer adverse consequences from their dedication to the defence of human rights. The media should contribute to promoting the just cause of peoples struggling for freedom and independence and their right to live in peace and equality without foreign interference. This is especially important for all oppressed peoples who, while struggling against colonialism, religious and racial discrimination, are deprived of opportunity to make their voices heard within their own countries. Communication needs in a democratic society should be met by the extension of specific rights such as the right to be informed, the right to infrom, the right to privacy, the right to practicipate in public communication all elements of a new concept, the right to communicate. In developing what might be called a new era of social rights we suggest all the implications of the right to communicate to further explored. Removal of Obstacles Communication, with its immense possibilities for influencing the minds and behaviour of people, can be a powerful means of promoting democratization of society and of widening public participation in the decision making 316 process. This depends on the structures and practices of the media and their management and to what extent they facilitate broader access and open the communication process to a free interchange of ideas, information and experience among equals, without dominance of discrimination. " In today 's free world freedom of press is the heart of social and political intercourse. The press has now assumed the role of the public educator making formal and non formal education possible in a large scale particularly in the developing world, where television and other kinds of modern communication are not still available for all sections of society. The purpose of the press is to advance the public interest by publishing facts and opinions without which a democratic electorate cannot make responsible judgments. Newspaper being surveyors of news and views having a bearing on public administration very often carry material which would not be palatable to governments and other authorities. The authors of the articles which are published in newspapers have to be critical of the action of government in order to expose its weaknesses. Such articles tend to become an irritant or even a threat to power. Governments naturally take recourse to suppress newspapers publishing such articles in different ways. Over the years, the governments in different parts of the world have used diverse methods to keep press under control. They have followed carrotstick methods. Secret payments of money, open monetary grants and subventions, grants of lands, postal concessions, Government advertisements, conferment of titles on editors and proprietors of newspapers, inclusion of press barons in cabinet and inner political councils etc. constitute one method of influencing the press. The other kind of pressure is one of using force against the press. Enactment of laws providing for precensorship, seizures, interference with the transit of newspapers and demanding security deposit, imposition of restriction on the price of newspapers, on the number of pages of newspapers and the area that can be devoted for advertisements, withholding of Government advertisements, increase of postal rates, imposition of taxes on newsprint, canalisation of import of newsprint with the object of making it unjustly costlier etc. are some of the ways in which Governments have tried to interfere with freedom of press. It is with a view to checking such malpractices which interfere with free flow of information, democratic constitutions all over the world have made provisions guaran 317 teeing the freedom of speech and expression laying down the limits of interference with it. lt is, therefore, the primary duty Of all the national courts to uphold the said freedom and invalidate all laws or administrative actions which interfere with it, contrary to the constitutional mandate. Thomas 1. Emerson in his article entitled 'Toward a General Theory of the First Amendment ' (The Yale Law Journal, Vol. 72,877 at p. 906) while dealing with the role of the Judicial institutions in a democratic society and in particular of the apex court of U.S.A. in upholding the freedom of speech and expression writes: "The objection that our judicial institutions lack the political power and prestige to perform an active role in protecting freedom of expression against the will of the majority raises more difficult questions. Certainly judicial institutions must reflect the traditions, ideals and assumptions, and in the end must respond to the needs, claims and expectiations, of the social order in which they operate. They must not, and ultimately can not, move too far ahead or lag too far behind. The problem for the Supreme Court is one of finding the proper degree of responsiveness and leadership, or perhaps better, of short term and long term responsiveness. Yet in seeking out this position the Court should not under estimate the authority and prestige it has achieved over the years. Representing the "con science of the community" it has come to possess a very real power to keep alive and vital the higher values and goals towards which our society imperfectly strives Given its prestige, it would appear that the power of the Court to protect freedom of expression is unlikely to be substantially curtailed unless the whole structure of our democratic institutions is threatened. " What is stated above applies to the Indian courts with equal force . In Romesh Thappar 's case (supra) Brij Bhushan 's case (supra), Express Newspapers (Private) Ltd. & Anr. vs The Union of India & Ors. ,(l) Sakal Papers (P) Ltd. &. Ors. vs The Union of India(2) and Bennett Coleman 's case (supra) this Court has very strongly pronoun (1) (2) ; 318 ced in favour of the freedom of press. Of these, we shall refer to some observations made by this Court in some of them. In Romesh Thappar 's case (supra) this Court said at page 602: "(The freedom). lay at the foundation of all democratic organisations, for without free political discussion on no public education, so essential for the proper functioning of the processes of popular government, is possible. A freedom of such amplitude might involve risks of abuse . . . C '(nut) it is better to leave a few of its noxious branches to their luxuriant growth, than, by pruning them away, to injure the vigour of those yielding the proper fruits". " In Bennett Coleman 's case (supra) A.N. Ray, C.J. On behalf of the majority said at page 796 thus: "The faith of citizen is that political wisdom and virtue will sustain themselves in the free market of ideas, so long as the channels of communication are left open. The faith in the popular government rests on the old dictum 'let the people have the truth and the freedom to discuss it and all will go well '. The liberty of the press remains an 'Ask of the Covenant ' in very democracy . The newspapers give ideas. , The newspaper `give the people the freedom to find out what ideas are correct. " In the very same case, Methew, J, observed at page 818: "The constitutional guarantee of the freedom of speech is not so much for the benefit of the press as it is for the benefit of the public. The freedom of speech includes within its compass the right of all citizens to read and be informed. In Time vs Hill ; the U.S. Supreme Court said: "The constitutional guarantee of freedom of speech and press are not for the benefit of the press so much as for the benefit of all the people." In Griswold vs Connecticut ; , 482) the U.S. Supreme Court was of the opinion that the right of freedom of speech and press includes not only the right to utter or to print, but the right to read." 319 Justice Mathew proceeded to observe (at pp. 819 820): "Under article 41 of the Constitution the State has a duty to A take effective steps to educate the people within limits of its available economic resources. That includes political education also. Public discussion of public issues together with the spreading of information and any opinion on these issues is supposed to be the main function of newspaper. The highest and lowest in the scale of intelligence resort to its columns for information. Newspapers is the most potent means for educating the people as it is read by those who read nothing else and, in politics, the common man gets his education mostly from newspaper. The affirmative obligation of the Government to permit the import of newsprint by expanding foreign exchange in that behalf is not only because press has a fundamental right to express itself, but also because the 1 community has a right to be supplied with information and the Government a duty to educate the people within the limits of its resources. The Government may, under cl. 3 of the Imports (Control) Order, 1955 totally prohibit the import of newsprint and thus disable any person from carrying on a business in newsprint, if it is in the general interest of the public not to expend any foreign exchange on that score. If the affirmative obligation to expend foreign exchange and permit the import of newsprint stems from the need of the community for information and the fundamental duty of Government of educate the people as also to satisfy the individual need for self exression, it is not for the proprietor of a newspaper alone to say that he will reduce the circulation of the newspaper and increase its page level, as the community has an interest in maintaining or increasing circulation of the newspapers. It is said that a proprietor of a newspaper has the freedom to cator to the needs of intellectual highbrows who may choose to browse in rich pastures and for that he would require more pages for a newspaper and that it would be a denial of his fundamental right if he were told that he cannot curtail the circulation and increase the pages. A claim to enlarge the volume of speech by diminishing the circulation 320 raises the problem of reconciling the citizens ' right to unfettered exercise of speech in volume with the community 's right to undiminished circulation. Both rights fall within the ambit of the concept of freedom of speech as explained above. " The Second Press Commission has explained the concept of freedom of press in its Report (Vol. 34 35) thus: "The expression 'freedom of the press ' carries different meanings to different people. Individuals, whether professional Journalists or not, assert their right to address the public through the medium of the press. Some people stress the freedom of the editor to decide what shall be published in his paper. Some others emphasize the right of the owners to market their publication. To Justice Holmes, the main purpose of the freedom was to prevent all prior restraint on publication. The theory is that in a democracy freedom of expression is indispensable as all men are entitled to participate in the process of formulation of common decisions. Indeed, freedom of expression is the first condition of liberty. It occupies a preferred position in the hierarchy of liberties giving succour and protection to other liberties. It has been truly said that it is the mother of all other liberties. The press as a medium of communication is a modern phenomenon. It has immense power to advance or thwart the progress of civilization. Its freedom can be used to create a brave new world or to bring about universal catastrophe. Freedom of speech presupposes that right conclusions are more likely to be gathered out of a multitude of tongues than through any kind of authoritative selection. It rests on the assumption that the widest possible dissemination of information from as many diverse and antagonistic sources as possible is essential to the welfare of the public. It is the function of the Press to disseminate news from as many different sources and with as many different facts and colours as possible. A citizen is entirely dependent on the Press for the quality, proportion and 321 extent of his news supply. In such a situation, the exclusive and continuous advocacy of one point of view through the medium of a newspaper which holds monopolistic position is not conducive to the formation of healthy public opinion. If the newspaper industry is concentrated in a few hands, the chance of an idea antagonistic to the idea of the owners getting access to the market becomes very remote. But our constitutional law has been in different to the reality and implication of non governmental restraint on exercise of freedom of speech by citizens. The indifference becomes critical when comparatively a few persons are in a position to determine not only the content of information but also its very availability. The assumption in a democratic set up is that the freedom of the press will produce a sufficiently diverse Press not only to satisfy the public interest by throwing up a broad spectrum of views but also to fulfill the individual interest by enabling virtually everyone with a distinctive opinion to find some place to express it. " D The petitioners have heavily relied upon the decision of this Court in sakal 's case (supra) in which the constitutionality of the and the Daily Newspaper (Price and Page) Order, 1960 arose for consideration. The petitioner in that petition was a private limited company engaged in the business inter alia of publishing daily and weekly newspapers in Marathi named 'Sakal ' from Poona. The newspaper 'Sakal" had a net circulation of 52,000 copies on week days and 56,000 copies on Sundays. The daily edition contained six pages a day for five days in a week and four pages on one day. This edition was priced at 7 paise. The Sunday edition consisted of ten pages and was priced at 12 paise. About 40% of the space in the newspaper was taken up by the advertisements and the rest by news, views and other usual features. The newspaper (price and page) Act, 1956 regulated the number of pages according to the price charged, prescribed the number of supplements to be published and prohibited the publication and sale of newspapers in contravention of the Act. It also provided for the regulation of the size and area of advertising matter contained in a newspaper. Penalties were prescribed for contravention of that Act or the Order made thereunder. As a result of the enforcement of that Act, in order to publish 34 pages on six days in a week as it was doing 322 then, the petitioner had to raise the price from 7 paise to 8 paise per day and if it did not wish to increase the price, it had to reduce the total number of pages to 24 The petitioner which could publish any number of supplements as and when it desire to do so before the Order impugned in that case was passed could do so thereafter only with permission of the Government. The contention of the petitioner in that case was that the impugned Act and the impugned Order were pieces of legislation designed to curtail the circulation of the newspaper as the increase in the price of the paper would adversely affect its circulation and they directly interfered with the freedom of the press. The validity of these pieces of legislation was challenged on the ground that they violated Article 19 (1) (a) of the Constitution. The Union Government contested the petition. It pleaded that the impugned Act and the Order had been passed with a view to preventing unfair competition among newspapers and also with a view to preventing the rise of monopolistic combines so that newspapers might have fair opportunities of free discussion. It was also con tended that the impugned Act and the impugned Order had been passed in the public interest and the petitioner 's business being a trading activity falling under Article 19 (1) (g) of the Constitution any restriction imposed by the said Act and the Order was protected by Article 19 (6) of the Constitution. This Court negativing the contention of the Union Government observed at page 866 thus: "Its object thus is to regulate something which, as already stated, is directly related to the circulation of a newspaper. Since circulation of a newspaper is a part of the right of freedom of speech the Act must be regarded as one directed against the freedom of speech. It has selected the fact or thing which is an essential and basic attribute of the conception of the freedom of speech viz. the right to circulate one 's views to all whom one can reach or care to reach for the imposition of a restriction. It seeks to achieve its object of enabling what are termed the smaller newspapers to secure larger circulation by pro visions which without disguise are aimed at restricting the circulation of what are termed the larger papers with better financial strength The impugned law for from being one, which merely interferes with the right of freedom speech incidentally, does so directly though it 323 seeks to achieve the end by purporting to regulate the business aspect of a newspaper. Such a course is not permissible and the courts must be ever vigilant in guarding perhaps the most precious of all the freedoms guaranteed by our Constitution. The reason for this is obvious. The freedom of speech and expression of opinion is of paramount importance under a democratic Constitution which envisages changes in the composition of legislatures and governments and must be preserved. No doubt, the law in question was made upon the recommendation of the Press Commission but since its object is to affect directly the right of circulation of news papers which would necessarily undermine their power to influence public opinion it cannot stat be regarded as a dangerous weapon which is capable of being used against democracy itself. " Continuing further the Court observed at pages 867 and 868 thus: "It was argued that the object of the Act was to prevent monopolies and that monopolies are obnoxious. We will assume that monopolies are always against public interest and deserve to be suppressed. Even so, upon the view we have taken that the intendment of the Act and the direct. and immediate effect of the Act taken along with the impugned order was to interfere with the freedom of circulation of newspapers the circumstance that its object was to suppress monopolies and prevent unfair practices is of no assistance. The legitimacy of the result intended to be achieved does not necessarily imply that every means to achieve it is permissible for even if the end is desirable and permissible, the means employed must not transgress the limits laid down by the Constitution, if they directly impinge on any of the fundamental rights guaranteed by the Constitution it is no answer when the constitutionality of the measure is challenged that apart from the fundamental right infringed the provision is otherwise legal. " 324 We have so far seen the importance of the freedom of speech and expression which includes the freedom of press. We shall now proceed to consider whether it is open to the Government to levy any tax on any of the aspects of the press industry. IV Do newspapers have immunity from taxation ? Leaving aside small newspaper establishments whose circulation may be less than about 10,000 copies a day, all other bigger newspaper establishments have the characteristics of a large industry. Such bigger newspaper concerns are mostly situated in urban areas occupying large buildings which have to be provided with all the services rendered by municipal authorities. They employ hundreds of employees. Capital investment in many of them is in the order of millions of rupees. Large quantities of printing machinery are utilised by them, a large part of which is imported from abroad. They have to be provided with telephones, teleprinters, postal and telegraphic services, wireless communication systems etc. Their newspapers have to be transported by roads, railways and air services. Arrangements for security of their property have to be made. The Government has to provide many other services to them. All these result in a big drain on the financial resources of the State as many of these services are heavily subsidized. Naturally such big newspaper organisations have to contribute their due share to the public exchequer. They have to bear the common fiscal burden like all others. While examining the constitutionality of a law which is alleged to contravene Article 19 (1) (a) of the Constitution, we cannot, no doubt, be solely guided by the decisions of the Supreme Court of the United States of America. But in order to understand the basic principles of freedom of speech and expression and the need for that freedom in a democratic country, we may take them into consideration. The pattern of Article 19 (1) (a) and of Article 19 (1) (g) of our constitution is different from the pattern of the First Amendment to the American Constitution which is almost absolute in its terms. The rights guaranteed under Article 19 (1) (a) and Article 19 (1) (g) of the Constitution are to be read along with clauses (2) and (6) of Article 19 325 which carve out areas in respect of which valid legislation can be A made. It may be noticed that the newspaper industry has not been granted exemption from taxation in express terms. On the other hand Entry 92 of List I of the Seventh Schedule to the Constitution empowers Parliament to make laws levying taxes on sale or purchase of newspapers and on advertisements published therein. It is relevant to refer here to a few extracts from the speech of Shri Deshbandhu Gupta on the floor of the Constituent Assembly opposing the provisions in the Draft Constitution which authorised the State Legislatures to levy sales tax on sale of newspapers and tax on advertisements in newspapers. He said: C ". No one would be happier than myself and my friends belonging to the press, if the House were to decide today that newspapers will be free from all such taxes. Of course that is what it should be because in no free country with a democratic Government we have any such taxes as the sales tax or the advertisement tax . . . . . I claim that newspapers do deserve a distinctive treatment. They are not an industry in the sense that other industries are. This has been recognised all over the world. They have a mission to perform. And I am glad to say that the newspapers in India have performed that mission of public service very creditably and we have reason to feel proud of it. I would, there. fore, expect this House and my friend Mr. Sidhva to bear it in mind at the time when God forbid any proposal comes before the Parliament for taxation. That would be the time for them to oppose it. Sit, after all, this is an enabling clause. It does not say that there shall be sales and advertisement tax imposed on newspapers. It does not commit the House today to the imposition of a tax on the sales of or a tax on advertisements published in newspapers, All that we have emphasised is that newspapers as such should be taken away from the purview of the provincial Governments and brought to the Central List so that if at all at any time a tax is to be imposed on newspapers it should be done by the representatives of whole country realising the full 326 implications of their action. It should not be an isolated A act on the part of some Ministry of some province. That was the fundamental basis of our amendment . . . . . . . . . If today all news papers including those published from Delhi are opposing the imposition of these taxes with one voice and demanding their inclusion in the Central List, they do so, not because it is a question of saving some money, but be cause the fundamental question of the liberty of the press is involved. By advocating their transfer to the Central List we are prepared to run the risk of having these takes imposed in Delhi, and in other provinces which have not sought to impose such taxes so far. But we do not want to leave it to the Provinces so that the liberty of the press remains unimpaired. We have faith in the Parliament: we have faith in the collective wisdom of the country and we have no doubt that when this matter is viewed in the correct perspective, there will be no such taxes imposed on the newspapers, but we have not got that much faith in the Provincial Ministries. It is in that hope and having a full realisation of the situation that we have agreed, as a matter of compromise, or should I say as a lesser evil, to have these two taxes transferred from the Provincial to the Central List." (Vide Constituent Assembly Debates .Vol. IX, pp. 1175 1180 dated September 9, 1949). Ultimately the power to levy taxes on the sale or purchase of newspapers and on advertisement published therein was conferred on Parliament by Entry 92 of List I of the Seventh Schedule to the Constitution. This shows the anxiety on the part of the framers of our Constitution to protect the newspapers against local pressures. But they, however, did not agree to provide any constitutional immunity against such taxation. The power to levy customs duties on goods imported into the country is also entrusted to Parliament by Entry 83 in List I of the Seventh Schedule to the Constitution. On the power of t e Government in the United States of America to levy taxes on and to provide for the licensing of news papers, Corpus Juris Sequndum (Vol. 16) says at page 1132 as follows: 327 "213. (13), Taxing and Licensing "The Constitutional guaranties of freedom of speech and of the press are subject to the proper exercise of the government s power of taxation, and reasonable license fees may be imposed on trades or occupations concerned with the dissemination of literature or ideas. As a general rule, the constitutional guaranties of freedom of speech and of the press are subject to the proper exercise of the government 's power of taxation, so that the imposition of uniform and non discriminatory taxes is not invalid as applied to persons or organisations engaged in the dissemination of ideas through the publication or distribution of writing. The guaranty of freedom of the press does not forbid the taxation of money or property employed in the publishing business, or the imposition of reasonable licenses and license fees on trades or occupations concerned with the dissemination of literature or ideas. A license or license tax to permit the enjoyment of freedom of speech and freedom of press may not, however, be required as a form of censorship, and where the purpose of the tax or license is not for revenue, or for reasonable regulation, but is a deliberate and calculated device to prevent, or to curtail the opportunity for, the acquisition of knowledge by the people in respect of their governmental affairs, the statute or ordinance violates the constitutional guaranties, and particularly the Fourteenth Amendment to the federal Constitution. While an ordinance imposing a tax on, and requiring a license for, the privilege of advertising by distributing books, circulars, or pamphlets has been held valid, an ordinance requiring the payment of a license tax by street vendors or peddlers is invalid as applied to members of a religious group distributing religious literature as part of their activities, at least where the fee is not merely a nominal one imposed to defray the cost of regulation, notwithstanding the ordinance is non discriminatory. A governmental regulation requiring a license to solicit, for compensation, memberships in organizations requiring the payment of dues is invalid, 328 where it fixes indefinite standards for the granting of a license to an applicant. A provision of a retail sales tax act providing that a retailer shall not advertise as to the non collection of sales tax from purchasers does not deprive retailers of the constitutional right of free speech. " The above subject is summarised in American Jurisprudence 2d (Vol. 16) at page 662 thus: "Speech can be effectively limited by the exercise of that taxing power. Where the constitutional right to speak is sought to be deterred by a state 's general taxing program; due process demands that the speech be unencumbered until the state comes forward with sufficient proof to justify its inhibition. But constitutional guaranties are not violated by a statute the controlling purpose of which is to raise revenue to help defray the current expenses of state government and state obligations, and which shows no hostility to the press nor exhibits any purpose or design to restrain the press. " It may be mentioned here that the First Amendment to the Constitution of the United States of America is almost in absolute terms. It says that the Congress shall make no law abridging the freedom of the press. Yet the American Courts have recognised the power of the State to levy taxes on newspaper establishments, of course, subject to judicial review by courts by the application of the due process of law principle. "Due process of law does not forbid all social control; but it protects personal liberty against social control, unless such social control is reasonable either because of a constitutional exercise of the police power, or of the power of taxation or of the power of eminent domain". If any legislation delimiting personal liberty is held to be outside of all three of these categories, it is taking away of personal liberty without due process of law and is unconstitutional. The police power, taxation and eminent. domain are all forms of social control which are essential for peace and good government. 'The police power is the legal capacity of the severeignty or one of its governmental agents, to delimit the personal liberty of persons by means which bear a substantial relation to the end to be accomplished for the protection of social interests which reasonably need protection. Taxation is the legal capacity of sovereignty or one of its govern 329 mental agents to exact or impose a charge upon persons or their property for the support of the government and for the payment for any other Public purposes which it may constitutionally carry out. Eminent domain is the legal capacity of sovereignty or one of its governmental agents, to take private property for public use upon the payment of just compensation. ' It is under the above said sovereign power of taxation the government is able to levy taxes on the publishers of newspapers too, subject to judicial review by courts notwithstanding the language of the First Amendment which is absolute in terms. In India too the power to levy tax even on persons carrying on the business of publishing newspapers has got to be recongnised as it is inherent in the very concept of government. But the exercise of such power should, however, be subject to scrutiny by courts. Entry 92 of List I of the Seventh Schedule to the Constitution expressly suggests the existence of such power. Thomas I. Emerson in his article on the First Amendment (The Yale Law Journal, Vol. 72 at p. 941, has made certain relevant observations on the power of the State to impose taxes and economic regulations on newspaper industry. He says: "(a) Taxation and Economic Regulation. Regular tax measures, economic regulations, social welfare legislation and similar provisions may, of course, have some effect upon freedom of expression when applied to persons or organisations engaged in various forms of communication. But where the burden is the same as that borne by others engaged in different forms of activity, the similar impact on expression seems clearly insufficient to constitute an "abridging" of freedom of expression. Hence a general corporate tax, wage and hour or collective bargaining legislation, factory laws and the like are as applicable to a corporation engaged in newspaper publishing as to other business organisations. On the other hand, the use of such measures as a sanction to diminish the volume Of expression or control its content would clearly be as impermissible an "abridgment" as direct criminal prohibitions. The line may sometimes be difficult to draw, the more so as the scope of the regulation is narrowed. Two principles for delineating the bounds of "abridg 330 ing" may be stated. First, as a general proposition the validity of the measure may be tested by the rule that it must be equally applicable to a substantially larger group than that engaged in expression. Thus a special tax on the press alone, or a tax exemption available only to those with particular political views or associations, would not be permitted. second, neither the substantive nor procedural provisions of the measure, even though framed in general terms, may place any substantial burden on expression because of their peculiar impact in that area. Thus the enforcement of a tax or corporate registration statute by requiring disclosure of membership in an association, where such disclosure would substantially impair freedom of expression, should be found to violate first amendment protection. (Underlining by us). This view appears to have been accepted by our Second Press Commission in its Report (Vol. I) at page 35. The Commission observes: "21. Economic and tax measures, legislation relating to social welfare and wages, factory laws, etc., may have some effect upon freedom of the Press when applied to persons or institutions engaged in various forms of communication. But where the burden placed on them is the same as that borne by other engaged in different forms of activity, it does not constitute abridgment of freedom of the Press. The use of such measures, however, to control the content ' of expression would be clearly impermissible. " In Alice Lee Grosjean, Supervisor of Public Accounts for the State of Louisiana vs American Press Company(l) in which the appellants had questioned the constitutional validity of an Act of Louisiana which required every person engaged in the business of selling or making any charge for, advertising or for advertisements, printed or published in any newspaper, periodical etc. having a circulation of more than 20,000 copies per week to pay, in addition to all other taxes, a license tax for privilege of engaging in such business in the State of Louisiana of two per cent (2%) of the gross receipts of such business, the Supreme Court of the United States observed at pages 668 669: (1) ; 80 L. ed. 331 "In the light of all that has now been said, it is evident that the restricted rules of the English law in respect of the A freedom of the press in force when the Constitution was adopted were never accepted by the American colonists, and that by the First Amendment it was meant to preclude the national government, and by the Fourteenth Amendment to preclude the states, from adopting any form of previous restraint upon printed publications, or their circulation, including that which had theretofore been effected by these two well known and odious methods It is not intended by anything we have said to suggest that the owners of newspapers are immune from any of the ordinary forms of taxation for support of the government. But this is not an ordinary form of tax, but one single in kind, with a long history of hostile misuse against the freedom of the press. The predominant purpose of the grant of immunity here invoked was to preserve an untrammelled press as a vital source of public information. The newspapers, magazines and other journals of the country, it is safe to say, have shed and continue to shed, more light on the public and business. affairs of the nation than any other instrumentality of publicity; and since informed public opinion is the most potent of all restraints upon misgovernment, the suppression or abridgment of the publicity afforded by a free press cannot be regarded otherwise than with grave concern. The tax here involved is bad not because it takes money from the pockets of the appellees. If that were all, a wholly different question would be presented. It is bad because, in the light of its history and of its present setting, it is seen to be a deliberate and calculated device in the guise of a tax to limit the circulation of information to which the public is entitled in virtue of the constitutional guaranties. A free press stands as one of the great interpreters between the government and the people. To allow it to be fettered is to fetter ourselves." (Underlining by us) The levy imposed by Louisiana was quashed by the Supreme 332 Court of the United States of America in the above case on the ground that it violated the First Amendment to the Constitution of the United States of America since it was of the view that the tax levied in this case was a device to limit the circulation of information. The Court, however, did not say that no tax could be levied on the press in any event. In Robert Murdock, Jr. vs Commonwealth of Pennsylvania (City of Jeannette)(1) the Supreme Court of the United States of America declared as unconstitutional and violative of the First Amendment to the Constitution of the United States of America which guaranteed freedom of speech and expression, an ordinance which imposed a licence tax on persons canvassing for and soliciting within the city of Jeannette orders for goods, paintings, pictures, wares or merchandise of any kind or persons delivering such articles under orders so obtained or solicited. The petitioners in that case were 'Jehovah 's witnesses ' who went about from door to door in the city of Jeannette distributing literature and soliciting people to purchase certain religious books and pamphlets. None of them obtained a licence by paying the prescribed fee and they were convicted for violating the Ordinance by the Superior Court of Pennsylvania. The Supreme Court of the United States of America quashed the conviction holding that the Ordinance violated the First Amendment. Douglas, J. who wrote the majority opinion observed at pages 1299 and 1300 thus: "In all of these cases the issuance of the permit or license is dependent on the payment of a license tax. And the license tax is fixed in amount and unrelated to the scope of the activities of petitioners or to their realized revenues. It is not a nominal fee imposed as a regulatory measure to defray the expenses of policing the activities in question. It is in no way apportioned. It is a flat license tax levied and collected as a condition to the pursuit of activities whose enjoyment is guaranteed by the first Amendment. Accordingly, it restrains in advance those constitutional liberties of press and religion and inevitably tends to suppress their exercise. That is almost uniformly recognised as the inherent vice and evil of this flat license tax. . . (1) ; 87 Law. 333 The fact that the ordinance is ' 'nondiscriminatory ' ' A is immaterial. The protection afforded by the First Amendment is not so restricted. A license tax certainly does not acquire constitutional validity because it classifies the privileges protected by the First Amendment along with the wares and merchandise of hucksters and peddlers and treats them all alike. Such equality in treatment does not save the ordinance. Freedom of press, freedom of speech, freedom of religion are in a preferred position." (Underlining by us). Justice Reed who dissented from the majority observed at page 1306 thus: "It will be observed that there is no suggestion of freedom from taxation, and this statement is equally true of the other State constitutional provisions. It may be concluded that neither in the state or the federal constitutions was general taxation of church or press interdicted. Is there anything in the decisions of this Court which indicates that church or press is free from the financial burdens of government ? We find nothing. Religious societies depend for their exemptions from taxation upon state constitutions or general statutes, not upon the Federal Constitution. Gibbons vs District of Columbia, ; , 29 L ed 680; , This Court has held that the chief purpose of the free press guarantee was to prevent previous restraints upon publication. Near vs Minuesota ; , 713, 75 L ed 1357; , In Grosjean vs American Press Co.; , , 250, 80 L ed 660, 668; , , it was. , said that the predominant purpose was to preserve "an untrammelled press as a vital source of public information." In that case, a gross receipts tax Oil advertisements in papers with a circulation of more than twenty thousand copies per week was held invalid because a deliberate and calculated device in the guise of a tax to limit the circulation. .". There was this further comment: "It is not intended by anything we have said to suggest 334 that the owners of newspapers are immune from any of the ordinary forms of taxation for support of the government. But this is not an ordinary form of tax, but one single in kind, with a long history of hostile misuse against the freedom of the press. " Id. 297 Us 250, 80 L ed 668. ; It may be said, however, that ours is a too narrow, technical and legalistic approach to the problem of state taxation of the activities of church and press; that we should look not to the expressed or historical meaning of the First Amendment but to the broad principles of free speech and free exercise of religion which pervade our national way of life. It may be that the Fourteenth Amendment guarantees these principles rather than the more definite concept expressed in the First Amendment. This would mean that as a Court, we should determine what sort of liberty it is that the due process clause of the Fourteenth Amendment guarantees against state restrictions on speech and church. Nor do we understand that the Court now maintains that the Federal Constitution frees press or religion of any tax except such occupational taxes as those here levied. Income taxes, ad valorem taxes, even occupational taxes are presumably valid, save only a license tax on sales of religious books. Can it be that the Constitution permits a tax on the printing presses and the gross income of a metropolitan newspaper but denies the right to lay an occupational tax on the distributors of the same papers ? Does the exemption apply to book sellers or distributors of magazines or only to religious publications ? And, if the latter, to what distributors ? Or to what books ? Or is this Court saying that a religious practice of book distribution is free from taxation because a state cannot prohibit the "free exercise thereof" and a newspaper is subject to the same tax even though the same Constitutional Amendment says the state cannot abridge the freedom of the press ? It has never been thought before that freedom from taxation was a perquisite attaching to the privileges of the First Amendment." Justice Reed added at pages 1307 and 1308 thus: 335 "It is urged that such a tax as this may be used readily to restrict the dissemination of ideas, This must be conceded but the possibility of misuse does not make a tax unconstitutional. No abuse is claimed here. The ordinances in some of these cases are the general occupation license type covering many businesses. In the Jeannette prosecutions, the ordinance involved lays the usual tax on canvassing or soliciting sales of goods, wares and merchandise. It was passed in 1898. Every power of taxation or regulation is capable of abuse. Each one, to some extent, prohibits the free exercise of religion and abridges the freedom of the press, but that is hardly a reason for denying the power. If the tax is used oppressively the law will protect the victims of` such action." (Underlining by us.) Justice Frankfurter who also dissented from the majority observed at pages 1310 and 1311 thus: "It cannot be said that the petitioners are constitutionally exempt from taxation merely because they may be engaged in religious activities or because such activities may constitute an exercise of a constitutional right. . Nor can a tax be invalidated merely because it falls upon activities which constitute an exercise of a constitutional right. The First Amendment of course protects the right to publish a newspaper or a magazine or a book. But the crucial question is how much protection does the Amendment give, and against what is the right protected ? It is certainly true that the protection afforded the freedom of the press by the First Amendment does not include exemption from all taxation. A tax upon newspaper publishing is not invalid simply because it falls upon the exeacise of a constitutional right. Such a tax might be invalid if it invidiously singled out newspapers publishing, for bearing the burdens of taxation or imposed upon them in such ways as to encroach on the essential scope of a free press. If the Court could justifiably hold that the tax measures in these cases were Vulnerable on that ground, I would unreservedly agree. But the 336 Court has not done so, and indeed could not." (Under lining by us) In the above case it may be noticed that Douglas, J. who gave the majority opinion did not say that no tax could be levied at all on a press, but he did not approve of a uniform license tax unrelated to the scope of the activities of the persons who had to beat it. The dissenting opinions have clearly stated that the press does not enjoy any immunity from taxation. They, however, say that the taxation should not encroach upon the essential scope of a free press. We may usefully refer here to a passage in the foot note given below the Essay No 84 by Alexander Hemilton in 'The Federalist '. it reads: "It cannot certainly be pretended that any degree of duties, however low, would be an abridgment of the liberty of the press. We know that newspapers are taxed in Great Britain, and yet it is notorious that the press nowhere enjoys greater liberty than in that country. And if duties of any kind may be laid without a violation of that liberty, it is evident that the extent must depend on legislative discretion, regulated by public opinion ;" At this stage we find it useful to refer to a decision of the Privy Council in Attorney General & Anr. vs Antigua Times Ltd.( Where the Judicial Committee of the Privy Council was called upon to decide about the validity of the imposition of a licence fee of p S 600 annually on the publisher of a newspaper under the News papers Registration (Amendment) Act, 1971. Section 10 of the Constitution of Antigua read as follows: "10. (1) Except with his own consent, no person shall be hindered in the enjoyment of his freedom of expression, and for the purposes of this section the said freedom includes the freedom to hold opinions and to receive and impart ideas and information without interference, and freedom from interference with his correspondence and other means of communication (1). 337 (2) Nothing contained in or done under the authority of any law shall be held to be inconsistent with or in contravention of this section to the extent that the law in question makes provision (a) that is reasonably required (i) in the interests of defence, public safety, public order, public morality or public health; or (ii) for the purpose of protecting the reputations, rights and freedoms of other persons, or the private lives of persons concerned in legal proceedings, preventing the disclosure of information received in confidence, maintaining the authority and independence of the courts, or regulating telephony, telegraphy, posts, wireless, broadcasting, television or other means of communication, public exhibitions or public entertainments; or (b) that imposes restrictions upon public officers." Lord Fraser who delivered the judgment of the Privy Council upheld the levy of the licence fee as being reasonably required in the interests of defence and for securing public safety etc. referred to in section 10 (2) (a) (i) of the Constitution of Antigua, The learned Lord observed in that connection thus: Revenue requires to be raised in the interests of defence and for securing public safety, public order, public morality and public health and if this tax was reasonably required to raise revenue for these purposes or for any of them, then section IB is not to be treated as contravening the Constitution. In some cases it may be possible for a court to decide from a mere perusal of an Act whether it was or was not reasonably required. In other cases the Act will not provide the answer to that question. In such cases has evidence to be brought before the court of the reasons for the Act and to show that it was reasonably required ? Their Lordships think that the proper approach to the question is to presume, until the contrary appears or is shown, that all Acts passed by the Parliament of Antigua were reasonably required. This presumption will be rebutted if the statutory provisions in question are, to use the words of Louisy J, 'so arbitrary as to compel the conclusion that it does not involve an exertion of the 338 taxing power but constitutes in substance and effect the direct execution of a different and forbidden power. ' y the amount of the licence fee was so manifestly excessive its to lead to the conclusion that the real reason for its imposition was not the raising of revenue but the preventing of the publication of newspapers, then that would justify the conclusion that the law was not reasonably required the raising of revenue. In there Lordships ' opinion the presumption that the newspapers Registration (Amendment) Act, 1971 was reasonably required has not been reputed and they do not regard the amount of the licence fee as manifestly excessive and of such a character as to lead to the conclusion that section IB was not enacted to raise revenue but for some other Purpose." (Underlining by us) Here again it is seen that the Privy council was of the view that the law did not forbid the levy of fee on the publisher of a newspaper but it would be open to challenge if the real reason for its imposition was not the raising of revenue but the preventing of the publication of newspaper. At this stage it is necessary to refer to a forceful argument addressed before us. It was urged on behalf of the petitioners that the recognition of the power of the Government to levy taxes of any kind on the newspaper establishments would ring in the death knell of the freedom of press and would be totally against the spirit of the Constitution. It is contended that the Government is likely to use it to make the press subservient to the Government. It is argued that when once this power is conceded, newspapermen will have to run after the Government and hence it ought not to be done. This raises a philosophical question Pressversus Government We do not think it is necessary for the press to be subservient to the Government. As long as 'this Court sits ' newspapermen need not have the fear of their freedom being curtailed by unconstitutional means. It is, however, good to remember some statements made in the past by some wise men connected with newspapers in order to develop the culture of an independent press. Hazlitt advised editors to stay in their garrets and avoid exposing themselves to the sub leties of power. Walter Lippman in his address to the International Press Institute some 339 years ago said that the danger to the independence and integrity of journalists did not come from the pressures that might A be put on them; it was that they might be captured and capitivated by the company they keep. Arthur Krock after 60 years of experience said that it 'is true that in most cases, the price of friendship with a politician is so great for any newspaperman to pay '. A. P. Wadsworth of the Manchester Guardian said "that no editor should ever be on personal terms with our leaders for fear of creating a false sense of relation of confidence." James Margach says that 'when leading media figures see too much rather than too little of Prime Minister that the freedom of press is endangered. ' Lord Salisbury told Buckle a famous editor in England "you are the first person who has not come to see me in the last few days who is not wanting something at my handsplace or decoration or peerage. You only want information." Charles Mitchell wrote in 'Newspaper Directory '. The Press has row so great and so extensive an influence on public opinion. that. its conductors should be GENTLEMAN in the true sense of the word. They should be equally above corruption and intimidation incapable of being warped by personal considerations from the broad path of truth and honour, superior to all attempts at misrepresenting or mystifying public events '. If the press ceases to be independent the healthy influence of the press and public opinion will soon be substituted by the traditional influences of landlordism and feudalism. The press lords should endeavour to see that their interest do not come into conflict with their duties. All this is said only to show that Government alone may not always be the culprit in destroying the independence of the press. Be that as it may, it is difficult to grant that merely because the Government has the power to levy taxes the freedom of press would be totally lost. As stated earlier, the court is always there to hold the balance even and to strike down any unconstitutional invasion of that freedom. Newspaper industry enjoys two of the fundamental rights, namely the freedom of speech and expression guaranteed under Article 19 (l) (a) and the freedom to engage in any profession, occupation, trade, industry or business guaranteed under Article 19 (1) (g) of the Constitution, the first because it is concerned with the field of expression and communication and the second because communication has become an occupation or profession and because there is on invasion of trade, business and industry 340 into that field where freedom of expression is being exercised. While there can be no tax on the right to exercise freedom of expression, tax is leviable on profession, occupations trade, business and industry. Hence tax is leviable on newspaper industry. But when such tax transgresses into the field of freedom of expression and stifles that freedom, it becomes unconstitutional. As long as it is within reasonable limits and does not impede freedom of expression it will not be contravening the limitations of Article 19 (2). The delicate task of determining when it crosses from the area of profession, occupation, trade, business or industry into the area of freedom of expression and interferes with that freedom is entrusted to the courts. The petitioners, however, have placed strong reliance on the Sakal 's case (supra) and the Bennett Coleman 's case (supra) in support of their case that any tax on newsprint which is the most important component of a newspaper is unconstitutional. They have drawn our attention to the following passage in the decision in Sakal 's case (supra) which is at page 863: " It may well be within the power of the state to place, in the interest of the general public, restrictions upon the right of a citizen to carry on business but it is not open to the State to achieve this object by directly and immediately curtailing any other freedom of that citizen guaranteed by the Constitution and which is not susceptible of abridgement on the same grounds as are set out in cl. (6) of article 19. Therefore, the right of freedom of speech cannot be taken away with the object of placing restrictions on the business activities of a citizen. Freedom of speech can be restricted only in the interests of the security of the State, friendly relations with foreign State, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence. It cannot, like the freedom to carry on business, be curtailed in the interest of the general public. If a law directly affecting it is challenged it is no answer that the restrictions enacted by it are justifiable under cls. (3) to (6). For, the scheme of article 19 is to enumerate different freedoms separately and then to specify the extent of restrictions to which they may be subjects and the object for securing which this could be done. A citizen 341 is entitled to enjoy each and every one of the freedoms together and cl. (1) does not prefer one freedom to A another. That is the plain meaning of this clause. It follows from this that the State cannot make a law which directly restricts one freedom even for securing the better enjoyment of another freedom. All the greater reason, therefore, for holding that the State cannot directly restrict one freedom by placing an otherwise permissible restriction another freedom. " In Bennett Coleman 's case (supra) the question which arose for consideration related to the validity of a restriction imposed under the newsprint policy which had certain objectionable features such as (i) that no newspaper or new edition could be started by a common owner ship unit even within the authorised quota of newsprint (ii) that there was a limitation on the maximum number of pages, no adjustment being permitted between circulation and pages so as to increase pages, (iii) that a big newspaper was prohibited and prevented from increasing the number of pages, page area, and periodicity by reducing circulation to meet the requirement even within its admissible quota etc. The majority held that the fixation of page limit had not only deprived the petitioners of their economic vitality but also restricted their freedom of expression. It also held that such restriction of pages resulted in reduction of advertisement, revenue and thus adversely affected the capacity of a newspaper to carry on its activity which is protected by Article 19(1)(a) of the Constitution. We have carefully considered the above two decisions. In the first case the Court was concerned with the newspaper price page policy and in the second the newsprint policy imposed by the Government had been challenged. Neither of them was concerned with the power of Parliament to levy tax on any goods used by the newspaper industry As we have observed earlier taxes have to be levied for the support of the Government and newspapers which derive benefit from the public expenditure cannot disclaim their liability to contribute a fair and reasonable amount to the public exchequer. What may, however, have to be observed in levying a tax on newspaper industry is that it should not be a over burden on newspapers which constitute the Fourth Estate of the country. Nor should it single out newspaper industry for harsh treatment. A wise administrator should realise that the imposition of a tax like the customs duty on 342 new newsprint is an imposition on knowledge and would virtually amount to a burden imposed on a man for being literate and for being conscious of his duty as a citizen to inform himself about the world around him. 'The public interest in freedom of discussion (of which the freedom of the press is one aspect) stems from the requirement t that members of a democratic society should be sufficiently informed that they may influence intelligently the decisions which may affect themselves '. (Per Lord Simon of Glaisdale in Attorney General vs Times Newspapers(l). Freedom of expression, as learned writers have observed, has four broad social purposes to serve: (i) it helps an individual to attain self fulfilment, (ii) it assists in the discovery of truth, (iii) it strengthens the capacity of an individual in participating in decision making and (iv) it provides a mechanism by which it would be possible to establish a reasonable balance between stability and social change. All members of society should be able to form their own beliefs and communicate them freely to others. In sum, the fundamental principle involved here is the people 's right to know. Freedom of speech and expression should, therefore, receive a generous support from all those who believe in the participation of people in the administration. It is on account of this special interest which society has in the freedom of speech and expression that the approach of the Government should be more cautious while levying taxes on other matters concerning newspapers industry than while levying taxes on matters. It is true that this Court has adopted a liberal approach while dealing with fiscal measures and has upheld different kinds of taxes levied on property, business, trade and industry as they were found to be in the public interest. But in the cases before us the Court is called upon to reconcile the social interest involved in the freedom of speech and expression with the public interest involved in the fiscal levies imposed by the Government specially because newsprint constitutes the body, if expression happens to be the soul. In view of the intimate connection of newsprint with the freedom of the press, the tests for determining the vires of a statute taxing newsprint have, therefore, to be different from the tests usually adopted for testing the vires of other taxing statutes. In the case of ordinary taxing statutes, the laws may be questioned only if they are either openly confiscatory or a colourable device to confiscate. On the other hand, in the case of a tax on newsprint, (1) 343 it may be sufficient to show a distinct and noticeable burdensomeness, clearly and directly attributable to the tax. A While we, therefore, cannot agree with the contention that no tax can be levied on newspaper industry, we hold that any such levy is subject to review by courts in the light of the provisions of the V Are the impugned notifications issued under section 25 of the beyond the reach of the Administrative Law. It is argued on behalf of the Government that a notification issued under section 25(1) of the granting, modifying or withdrawing an exemption from duty being in the nature of a piece of subordinate legislation, its validity cannot be tested by the Court by applying the standards applicable to an administrative action. Reliance is placed on the decision of this Court in Narinder Chand Hem Raj & Ors. vs Lt. Governor, Administrator. Union Territory, Himachal Pradesh & Ors. (1) in support of the above contention. In that case the appellants were wine merchants carrying on business in Simla. At the auction held for the purpose of granting the privileges to sell the Indian made foreign liquor the appellants were the highest bidders. It appears that before the auction was held the Collector of Excise and Taxation had announced that no sales tax would be liable to be paid on the sale of liquor and despite this assurance the Government had levied and collected from the appellants a certain amount by way of sales tax. The appellants prayed for the issue of a writ to the Governments restraining them from levying any sales tax and to refund what had been recovered from them by way of sales tax already. It was contended on behalf of the Government of Himachal Pradesh that non collection of sales Tax possible only on the issue of a notification by the Government pursuant to its statutory power under the Punjab General Sales Tax Act, which was in force in the area in question shifting 'liquor ' which was in Schedule 'A ' to Schedule 'B ' to the Punjab General Sales Tax Act, and that such a notification could not be issued because the Central Government had not given its requisite approval. Hence it was urged by the Government that since sales tax had been imposed by law on all items in Schedule 'A ' it could not disobey the mandate of law. It further contended that the Court could not issue a mandamus to the Government to issue a notification to amend the Schedules to the statute as the act of issuing such a notification was a legislative act and no writ could be issued to a 344 legislative body or a subordinate Legislative body to a make a law or to issue a notification, as the case may be, which would have the effect of amending a law in force. This Court upheld the contention of the Government. The Court said: "Our attention has not been drawn to any provision in that, Act empowering the Government to exempt any assessee from payment of tax. Therefore it is clear that appellant was liable to pay the tax imposed under the law. What the appellant really wants is a mandate from the court to the competent authority to delete the concerned entry from Schedule A and include the same in Schedule B. We shall not go into the question whether the Government of Himachal Pradesh on its own authority was competent to make the alteration in question or not. We shall assume for our present purpose that it had such a power. The power to impose a tax is undoubtedly a legislative power. That power can be exercised by the legislature directly or subject to certain conditions, the legislature may delegate the power to some other authority. But the exercise of that power whether by the legislature or by its delegate is an exercise of a legislative power. The fact that the power was delegated to the executive does not convert that power into an executive or administrative power. No Court can issue a mandate to a legislature to enact a particular law. Similarly no court can direct a subordinate legislative body to enact or not to enact a law which it may be competent to enact. The relief as framed by the appellant in his writ petition does not bring out the real issue calling for determination. In reality he wants this Court to direct the Government to delete the entry in question from Schedule A and include the same in Schedule B. article 265 of the Constitution lays down that no tax can be levied and collected except by authority of law. Hence the levy of a tax can only be done by the authority of law and not by any executive order. Unless the executive is specially empowered by law to give any exemption it cannot say that it will not enforce the law as against a particular person . No court can give a direction to a Government to refrain from enforcing a provision of law. Under these circumstances, we must held that the relief asked for by the appellant cannot be granted." (Underlining by us) 345 The above decision does not in fact support the contention of the Government in the cases before us. It is noteworthy that the Court in the passage extracted above has made a distinction between the amendment of the Schedule to the Punjab General Sales Tax Act by the issue of a notification by the Government of Himachal Pradesh in exercise of its power delegation by the legislature and the power of that Government to grant exemption under a power to grant K exemption. In the present cases we are concerned with a power to grant exemption conferred on Government by section 25 of the and not with a power to amend the Act by means of a notification. Moreover this was just a case relating to business in liquor. We shall assume for purposes of these cases that the power to grant exemption under section 25 of the is a legislative power and a notification issued by the Government thereunder amounts to a piece of subordinate legislation. Even then the notification is liable to be questioned On the ground that it is an unreasonable one. The decision of this Court in Municipal Corporation of Delhi vs Birla Cotton, Spinning and Weaving Mills, Delhi & Anr.(l) has laid down the above principle. In that case Wanchoo, C.J. while upholding certain taxes levied by the Corporation of Delhi under section 150 of the Delhi Municipal Corporation Act, 1957 observed thus: "Finally there is another check on the power of the Corporation which is inherent in the matter of exercise of power by subordinate public representative bodies such as municipal boards. In such cases if the act of such a body in the exercise of the power conferred on it by the law is unreasonable, the courts can hold that such exercise is void for the unreasonableness. This principle was laid down as far back as 1898 in Kruse vs Johnson But it appears that the principle enunciated in Kruse vs Johnson (2) is not being applied so stringently in England now. A piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a com (1) ; (2) 346 petent legislature. Subordinate legislation may be questioned on any of the grounds on which plenary legislation is questioned. In addition it may also be questioned on the ground that it does not conform to the statute under which it is made. It may further be questioned on the ground that it is contrary to some other statute. That is because subordinate legislation must yield to plenary legislation. It may also be questioned on the ground that it is unreasonable, unreasonable not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary. In England, the judges would say "Parliament never intended authority to make such rules. They are unreasonable and ultra vires". The present position of law bearing on the above point is stated by Diplock, L.J. in Mixnam Properties Ltd. vs Chertsey U.D.C.(1) thus: 'The various grounds upon which subordinate legislation has sometimes been said to be void . can, I think, today be properly regarded as being particular applications of the general rule that subordinate legislation, to be valid must be shown to be within the powers conferred by the statute. Thus the kind of unreasonableness which invalid dates a by law is not the antonym of 'reasonableness ' in the sense of which that expression is used in the common law, but such mainfest arbitrariness, injustice or partiality that a court would say: 'Parliament never intended to give authority to make such rules: they are unreasonable and ultra vires. ' If the courts can declare subordinate legislation to be invalid for 'uncertainty, ' as distinct from unenforceable this must be because Parliament is to be presumed not to have intended to authorise the subordinate legislative authority to make changes in the existing law which are uncertain. " Prof. Alan Wharam in his Article entitled 'Judicial Control of Delegated Legislation: The Test of Resonableness ' in 36 modern Law Review 611 at pages 622 23 has summarised the present position in England as follows: "(i) It is possible that the courts might invalidate statutory instrument on the grounds of unreasonableness or uncertainty, vagueness or aribitrariness; but the writer 's (1) 347 view is that for all practical purposes such instruments must be read as forming part of the parent statute, subject only to the ultra vires test. (ii) The courts are prepared to invalidate by laws, or any other form of legislation, emanating from an elected, representative authority, on the grounds of unreasonableness uncertainty or repugnance to the ordinary law; but they are reluctant to do so and will exercise their power only in clear cases. (iii) The courts may be readier to invalidate by laws passed by commercial undertakings under statutory power, although cases reported during the present century suggest that the distinction between elected authorities and commercial undertakings, as explained in Kruse vs Johnson, might not now be applied so stringently. (iv) As far as subordinate legislation of non statutory origin is concerned, this is virtually obsolete, but it is clear from In re French Protestant Hospital [1951] ch. 567 that it would be subject to strict control." (See also H.W.R. Wade: Administrative Law (5th Edn.) pp. 747 748). In India arbitrariness is not a separate ground since it will come within the embargo of Article 14 of the Constitution. In India any enquiry into the vires of delegated legislation must be confined to the grounds on which plenary legislation may be questioned, to the ground that it is contrary to the statute under which it is made, to the ground that it is contrary to other statutory provisions or that it is so arbitrary that it could not be said to be in conformity with the statute or that it offends Article 14 of the Constitution. That subordinate legislation cannot be questioned on the ground of violation of principles of natural justice on which administrative action may be questioned has been held by this Court in The Tulsipur Sugar Co. Ltd. vs The Notified Area Committee, Tulsipur(l), Rameshchandra Kachardas Porwal & Ors. vs State of (1) [1980] 2 S.C.R 1111. 348 Maharashtra & Ors. etc(1). and in Bates vs Lord Hailsham of St Marylebone & Ors(2). A distinction must be made between delegation of a legislative function in the case of which the question of reasonableness cannot be enquired into and the investment by statute to exercise particular discretionary powers. In the latter case the question may be considered on all grounds on which administrative action may be questioned, such as, nonapplication of mind, taking irrelevant matters into consideration, failure to take relevant matters into consideration, etc. On the facts and circumstances of a case, a subordinate legislation be may struck down as arbitrary or contrary to statute if it fails to take into account very vital facts which either expressly or by necessary implication are required to be taken into consideration by the statute or, say, the Constitution. This can only be done on the ground that it doe not conform to the statutory or constitutional requirements or that it offends Article 14 or Article 19 (1) (a) of the Constitution. It cannot, no doubt, be done merely on the ground that it is not reasonable or that it has not taken n into account relevant circumstances which the Court considers relevant. We do not, therefore, find much substance in the contention that the courts cannot at all exercise judicial control over the impugned notifications. In cases where the power vested in the Government is a power which has got to be exercised in the public interest, as it happens to be here, the Court may require the Government to exercise that power in a reasonable way in accordance with the spirit of the Constitution. The fact that a notification issued under section 25 (1) of the is required to be laid before Parliament under section 159 thereof does not make any substantial difference as regards the jurisdiction of the court to pronounce on its validity. The power to grant exemption should, however, be exercised in a reasonable way. Lord Greene M.R. has explained in Associated Provincial Picture Houses Ltd. vs Wednesbury Corporation(U) what a 'reasonable way ' means as follows: "It is true that discretion must be exercised reason ably. Now what does that mean ? Lawyers familiar with (1) ; (2) (3) ; 349 the phraseology used in relation to exercise of statutory A discretions often use the word 'unreasonable ' in a rather comprehensive sense. It has frequently been used and is frequently used as a general description of the things that must not be done. For instance, a person entrusted with a discretion must, so to speak, direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said, and often is said to be acting 'unreasonably '. Similarly, there may be some thing so absurd that no sensible person could ever dream that it lay within the powers of the authority. Warrlngton L.J. in short Y, Poole Corporation gave the example of the red haired teacher, dismissed because she had red hair. This is unreasonable in one sense. In another it is so unreasonable that it might almost be described as being done in bad faith; and, in fact, all these things run into one another. " Hence the claim made on behalf of the Government that the impugned notifications are beyond the reach of the administrative law cannot be accepted without qualification even though all the grounds that may be urged against an administrative order may not be available against them. Now, the notifications issued on March 1, 1981 and February 28, 1982 under section 25 of the which grant exemptions from payment of certain duty beyond what is mentioned in them are issued by the executive Government. They were issued in substitution of earlier notifications which had granted total exemption. Such notifications have to be issued by the Government after taking into consideration all relevant factors which bear on the reasonableness of the levy on the news print. The Government should strike a just and reasonable balance between the need for ensuring the right of people to freedom of speech and expression on the one hand and the need to impose social control on the business of publication of a newspaper on the other. In other words, the Government must at all material times be conscious of the fact that it is dealing with an activity protected by Article 19 (1) (a) of the Constitution 350 which is vital to our democratic existence. In deciding the reasonableness of restrictions imposed on any fundamental right the court should take into consideration the nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the disproportion of the imposition and the prevailing conditions at the relevant time including the social values whose needs are sought to be satisfied by means of the restrictions. (See the State of Madras vs V.G. Rao(l)). The restriction in question is the burden of import duty imposed on newsprint. Section 25 of the under which the notifications are issued confers a power on the Central Government coupled with a duty to examine the whole issue in the light of the public interest. It provides that if the Central Government is satisfied that it is necessary in the public interest so to do it may exempt generally either absolutely or subject to such conditions goods of any description from the whole or any part of the customs duty leviable thereon. The Central Government may if it is satisfied that in the public interest so to do exempt from the payment of duty by a special order in each case under circumstances of an exceptional nature to be stated in such order any goods on which duty is leviable. The power exercisable under section 25 of the is no doubt discretionary but it is not unrestricted, It is useful to refer here to the observations of Lord Denning M.R, in Breen vs Amalgamated Engineering Union(2) at page 190 read thus: "The discretion of a statutory body is never unfet tered. It is a discretion which is to be exercised according to law. That means at least this: the statutory body must be guided by relevant considerations and not by irrelevant. If its decision is influenced by extraneous considerations which it ought not to have taken into account then the decision cannot stand. No matter that the statutory body may have acted in good faith nevertheless the decision will be set aside. That is established by Pad field vs Minister of Agriculture Fisheries and Food [1968] A.C. 997 which is a landmark in modern administrative law. " In any event any notification issued under a statute also (1) ; (2) 351 being a 'law ' as defined under Article 13 (3) (a) of the Constitution is liable to) be struck down if it is contrary to any of the fundamental rights guaranteed under Part III of the Constitution. VI Has there been proper exercise of power under section 25 (1) of the, ? Freedom of press as the petitioners rightly assert means freedom from interference from authority which would have the effect of interference with the content and circulation of newspapers. The most important raw material in the production of a newspaper is the newsprint. The cost and availability of newsprint determine the price, size and volume of the publication and also the quantum of news, views and advertisements appearing therein. It is not disputed that the cost of newsprint works out to nearly 60% of the cost of production of newspaper. In the case of a big newspaper the realisation by the sale of newspaper is just about 40% of its total cost of production. The remaining cost is met by advertisements revenue which is about 40%, by revenue from waste sales and job work which comes to about 5% and revenue from other sources such as the income from properties and other investments of the newspaper establishment. These figures have been derived from the statement furnished by one of the big newspapers. The case of all other big newspapers may be more or less the same. The financial and other difficulties felt by the newspaper press in securing newsprint in recent years which have become an international phenomenon are set out in the Final Report of the International Commission for the Study of Communication Problems referred to above at page 141 thus: "Extremely serious on an international scale has been the effect of high costs of important materials or facilities. . . . . Paper is a material consumed in vast quantities whose price in recent years has spiralled out of proportion to the general world wide inflation. . As for newsprint, its price on world markets rose from a datum figure of 100 in 1970 to 329 in May 1977, and has continued to rise since. A sad by product of this situation has been the intro 352 duction of a covert form of censorship, as some Governments limit the import of newsprint, distribute it by official allocation schemes, and use these schemes to discriminate against the opposition newspapers. " In Chapter 4 of the same Report at page 100 the Inter national Commission has observed thus: "While newspapers which are commercial enterprises expect to sustain themselves by sales and advertising, they are not always viable on this traditional basis. Capital and profits from other media and from business in general are often injected into the newspaper industry. In many cases, the financing, or at least the deficits are covered by governments or political bodies. Assistance from the State has taken various forms, including tax concessions not enjoyed by other industries, reduced postal and telephone rates, guaranteed Government advertising, and subsidies to the price of newsprint. Although the press is suspicious of Government involvement in its affairs, a desire to preserve variety by keeping the weaker papers alive has led to consideration of various schemes. Direct grants to papers in need are made in seven European nations. Smaller newspapers and some parts of the "quality" or "specialized" press have experienced difficulties from a contraction of operations and size, which has led to limitations on the variety of information sources. This has induced many governments to examine the possibility of subsidies to help keep newspapers alive or to establish new ones, in monopoly circulation areas and to promote plurality and variety in general. If any duty is levied on newsprint by Government, It necessarily has to be passed on to the purchasers of newspapers" unless the industry is able to absorb it. In order to pass on the duty to the consumer the price of newspapers has to be increased. Such increase naturally affects the circulation of newspapers adversely. In Sakal 's case (supra), this Court has observed thus; 353 "The effect of raising the selling price of newspaper A has been considered by the Press Commission. In Paragraph 164 of the Report it is observed: "The selling price of a paper would naturally have an important effect on its circulation. In this connection we have examined the effect of price cuts adopted by two English papers at Bombay on the circulation of those two papers as well as of the leading paper which did not reduce its price. Prior to 27th October 1952, Times of India which had the highest circulation at Bombay was being sold at Re. 0 2 6 while Free Press Journal and National Standard which rank next in circulation were being sold for Re. 0 2 0. On 27th October, 1952, Free Press Journal reduced its price to Rs. 0 1.0 and within a year had claimed to have doubled its circulation. On 1st July, 1953, the National Standard was converted into a Bombay edition of Indian Express with a selling price of Rs. 0 1 6. Within six months it too claimed to have doubled its circulation During this period the Times of India which did not reduce its selling price continued to retain its readership. Thus it would appear that Free Press Journal and Indian Express by reducing their price have been able to tap new readership which was latent in the market but which could not pay the higher prices prevailing earlier." " Though the prices of newspapers appear to be on the low side it is a fact that even so many people find it difficult to pay that small price. This is what has been pointed out by the Press Commission in Paragraph 52 of its report. According to it the most common reason for people in not purchasing newspapers is the cost of the newspaper and the inability of the household to spare the necessary amount. This conclusion is based upon the evidence of a very large number of individuals and representatives of Associations. We would, therefore, be justified in relying upon it and holding that raising the price of newspaper even by a small amount such as one 354 nP. in order that its present size be maintained would adversely affect its circulation. " This is not a novel phenomenon. A stamp tax on newspapers came to be levied in England in 1712. It virtually crippled the growth of the English press and thus became unpopular. There was a lot of agitation against the said tax. But on its abolition in 1861, the circulation of newspapers increased enormously. The following account found in the Encyclopaedia Britannica (1962) Vol. 16 at page 339 is quite instructive: "Abolition of "Taxes on knowledge". The development of the press was enormously assisted by the gradual abolition of the "taxes on knowledge," and also by the introduction of a cheap postal system. . To Lord Lytton, the novelist and politician, and subsequently to Milner Gibson and Richard Cobden, is chiefly due the credit of grappling with this question in Parliament to secure first the reduction of the tax to a penny in 1836, and then its total abolition in 1855. The number of news papers established from the early part of 1855, when the repeal of the duty had become a certainty, and continuing in existence at the beginning of 1857, amounted to 107; 26 were metropolitan and 81 provincial. The duties on paper itself were finally abolished in 1861. The abolition of the stamp taxes brought about such reductions in the prices of newspapers that they speedily began to reach the many instead of the few. Some idea of the extent of the tax on knowledge imposed in the early 19th century may be gathered from the fact that the number of stamps issued in 1820 was nearly 29,400,000, and the incidence of the advertisement tax, fixed at 3s. in 1804, made it impossible for the newspaper owner to pass on the stamp tax to the advertiser. In 1828 the proprietors of the Times had to pay the state more than 68,000 in stamp and advertisement taxes and paper duty. But after the reduction of the stamp tax in 1836 from four pence to one penny, the circulation of English news papers, based on the stamp returns, rose from 39,000,000 to 122,000,000 in 1854. " 355 The Second Press Commission in its Report (Vol. II) at pages 182 183 has stated that the figures of circulation of newspaper A compiled by the Audit Bereau of Circulation (ABC) for the period January to June 1981 indicated that the circulation of newspapers in the period January to June 1981 was 1.9% lower than in the previous six months period The decline in the circulation of dailies was more in the case of very big newspapers with circulation of one lakh and above than in the case of smaller papers. The Commission said that the decline in circulation would appear to be attributable mainly to two factors increase in the retail price of newspapers in September October, 1980 and again in April May, 1981 and that the increase in retail prices appeared to have become necessary following continuing increase in newsprint prices in the last few years including levy of import duty in 1981 and increase in wages and salaries cost on account of Palekar Award. Of these factors which were responsible for increase in prices, the imposition of import duty on newsprint was on account of State action. This aspect of the matter is not seriously disputed by the Government. The pattern of the law imposing customs duties and the manner in which it is operated to a certain extent exposes the citizens who are liable to pay customs duties to the vagaries of executive discretion. While parliament has imposed duties by enacting the and the , the Executive Government is given wide power by section 25 of the to grant exemptions from the levy of Customs duty. It is ordinarily assumed that while such power to grant exemptions is given to the Government it will consider all relevant aspects governing the question whether exemption should be granted or not. In the instant case in 1975 when the was enacted, 40% ad valorem was levied on newsprint even though it had been exempted from payment of such duty. If the exemption had not been continued, newspaper publishers had to pay 40x6 ad valorem customs duty on the coming into force of the . Then again in 1982 by the Finance Act, 1982 an extra levy of Rs. 1,000 per tonne was G imposed in addition to the original 40% ad valorem duty even though under the exemption notification the basic duty had been fixed at 10% of the value of the imported newsprint. No information is forthcoming from the Government as to whether there was any material which justified the said additional levy. It is also not clear why this futile exercise of levying an additional duty of 356 Rs. 1,000 per tonne was done when under the notification issued under section 25 of the on March 1, 1981 which was in force then, customs duty on newsprint above 10% ad valorem had been exempted. As mentioned elsewhere in the course of this judgment while levying tax on an activity which is protected is also by Article 19(1)(a) a greater degree of care should be exhibited. While it is indisputable that the newspaper industry should also bear its due share of the total burden of taxation alongwith the rest of the community when any tax is specially imposed on newspaper industry, it should be capable of being justified as a reasonable levy in court when its validity is challenged. In the absence of sufficient material, the levy of 40% plus Rs. 1,000 per tonne would become vulnerable to attack. If the levy imposed by the statute itself fails, there would be no need to question the notifications issued under section 25 of the . But having regard to the prevailing legislative practice let us assume that in order to determine the actual levy we should take into consideration not merely the rate of duty mentioned in the but also any notification issued under section 25 of the which is in force. Even then the reasons given by the Government to justify the total customs duty of 15% levied from March 1, 1981 or Rs. 825 per tonne as it is currently being levied appear to be inadequate. In the Finance Minister 's speech delivered on the floor of the Lok Sabha in 1981, the first reason given for the levy of 15% duty was that it was intended "to promote a measure of restraint in the consumption of imported newsprint and thus help in conserving foreign exchange". This ground appears to be not tenable for two reasons. In the counter affidavit filed on behalf of the Government, it is stated that the allegation that the position of foreign exchange reserve is comfortable is irrelevant, it. This shows that nobody in Government had over taken into consideration the effect of the import of newsprint on the foreign exchange reserve before issuing the notifications levying 15% duty. Secondly no newspaper owner can import newsprint directly newsprint import is canalised through the State (Trading Corporation. If excessive import of newsprint adversely affects foreign exchange reserve, the State Trading Corporation may reduce the import of newsprint and allocate lesser quantity of imported newsprint to newspaper establishments. There is however, no need to impose import duty with a view to curbing excessive import of newsprint. In the Finance Minister 's speech there is no reference to the capacity of the newspaper industry to bear the levy 15% of 357 duty. In the counter affidavit it is asserted that the extent of A burden faced by the newspaper industry in India is irrelevant to the levy of import duty on newsprint. This clearly shows again that the Government had not also considered a vital aspect of the question before withdrawing the total exemption which was being enjoyed by newspaper industry till March 1,1981 and imposing 15% duty on newsprint. The petitioners have alleged that the imposition of customs duty has compelled them to reduce the extent of the area of the newspapers for advertisements which supply a major part of the sinews of a newspaper and consequently has adversely affected their revenue from advertisements. It is argued by them relying upon the ruling in Bennett Coleman 's case (supra) that Article 19(1) (a) is infringed thereby. Our attention is drawn to the following passages in Bennett Coleman 's case (supra) which are at pages 777778 and at page 782: "Publications means dissemination and circulation The press has to carry on its activity by keeping in view the class of readers, the conditions of labour, price of material, availability of advertisements, size of paper and the different kinds of news comments and views and advertisements which are to be published and circulated The law which lays excessive and prohibitive burden which would restrict the circulation of a newspaper will not be saved by Article 19(2). If the area of advertisement is restricted. price of paper goes up. In the price goes up circulation will go down. This was held in Sakal Papers Case (supra) to be the direct consequence of curtailment of advertisement. The freedom of a newspaper to publish any number of pages or to circulate it to any number of persons has been held by this Court to be an integral part of the freedom of speech and expression. This freedom is violated by placing restraints upon something which is an essential part of that freedom. A restraint on the number of pages, a restraint on circulation and a restraint on advertisements would affect the fundamental rights under Article 19(1)(a) on the aspects of propagation, publication and circulation. . The various provisions of the newsprint import policy have been examined to indicate as to how the petitioners ' II 358 fundamental rights have been infringed by the restrictions on page limit, prohibition against new newspapers and new editions. The effect and consequences of the impugned policy upon the newspapers is directly controlling the growth and circulation of newspapers. The direct effect is the restriction upon circulation of newspapers. The direct effect is upon growth of newspapers through pages. The direct effect is that newspapers are deprived of their area of advertisement. The direct effect is that they are exposed to financial loss. The direct effect is that freedom of speech and expression is infringed. " In meeting the above contention the Government relying on the decision in Hamdard Dawakhana ( Wakf ) Lal Kuan, Delhi & Anr. vs Union of India & Ors.(1) has pleaded in defence of its action that the right to publish commercial advertisement is not part of freedom of speech and expression. We have carefully considered the decision in Hamdard Dawakhana 's case (supra). The main plank of that decision was that the type Of advertisement dealt with there did not carry with it the protection of Article 19(1)(a). On examining the history of the legislation, the surrounding circumstances and the scheme of the Act which had been challenged there namely the (21 of 1954) the Court held that the object of that Act was the prevention of self medication and self treatment by prohibiting instruments which may be used to advocate the same or which tended to spread the evil. The Court relying on the decision of the American Supreme Court in Lewis J. Valentine vs F.J. Chresten sen (2) observed at pages 687 689 thus: "It cannot be said that the right to publish and distribute commercial advertisements advertising an individual 's personal business is a part of freedom of speech guaranteed by the Constitution. In Lewis Valentine vs F.). Chrestensen it was held that the constitutional right of free speech is not infringed by prohibiting the distribution in city streets of handbills bearing on one side a protest against action taken by public officials and on the other advertising matter. The object of affixing of the protest to the (1) ; (2) ; 359 advertising circular was the evasion of the prohibition of a city Ordinance forbidding the distribution in the city streets of commercial and business advertising matter. Mr. Justice Roberts, delivering the opinion of the court said: "This Court has unequivocally held that the streets are proper places for the exercise of the freedom of communicating information and disseminating opinion and that, though the states and municipalities may appropriately regulate the privilege in the public interest, they may not unduly burden or prescribe its employment in these public thoroughfares. We are equally clear that the Constitution imposed no such restraint on government as respects purely commercial advertising y . If the respondent was attempting to use the streets of New York by distributing commercial advertising the prohibition of the Code provisions was lawfully invoked against such conduct. " It cannot be said, therefore, that every advertisement is a matter dealing with freedom of speech nor can it be said that it is an expression of ideas. In every case one has to see what is the nature of the advertisement and what activity falling under article 19(I) it seeks to further. The advertisements in the instant case relate to commerce or trade and not to propagating of ideas; and advertising of prohibited drugs or commodities of which the sale is not in the interest of the general public cannot be speech within the meaning of freedom of speech and would not fall within article 19(1)(a). The main purpose and true intent and aim, object and scope of the Act is to prevent self medication or self treatment and for that purpose advertisement commending certain drugs and medicines have been prohibited. Can it be said that this is an abridgement of the petitioners right of free speech ? In our opinion it is not. Just as in Chamarbaugwalla 's case ; it was said that activities undertaken and carried on with a view to earning profits e.g. the business of betting and gambling will not be protected as falling within the guaranteed right of carrying on business or trade, so it cannot be said that an advertisement commending drugs and substances an 360 appropriate cure for certain discases is an exercise of the right of freedom of speech. " In the above said case the Court was principally dealing with the right to advertise prohibited drugs, to prevent self medication and self treatment. That was the main issue in the case. It is no doubt true that some of the observations referred to above go beyond the needs of the case and tend to affect the right to publish all commercial advertisements. Such broad observations appear to have been made in the light of the decision of the American Court in Lewis J. Valentine vs F. J. Chrestensen (supra), But it is worthy of notice that the view expressed in this American case has not been fully approved by the American Supreme Court itself in its subsequent decisions. We shall refer only to two of them. In his concurring judgment in William B. Cammarano v, United States of America(1) Justice Douglas said " Valentine vs Chrestensen held that business of advertisements and commercial matters did not enjoy the protection of the First Amendment, made applicable to the States by the Fourteenth. The ruling was casual, almost off hand. And it has not survived reflection". In Jeffrey Gole Bigelow vs Commonwealth of Virginia(2) the American Supreme Court held that the holding in Lewis J. Valentine vs F.J. Chrestensen (supra) was distinctly a limited one. In view of the foregoing, we feel that the observations made in the Hamdard Dawakhana 's case (supra) are too broadly stated ' and the Government cannot draw much support from it. We ate of the view that all commercial advertisements cannot be denied the protection of Article 19 (1) (a) of the Constitution merely because they are issued by businessmen. In any event the Government cannot derive any assistance from this case to sustain the impugned notifications. It was next urged on behalf of the Government that the levy of customs duty on newsprint was not strictly a levy on newsprint as such since though customs duties were levied with reference to goods, the taxable event was the import of goods within the customs barrier and hence there could be no direct effect on the freedom of speech end expression by virtue of the levy of customs duty on newsprint. Reliance was placed in support of the above contention (1) ; 3 L ed 2d 462 (2) ; 44 L ed 2d 600 at 610 361 On the decision in In re Sea Customs Act.(l) That decision was A rendered on a reference made by the President under Article 143 of the Constitution requesting this Court to record its opinion on the question whether the Central Government could levy customs duty on goods imported by a State. The contention of the majority of the States in that case was that the goods imported by them being their property no tax by way of customs could be levied by reason of Article 289 (t) of the Constitution which exempted the property of a State from taxation by the Union. This Court (majority 5, minority 4) held that in view of clause (1) of Article 289 which was distinct from clause (2) thereof which provided that nothing in clause (1) of Article 289 would prevent the Union from imposing or authorising the imposition of any tax to such extent, if any, as Parliament might by law provide in respect of a trade or business of any kind carried on by or on behalf of a State or any operations connected therewith or any property used or occupied for the purposes of such trade or business or any income accruing or arising in connection therewith and the other provisions of the Constitution which enabled the Union to levy different kinds of taxes, customs duty levied on the importation of goods was only a to levied on international trade and not on property. The Court further held that the immunity granted under Article 289 (1) in favor of States had to be restricted to taxes levied directly on property and even though customs duties had reference to goods and commodities they were not taxes on property and hence not within the exemption in Article 289 (1). The above decision is again of very little assistance to the Government since it cannot be denied that the levy of customs duty on newsprint used in the production of newspapers is a restriction on the activity of publishing a newspaper and the levy of customs duties had a direct effect on that activity. There exists no analogy between Article 289 (l) and Article 19 (1) (a) and (2) of the Constitution. Hence the levy cannot be justified merely on the ground that it was not on any property of the publishers of newspapers. Our attention has been particularly drawn to the statement of the Finance Minister that one of the considerations which prevailed upon the Government to levy the customs duty was that the newspapers contained 'piffles '. A 'piffle ' means foolish nonsense. It appears (1) ; 362 that one of the reasons for levying the duty was that certain writings in newspapers appeared to the Minister as piffles '. Such action is not permissible under our Constitution for two reasons (i) that the judgment of the Minister about the nature of writings cannot be a true description of the writings and (ii) that even if the writings are piffles it cannot be a ground for imposing a duty will whiohhinder circulation of newspapers. In this connection it is useful to refer to the decision of the American Supreme Court in Robert E. Hannegan vs Esquire, Inc.(l) in which it was held that a publication could not be deprived of the benefit of second class mailing rates accorded to publications disseminating "information of a public character, or devoted literature, the sciences, arts, or some special industry" because its contents might seem to the Postmaster General by reason of vulgarity or poor taste, not to contribute to the public good. Justice Douglas observed in that decision thus: "It is plain, as we have said, that the favorable second class rates were granted to periodicals meeting the requirements of the Fourth condition, so that the public good might be served through a dissemination of the class of periodicals described. But that is a far cry from assuming that Congress had any idea that each applicant for the second class rate must convince the Postmaster General that his publication positively contributes to the public good or public welfare. Under our system of government there is an accommodation for the widest varieties of tastes and ideas. What is good literature, what has educational value, what is refined public information, what is good art, varies with individuals as it does from one generation to another. There doubtless would be a contrariety of views concerning Cervantes ' Don Quixote, Shakespeare 's Venus & Adonis, or Zola 's Nana. But a requirement that literature or art conform to some norm prescribed by an official smacks of an ideology foreign to our system. The basic Values implicit in the requirements of the Fourth condition can be served only by uncensored distribution of literature. From the multitude of competing offerings the public will pick and choose. What seems to one to be trash may have for others fleeting or even enduring values." (1) ; 363 Matters concerning the intellect and ethics do undergo fluctuations from era to era. The world of mind is a changing one. A It is not static. The streams of literature and of taste and judgment in that sphere are not stagnant. They have a quality of freshness and vigour. They keep on changing from time to time, from place to place and from community to community. It is one thing to say that in view of considerations relevant to public finance which require every citizen to contribute a reasonable amount to public exchequer customs duty is leviable even on newsprint used by newspaper industry and an entirely different thing to say that the levy is imposed because the newspapers generally contain 'piffles '. While the former may be valid if the circulation of newspapers is not affected prejudicially, the latter is impermissible under the Constitution as the levy is being made on a consideration which is wholly outside the constitutional limitations. The Government cannot arrogate to itself the power to prejudge the nature of contents of newspapers even before they are printed. Imposition of a restriction of the above kind virtually amounts to conferring on the Government the power to precensor a newspaper. The above reason given by the Minister to levy the custom duty is wholly irrelevant. To sum up, the counter affidavit filed on behalf of the Government in these cases does not show whether the Government ever considered the relevant matters. It says that the extent of burden on the newspaper industry imposed by the impugned levy is irrelevant. It says that the position that foreign exchange reserve is comfortable is not relevant. It does not say that the increasing cost of imported newsprint was taken into consideration. The Finance Minister says that the levy was imposed because he found piffles ' in some newspapers. There is no reference to the effect of the implementation of the Palekar Award on the newspaper industry. It does not also state what effect it will have on the members of the public who read newspapers and how far it will reduce the circulation of newspapers. It is argued on behalf of the Government that the effect of the impugned levy being minimal, there is no need to consider the contentions urged by the petitioners. As observed by Lord Morris of Borth Y Gest in Honourable Dr. Paul Borg Olivier & Anr vs Honourable Dr. Anton Buttigieg(l) a case from Malta, that where (1) 11967] A.C. 115 (P.C.) 364 fundamental rights and freedom of the individual are being considered, a court should be cautious before accepting the view that some particular disregard of them is of minimal account. The learned Lord observed in the above case that there was always the likelihood of the violation being vastly widened and extended with impunity. He also referred to the words of Portia 'Twill be recorded for a precedent, and many an error by the same example will rush into the state ', and the following passage from the American case i e Thomas vs Collins (I) "The restraint is not small when it is considered what was restrained. The right is a national right, federally guaranteed. There is some modicum of freedom of thought, speech and assembly which all citizens of the republic may exercise throughout its length and breadth, which no state, nor all together, not the nation itself, can prohibit, restrain or impede. If the restraint were smaller than it is, it is from petty tyrannies that large ones take root and grow. This fact can be more plain than when they are imposed on the most basic right of all. Seedlings planted in that soil grow great and, growing, break down the foundations of liberty. " In the above decision the Privy Council cited with approval the view expressed by this Court in Romesh Thappar 's case (supra) and in Martin vs City of Struthers(2) The Privy Council observed thus: "A measure of interference with the free handling of the newspaper and its free circulation was involved in the prohibition which the circular imposed. It was said in an Indian case Romesh Thappey vs State of Madras): "There can be no doubt that freedom of speech and expression includes freedom of prepagation of ideas and that freedom is secured by freedom of circulation. 'Liberty of circulation is as essential to that freedom as the liberty of publication. Indeed without circulation the publication would be of little value." (2) ; (3)[1943] ; 365 Similar thoughts were expressed by Black J. in his judgment in Martain vs City of Struthers when he said: "Freedom to distribute information to every citizen wherever he desires to receive it is so clearly vital to the preservation of a free society that, putting aside reasonable police and health regulations of time and manner of distribution, it must be fully preserved". We respectfully endorse the high principle expounded by the Privy Council in the above case. Moreover in the absence of a proper examination of all relevant matters, it is not possible to hold that the effect of the levy is minimal. In fact the impact of the impugned levy in these cases is not minimal at all. For example, The Tribune Trust has to pay Rs. 18.7 lacs and The Statesman Ltd. has to pay Rs. 35.9 lacs by way of customs duty on newsprint imported during 1983 84. Other big newspapers have also to pay large sums by way of customs duty annually. The question in the present cases is whether the tax has been shown to be so burdensome as to warrant its being struck down ? The petitioners have succeeded in showing a fall in circulation but whether it is a direct consequence, of the customs levy and the increase in price has not been duly established. It may be due to various circumstances. The fall in circulation may be due to the general rise in cost of living and the ' reluctance of people to buy as many newspapers as they used to buy before. It may be due to bad management. It may be due to change of editorial policy. It may be due to the absence of certain feature writers. It may be due to other circumstances which it is not possible to enumerate. Except the synchronizing of time, there is nothing to indicate that the slight fall in circulation is directly due to the levy of customs duty. One curious feature of the case is that the petitioners have made no efforts to produce their balance sheets or profit and loss statements to give us a true idea of how burdensome the customs levy really is. On the other hand, the Government also has made no efforts to show the effect of the impact of the levy on the newspaper industry as a whole. All these years, the very exemption which they granted was an indication that the levy was likely to have a serious impact on the newspaper industry. Even now the exemption given to the small and medium newspapers shows that there is bound to be an impact. No effort has been made on the part of the Government to show 366 the precise nature of the impact. On the other hand, the case of the Government appears to be that such considerations are entirely irrelevant, though the outstanding fact remains that for several years, the Government itself thought that the newsprint deserved total exemption. On the material now available to us, while it is not possible to come to the conclusion that the effect of the levy is indeed so burdensome as to affect freedom of the press, we are also not able to come to the conclusion that it will not be burdensome. This a matter which touches the freedom of the press which is, as we said, the very soul of democracy. This is certainly not a question which should be decided on the mere question of burden of proof. There are factors indicating that the present levy is heavy and is perhaps heavy enough to affect circulation. On such a vital issue, we cannot merely say that the petitioners have not placed sufficient material to establish the drop in circulation is directly linked to increase of the levy when, on the side of the Government the entire exercise is thought to be irrelevant. Hence there appears to be a good ground to direct the Central Government to reconsider the matter afresh in the light of what has been said here. Is the classification of newspapers made for the purpose of exemption violative of Article 14 7 We do not, however, see much substance in the contention of some of the petitioners that the classification of the newspapers into small, medium and big newspapers for purposes of levying customs duty is violative of Article 14 of the Constitution. The object of exempting small newspapers from the payment of customs duty and levying 5% ad valorem (now Rs. 275 per MT) on medium newspapers while levying full customs duty on big newspapers is to assist the small and medium newspapers in bringing down their cost of production. Such papers do not command large advertisement revenue. Their area of circulation is limited and majority of them are in Indian languages catering to rural sector. We do not find anything sinister in the object nor can it be said that the classification has no nexus with the object to be achieved. As observed by Mathew, J. in the Bennett Coleman 's case (supra) it is the duty of the State to encourage education of the masses through the medium of the press under Article 41 of the Constitution. We? therefore, reject this contention. 367 VIII Relief Now arises the question relating to the nature of relief that may be granted in these petitions. These cases present a peculiar difficulty which arises out of the pattern of legislation under consideration. If the impugned notifications ale merely quashed, they being notifications granting exemptions, the exemptions granted under them will cease. Will such quashing revive the notification dated July 15,1977 which was in force prior to March 1,1981 under which total exemption had been granted ? We do not think so. The impugned notification dated March 1, 1981 was issued in supersession of the notification dated July 15,1977 and thereby it achieved two objects the notification dated July 15,1977 came to be repealed and 10% ad valorem. customs duty was imposed on newsprint. Since the notification dated July 15,1977 had been repealed by the Government of India itself, it cannot he revived on the quashing of the notification of March 1,1981. The effect of such quashing of a subsequent notification on an earlier notification in whose place the subsequent notification was issued has been considered by this Court in B.N. Tiwari vs Union of India and Ors.(1) In that case the facts were these: in 1952, a 'carry forward ' rule governing the Central Service was introduced whereby the unfilled reserved vacancies of a particular year would be carried forward for one year only. In 1955 the above rule was substituted by another providing that the unfilled reserved vacancies of a particular year would be carried forward for two years. In T. Devadasan vs The Union of India & Anr.(2) the 1955 rule was declared unconstitutional. One of the questions which arose for consideration in this case 'Tiwari 's case (supra) was whether the 1952 rule had revived after the 1955 rule was struck down. This Court held that it could not revive. The following are the observations of this Court on the above question: "We shall first consider the question whether the carry forward rule of 1952 still exists. It is true that in Devadasan 's case, the final order of this Court was in these terms: "In the result the petition succeeds partially and (1) ; (2) ; 368 the carry forward rule as modified in 1955 is declared invalid. " That however does not mean that this Court held that the 1952 rule must be deemed to exist because this Court said that the carry forward rule as modified in 1955 was declared invalid. The carry forward rule of 1952 was substituted the carry forward by rule of 1955. On this substitution the carry forward rule of 1952 clearly ceased to exist because its place was taken by the carry forward rule of 1955. Thus by promulgating the new carry forward rule in 1955, the Government of India itself canceled the carry forward rule of 1952. When therefore this Court struck down the carry forward rule as modified in 1955 that did not mean that the carry forward rule of 1952 which had already ceased to exist, because the Government of India itself canceled it and had substituted a modified rule in 1955 in its place, could revive. We are therefore of opinion that after the judgment of this Court in Devadasan 's case there is no carry forward rule at all, for the carry forward rule of 1955 was struck down by this Court while the carry forward rule of 1952 had ceased to exist when the Government of India substituted the carry forward rule Of 1955 in its place." In Firm A.T.B. Mehtab Majid & Co. vs State of Madras & Anr.(1) also this Court has taken the view that once an old rule has been substituted by a new rule, it ceases to exist and it does not get revived when the new rule is held invalid. The rule in Mohd. Shaukat Hussain Khan vs State of Andhra Pradesh(2) is inapplicable to these cases. In that case the subsequent law which modified the earlier one and which was held to be void was one which according to the Court could not have been passed at all by the State Legislature. In such a case the earlier law could be deemed to have never been modified or repealed and would, therefore, continue to be in force. It was strictly not a case of revival of an earlier law which had been repealed or modified on (1) [19631 Supp. 2 S.C.R. 435 at 446. (2) ; 369 the striking down of a later law which purported to modify or repeal A the earlier one. It was a case where the earlier law had not been either modified or repealed effectively. The decision of this Court in Shri Mulchand Odhavji vs Rojkot Borough Municipality is also distinguishable. In that case the State Government had been empowered by section 3 of the Saurashtra Terminal Tax and Octroi Ordinance (47 of 1949) to impose octroi duty in towns and cities specified in Schedule I thereof and section 4 authorised the Government to make rules for the imposition and collection of octroi duty. These rules were to be in force until the City Municipalities made their own rules. The rules framed by the Municipality concerned were held to be inoperative. Then the question arose whether the rules of the Government continued to be in force. The Court held a "The Government rules, however, were to cease to operate as the notification provided "from the date the said Municipality put into force their independent by laws. " It is clear beyond doubt that the Government rules would cease to apply from the time the respondent Municipality brought into force its own bye laws and rules under which it could validly impose, levy and recover the octroi duty. The said notification did not intend any hiatus when neither the Government rules nor the municipal rules would be in the field. Therefore, it is clear that if the bye laws made by the respondent Municipality could not be legally in force some reason or the other, for instance, for not having been validly made, the Government rules would continue to operate as it cannot be said that the Municipality had 'put into force their independent bye laws". The Trial Court, as also the District Court, were therefore, perfectly right in holding that the respondent Municipality could levy and collect octroi duty from the appellant firm under the Government rules. There was no question of the Government rules being revived, as in the absence of valid rules of the respondent Municipality they continued to operate. The submission of counsel in this behalf, therefore, cannot be sustained. " In the cases before us we do not have rules made by two (1 ) A.l. R. 370 different authorities as in Mulchand 's case (supra) and no intention on the part of the Central Government to keep alive the exemption in the event of the subsequent notification being struck down is also established. The decision of this court in Koteswar Vittal Kamath vs K Rangappa Baliga & Co.(1) does not also support the petitioners. In that case again the question was whether a subsequent legislation which was passed by a legislature without competence would have the effect of reviving an earlier rule which it professed to supersede. This case again belongs to the category of Mohd. Shaukat Hussain Khan 's case (supra). It may also be noticed that in Koteswar Vittal Kamath 's case (supra) the ruling in the case of Firm A.T.B. Mehtab Majid & Co. (supra) has been distinguished. The case of State of Maharashtra etc. vs The Central Provinces Manganese Ore Co. Ltd.(2) is again distinguishable. In this case the whole legislative process termed substitution was abortive, because, it did not take effect for want of the assent to the Governor General all the Court distinguished that case from Tiwari 's case (supra). We may also state that the legal effect on an earlier law when the later law enacted in its place is declared invalid does not depend merely upon the use of words like, 'substitution ', or 'supersession '. It depends upon the totality of circumstances and the context in which they are used. In the cases before us the competence of the Central Government to repeal or annul or supersede the notification dated July 15, 1977 is not questioned Hence its revival on the impugned notifications being held to be void would not arise. The present cases are governed by the rule laid down in Tiwari 's case (supra) Hence if the notification dated July 15, 1977 cannot revive on the quashing of the impugned notifications, the result would be disastrous to the petitioners as they would have to pay customs duty of 40% ad valorem from March 1, 1981 to February 28, 1982 and 40% ad valorem plus Rs. 1,000 per MT from March 1, 1982 onwards. In addition to it they would also be liable to pay auxiliary duty of 30% ad valorem during the fiscal year 1983 84 and auxiliary duty of 50% ad valorem during the fiscal year 1982 83. They would straigtaway be liable to pay the whole of customs duty and any other duty levied during the current fiscal year also. Such a result cannot be allowed to 'ensue. (1) ; (2) [1977] I S.C.R. 1002. 371 It is no doubt true that so me of the petitioners have also questioned the validity of the levy prescribed by the itself. But we are of the view the it is unnecessary to quash it because of the pattern of the legislative provisions levying customs duty which authorise the Government in appropriate cases either to reduce the duty or to grant total exemption under section 25 of the having regard to the prevailing circumstances and to very such concessions from time to time. The Governmental practice in the matter of customs duties has made the law imposing customs virtually a hovering legislation. Parliament expects the Government to review the situation in each case periodically and to decide what duty should be levied within the limit prescribed by the . Hence the validity of the provision in the need not be examined now. Since it is established that the Government has failed to discharge its statutory obligations in accordance with law while issuing the impugned notifications issued under section 25 of the Custom Act, 1962 on and after March 1, 1981, the Government should be directed to re examine the whole issue relating to the extant of exemption that should be granted in respect of imports of newsprint after taking into account all relevant considerations for the period subsequent to March 1,1981 We adopt this course since we do not also wish that the Government should be deprived of the legitimate duty which the petitioners would have to pay on the imported newsprint during the relevant period. In the result, in view of the peculiar features of these cases and having regard to Article 32 of the Constitution which imposes an obligation on this Court to enforce the fundamental rights and Article 142 of the Constitution which enables this Court in the exercise of its jurisdiction to make such order as is necessary for doing complete justice in any cause or matter pending before it, we make the following order is these cases: The Government of India shall reconsider within six months the entire question of levy of import duty or auxiliary duty payable by the petitioners and others on newsprint used for printing newspapers, periodicals etc. with effect from March 1, 1981. The petitioners and others who are engaged in newspaper business shall make available to the Government all information necessary to decide the question. If on such reconsideration the Government decides that 372 there should be any modification in the levy of customs duty or A auxiliary duty with effect from March 1, 1981, it shall take necessary steps to implement its decision. Until such redetermination of the liability of the petitioners and others is made, the Government shall recover only Rs. 550 per MT on imported newsprint towards customs duty and auuiliary duty and shall not insist upon payment of duty in accordance with the impunged notifications. The concessions extended to medium and small newspapers. may, however, remain in force. If, after such redetermination, it is found that any of the petitioners is liable to pay any deficit amount by way of duty, such deficit amount shall be paid by such petitioner within four months from the date on which a notice of demand is served on such petitioner by the concerned authority. Any bank guarantee or security given by the petitioners shall be available for recovery of such deficit amounts. If, after such redetermination, it is found that any of the petitioners is entitled to any refund such refund shall be made by the Government within four months from the date of such redetermination. A writ shall issue to the respondents accordingly in these cases. Parties shall, however, bear their own costs. The petitions are accordingly allowed.

Under the Indian Tariff Act 1934, there was a levy of customs duty on imported paper. Exemption, however, had been granted for import of white, grey or unglazed newsprint from the levy of any kind of customs duty in excess of 1.5% ad valorem but subsequently a specific import duty of Rs. 50 per MT was levied on newsprint imports upto 1966. The Inquiry Committee on Small Newspapers examined the question of customs duty on newsprint and submitted its report in 1965 recommending total exemption of newsprint from customs duty. Pursuant to the said recommendation, the Government abolished customs duty on newsprint altogether in the year 1966. In 1971, a regulatory duty of 2 1/2% was levied on newsprint imports. This 2 1/2% regulatory duty was abolished and was converted into 5% auxiliary duty by the Finance Act of 1973. On the coming into force, the Indian Tariff Act 1934 was repealed. Under section 2 read with Heading No. 48.01/21 of the First Schedule to the 197S Act, a levy of basic customs duty of 40% ad valorem was imposed on newsprint. However, the 5% auxiliary duty levied from April 1, 1973 continued to be in operation which was also totally abolished in July 1977. The total exemption from customs duty on newsprint continued till March 1, 1981 when notification dated July IS, 1977 granting total exemption from customs duty superseded by the issue of a fresh notification under which publishers of newspapers had to pay 10% ad valorem customs duty on imported newsprint. By another notification issued at about the same time the auxiliary duty imposed by the Finance Act of 1981 above 5% ad valorem was exempted in the case of newsprint. The result was that a total duty of 15% ad valorem came to be imposed on newsprint for the year 1981 82, which led to the increase in the price of newspaper resulting in fall in circulation of news papers. In the first set of writ petitions this 15% levy was challenged. During the pendency of these writ petitions while was amended levying 40% ad valorem plus Rs. 1000 pet MT as customs duty on newsprint, the auxiliary duty payable on all goods subject to customs duty was increased to 50% ad valorem. But by notification dated February 82. 289 1982 issued under section 25(2) of the the notification A dated March 1, 1981 was superseded and Rs. 550 per tonne was imposed as customs duty on newsprint and auxiliary duty was fixed at Rs. 275 per tonne. In all Rs. 825 per tonne of newspaper had to be paid as duty. Under the newsprint policy of the Government there were three sources of supply of newsprint (i) high seas sales. (ii) sales from the buffer stock built up by the State Trading Corporation which includes imported newsprint, and (iii) newsprint manufactured in India. Imported newsprint is an important component of the total quantity of newsprint utilised by any newspaper establishment. The validity of the imposition of import duty on newsprint imported from abroad under section 12 of the (Act 52 of 1962) read with section 2 and Heading No. 48.01/21 Sub heading No. (2) in the First Schedule to the (Act 51 of 1975) and the levy of auxiliary duty under the Finance Act, 1981 on newsprint as modified by notifications issued under section 25 of the with effect from March 1, 1981 was challenged in the writ petitions. In the writ petitions it was contended (I) that the imposition of the import duty has the direct effect of crippling the freedom of speech and expression guaranteed by the Constitution as it led to the increase in the price of newspapers and the inevitable consequence of reduction of their circulation; (2) that with the growth of population and literacy in the country every newspaper is expected to register an automatic growth of at least 5% in its circulation every year but this growth is directly 'impeded by the increase in the price of newspapers; (3) that the method adopted by the and the in determining the rate of import duty has exposed E the newspaper publishers to Executive interference; (4) that there was no need to impose customs duty on newsprint which had enjoyed total exemption from its payment till March 1, 1981, as the foreign exchange position was quite comfortable. Under the scheme in force, the State Trading Corporation of India sells newsprint to small newspapers with a circulation of less than 15000 at a price which does not include any . import duty. to medium newspapers with a circulation between 15000 and 50,000 at a price which includes 5% ad valorem duty (now Rs. 275 per MT) and to big newspapers having a Circulation of over 50,000 at a price which includes the levy of 15% ad valorem duty (now Rs. 825 per MT). This classification of newspapers ' into big, medium and small newspapers is irrational as the purchases on high seas are sometimes effected by a publisher owning many newspapers which may belong to different classes; (5) that the enormous increase in the price of newsprint subsequent to March 1, 1981 and the inflationary economic conditions which led to higher cost of production have made it impossible for the industry to bear the duty any longer. Since the capacity to bear the duty is an essential element in determining the reasonableness of the levy, the continuance of the levy is violative of Article 19(1)(a) and Article 19(1)(g) of the Constitution. The imposition of the levy on large newspapers by the Executive is done with a view to stifling circulation of newspapers which are highly critical of the performance of the adminis 290 tration. The classification of newspapers into small, medium and big for purposes of levy of import duty is violative of Article 14 of the Constitution; and (6) that the power of the Government to levy taxes of any kind on the newspaper establishment rings the death knell of the freedom of press and would be totally against the spirit of the Constitution. The Union of India contested the writ petitions alleging (I) that the Government had levied the duty in the public interest to augment the revenue of the Government. When exemption is given from the customs duty, the Executive has to satisfy itself that there is some other corresponding public interest justifying such exemption and that in the absence of any such public interest, there is no power to exempt but to carry out the mandate of Parliament which has fixed the rate of duty by the ; (2) that the classification of newspapers for purposes of granting exemption is done the public interest having regard to relevant considerations, and that the levy was not Malay fide Since every section of the society has to bear its due share of the economic burden of the state, levy of customs duty on newsprint cannot be considered to be violative of Article 19(1) (a). The plea that the burden of taxation is excessive is an irrelevant factor to the levy of import duty on newsprint; (3) that the fact that the foreign exchange position was comfortable was no bar to the imposition of import duty; and (4) since the duty imposed is an indirect tax which would be borne by the purchaser of newspaper, the petitioner could not feel aggrieved by it. Allowing the Writ Petitions, ^ HELD: 1. The expression 'freedom of press ' has not been used in Article 19 of the Constitution but, as declared by this Court, it is included in Article 19 (1) (a) which guarantees freedom of speech and expression. Freedom of press means freedom from interference from authority which would have the effect of interference with the content and circulation of newspapers. [310C; 35I] 2. There could not be any kind of restriction on the freedom of speech and expression other than those mentioned in Article 19 (2) and it is clear that there could not be any interference with that freedom in the name of public interest, Even when clause (2) of Article 19 was subsequently substituted under the Constitution (First Amendment) Act, 1951 by a new clause which permitted the imposition of reasonable restrictions on the freedom of speech and expression in the interests of sovereignty and integrity of India, these urity of the State, friendly relations with foreign States, public order, decency or morality in relation to contempt of court, defamation or incitement to an offence. Parliament did not choose to include a clause enabling the imposition of reasonable restrictions in the public interest. [3l2B C] 3. Freedom of press is the heart of social and political. intercourse The press has now assumed the role of the public educator making formal and non formal education possible in a large scale particularly in the developing world, where television and other kinds of modern communication are not 291 still available for all sections of society. The purpose of the press is to advance the public interest by publishing facts and opinions without which a democratic electorate cannot make responsible judgments. Newspapers being purveyors of news and views having a bearing on public administration very often carry material which would not be palatable to governments and other authorities. With a view to checking malpractices which interfere with free flow of information, democratic constitutions all over the world have made provisions guaranteeing the freedom of speech and expression laying down the limits of interference with it. [316B.D; H] It is the primary duty of all the national courts to uphold the said freedom and invalidate all laws or administrative actions which interfere with it, contrary to the constitutional mandate. [317A] Brij Bhushan & Anr. v The State of Delhi [1950] S C.R. 605, Bennett Coleman & Co. & ors vs Union of India & ors. ; , Romesh Thappar vs The State of Madras; ; , Express Newspapers (Private) Ltd. & Anr. vs The Union of lndia & ors. and Sakal Papers (P Ltd. & Ors vs The Union of India [19621 3 S.C.R. 842, followed. 1 Annals of Congress (1789 96) p. 141; D.R. Mankekar: The Press under Pressure (1973) p 25; Article 19 of the Universal Declaration of Human Rights [1948: Article 19 of the International Covenant on Civil and Political Rights 1965; Article 10 of the European Convention on Human Rights: First Amendment to the Constitution of the United States of America; Article by Frank C. Newman and Karel Vasak on 'Civil and political Rights ' in the International Dimensions of Human Rights (Edited by Karel Vasak) Vo. 155 156; "Many Voices one World" a publication of UNESCO containing the Final Report of the International Commission for the Study of Communication Problems Part V dealing with 'Communication Tomorrow ' p. 265; Article entitled 'Toward a General Theory of the First Amendment ' by Thomas 1. Emerson (The Yale Law Journal Vol. 72 .877 at p. 906; Second Press Commission Report (Vol.l. 3435). referred to. (i) Excluding small newspaper establishments having circulation of less than about 10,000 copies a day, all other bigger newspaper establishments have the characteristics of a large industry The Government has to provide many services to them resulting in a big drain on the financial resources of the State as many of these services are heavily subsidized. Naturally such big newspaper organisations have to contribute their due share to the public exchequer and have to bear the common fiscal burden like all others. 1324C; E] (ii) While examining the constitutionality of a law said to be contravening Article 19 (1) (a) of the Constitution, the decisions of the Supreme Court of the United States of America cannot be solely relied upon for guidance but could be taken into consideration for understanding the basic principles of freedom of speech and expressiyn and the need for that freedom in a democratic country. 1324F G] (iii) The pattern of Article 19 (1) (a) and of Article 19 (1) (g) of the Indian Constitution is different from the pattern of the First Amendment to the American Constitution which is almost absolute in its terms. The rights guaranteed under Article 19 (1) (a) and Article 19 (1) (g) of the Constitution 292 are to be read alongwith clauses (2) and (6) of Article 19 which carve out areas A in respect of which valid legislation can be made. [324H; 325A] 6. Newspaper industry has not been granted exemption from taxation in express terms. Entry 92 of List I of the Seventh Schedule in the Constitution empowers Parliament to make laws levying taxes on sale or purchase of newspapers and on advertisements published therein. The power to levy customs duties on goods imported into the country is also entrusted to Parliament by Entry 83 in List I of the Seventh Schedule to the Constitution. [325B; 326G] 7. The First Amendment to the Constitution of the United States of America is almost in absolute terms and, therefore, no law abridging the freedom of the press can be made by the Congress. Yet the American Courts have recognised the power of the State to levy taxes on newspapers establishments, subject to judicial review by courts by the application of the due process of law principle. [328E F] 8. The police power, taxation and eminent domain are all forms of social control which are essential for peace and good government. In India the power to levy tax on persons carrying on the business or publishing newspapers has got to be recognised as it is inherent in the very concept of government. But the exercise of such power should. however, be subject to scrutiny by courts. Entry 92 of List I of the Seventh Schedule to the Constitution expressly suggests the existence of such power. [328G; 329C] 9. It is not necessary for the press to be subservient to the Government. As long as this Court sits ' newspapermen need not have the fear of their freedom being curtailed by unconstitutional means. It is not acceptable that merely because the Government has the power to levy taxes, the freedom of press would be totally lost. The Court is always there to hold the balance even and to strike down any unconstitutional invasion of that freedom. [338G; 339F] 10. Newspaper industry enjoys two of the fundamental rights, namely, the freedom of speech and expression guaranteed under Article 19 (1) (a) and the freedom to engage in any profession, occupation, trade. industry or business guaranteed under Article 19 (1) (g), While there can be no tax on the right to exercise freedom of expression, tax is leviable on profession, occupation, trade, business and industry. Hence tax is leviable on newspaper industry. But when such tax transgresses into the field of freedom of expression and stifles that freedom, it becomes unconstitutional. As long as it is within reasonable limits and does not impede freedom of expression it will not be contravening the limitations of Article 19 (2). The delicate task of determining when it crosses from the area of profession, occupation, trade, business or industry into the area of freedom of expression and interferes with that freedom is entrusted to the courts. [339G H; 340A B] 11. While levying a tax on newspaper industry it must be kept in mind that it should not be an over burden on newspapers which constitute the Fourth Estate of the country. Nor should it single out newspaper industry for harsh treatment. Imposition of a tax like the customs duty on newsprint is an imposition on knowledge and would virtually amount to a burden imposed on 293 a man for being literate and for being conscious of his duty as a citizen to inform himself about the would around him. 'The public interest in freedom A of discussion (of which the freedom of the press is one aspect) stems from the requirement that members of a democratic society should be sufficiently informed that they may influence intelligently the decisions which may affect 'themselves '. [341H; 342A B] 12. Freedom of expression has four broad social purposes to serve: (i) it helps an individual to attain self fulfilment, (ii) it assists in the discovery of truth, (iii) it strengthens the capacity of an individual in participating in decision making, and (iv) it provides a mechanism by which it would be possible to establish a reasonable balance between stability and social change. All members of society should be able to form their own beliefs and communicate them freely to others. In sum, the fundamental principle is the people 's right to know. Freedom of speech and expression should, therefore, receive a generous support from all those who believe in the participation of people in the administration. It is on account of this special interest which society has in the freedom of speech and expression that the approach of the Government should be more cautious while levying taxes on matters concerning newspaper industry than while levying taxes on other matters. [342C E] 13. In view of the intimate connection of newsprint with the freedom of the press, the tests for determining the vires of a statute taxing newsprint have, therefore, to be different from the tests usually adopted for testing the vires of other taxing statutes. In the case of ordinary taxing statutes, the laws may be questioned only if they are either openly confiscatory or a colourable device to confiscate. On the other hand. in the case of a tax on newsprint, it may be sufficient to show a distinct and noticeable burdensomeness, clearly and directly attributable to the tax. [342G H] Constituent Assembly Debates. IX pp. 1l75 1180 dt. September 9,1949: Corpus Juris Secundum (Vol. 16) p. 1132; American Jurisprudence 2d (Vol. 16) p. 662; Article on the First Amendment by Thomas 1. Emerson (The Yale Law journal Vol. 72 at p. 941); Second Press Commission Report (Vol 1) p. 35; Essay No. 84 by Alexander Hamilton in 'The Federalist; Alice Lee Grosjean supervisor of Public Accounts for the State of Louisiana vs American Press Company ; 80 L. ed. 660; Robert Murdock Jr. vs Commonwealth of Pennsylvania (City of Jeannette). ; 87 Law. 1292 and Attorney General & Anr. vs Antigua Times Ltd. , referred to Bennett Coleman & Co. & ors. vs Union of India & ors, [19731 2 S.C.R. 757 and Sakal Papers (P) Ltd. & Ors. vs The Union of India ; , distinguished. G Attorney General vs rimes Newspapers [1973] 3 All. E.R. 54, followed. 14, In the instant cases, assuming that the power to grant exemption under section 25 of the is a legislative power and a notification issued by the Government there under amounts to a piece of 294 subordinate legislation, even then the notification is liable to be questioned on the ground that it is an unreasonable one. [34SC D] 15. A piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent legislature Subordinate legislation may be questioned on any of grounds on which plenary legislation is questioned. In addition it may also be questioned on the ground that it does not conform to the statute under which it is made. It may further be questioned on the ground that it is contrary to some other statute. That is because subordinate legislation must yield to plenary legislation. It may also be questioned on the Ground that it is unreasonable, unreasonable not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary. [345H ;346A B] 16. In India arbitrariness is not a separate ground since it will come within the embargo or Article 14 of the Constitution. In India any enquiry into the vires of delegated legislation must be confined to the ground on which plenary legislation may be questioned to the ground that it is contrary to other statutory provisions or that it is so arbitrary that it could not be said to be in conformity with the statute or that it offends Article 14 of the Constitution. Subordinate legislation cannot be questioned on the ground of violation of principles of natural justice on which administrative action may be questioned. [347E G] 17. A distinction must be made between delegation of a legislative function in the case of which the question of reasonableness cannot be enquired into and the investment by statute to exercise particular discretionary power. In the latter case the question may be considered on all grounds on which administrative action may be questioned, such as, non application of mind, taking irrelevant matters into consideration, failure to take relevant matters into consideration, etc. On the facts and circumstances of a case, a subordinate legislation may be struck down as arbitrary or contrary to statute if it fails to take into account very vital facts which either expressly or by necessary implication are required to be taken into consideration by the statute or, say, the Constitution. This can only be done on the ground that it does not conform to the statutory or constitutional requirements or that it offends Article 14 or Article 19 (1) (a) of the Constitution. It cannot, no doubt, be done merely on the ground that it is not reasonable or that it has not taken into account relevant circumstances which the Court considers relevant. [ 348A D] 8. In cases where the power vested in the Government is a power which has got lo be exercised in the public interest, as it happens to be here, the Court may require the Government to exercise that power in a reasonable way in accordance with the spirit of the Constitution. The fact that a notification issued under section 25 (1) of the is required to be laid before Parliament under section 159 thereof does not make any substantial difference as regards the jurisdiction of the court to pronounce on its validity. [348E F] 19. Section 25 of the under which the notifications are issued confers a power on the Central Government coupled with a duty to examine the whole issue in the light of public interest. It provides that if the Central Government is satisfied that it is necessary in the public interest so to 295 do it may exempt generally either absolutely or subject to such conditions, A goods of any description, from the whole or any part of the customs duty leviable thereon. The Central Government may if it is satisfied that in the public interest so to do exempt from the payment of duty by a special order in each case under circumstances of an exceptional nature to be stated in such order any goods on which duty is leviable The power exercisable under section 25 of the is no doubt discretionary but it is not unrestricted. [350C E] 20. Any notification issued under a statute also being a 'law ' as defined under Article 13(3)(a) of the Constitution is liable to be struck down if it is contrary of any of the fundamental rights guaranteed under Part III of the Constitution. [350H; 351A] Article entitled 'Judicial Control of Delegated Legislation: The Test of Reasonableness ' by Prof. Alan Wharam, at pp 622 23; H.W.R Wade: Administrative Law (5th Edn.) pp. 747 748; Municipal Corporation of Delhi vs Birla Cotton Spinning and Weaving Mills Delhi & Anr. ; ; Kruse vs Johnson ; Mixnam Properties Ltd. vs Chertsey U.D.C. [1964] I Q.B. 214; The Tulsipur Sugar Co. Ltd vs The Notified Area Committee Tulsipur [1980] 2S.C.R.1111;Ramesh Chandra Kachardas Porwal & Ors. vs State of Maharashtra & ors. etc. ; ; Bates vs Lord Hailsham of St. Marylebone & ors. and Associated Provincial Picture Houses Ltd. vs Wednesbury Corporation ; , referred to. Narinder Chand Hem Raj & ors. vs Lt. Governor Administrator Union Territory. Himachal Pradesh & Ors.[1972] 1 S.C.R. 940, distinguished E State of Madras vs V.G. Rao ; and Breen vs Amalgamated Engineering Union , relied upon. If any duty is levied on newsprint by Government it necessarily has to be passed on to the purchasers of newspapers, unless the industry is able to absorb it. In order to pass on the duty to the consumer the price of newspapers has to be increased. Such increase naturally affects the circulation of newspapers adversely. [352G] 22. The pattern of the law imposing customs duties and the manner in which it is operated, to a certain exposes the citizens who are liable to pay customs duties to the vagaries of executive discretion. While Parliament has imposed duties by enacting the and the Customs Tariff Act, 1962 the Executive Government is given wide power by section 25 of the to grant exemption from the levy of Customs Duty, it is ordinarily assumed that while such power to grant exemptions is given to the Government it will consider all relevant aspects governing the question whether exemption should be granted or not. In the instant case, in 1975 when the was enacted, 40% ad valorem was levied on newsprint even though it had been exempted from payment of such duty. If the exemption had not been continued, newspaper publishers had to pay 40% ad valorem customs duty on the coming into force of the , 296 1975 Then again in 1982 by the Finance Act, 1982 an extra levy of Rs. 1000 per tonne was imposed in addition to the original 40% ad valorem duty even though under the exemption notification the basic duty had been fixed at 10% of the value of the imported newsprint. Neither any material justifying the said additional levy was, produced by the Government nor was it made clear why this futile exercise of levying an additional duty of Rs. 1000 per tonne was done when under the notification issued under. section 25 of the on March 1, 1981, which was in force then, customs duty on newsprint above 10% ad valorem had been exempted. While levying tax on an activity which is protected also Article l9(1)(a) a greater degree of care should he exhibited. While it is indisputable that the newspaper industry should also hear its due share of the total burden of taxation alongwith the rest of the community when any tax is specially imposed on newspaper industry, it should he capable of being justified as a reasonable levy in court when its validity is challenged. In the absence of sufficient material. the levy of 40 plus Rs. 1000 per tonne would become vulnerable to attack. [355E H;356A C] 23. The reasons given by the Government to justify the total customs duty of 15% levied from March 1, 1981 or total Rs. 825 per tonne as it is currently being levied appear to be inadequate. In the Finance Minister 's speech delivered on the floor of the Lok Sabha in 1981, the first reason given for the levy of 15% duty was that it was intended ' to promote a measure of restraint in the consumption of imported newsprint and thus help in conserving foreign exchange. " This ground appears to be not tenable for two reasons. Nobody in Government had ever taken into consideration the effect of the import of newsprint on the foreign exchange reserve before issuing the notification levying 15 duty. Secondly, no newspaper owner can import newsprint directly. News print import is canalised through the State Trading Corporation. If excessive import of newsprint adversely affects foreign exchange reserve, the State Trading Corporation may reduce the import of newsprint and allocate lesser quantity of imported newsprint to newspaper establishments. There is. however, no need to impose import duty with a view to curbing excessive import of news print. It is clear that the Government had not considered vital aspects before Withdrawing the total exemption which was being enjoyed by newspaper industry till March 1, 1981 and industry 15 duty on newsprint. [356D H; 357A B] 24. Attention was particularly drawn to the statement of the Finance Minister that one of the considerations which prevailed upon the Government to levy the customs duty was that the newspapers contained 'piffles '. A 'piffle ' means foolish nonsense. It appears that one of the reasons for levying the duty was that certain writings in newspapers appeared to the Minister as 'piffles '. Such action is not permissible under the Constitution. [361H; 362A] 25. Matters concerning the intellect and ethics do undergo fluctuations from era to era. The world of mind is a changing one. It is not static. The streams of literature and of taste and judgment in that sphere are not stagnant. They have a quality of freshness and vigour. They keep on changing from time to time, from place to place and from community to community. [868A] 297 26. It is one thing to say that in view of considerations relevant to A public finance which require every citizen to contribute a reasonable amount to public exchequer customs duty is leviable even on newsprint used by newspaper industry and an entirely different thing to say that the levy is imposed because the newspapers generally contain ' 'piffles ' '. While the former may be valid if the circulation of newspapers is not affected prejudicially, the latter is impermissible under the Constitution as the levy is being made on a consideration which is wholly outside the constitutional limitations. The Government cannot arrogate to itself the power to prejudge the nature of contents of newspapers even before they are printed. Imposition of a restriction of the above kind virtually amounts to conferring on the Government the power to precensor a newspaper. The above reason given by the Minister to levy the customs duty is wholly irrelevant. [363B D] 27 The argument on behalf of the Government that the effect of the impugned levy i minimal cannot be accepted. [365C] 28. There are factors indicating that the present levy is heavy and is perhaps heavy enough to affect circulation. There appears to be a good ground to direct the Central Government to reconsider the matter afresh. [366C ;D] Final Report of the International Commission for the Study of Communication Problems pp. 100 add 141; Encyclopaedia Britannica [1962] Vol. 16; p. 339; Second Press Commission Report(Vol. 11)pp. 182 183; Bennett Coleman 757; Sakal Papers(P) Ltd & Ors. vs The Union of India ; ; William B. Cammarane vs United States of America ; ; ; Jeffery Sole Bigelow Commonwealth of Virginia 421 us 809: L ed 2d60O at 610 and Robert E. Hannegan vs Esquire Inc. 90 L ed. 586, referred to. Hamdard Dawakhana (WakS) Lal Kuan Delhi & Anr. vs Union of India & Ors. , ; ; Lews J. Yelentine vs F. J. Chrestensen 86 Law ed. 1292 and in re Sea ; , distinguished. Romesh Thapper vs The State of Madras [1950] S.C.R. 564; Honourable Dr. Paul Borg olivier & Anr. vs Honourable Dr. Anton Buttigieg ; Thomas vs Collins ; Martin vs City of Struthers 11943] ; , followed. The classification of the newspapers into small, medium and big newspapers for purposes of levying customs duty is not violative of Article 14 of the Constitution. The object of exempting small newspapers from the payment of customs duty and levying 5% ad valorem (now Rs. 275 per MT) on medium newspapers while levying full customs duly on big newspapers is to assist the small and medium newspapers in bringing down their cost of production. Such papers do not command large advertisement revenue. Their area of circulation is limited and majority of them are in Indian languages catering to rural sector. There is nothing sinister in the 298 object nor can it be said that the classification has no nexus with the object to be achieved. [366F G] Bennett Coleman & Co. & Ors vs Union of India & Ors. ; referred to. Quashing of the impugned notification dated March 1, 1981, which had repealed the notification dated July 15, 1977 under which total exemption had been granted would not revive the notification dated July IS, 1977. Once an old rule has been substituted by a new rule, it cases to exist and it does not get revived when the new rule is held invalid. Since the competence of the Central Government to repealer annul or supersede the notification dated July 15 1977 is not questioned, its revival on the impugned notifications being held to be void would not arise and, therefore, on the quashing of the impugned notification the petitioners would have to pay customs duty of 40% ad valorem from March 1, 1981 to February 28 1982 and 40% ad valorem plus Rs 1000 per MT from March 1, 1982 onwards In addition to it they would also be liable to pay auxiliary duty of 30% ad valorem during the fiscal year 1982 83 and auxiliary duty of 50% ad valorem during the fiscal year 1983 8 i. They would straightaway be liable lo pay the whole of customs duty and any other duty levied during the current fiscal year also. Such a result cannot be allowed to ensue. The challenge to the validity of the levy prescribed by the customs Tariffs Act, 1975 itself cannot be allowed to succeed. [370F H] 31. The Government has failed to discharge its statutory obligations While issuing the impugned notifications. the Government is directed to reexamine the whole issue after taking into account all relevant considerations for the period subsequent to March 1, 1981. The Government cannot be deprived of the legitimate duty payable on imported newsprint. [371D E] 32. Having regard to the peculiar features of these cases and Article 32 of the Constitution which imposes an obligation on this Court to enforce the fundamental rights and Article 142 of the Constitution which enables this Court in the exercise of its jurisdiction to make such order as is necessary for doing complete justice in any cause or matter the following order was made: [371D E] 1. The Government of India shall reconsider within six months the entire question of levy of import duty or auxiliary duty payable by the petitioners and others on newsprint used for printing newspapers, periodicals etc. with effect from March 1,1981. The petitioners and others who are engaged in newspapers business shall make available to the Government all information necessary to decide the question. [37G H] 2. If on such reconsideration the Government decides that there should be any modification in the levy of customs duty or auxiliary duty with effect from March 1,1981, it shall take necessary steps to implement its decision. [372A] 3. Until such redetermination of the liability of the petitioners and others is made, the Government shall recover only Rs. 550 per MT on imported newsprint towards customs duty and auxiliary duty and shall not 299 insist upon payment of duty in accordance wish the impugned notifications. The concessions extended to medium and small newspapers may, however, A remain in force. [372C] 4. If, after such redetermination, it is found that any of the petitioners is liable to pay any deficit amount by way of duty, such deficit amount shall be paid by such petitioner within four months from the date on which a notice of demand is served on such petitioner by the concerned authority. Any bank guarantee or security given by the petitioners shall be available for recovery of such deficit amounts. [372D] 5. If, after such redetermination, it is found that any of the petitioners is entitled to any refund, such refund shall be made by the Government within four months from the date of such redetermination. A writ shall issue to the respondents. [372F] C B.N. Tiwari vs Union of India & ors, [1965] 2 S.C.R. 421, T. Devadasan vs Union of India & Anr. ; and Firm A.T.B. Mehtab Majid & Co. vs State of Madras & Anr. [1963] Supp 2 S.C.R, 435 at 446. relied on. Mohd. Shaukat Hussain Khan vs State of Andhra Pradesh [975] I S.C.R. 429, Shri Mulchand Odhavji. Rajkot Borough Municipality A.I.R. 1970 S.C. 685, Koteswar Vittal Kamath vs K. Rangappa Baliga & Co. ; and The case of State of Maharashtra etc. vs The Central Provinces Manganese Ors Co. Ltd. [1977] I S.C.R. 1000, distinguished.

Civil Appeal No. 1101 of 1969. From the Judgment and Order dated the 26th April 1968 of the Calcutta High Court in Wealth Tax Matter No. 421 of 1964. section T. Desai, B. B. Ahuja, S P. Nayar and R. N. Sachthey, for the Appellant. section K. Sen, A. K. Nag and D. P. Mukherjee for the Respondents. The Judgment of the Court was delivered by SHINGHAL, J. This appeal by certificate has come before us as the question of law arising for decision is said to be of great importance. The facts giving rise to the appeal are quite simple and may be shortly stated. One Bireswar Chatterjee, who was admittedly governed by the Dayabhaga School of Hindu law, was assessed to income tax as an individual. He died intestate on January 7, 1957, leaving his widow, sons and daughters. The Wealth tax officer rejected their plea that on the death of Bireswar Chatterjee they held definite and determined shares in his properties and were liable to separate assessment, and assessed them as a Hindu undivided family for the assessment year 1958 59. On appeal, the Appellate Assistant Commissioner held that since the assesses was governed by the Dayabhaga School of Hindu law, the properties could not belong to the Hindu undivided family and were to be taxed "in the hands of the co sharers separately. " The department took an appeal to the Income tax Appellate Tribunal, 'B ' Bench, Calcutta. There was difference of opinion between the members of the Tribunal, and in accordance with the opinion of the majority of the members it was ordered that "notwithstanding that there was no unity of ownership amongst members governed by the Dayabhaga School of Hindu law in respect of the family property and each member thereof had definite shares in it, such property, until partitioned, was assessable to wealth tax in the hands of the Hindu undivided family. " The Tribunal however referred the following question of law to the Calcutta High Court for decision "Whether on the facts and in circumstances of the case, the Tribunal was right in holding that properties possessed jointly by the members governed by the Dayabhaga School of Hindu law were assessable to wealth tax jointly in the status of a Hindu undivided family?" 1098 The High Court accepted the contention that the question assumed that the property was owned jointly by the members of a Hindu undivided family governed by the Dayabhaga School of Hindu law, and reframed it as follows, "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the property possessed by the heirs of a Hindu male governed by the Dayabhaga School of Hindu law were assessable to wealth tax jointly in the status of a Hindu undivided family?" It took the view that the matter was covered by its earlier decisions including Commissioner of Wealth tax. West Bengal vs Gouri Shankar Bhar where it had been held that on the death intestate of a Dayabhaga male, his heirs do not inherit his estate as members of a Hindu undivided family, and remain as co owners with definite and ascertained shares in the properties left by the deceased unless they voluntarily decide to live as members of a joint family. The High Court also took notice of the fact that a suit for partition had been filed and a preliminary decree had been obtained on July 4, 1959, and answered the reframed question in the negative. As has been stated, the High Court has certified this to be fit case for appeal to this Court. Mr. section T. Desai appearing for the Commissioner of Wealth tax has challenged the view taken by the High Court and has argued that under the Dayabhaga School of Hindu law the property left by the father is taken by the sons jointly by descent, as coparceners, as their joint family comes into existence by operation of law. He has accordingly argued that the father 's property is liable to be taxed under section 3 of the Wealth tax Act, hereinafter referred to as the Act, as a unit until it is partitioned amongst its members by metes and bounds. Reference has in this connection been made to certain commentaries and judgments and we shall refer to them as and when necessary. Section 3 of the Act is the charging section and the correctness or otherwise of the view taken by the High Court depends on its meaning and content. The section provides for the charge of wealth tax in these terms. "3. Subject to the other provisions contained in this Act, there shall be charged for every assessment year commencing on and from the first day of April, 1957, a tax (hereinafter referred to as Wealth tax) in respect of the net wealth on the corresponding valuation date of every individual Hindu undivided family and company at the rate or rates specified in the Schedule. " The liability to wealth tax therefore arises in respect of the "net wealth" of the assessee, which expression has been defined as follows in section 2(m), "(m) "net wealth" means the amount by which the aggregate value computed in accordance with the provisions 1099 of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owned by the assessee on the valuation date other than, . " The expression "belong" has been defined as follows in the Oxford English Dictionary. "To be the property or rightful possession of. " So it is the property of a person, or that which is in his possession as of right, which is liable to wealth tax. In other words, the liability to wealth tax arises out of ownership of the asset, and not otherwise. Mere possession, or joint possession, unaccompanied by the right to, or ownership of property would therefore not bring the property within the definition of net wealth" for it would not then be an asset "belonging" to the assessee. The question is whether the estate or property of Bireswar Chatterjee could be said to belong jointly to his heirs, after his death? It is not in controversy, and is in fact admitted, that the property in question belonged to Bireswar Chatterjee who was its sole owner in his life time and was assessed to income tax as an individual. His family consisted of his widow, sons and daughters and was governed by the Dayabhaga School of Hindu law. Bireswar Chatterjee 's property was therefore the heritage, or the wealth, which vested in his heirs on his death. According to Jimuta Vahana, his wife or sons or daughters had no ownership in his property during his life time for "sons have not ownership while the father is alive and free from defect." (Hindu Law by Colebrooke, P.9) ownership of wealth is however vested in the heirs "by the death of their father" (page 54, supra) when they become coheirs and can claim partition. It is on this basis that "Dayabhaga" (partition of heritage) has been expanded by Jimuta Vahana. According to him, "since anyone parcener is proprietor of his own wealth, partition at the choice even of a single person is thence deducible." (page 16, supra). The heritage does not therefore become the joint property of the heirs, or the joint family, on the demise of the last owner, but becomes the fractional property of the heirs in well defined shares. This concept of fractional ownership has been stated as follows by Krishna Kamal Bhattacharya in his "Law relating to the Joint Hindu Family" (Tagore Law Lectures) with reference to the doctrine of negation of the son 's right by birth (page 168), "As a corollary of the doctrine set forth above, negativing the son 's right by birth, is another peculiar doctrine of the Bengal School, that of what is called the 'fractional ownership ' of the heirs, contrasted with the doctrine of 'aggregate ownership expounded by all other schools. " That is why 'partition ' in Dayabhaga is defined as an act of "particularising ownership", and is not the act of fixing diverse ownerships on particular parts of an aggregate of properties as in Mitakshara. The 1100 learned author has clarified the position in unmistakable terms as follows (pages 172 73), "From what has been said above, it is evident that there is no unity of ownership in Bengal joint family, although there may be something like a unity of possession." (Emphasis added) This is why Mitashara is designated as the School of "aggregate ownership", while Dayabhaga is known as the School of "fractional ownership. " As has been stated in Gopalchandra Sarkar Sastri 's "Hindu law" (eighth edition page 465), while the joint family system prevails in Bengal, "there cannot be a real joint family consisting of father and sons during the father 's life time, inasmuch as joint property which is the essence of the conception of joint family, would be wanting to make them joint. " This is why, according to the Bengal School, the sons become tenants in common and not joint tenants in respect of the estate inherited by them from their father. The position of joint family under the Dayabhaga law has been stated as follows in Mayne 's Treatise on "Hindu Law and Usage" (eleventh edition, page 364), "It follows therefore that under the Dayabhaga law, a father and his sons do not form a joint family in the technical sense having coparcenary property. But as soon as it has made a descent, the brothers or other co heirs hold their shares in quasi severalty. Each coparcener has full powers of disposal over his share which is defined and not fluctuating with births and deaths as in the case of a Mitakshara family and his interest, while still undivided, will on his death pass on to his own heirs male or female or even to his legatees. " That was stated to be the law in Sreemutty Soorjeemoney Dossee vs Denobundoo Mullick The position has been dealt with in Mulla 's "Principles of Hindu Law" (fourteenth edition, at page 348), as follows, "The essence of a coparcenary under the Mitakshara law is unity of ownership. On the other hand, the essence of a coparcenary under the Dayabhaga law is unity of possession. It is not unity of ownership at all. The ownership of the coparcenary property is not in the whole body of coparceners. Every coparcener takes a defined share in the property, and he is the owner of that share. That share is defined immediately the inheritance falls in. It does not fluctuate with births and deaths in the family. Even before partition any coparcener can say that he is entitled to a particular share, one third or one fourth. Thus if A dies leaving three sons, B, C, and D, each one will be the owner of his on third share. The sons are coparceners in this sense that 1101 possession of the property inherited from A is joint. It is the unity of possession that makes them coparceners. So long as there is unity of possession, no coparcener can say that a particular third of the property belongs to him; that he can say only after a partition. Partition then, according to the Dayabhaga law, consists in splitting up joint possession and assigning specific portions of the property to the several coparceners. According to the Mitashara law, it consists in splitting up joint ownership and in defining the share of each coparcener. " In fact we find that a case somewhat similar to the one before us arose when one Prafulla Chandra Bhar, a Hindu governed by the Dayabhaga School, died intestate. His mother, widow, three sons and one daughter survived him. Since the death took place before the came into operation, he was succeeded by his widow and three sons, each inheriting one fourth share in the estate. Gouri Shankar Bhar, one of the sons, took out letters of administration and filed, a wealth tax return in his capacity as ad ministrator descrth the status of the assessee as a Hindu undivided family. The Wealth Officer also treated the status as such, and made the assessment. Gouri Shankar however filed an appeal and contended that the family being governed by the Dayabhaga School,the shares of the coparceners in the property of the deceased were definite and ascertained and the assessment should not have been made in their status as a Hindu undivided family and each member should have been assessed separately upon the value of his share in the inherited property. The Appellate Assistant Commissioner overruled the contention and took the view that even though the shares of the coparcencrs were definite and ascertained, the income from the prperty of the family did not belong to the several members in specified shares but continued to belong to the Hindu undivided family as a whole. On further appeal, the Tribunal held that as the coparcener under the Dayabhaga law had a definite share in the property left by the deceased and was legally the owner thereof, he had a defined share and that since the wealth tax was levied on the basis of ownership, it was proper that the assessment should have been made on the individual coparceners on their respective shares and assessment of the total wealth in the hands of the undivided family would be illegal. The matter was referred to the High Court at the instance of the Commissioner of Wealth tax. The High Court of Calcutta in Commissioner of Wealth tax case (supra) made a reference, inter alia, to the decision in Biswa Ranjan Sarvadhikari vs Income tax officer, F. Ward District, (2) Calcutta and upheld the view that where property is owned by two or more persons governed by the Dayabhaga School and their shares are.definite and ascertainable, then, although they are in Joint possession, the tax will be assessed on the basis of the share of the income in the hands of the assessee and not as of a Hindu undivided family. It was held that the position was not different under the Wealth tax Act. The matter was brought to this Court on appeal and it was conceded by Solicitor General appearing for the Commissioner of Wealth tax that as the property was the individual property of the 1102 deceased, it devolved on his heirs in severalty. It was held that as each of them took a definite and separate share in the property, each of them was liable, in law, to pay wealth tax as an individual. While upholding the decision of the High Court it was however observed by this Court that it was not necessary to decide, in that case, whether a Dayabhaga family could be considered as a Hindu undivided family within the meaning of section 3 of the Act. That decision is Commissioner of Wealth tax, West Penal vs Gauri Shankar Bhar. In the case before us, it is not in dispute that the property in question was the individual property of Bireswar Chatterjee and that it devolved on his heirs according to the provisions of the . It will be recalled that a suit for partition was filed on June 21, 1957 and a preliminary decree was passed on July 4, 1959. For reasons already stated, the coparcenary had unity of possession but not unity of ownership on the property. Eac coparcener therefore took a defined share in the property and was the owner of his share. Each such defined shar thus "belonged" the coparcener. It was his "net wealth" within the meaning of section 2(m) of the Act and was liable to wealth tax as such under section 3. The High Court was therefore right in answering the reframed question in the negative, and as we find no force in the argument of Mr. Desai, the appeal fails and is dismissed with costs.

Rejecting the respondents ' plea that as persons governed by the Dayabhaga School of Hindu Law they had held definite and determined shares in the properties inherited by them from their father and were liable to separate assessment of wealth tax, the Wealth Tax Officer assessed them as a Hindu Undivided Family. On appeal the Appellate Assistant Commissioner held that the properties should be taxed in the hands of the co sharers separately. On further appeal, the Appellate Tribunal held that notwithstanding that there was no unity of ownership amongst members governed by the Dayabhaga School of Hindu Law in respect of family property and each member thereof had no definite share in it, such property, until partitioned, was assessable to wealth tax in the hands of the Hindu Undivided Family. On reference, the High Court held in favour of the assesses. Dismissing the appeal to this Court, ^ HELD: Dayabhaga means partition of heritage. A Dayabhaga male 's wife or sons or daughters have no ownership in his property during his lifetime. Ownership of wealth is vested in the heirs by the death of their father, when they become co heirs and can claim partition. The heritage of a Dayabhaga male does not become the joint property of the heirs or of the joint family on the demise of the last owner but becomes the fractional property of the heirs in well defined shares. That is why partition in Dayabhaga is defined as an act of particularising ownership. In Dayabhaga, the sons become tenants in common and not joint tenants in respect of the estate inherited by them from their father. While Mitakshara is known as the School of "aggregate ownership", Dayabhaga is known as the school of "fractional ownership". The essence of a coparcenary under the Mitakshara Law is unity of ownership; under the Dayabhaga it is unity of possession, not unity of ownership at all. Under the Dayabhaga school every coparcener takes a definite share in the property and he is the owner of that share which is defined immediately the inheritance falls in.[1099D G: 1100B H] Sreemutty Soorjeemoney Dossee vs Denobundoo Mullick, 6 M.I.A. 526 at p. 553. Hindu Law by Colebrooke p. 9. 2. Law relating to the Joint Hindu Family (Tagore Law Lecrures) by Krishna Kamal Bhattacharya p. 168 and 3. Principles of Hindu Law by Mulla (14th Edition) p. 348. Hindu Law & Usage, by Mayne,11th Edition 364, approved. (i) Under section 3, the liability of wealth tax arises in respect of the net wealth of the assesses. The term "net wealth" means all the assets belonging to the assesses, on the valuation date. The expression "belong" according to the Oxford Dictionary means "to be the property or rightful possession of". [1098G H] (ii) The liability to wealth tax arises out of ownership of the asset and not otherwise. Mere possession or joint possession unaccompanied by the right to or ownership of property would, therefore, not bring the property within the 1097 definition of "net wealth", for it would not then be the asset belonging to the assesses. [1099C] In the instant case, the property in question was the individual property of the father of the respondents and it devolved on the heirs according to the provisions of the . The coparcenary had unity of possession but not unity of ownership on the property. Each coparcener took a defined share in the property and was the owner of his share. Each such defined share thus belonged to the coparcener. It was his net wealth within the meaning of section 2(m) of the Wealth Tax Act and was liable to wealth tax, as such, under section 3. [1102C D] Commissioner of Wealth tax West Bengal vs Gouri Shankar Bhar, explained.

Civil Appeal No. 2419 of 1968. From the Judgment and Order dated 25 9 67 of the Punjab and Haryana High Court in Civil Writ No. 1630/62. 1280 section K. Mehta, P. N. Puri, K. R. Nagaraja and G. Lal for the Appellants. K. L. Narula, District Attorney, Haryana, R. B. Datar and Girish Chandra for Respondent No.1. E. C. Agarwala for Respondent No. 14 (Rest of the Respondents Ex parte) The Judgment of the Court was delivered by JASWANT SINGH, J. The litigation culminating in the present appeal (by certificate under Article 133(1)(b) of the Constitution) which is directed against the judgment and order dated September 25, 1967, of the Punjab and Haryana High Court in C.W.N. 1630 of 1962 setting aside the allotment dated May 23, 1960 made by Naib Tehsildar cum Managing Officer, Fatehabad, District Hissar in favour of Madan Mohan and others, and orders dated April 18, 1962 and July 21, 1962 of the Assistant Settlement Commissioner and Chief Settlement Commissioner respectively on the finding that "no part of the holding which formed part of the land allotted to respondent No. 14, Mehta Lal Chand, (hereinafter referred to as 'the respondent ') could, during the subsistence of such allotment and without its cancellation, be allotted to any one else" has had a very chequered career extending over well nigh two decades. It appears that the respondent who is a displaced person from Pakistan was found entitled to an allotment of 113 standard acres and 3 units of land in lieu of 120 acres of land held by him as owner in Bhawalpur (Pakistan). Against the aforesaid entitlement, the respondent was allotted 90 standard acres and 6 units of evacuee land between 1953 and 1958 in different villages of Tehsil Fatehabad, District Hissar including two areas measuring (1) 13 standard acres and 3 1/2 units and (2) 13 standard acres and 13 1/2 units in village Bahmniwala allotment of which was made on March 1, 1957 and October 10, 1958 respectively. Pursuant to the above allotment of 13 standard acres and 3 1/2 units made in his favour in village Bahmniwala vide Sanad dated March 6, 1957 (Annexure 'C ' to the writ petition), the respondent was given possession of the plots of land comprised in khasra Nos. 1411 min, 1412 min, 1472 min, 1241 min, 1242, 1243, 1244, 1245, 1246, 1247, 1621, 1622 to 1635 (14 khasras), 1642, 1644, 1645 on June 17, 1957. The respondent continued to remain in possession of the aforesaid plots of land till Rabi 1960 when consolidation of holdings were undertaken in village Bahmniwala. Without caring to look into the revenue record, the Consolidation Officer instead of showing the aforesaid allotted area in Bahmniwala in the name 1281 of the respondent included the same in the kurrah (area) of the Custodian. On coming to know about this irregularity, the respondent filed objections before the Consolidation Officer and requested him to rectify the mistake. The Consolidation Officer by his order dated March 23, 1960 consigned the objection petition of the respondent to the record room observing that in the absence of the relevant record which, as per the report of the Wasal Baqi Nawis is has been despatched to Jullundur for checking purposes, the factum of allotment cannot be verified and as it is necessary to take proceedings under section 21(2) of the Consolidation of Holdings Act in village Bahmniwala in this very month, the record cannot be awaied any further. The Consolidation Officer further observed that since it appeared from a perusal of the copy of the Sanad (allotment) that the entire kurrah consisted of almost evacuee land bearing khasra numbers mentioned in the Sanad of allotment, the respondent could, on the receipt of the record, get the area at the place where, according to him, the evacuee land mentioned by him in his application was situate. By his order dated May 23, 1960, the Naib Tehsildar cum Managing Officer, Fatehabad, however, made the following allotments out of an area of 58 standard acres and 7 units situate in Bahmniwala which included the khasra numbers already allotted to the respondent but which according to the Fard Fazla (statement of surplus area) prepared by the concerned Patwari appeared to be available for allotment: In favour of Bagga Singh, S/o Pokhar Singh: 5 1/2 units " " " Inder Singh, S/o Mit Singh : 7 Standard acres 1 1/2unit " " " M. dan Mohan Singh, S/o Puran Singh, " " " Odin Singh and Harduman Singh, 20 Standerd acres 2 units Sons of Madan Mohan Singh, Predecessor in interest of the appellants Aggrieved by this order of the Naib Tehsildar cum Managing Officer which adversely affected the allotment already made in his favour, the respondent preferred an appeal to the Assistant Settlement Commissioner (with powers of Settlement Commissioner), Punjab, Jullundur contending that 13 standard acres and 3 1/2 units of land in Bahmniwala allotted to him in 1957 had been erroneously included in the 'kurrah ' of the Custodian at the time of the Consolidation operations and that the same had now been erroneously allotted without his knowledge to Bagga Singh, Inder Singh, Madan 1282 Mohan Singh and his sons. Curiously enough, the Assistant Settlement Commissioner (with powers of Settlement Commissioner) while conceding that the aforesaid 13 standard acres and 3 1/2 units and 13 standard acres and 13 1/2 units in village Bahmniwala were allotted in favour of the respondent on June 17, 1957 and October 10, 1958 respectively and that there was no cancellation order in respect thereof and that the consolidation authorities should not have withdrawn the area from the name of the respondent who had through no fault of his been put to a lot of difficulty and that it was just and proper that the matter of allotment to which he was entitled be settled once for all in such a way that whole of the area is given to him permanently in one village, rejected the appeal by his order dated April 18, 1962 observing that there was no good ground for interfering with the allotment of the appellants and that it would be open to the respondent to apply to the Naib Tehsildar cum Managing Officer to make up the shortfall in his area by allotment of some other land which may be available in that village. Dissatisfied with the order of the Assistant Settlement Commissioner, the respondent took the matter in revision to the Deputy Secretary (Rehabilitation) exercising the powers of the Chief Settlement Commissioner who also after paying lip sympathy dismissed the revision on the ground that it was time barred. Aggieved by these orders, the respondent moved the High Court of Punjab and Haryana by means of the aforesaid petition under Articles 226 and 227 of the Constitution. The High Court by its judgment and order dated September 25, 1962 set side the aforesaid thee impugned orders holding that they were wholly without jurisdiction and the Tehsildar cum Managing Officer was not authorised to allot to the appellants the land which was already comprised in a subsisting valid allotment of the respondent. It is against this judgment and order of the High Court that the present appeal is directed. On the appeal coming up before us on July 19, 1978, we heard counsel for the parties at considerable length and felt it necessary for clarification of certain points which had been left vague the courts below to have before us the entire record relating to the allotment made in favour of the respondent. Accordingly, with the consent of counsel for the parties, we adjourned the hearing of the case and directed the Union of Indian to instruct the Chief settlement Commissioner, State of Haryana, either to appear himself before us with all the relevant record relating not only to the allotment originally made in favour of the respondent vide Sanad No. HS4/ 1957/11202 dated March 1, 1957 but also with the record pertaining to all the subsequent allotments made in his favour upto date or 1283 cause the appearance of a responsible officer with the aforesaid record. To obviate delay in disposal of the case, we also directed the Chief Settlement Commissioner to have in readiness a factual statement showing the net area in terms of standard acres to which the respondent was entitled as a displaced person, the particulars of the field initially allotted in his favour including the survey numbers and the extent of the area thereof, particulars of the survey numbers of the fields taken out of the respondent 's allotment vide Naib Tehsildar cum Managing Officer, Tehsil Fatehabad 's order dated May 23, 1960 and particulars of all the subsequent allotments made upto date in the respondent 's favour in different villages of District Hissar including village Bahmniwala as also the extent of the allotted area which is at present held by him. Accordingly, the Chief Settlement Commissioner has caused the attendance of K. L. Narula, Deputy District Attorney, Rehabilitation Department, Haryana, Chandigarh who has also filed an affidavit relating to the points on which information was required by us. We have perused the entire material and have again heard counsel for all the sides. Two questions arise for determination in this case (1) whether the respondent acquired any enforceable right as a result of the allotment made in his favour on March 1, 1957 and delivery in pursuance thereof to him of possession of the aforesaid khasra numbers on June 17, 1957 and (2) whether the parcels of land which already stood allotted in favour of the respondent vide allotment order dated March 1, 1957 could be allotted by the Naib Tehsildar cum Managing Officer, Fatehabad in favour of Madan Mohan Singh and others without notice to the respondent and without affording him in opportunity of being heard. The first question has to be considered in the light of the judgment of this Court in Amar Singh vs Custodian Evacuee Property, Punjab where the whole history of the legislative measures devised from time to time in the erstwhile State of Punjab to combat the gigantic problems created as a result of the mass migration of non Muslim land holders to East Punjab is traced. A perusal of the judgment reveals that in exercise of the rule making power vested in it under clauses (f) and (ff) of sub section (2) of section 22 of the East Punjab Evacuees ' (Administration of Property) Act, 1947 (E. P. Act No. XIV of 1947) as amended in 1948, the Punjab Government issued Notification Nos. 4891 S and 4892 S on July 8, 1949 1284 setting out the conditions regulating allotment by the Custodian of the land which vested in him. The first incident of allotment deducible from the notification is hereditability of the rights of the allottee which constitute quasi permanent allotment. The statement of conditions published under Notification Nos. 4891 S and 4892 S of July 8, 1949 was continued in force as the Administration of Evacuee Property (Rural) Rules framed by the Provincial Government under sub section (2) of section 53 of the Central Ordinance No. XXVII of 1949 under delegation from the Central Government under Notification No. 3094 A/Cus/49 dated December 2, 1949 subject to certain modifications and amendments. On repeal of the Central Ordinance by Central Act XXXI of 1950, the aforesaid rules were continued by virtue of section 58 of the Act as though made under that Act. Later in exercise of the delegated rule making power vested in the Provincial Government under section 55 of the Central Act, the Punjab Government framed rules dated August 29, 1951 entitled "Instructions for review and revision of land allotment" which affected the rules of July 8, 1949 only to the extent that they were inconsistent with the earlier rules. A reference to the earlier and subsequent rules would show that the later rules do not concern any of the matters provided by the earlier rules of 1949 (and 1950) excepting as regards resumption which virtually is cancellation of allotment. The position that emerges from the foregoing is that the rules of July, 1949 continued in force except to the extent of inconsistency. (The next set of rules are those made under Central Act XXXI of 1950). Then came the rules dated August 29, 1951 made by the Punjab Government in exercise of the powers delegated to it by the Central Government under section 55(1) of the Central Act XXXI of 1950. It will be seen that the rules of August 29, 1951 are substantially the same as those enumerated in clause (6) of July 8, 1949 notification as regards resumption and only supplement the notification of July 8, 1949 as regards eviction in certain contingencies. The rights and incidents enjoyed by the allottees under the quasi permanent scheme introduced by the aforesaid notification of July 8, 1949 are catalouged at page 823 of the aforesaid judgment of this Court in Amar Singh vs Custodian, Evacuee Property, Punjab (supra). They are: "1. The allottee is entitled to right of use and occupation of the property until such time as the property remains vested in the Custodian. [Clause 3(1). The benefit of such right will ensure to his heirs and successors. (Definition of 'allottee '). His enjoyment of the property is on the basis of paying land revenue thereupon and ceases for the time being. 1285 Additional rent may be fixed thereupon by the Custodian. If and when he does so, the allottee is bound to pay the same. [Clause 3(3). He is entitled to quiet and undisturbed enjoyment of the property during that period. (Clause 8). He is entitled to make improvements on the land with the assent of the Custodian and is entitled to compensation in the manner provided in the Punjab Tenancy Act. (Clause 7). He is entiled to exchange the whole or any part of the land for other evacuee land with the consent of the Custodian. (Clause 5). He is entitled to lease the land for a period not exceeding three years without the permission of the Custodian and for longer period with his consent. But he is not entitled to transfer his rights by way of sale, gift, will, mortgage or other private contract. [Clause 4(c).] 8. His rights in the allotment are subject to the fairly extensive powers of cancellation under the Act and rules as then in force prior to July 22, 1952, on varied administrative considerations and actions such as the following (Clause 6 and subsequent rules of 1951): (a) That the allotment is contrary to the orders of the Punjab Government or the instructions of the Financial Commissioner, Relief and Rehabilitation, or of the Custodian, Evacuee Property, Punjab; (b) That the claims of other parties with respect to the land have been established or accepted by the Custodian or the Rehabilitation Authority; (c) That it is necessary or expedient to cancel or vary the terms of an allotment for the implementation of resettlement schemes and/or rules framed by the State Government; or for such distribution amongst displaced persons as appears to the Custodian to be equitable and proper; 1286 (d) That it is necessary or expedient to cancel or vary the terms of an allotment for the preservation, or the proper administration, or the management of such property or in the interests of proper rehabilitation of displaced persons. Then came the two Notifications Nos. SRO 129 dt. July 22, 1952 and SRO 351 dated Feb. 13, 1953 amending and recasting sub rule (6) of Rule 14 of the Central Rules of 1950 as under: "(6) Notwithstanding anything contained in this rule, the Custodian of Evacuee Property in each of the States of Punjab and Patiala and East Punjab States Union shall not exercise the power of cancelling any allotment of rural Evacuee property on a quasi permanent basis, or varying the terms of any such allotment, except in the following circumstances: (i) where the allotment was made although the allottee owned no agricultural land in Pakistan; (ii) where the allottee has obtained land in excess of the area to which he was entitled under the scheme of allotment of land prevailing at the time of allotment; (iii)where the allotment is to be cancelled or varied (a) in accordance with an order made by a competent authority under section 8 of the East Punjab Refugees (Registration of Land Claims) Act, 1948; (b) on account of the failure of the allottee to take possession of the allotted evacuee property within six months of the date of allotment; (c) in consequence of a voluntary surrender of the allotted evacuee property, or a voluntary exchange with other available rural evacuee property, or a mutual exchange with such other available property; (d) in accordance with any general or special order of the Central Government; Provided that where an allotment is cancelled or varied under clause (ii), the allottee shall be entitled to retain such portion of the land to which he would have been entitled under the scheme of quasi permanent allotment of land; Provided further that nothing in this sub rule shall apply to any application for revision, made under section 26 or 1287 section 27 of the Act, within the prescribed time, against an order passed by a lower authority on or before 22nd July, 1952. " Thus the power of resumption or cancellation of quasi permanent allotment was restricted and reduced. The next legislative measure is the (Act No. XLIV of 1954), important provisions whereof which may be useful in dealing with the first question may be noticed. Section 4 provides for the time, the manner and the form of making an application for payment of compensation. Section 10 of the Act inter alia lays down that where any immovable property has been leased or allotted to a displaced person by the Custodian under conditions published by the Notification of the Government of Punjab No. 4891 S or 4892 S dated July 8, 1949 and such property is acquired under the provisions of the Act and forms part of the compensation pool, the displaced person shall so long as the property remains vested in the Central Government, continue in possession of such property on the same conditions on which he held the property immediately before the date of the acquisition. It further provides that the Central Government may for the purpose of payment of compensation to such displaced persons transfer to him such property on such forms and conditions as may be prescribed. Section 12 provides: "12.(1) If the Central Government is of opinion that it is necessary to acquire any evacuee property for a public purpose, being a purpose connected with the relief and rehabilitation of displaced persons, including payment of compensation to such persons, the Central Government may at any time acquire such evacuee property by publishing in the official gazette a notification to the effect that the Central Government has decided to acquire such evacuee property in pursuance of this section. (2) On the publication of a notification under sub section (1), the right, title and interest of any evacuee in the evacuee property specified in the notification shall, on and from the beginning of the date on which the notification is so published be extinguished and the evacuee pro 1288 perty shall vest absolutely in the Central Government free from all encumbrances. (3) . . . . . " It may be noted that by virtue of Central Government Notification No. S.R.O. 697 dated March 24, 1955, under sub section (1) of this section 12, all evacuee property allotted under the Punjab Government Notification dated July 8, 1949 was acquired by the Central Government excepting certain specified categories in respect of which proceedings were pending. Section 13 which deals with compensation for evacuee property acquired says: "13. There shall be paid to an evacuee compensation in respect of his property acquired under section 12 in accordance with such principles and in such manner as may be agreed upon between the Governments of India and Pakistan. " Section 14 which provides for the constitution of compensation pool runs thus: "14. (1) For the purpose of payment of compensation and rehabilitation grants to displaced persons, there shall be constituted a compensation pool which shall cosist of: (a) all evacuee property acquired under section 12, including the sale proceeds of any such property and all profits and income accruing from such property; (b) such cash balances lying with the Custodian as may, by order of the Central Government, be transferred to the compensation pool; (c) such contributions, in any form whatsoever, as may be made to the compensation pool by the Central Government or any State Government; (d) such other assets as may be prescribed. (2) The compensation pool shall vest in the Central Government free from all encumbrances and shall be utilised in accordance with the provisions of this Act and the rules made thereunder. " Section 16 authorised the Central Government to appoint Managing Officers or constitute Managing Corporations for the custody, management and disposal of compensation pool so that it may be effectively used in accordance with the provisions of the Act. 1289 Section 40 enables the Central Government by notification in the official gazette to make rules. Whereas sub section (1) of the section confers general power on the Central Government to make rules to carry out the purposes of the Act, sub section (2) of the Section particularities the subjects on which rules may be made by the Central Government without prejudice to the general power contained in sub section (1). In exercise of this power, the Central Government made rules called the Displaced Persons (Compensation and Rehabilitation) Rules, 1955 and published the same vide Notification dated May 21, 1955. Rule 3 lays down that an application for compensation may be made by a displaced person having a verified claim or if such displaced person is dead, by his successor in interest. Rule 4 prescribes the from of application for compensation. Rule 16 says that compensation shall be payable in accordance with the scale specified in Appendices VIII or IX as the case may be. Rule 49 as originally made ran thus: "49. Compensation normally to be paid in the form of land. Except as otherwise provided in this chapter, a displaced person having verified claim in respect of agricultural land shall, as far as possible, be paid compensation by allotment of agricultural land. Provided that where any such person wishes to have his claim satisfied against property other than agricultural land, he may purchase such property by bidding for it at an open auction or by tendering for it and in such a case the purchase price of the property shall be adjusted against the compensation due on this verified claim for agricultural land which shall be converted into cash at the rate specified in Rule 56." In 1960, the following explanation was added to the above rule: "Explanation: In this rule and in the other rules of this chapter, the expression 'agricultural land ' shall mean the agricultural land situated in a rural area. " Rule 51 lays down that the scale for the allotment of land as compensation in respect of a verified claim for agricultural land shall be 1290 the same as in the quasi permanent land Allotment Scheme in the States of Punjab and Patiala and the East Punjab States Union as set out in Appendix XIV. Rule 67AA provides: "67A. Compensation to displaced persons from West Punjab, etc., in respect of agricultural land. Notwithstanding anything contained in this Chapter, a displaced person from West Punjab or a displaced person who was originally domiciled in the undivided Punjab, but who before the partition of India had settled in North West Frontier Province, Baluchistan, Bhawalpur or Sind, whose verified claim in respect of agricultural land has not been satisfied or has been satisfied only partially by the allotment of evacuee land under the relevant notification specified in section 10 of the Act shall not be paid compensation in any form other than the transfer of acquired evacuee agricultural land and rural houses and sites in the State of Punjab or Patiala and East Punjab States Union in accordance with the scales specified in the quasi permanent allotment scheme operating in those States: Provided that if any person has been allotted land in a State other than Punjab and his land claim has not been satisfied fully, he may, for the remaining claim, either be allotted land due to him in that State or issued a Statement of Account which he may utilise for purchase of property forming part of the compensation pool or for adjustment of public dues. " Rule 68 is to the following effect: "68. Grant of Sanad for transfer of agricultural land Where any agricultural land is transferred to any person under these rules, the transferee shall be granted a Sanad in the form specified in Appendix XV (with such modifications as may be necessary in the circumstances of any particular case), or the transfer may be effected in any other manner in conformity with the provisions of any local or special law relating to transfer of agricultural land in force in the area where such agricultural land is situated. " Rule 71 casts an obligation on every person to whom any immoveable property has been allotted by the Custodian under any of the notifications specified in section 10 of the Act to file a declara 1291 tion in the form specified in Appendix XVI in the office of the Settlement Officer or before the authorised officer in the village concerned on the date and place notified under sub rule (4). Rule 72(1) provides for an enquiry where the allottee has no verified claim. Rule 72(2) lays down that if the Settlement Officer is satisfied that the allotment is in accordance with the quasi permanent scheme, he may pass an order transferring the land allotted to the allottee in permanent ownership as compensation and shall also issue to him a sand in the form specified in Appendix XVII or XVIII, as the case may be with such modifications as may be necessary in the circumstances of any particular case granting him such right. After the foregoing conspectus of the various legislative and delegated legislative measures, let us see whether the respondent had any right the enforcement of which he could have sought by means of the above mentioned writ petition. From the material on the record it is abundantly clear that the respondent migrated to India from West Punjab in the wake of the partition of the Sub Continent in 1947 and that the settlement and rehabilitation authorities satisfied themselves that he was entitled to an allotment of 113 Standard acres and 3 units of land in lieu of the land left behind by him in Bhawalpur. Since the respondent migrated from Bhawalpur where he had indisputably settled before the partition of the Sub Continent and his verified claim in respect of agricultural land had been only partially satisfied, he could not according to rule 67A of the Displaced Persons (Compensation and Rehabilitation) Rules, 1955, be paid compensation in any form other than by transfer of acquired evacuee agricultural land in accordance with the scale specified in the quasi permanent allotment scheme. Consequently, it was the duty of the Settlement officer under Rule 72(2) of the Displaced Persons (Compensation and Rehabilitation) Rules, 1955 to pass an order transferring the land allotted to the respondent in permanent ownership as compensation and had to issue him a Sanad in the prescribed form. It also appears that by virtue of Notification No. 697 dated March 24, 1955 issued under sub section (1) of section 12 of the , all evacuee property allotted under the Punjab Government Notification dated July 8, 1947 (excepting certain specified categories in respect of which proceedings were pending) was acquired by the Central Government. It is in view of this unchallengable position that we 1292 find from the record particularly the copy of Dharam Chand Patwari 's statement dated April 6, 1962 made before the Assistant Settlement Commissioner (Annexure 'A ' to the petition at pages 24 and 25 of the printed Paper Book) that allotment on permanent proprietary basis of 13 standard acres and 3 1/2 units of land situate in village Bahmniwala was made in favour of the respondent on March 1, 1957 that Sanad evidencing allotment of the aforesaid 28 kila numbers was issued in favour of the respondent on the same date; that possession of the aforesaid area of 13 standard acres and 3 1/2 units was handed over to the respondent on June 17, 1957; that entry regarding delivery of possession of the aforesaid 28 kila numbers was made by the Patwari in the Roznamcha Waqaati on June 17, 1957; that entries exist in khasra girdawaries of village Bahmniwala regarding the respondent 's possession of the aforesaid fields from June 17, 1957 upto Rabi 1960 when due to carelessness on the part of the Consolidation Officer, Ratia, Rectangle No. 133 (kila Nos. 4min, 5min, 6min, 7min, 14min, 15, 16, 17min, 24 and 25) and Rectangle No. 134 (kila Nos. 8min, 9min, 18min, 19min, 20, 21min and 22min) which were allotted in exchange of the aforesaid 28 kila numbers were entered not in the name of the respondent but in the kurrah of the Custodian and subsequently due to the carelessness on the part of the Naib Tehsildar cum Managing Officer were allotted to Madan Mohan Singh and others. In view of the foregoing, we are of the opinion that the respondent has succeeded in establishing that permanent proprietary allotment of the aforesaid 28 kila numbers of village Bahmniwala was validily made in his favour vide aforesaid allotment order dated March 1, 1957. Accordingly, we have no hesitation in holding that the respondent had an enforceable right in respect of the aforesaid 28 kila numbers of village Bahmniwala. In view of our aforesaid finding that permanent proprietary allotment of the aforesaid 28 kila numbers was validly made in favour of the respondent which conferred an enforceable right on him, the answer to the second question cannot but be in the negative. The view that we have formed is reinforced by the provisions of section 19 of the and Rule 102 of the Displaced Persons (Compensation and Rehabilitation) Rules, 1955 which provide as under: "19. Powers to vary or cancel allotment of any property acquired under this Act. (1) Notwithstanding anything contained in any contract or any other law for the 1293 time being in force but subject to any rules that may be made under this Act, the managing officer or managing corporation may cancel any allotment or amend the terms of any allotment under which any evacuee property acquired under this Act is held or occupied by a person, whether such allotment was granted before or after the commencement of this Act. " 102. Cancellation of allotments : "A managing officer or a managing corporation may in respect of the property in the compensation pool entrusted to him or to it, cancel an allotment or vary the terms of any such allotment if the allottee (a) has sublet or parted with the possession of the whole or any part of the property allotted to him without the permission of a competent authority, or (b) has used or is using such property for a purpose other than that for which it was allotted to him without the permission of a competent authority, or (c) has committed any act which is destructive of or permanently injurious to the property, or (d) for any other sufficient reason to be recorded in writing. Provided that no action shall be taken under this rule unless the allottee has been given a reasonable opportunity of being heard." Though in view of the above quoted provisions, it may, in certain contingencies, be open to the Managing Officer or Managing Corporation to cancel the allotment under the aforesaid section 19 of the read with Rule 102 of the Displaced Persons (Compensation and Rehabilitation) Rules, 1955, it cannot be done unless an allottee is given a reasonable opportunity of being heard. In the present case, it is clear from the record that no action for cancellation of allotment was taken under the aforesaid provisions of the Act and the Rules. It is not understood how without complying with the aforesaid provisions, the Naib Tehsildar cum Managing Officer allotted the aforesaid parcel of land which already stood allotted in the name of the respondent to the appellants. The action on the part of the Naib Tehsildar cum Managing Officer was evidently in flagrant violation of the clear and unequivocal provisions of law. Accordingly, 1294 we agree with the High Court that the impugned orders are manifestly illegal, arbitrary, unjust and cannot be sustained. However, taking into consideration all the facts and circumstances of the case particularly the fact that the appellants appear to have purchased the area in question from Madan Mohan Singh for a huge sum of Rs. 40,000/ and invested a considerable amount on the construction of a house, we think that it will be eminently just and fair if the appellants are allowed to retain Rectangle No. 134 comprising kila Nos. 8min, 9min, 10min, 11, 12, 13min, 18min, 19min, 20, 21min and 22min on which their house also stands and Rectangle No. 133 comprising kila Nos. 4min, 5min, 6min, 7min, 14min, 15, 16, 17min, 24 and 25 is given over to the respondent. The learned counsel for the parties also agree to this course being adopted in the interest of justice. The respondent shall be at liberty to approach the settlement authorities for allotment of some other suitable land in lieu of Rectangle No. 134 comprising kila Nos. 8min, 9min, 10min, 11, 12, 13min, 18min, 19min, 20, 21min and 22min to make up the deficiency, if any, in the land to which he may be entitled and if the latter i.e. the settlement authorities find that the area already held by the respondent if added to the area now ordered to be given to him still falls short of his entitlement, they will be free to allot him an area which will make up his unsatisfied claim provided he is found otherwise authorised to hold the said area on allotment or occupy the same under any other law in force in the State. The allotment of the area to which the respondent may be found entitled to shall, as far as possible, be made in the vicinity of the area already held by him. Subject this modification, the rest of the judgment and order of the High Court will stand. The appeal is disposed of accordingly.

The respondent, who was a displaced person from West Pakistan, was allotted certain land in India and was given its possession. At the time of consolidation of holdings in 1960 the Consolidation Officer included a part of this land comprising 13 odd acres in the area of the Custodian. The respondent 's representations protesting against the action of the Consolidation Officer having failed at the different levels, the respondent moved the High Court under article 226 of the Constitution. The High Court set aside the impugned orders of the Consolidation Officer on the ground that they were wholly without jurisdiction and that the concerned officer was not authorised to allot to the appellant the land which was already comprised in a subsisting valid allotment made to the respondent. On the question whether the land in dispute which had already stood allotted in favour of the respondent could be allotted in favour of others without notice to the respondent and without affording an opportunity of being heard. ^ HELD: The respondent had succeeded in establishing that permanent proprietary allotment of the land in dispute was validly made in his favour. Therefore the respondent had enforceable right in respect of the land and it could not be allotted in favour of others. [1292F G] Although in certain contingencies it would be open to the Managing Officer or the Managing Corporation to cancel the allotment under section 19 of the read with Rule 102 of the Displaced Persons (Compensation and Rehabilitation) Rules 1955, it can not be done unless the allottee is given a reasonable opportunity of being heard. [1293F] In the instant case no action for cancellation of allotment was taken under the provisions of the Act and the Rules. The action of the Naib Tehsildar cum Managing Officer in allotting to the appellant the land which had already stood in the name of the respondent without complying with the relevant provisions of the Act was in flagrant violation of the provisions of the law. Therefore, the impugned orders were manifestly illegal, arbitrary and unjust and could not be sustained. [1293H]

l Appeal No. 11 29 of 1965. Appeal from the judgment and order dated April 15, 16, 17, 1963 of the Bombay High Court in Wealth Tax Reference No. 2 of 1961. R.J. Kolah, N. D. Karkhanis and 0. C. Mathur, for the appellant. B. Sen, R. Ganapathy Iyer and R. N. Sachthey, for the res pondent. 769 The Judgment of the Court was delivered by Shah, J. For the assessment year 1957 58 the appellant Company claimed in proceedings for assessment of wealth tax that the following four amounts be deducted in the computation of its net wealth: (1)Rs. 29,44,421 in, respect of income tax liability relating to the assessment year 1957 58. This amount included Rs. 2,95,869 representing the last instalment of advance tax under section 18A in respect of which a notice of demand had been issued. (2)Rs. 3,70,083 in respect of business profits tax liability. (3) Rs. 20,23,500 in respect of proposed dividend. (4) Rs. 25,02,675 "on account of accrued liability for gratuity to workmen and staff as per the award of Industrial Court and Labour Appellate Tribunal. " The claim was rejected by the Wealth tax Officer. The Appellate Assistant Commissioner accepted the claim of the appellant Company in respect of the last instalment of the advance tax for which a notice of demand had been issued, and rejected the claim in respect of the rest. The Income tax Appellate Tribunal upheld the claim of the appellant Company in respect of the 1st, 2nd and the 4th items and rejected the claim in respect of the 3rd item. At the instance of the Commissioner, the following four questions were referred to the High Court of Judicature at Bombay under section 27(1) of the Wealth tax Act 27 of 1957: "(1) Whether on the facts and circumstances of this case the last instalment of advance tax in the sum of Rs. 2,95,869 paid by the assessee after the valuation date in accordance with the notice of demand dated 20 10 1956 is an admissible deduction under Sections 7(2) and 2(m) of the Wealth tax Act for the purpose of computation of the net wealth of the assessee for the assessment year 1957 58 ? (2)Whether on the facts and circumstances of the case in computing the net wealth of the assessee under Section 7(2) read with Section 2(m) of the Wealth tax Act the liability for income tax and business profits tax could be allowed as a deduction? (3) Whether on the facts and circumstances of the case the liability in the sum of Rs. 25,02,675 which arose as a result of the awards dated 28 10 1948, 28 11 1956 and 17 10 1954 before the valuation date or any part thereof is allowable as a deduction in determining the net wealth of the assessee under Section 7(2) read with Section 2(m) of the Wealth tax Act ? (4)Whether on the facts and circumstances of the case of the sum of Rs. 20,23,500 being the provision made for dividends and shown as a liability in the balance sheet of the assessee company could be allowed as a deduction in computing the net wealth of the assessee company?" At the hearing before the High Court, the fourth question was not pressed by the appellant Company. The High Court answered the first question in the affirmative, the second question in the affirmative insofar as it related to the estimated liability of business profits tax subject to verification by the Wealth tax Officer, and in the negative insofar as it related to the estimated liability of income tax. The third question was answered in the negative. In this appeal the Company challenges the correctness of the answers to the second part of the second question and the third question. The second question insofar as it relates to estimated liability for payment of income tax needs no detailed consideration, for the answer thereto will be governed by the judgment of this Court in Kesoram Industries and Cotton Mills Ltd. vs Commissioner of Wealth tax (Central, Calcutta( '). It was held by this Court in that case that liability to pay income tax was a present liability though the tax became payable after it was quantified in accordance with ascertainable data: there was therefore a perfected debt at any rate on the last day of the accounting year and not a contingent liability, and the amount of the provision for payment of income tax in respect of the year of account was a "debt owed" within the meaning of section 2(m) on the valuation date and was as such deductible in computing the net wealth. The view expressed by the High Court on the second question insofar as it relates to provision for income tax cannot therefore be sustained and that part of the question should be answered in the affirmative. There remains the third question. Counsel for the Company had conceded before the High Court that the liability to pay gratuity to the employees whose services were not terminated in the relevant year of account was merely contingent, since it arose on the happening of certain events such as death, physical incapacity, voluntary retirement, or resignation, and was on that account not a debt within the meaning of section 2(m) of the Act. But it was contended before the High Court that the present value of the liability for payment of gratuity was a permissible deduction in valuing the assets of the business of the assessee under section 7(2)(a) of the Act. The (1)[1966] 2 S.C.R. 688 : ; 772 2. On voluntary retirement or resignation of an employee After 15 years ' continuous service in the company 15 months ' salary. On termination of his service by the Company (a)After 10 years ' continuous service but less than 15 years ' service in the company 3/4th of one month 's salary for each year of service. (b)After 15 years ' continuous service in the company 5 months ' salary. A gratuity will not be paid to any employee who is dismissed for dishonesty or misconduct. " The right to obtain gratuity under the awards arises only when there is determination of employment and not before. The liability does not exist hi praesenti: it is contingent upon the determination of employment. This Court pointed out in Kesoram Industries & Cotton Mills ' case( ') at p. 703: 'debt is a sum of money which is now payable or will become payable in future by reason of a present obligation: debitum in praesenti, solvendum in futuro. ' The said decisions also accept the legal position that :a liability depending upon a contingency is not a debt in praesenti or infuturo till the contingency happened. But if there is a debt the fact that the amount is to be ascertained does not make it any the less a debt if the liability is certain and what remains is only the quantification of the amount. In short, a debt owed within the meaning of section 2(m) of the Wealth tax Act can be defined as a liability to pay in praesenti or in futuro an ascertainable sum of money. " Observations made by the High Court of Gujarat in Commis sioner of Wealth tax, Gujarat vs Ajit Mills Ltd.,(2) that deduction for an amount claimed on account of liability for gratuity for workers and employees based on awards of the labour courts and agreements will be admissible deductions in the computation of the net wealth are plainly obiter, and in our judgment are not correct. The decision of the House of Lords in Southern Railway of Peru Ltd. vs Owen (Inspector of Taxes) (3) that the assessee company (1) ; (3) ; : (2) 771 High Court rejected that contention. Counsel for the Company has in this appeal contended that no such concession as is recorded in the judgment of the High Court was made, and in any event, the concession being on a question of law was not binding upon the appellant Company. Section 2(m) at the material time provided: .lm15 " net wealth ' means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than, (i)debts which under Section 6 are not to be taken into account; (ii)debts which are secured on, or which have been incurred in relation to any property in respect of which wealth tax is not chargeable under this Act; " By section 3 the wealth tax is charged for every financial year commencing on and from the first day of April, 1957 on the net wealth on the, corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in the Schedule. Broadly speaking net wealth is the difference on the valuation date between the aggregate value computed in accordance with the provisions of the Act of the assets belonging to the assessee and the aggregate value of all the debts owed by the assessee. If there is no debt owed on the valuation date, it can obviously not be deducted in determining the net wealth which is liable to tax under the Wealth tax Act. Apart from the concession made by counsel for the Company there is little doubt on the plain terms of the awards that the liability to pay gratuity to the employees of the appellant Company on determination of employment is a mere contingent liability which arises only when the employment of the employee is determined by death, incapacity, retirement or resignation. The relevant terms of the awards dated October 28, 1948, November 28, 1956 and October 17, 1954 are as follows: "Gratuity should be paid. . on the following, scale: 1.On the death of an employee, while in service of the company or on his becoming physically or mentally incapacitated for further service one month 's salary for each year of service . . . 773 was entitled to charge against each year 's receipts the cost of making provision for the retirement payments which would ultimately be payable as it had the benefit of the employees ' services during that year, provided the present value of the future payments could be fairly estimated, were a permissible deduction in the computation of income tax, have in our judgment no relevance in this case. In Southern Railway of Peru Ltd 's case( ') under the legislation of Peru a Company operating a railway was bound to pay its employees compensation on the termination of their services. The right to receive compensation arose on dismissal or on termination of the employment by the employer by proper notice, or on such termination by the death of the employee or on the expiry of the term of ' the employment. The compensation was an amount equivalent to one month 's salary at the rate in force at the date of determination for every year of service. The company claimed in the computation of taxable income, under the Income tax Act, 1918, to be entitled to charge against each year 's receipts the cost of making provision for the retirement payments which would ultimately 'be thrown on it, calculating what sum would be required to be paid to each employee if he retired without forfeiture at the close of the year and setting aside the aggregate of what was required in so far is the year had contributed to the aggregate. It was held that the company was not entitled to make the deductions, but the company was entitled to charge against each year 's receipts the cost of making provision for the retirement payments which would ultimately be payable as it had the benefit of the employees ' services during that year, provided the present value of the future payments could be fairly estimated. The question arose under the English Income tax Act of 1918. Lord MacDermott observed at p. 345: say that, in computing his taxable profits for a particular year, a trader, who is under a definite obligation to pay his employees for their services in that year ail immediate payment and also a future payment in some subsequent year, may properly deduct, not only the immediate payment, but the present value of the future payment, provided such present value can be satisfactorily determined or fairly estimated. " Similar observations were made in the judgment of Lord Radcliff. But the House in that case was concerned to determine the deductibility of the present value of a liability which may arise in future in the computation of taxable profits for the relevant year under the Income tax Act. The same considerations cannot, however, apply to a case under the Wealth tax Act, where the liability to pay wealth tax is charged upon the net wealth of an assessee. ; 774 In Commissioner of wealth tax, Gujarat vs New Rajpur Mills Ltd.( ') the assessee company claimed to deduct gratuity payable to employees under an agreement entered into with the labour associations before the valuation date. The Court in that case observed that the liability was not a debt owed by the assessee on the valuation date since the gratuity was not payable on the valuation date, but was payable only on fulfilment of the ,contingencies set out in those agreements. But the Court proceeded to observe that since contingent liabilities can be taken into account while computing the net wealth of the asseessee under section 7(2)(a) ,the liability for payment of gratuity under such agreements would 'have to be estimated and the estimated value of the contingent liability would be a permissible deduction in computing the net wealth of the assessee. In our view the first observation of the Court :is correct, but the second is not. We will presently set out the reasons for that view. The alternative plea that under section 7(2)(a) of the Act the appellant Company is entitled to claim deduction even if it cannot do so ,under section 2(m) has, in our judgment, no force. Section 7 deals with the manner of valuation of assets. It provides insofar as it is material: "(1) The value of any asset, other than cash, for the purposes of this Act, shall be estimated to be the price which in the opinion of the Wealth tax Officer it would fetch if sold in the open market on the valuation date. (2)Notwithstanding anything contained in subsection (1), (a)where the assessee is carrying on a business for which accounts are maintained by him regularly the Wealth tax Officer may, instead of determining separately the value of each asset held by the assessee in such business, determine the net value of the assets of the business as a whole having regard to the balance sheet of such business as on the valuation date and making such adjustments therein as the circumstances of the case may require;" Section 7 falls in Ch. II which deals with the charge of wealth tax and assets subject to such charge: it is intended to provide machinery for determination of the value of assets. It was observed in the minority judgment in Kesoram Industries & Cotton Mills ' case(2) at p.717 : "By the first sub section the Wealth tax Officer is authorised to estimate, for the purpose of determining the (1) (2) ; : ; 775 value of any asset, the price which it would fetch, if sold in the open market on the valuation date. But this rule in the case of a running business may often be inconvenient and may not yield a true estimate of the net value of the total assets of the business. The legislature has therefore pro vided in sub section (2)(a) that where the assessee is carrying on a business for which accounts are maintained by him regularly, the Wealth tax Officer may determine the net value of the assets of the business as a whole, having re gard to the balance sheet of such business as on the valua tion date and make such adjustments therein as the circum stances of the case may require. But the power conferred upon the tax officer by section7(2) is to arrive at a valuation of the assets, and not to arrive at the net wealth of the assessee. Section 7(2) merely provides machinery in certain special cases for valuation of assets, and it is from the aggregate valuation of assets that the net wealth chargeable to tax may be ascertained. The power conferred upon the tax officer to make adjustments as the circumstances of the case may require is also for the purpose of arriving at the true valueof the assets of the business. Sub section (2)(a) of section 7 contemplates the determination of the net value of the assets having regard to the balance sheet and after making such adjustment as the circumstances of the case may require. It does not contemplate determination of the net wealth, because net wealth can only be determined from the net value of the assets by making appropriate deductions for debts owed by the assessee. The argument raised by counsel for the assessee is that substantially section 7(2) is a definition section, which extends, for the purposes of the Act, the definition of the 'net wealth ' of assessees carrying on business. There is no warrant for this argument in the language used in section 7(2). Counsel was unable to suggest any rational explana tion why, if what he contends was the intention, Parliament should have adopted this somewhat roundabout way of incorporating a definition of net wealth in a section dealing with valuation of assets. " The majority of the Court did not express any opinion on this question. From the terms of section 2(m) it appears clear that the tax officer must first determine the aggregate value of all the assets belonging to the assessee on the valuation date, and then determine the aggregate value of all the debts owed by the assessee on the valuation date. Excess of the aggregate value of the assets over the debts is the net wealth. The aggregate value of the assets must be 776 computed in accordance with the provisions of section 7. But in the aggregation of the value of all the debts owed by the assessee on the valuation date, section 7 has no operation. In holding in New Rajpur Mills ' case() that a contingent liability can be taken into account while computing the net wealth of the assessee under section 7(2) (a), in our judgment, the true function of section 7(2)(a) of the Wealth tax Act was not appreciated. Section 7 does not deal with the computation of net wealth. It deals with the computation of the aggregate value of the assets. Under section 7 the Wealth tax Officer is competent, where the assessee is carrying on business of which accounts are maintained regularly, to determine the net value of the assets of the business as a whole. But in doing so he determines the value of the assets of the business as a whole, and not the net wealth of the business. The appeal therefore is partially allowed. Insofar as the claim relates to deduction of estimated income tax for the assessment year, the answer wilt be in favour of the appellant company, and in so far as the claim relates to deduction of gratuity payable to the employees of the company, the answer will be in the negative. There will be no order as to costs in this appeal. V.P.S. Appeal allowed in part.

In the computation of the net wealth of the appellant company under section 2(m) of the Wealth Tax Act 1957, two deductions were claimed the company : (i) the amount of estimated income tax for the assessment year and (ii) the amount of gratuity payable by the company to its employees under certain industrial awards. HELD : The first claim was allowable but not the second. [776 D] Under section 2(m) of the Act, the Wealth Tax Officer must first determine the aggregate value of all the assets belonging to the assessee on the valuation date, and then determine the aggregate value of all the debts owed by the assessee on the valuation date. Excess of the aggregate value of the assets over the debts is the net wealth. But on the terms of the awards the liability to pay gratuity did not exist in present : it was contingent upon the determination of employment by death, incapacity, retirement or resignation of the employee, and not before. Therefore, it was not a debt owned by the assessee on the valuation date. [772 C D; 775 H] Nor could the appellant company claim the deduction under section 7(2)(a) of the Act. The aggregate, value of the assets must be computed in accordance with the provisions of section 7. But in the aggregation of the value of all the debts owned by the assessee on the valuation date, section 7 has not operation. Section 7 does not deal with the computation of net wealth but only with the determination of the not value of the assets as a whole. [776 A C] Kesoram Industries and Cotton Mills Lid. vs Commissioner of Wealth Tax (Central) (Calcutta), ; , followed. Observations Contra in Commissioner of Wealth Tax, Gujarat vs Ajit Mills Ltd. and Commissioner of Wealth Tax Gujarat vs New Rajpur Mills , disapproved. Southern Railway of Peru vs Owen (Inspector of Taxes) ; , explained.

Civil Appeal Nos. 5723 5724 of 1985 etc. From the Judgment and order dated 22.2.1985 of the Andhra Pradesh Administrative Tribunal, Hyderabad in Representation Petn. No. 1041 and 1417 of 1983. P.P. Rao, G.L. Sanghi, R. Venkataramani, R.A. Perumal, R.K. Gupta, B. Kanta Rao, K. Ram Kumar and A. Subba Rao for the appearing parties. 179 The Judgment of the Court was delivered by SEN, J. These three appeals and the special leave petitions are directed against the judgment and order of the Andhra Pradesh Administrative Tribunal, Hyderabad dated 22nd February, 1985 quashing the panel of names prepared by the State Government under r. 8 of the Andhra Pradesh Medical & Health Service Special Rules, 1982 to fill up the promotional post of Professor of Cardiology as on 1st July, 1983 reckoning the teaching experience of all the Assistant Professors in that super speciality in order of seniority, holding that the Assistant Professors of Cardiology in different medical colleges in the State who had the requisite five years teaching experience under r. 5 of the Rules having the alternate qualification in cl. (b) of Annexure II were eligible for promotion as such and directing the State Government to draw up a fresh panel after considering the claims of all such Assistant Professors of Cardiology treating them as possessing the requisite teaching experience in terms of r. S for the promotional post of Professor of Cardiology as on 1st July, 1983. That turns on the meaning of the expression 'two years training in Cardiology ' as specified in cl. (b) of column 5 in serial No. 17 of Annexure II to the Rules prescribing the qualifications for the post of Professor of Cardiology. The Tribunal was of the view that such Assistant Professors of Cardiology were entitled to have the benefit of teaching experience grained by them as such after obtaining the post graduate degree in MD/MRCP in that speciality on the crucial date 1st July, 1983 when the State Government purported to prepare a panel under r. 8 of the Rules. The issue involved is of far reaching importance to the entire medical profession as similar problem is faced by the State Governments in promoting Readers/Associate Professors in a speciality to the post of Professor in that speciality in the medical colleges. The matters were heard a long time back and closed for judgment, but then a similar question arose in Civil Appeal No. 4456 of 1986 State of Orissa vs Dr. Sivsanker Lal Bajoria & Anr., and therefore the matters were re listed. By order dated 12th December, 1986 this Court granted special leave to the State Government of Orissa against the judgment and order of the Orissa High Court evolving a rule of substantial compliance. But learned counsel for the parties in these matters stated that they had made their submissions on merits and desired that the Court should proceed to judgment. At the very outset, we wish to place on record that in Civil Appeal No. 4456 of 1986 we had on 29th October, 1986 issued notice 180 to the Medical Council of India to enable it to clarify its stand as to the eligibility of Assistant Professors/Readers in Cardiology to the promotional post of Associate Professor/Professor of Cardiology and in particular as to the import of the term 'two years special training ' within the meaning of Regulation 5(2)(b) of the Indian Medical Council Regulations, 1970, framed under section 33 of the . We desired the Indian Medical Council to specify the particular institution where such special training is imparted It would be profitable to reproduce the relevant averments in the affidavit sworn by the Assistant Secretary on behalf of the Medical Council of India placing its point of view: "With reference to the question whether any syllabus has been prescribed for further studies in Cardiology is concerned, I state that the Council is a regulatory body which has its own rules under the Act. It does not prescribe any syllabus which is within the jurisdiction of every University and medical institutions. The Medical Council of India only prescribes broad guidelines for training in post graduate/ post doctoral courses leading to post graduation in D.M. (Cardiology), period of study, conduct of examination etc; true copy of the said broad guidelines which will cover post graduation courses is annexed herewith. It may be submit ted that there are no special guidelines for Cardiology. However it is submitted that some Universities/Institutions might have prescribed the syllabus. With reference to the second question whether further training/instructions are imparted in any college/ institution/university or hospital, I submit that various departments attached to various colleges have started imparting post graduation courses after obtaining permission from the Medical Council of India. Till this day, a list of such institutions which are imparting such recognised post doctoral training in Cardiology is given below: 1. Madras Medical College, Madras (Madras University) 2. Post Graduate Institute of Medical Education and Research, Chandigarh (P.G.I., Chandigarh) 3. All India Institute of Medical Science, New Delhi. 181 4. G.B. Pant Hospital (Delhi University) 5. G.S.V.M. Medical College, Kanpur (Kanpur University) Colleges/Institutions which have already been approved for conducting D.M. courses in Cardiology are as under: Permission accorded (STILL TO BE RECOGNISED) 1. Osmania Medical College, (Osmania University, Hyderabad) 2. Gandhi Medical College, (Osmania University, Hyderabad) 3. Armed Forces Medical College, Pune (Poona University) 4. Kasturba Medical College, Manipal (Mangalore University) 5. Bangalore Medical College, Barlgalore (Bangalore University) 6. S.C.B. Medical College, Cuttack (Utkal University) (Permitted in Sept., 86) 7. Grant Medical College, Bombay (Bombay University) 8. Seth G.S. Medical College, Bombay (Bombay University) 9. T.N. Medical College, Bombay (Bombay University)" Emphasis supplied The affidavit sworn by the Assistant Secretary to the Medical Council of India is admirably vague and reveals a sad state of affairs. It is quite manifest that when the Secretary to the Medical Council of India addressed a letter dated 26th April, 1976 conveying the recommenda 182 tions of the Medical Council of India purporting to lay down that after 31st May, 1977 for all teaching appointments to posts higher than Tutor in higher specialities i.e. Cardiology/ Neurology/Gastro Enterology / Thoracic Surgery / Neuro Surgery / Plastic Surgery / Paediatric Surgery/Urology, the candidates must possess post graduate degree qualifications in the speciality concerned i.e. DM/M. Ch. after MD/ MS or other equivalent qualifications as may be approved by the Council from time to time. There was no prospectus for a course of study for post graduation in a super speciality nor were there any institutions for imparting post doctoral training in all the subjects. There was also a Note added that the already existing qualifications with 'two years special training ' in a recognized training centre in the speciality concerned, shall cease to be sufficient qualification for appointment to the aforesaid teaching posts from that date. For the sake of completeness, we think it necessary to set out the aforesaid letter of the Secretary, which runs as follows: "After 31st May, 1977, for all teaching appointments to posts higher than Tutor in higher specialities i.e. Cardiology, Neurology / Gastro Enterology / Thoracic Surgery / Neuro Surgery / Plastic Surgery / Paediatric Surgery / Urology, the candidates must possess post graduate degree qualifications in the speciality concerned i.e. D.M./M.Ch. after M.D./M.S. Or other equivalent qualification as may be approved by the Council from time to time. The existing alternative qualifications i.e. M.D./M.S. Or an equivalent qualification with two years special training in a recognised training centre in the speciality concerned, shall cease to be sufficient qualification for appointment to aforesaid teaching posts from that date. Provided that the requirements of possessing post graduate degree qualification in the concerned higher speciality shall not be applicable for higher appointments in the case of existing teachers holding regular teaching posts whose appointment was initially made on the basis of two years special training in the speciality after the requisite M.D./M.S. " It would be noticed that the affidavit does not disclose the date or dates from which the institutions listed above, namely, Madras Medical College, Madras, Post Graduate Institute of Medical Education & Research, Chandigarh, All India Institute of Medical Sciences, 183 New Delhi, G.B. Pant Hospital, Delhi and G.S.V.M. Medical College, Kanpur were recognised for imparting post graduate/post doctoral training. Nor does it specify the Universities/Institutions which have prescribed a syllabus for the post graduate/post doctoral courses leading to post graduation in DM (Cardiology), period of study, conduct of examination etc. It is not necessary to set out the facts in any detail and it is sufficient to give only the salient facts to elucidate the points in controversy. On 1st July, 1983 the State Government purported to prepare a panel of all Assistant Professors of Cardiology in Government Medical Colleges in the State having the requisite teaching experience under r. 5 after obtaining the post graduate qualification as specified in Annexure II. There existed on that date four vacancies in the post of Professor of Cardiology which occurred on 1st November, 1982, 1st March, 1983, 1st May, 1983 and in June 1983. According to the Government, the teaching experience contemplated by r. 5 of the Rules was the teaching experience gained by the Assistant Professor in the concerned speciality after obtaining the second post graduation degree in that speciality. The Government therefore included in the penal the names of Dr. G. Subramanyam, Dr. A. Rajagopala Raju and Dr. Soghra Begum, Assistant Professors of Cardiology, who had as on the crucial date 1st July, 1983 five years teaching experience after obtaining their post graduation degree in DM (Cardiology) as enjoined by r. 5 read with the first proviso thereto, and accordingly by order dated 17th August, 1983 promoted them to the post of Professor of Cardiology. Thereupon, the respondents Dr. R. Murali Babu Rao and Dr. G. Sai Gopal moved the Andhra Pradesh Administrative Tribunal assailing the impugned order of promotion. The claim of the respondent Dr. R. Murali Babu Rao was that he having obtained his degree in MD/MRCP in Medicine was posted as Assistant Professor of Cardiology w.e.f. 18th January, 1978 and while continuing to work as such, he was selected to undergo a super speciality course in Cardiology i.e. DM and was deputed for that purpose on 18th January, 1980. After completing his DM (Cardiology) in April, 1981, he was posted as Assistant Professor of Cardiology from 12th June, 1981. Upon that basis, he claimed that apart from being seniormost Assistant Professor of Cardiology, he had five years of teaching experience in the Department of Cardiology as Assistant Professor of Cardiology as on 18th January, 1983. According to him, if a panel had been prepared on 1st January 1983, he would have been the seniormost candidate in service with requisite qualifications for any vacancy from 1st January, 1983 to 1st July, 1983. He characterised the action of the State Government in 184 the matter of computation of five years teaching experience after post graduation as required under r. 5 of the Rules only after the second post graduation degree in DM (Cardiology) as being wholly arbitrary and irrational. The State Government in the counter before the Tribunal repudiated his claim and contended inter alia that under r. 5 of the Rules, one must possess five years teaching experience in the speciality concerned after obtaining the post graduate qualification in the concerned speciality i.e. after the second post graduate course. It was averred that after completion of his post graduate course in DM (Cardiology), the respondent had been posted as Assistant Professor of Cardiology on 12th June, 1981 and thus he would complete the three years period as Assistant Professor of Cardiology after acquiring his post graduate degree in DM (Cardiology) only on 11th June, 1984. Tn the normal course. it was said, he would then become qualified for promotion as Professor of Cardiology. The claim of the other representationist Dr. G. Sai Gopal was more or less similar. He acquired his degree in MD in Medicine in 1973 and was posted as Assistant Professor of Cardiology in September 1973. He obtained his second post graduate degree in DM (Cardiology) on 14th December, 1981. His grievance is that he has been discriminated against by the Government. While he was working as Assistant Professor of Cardiology after obtaining his post graduate degree in MD in Medicine, in 1978 he applied for study leave to join the All India Institute of Medical Sciences, New Delhi for undergoing further studies for the second post graduation degree in DM (Cardiology). It was refused and he was asked to resign from service while the Government granted such leave to respondent No. 3 Dr. Soghra Begum and therefore he should have been treated at par with her as if leave had been granted, and thus he would have completed his DM (Cardiology) course in the year 1980 itself. During the year 1979 the Government however relented and granted him leave to study DM course in Cardiology in the All India Institute of Medical Sciences, New Delhi where he completed his DM (Cardiology) on 13th December, 1981. As he had put in 1 year 6 months 27 days after his post graduate degree in DM (Cardiology) and even after giving credit for 2 years 4 months and 18 days i.e. the second post graduation course period, he was short of the requisite five years teaching experience and thus the Government considered him ineligible for promotion. Of the three Assistant Professors of Cardiology promoted as Professors, the Government placed before the Tribunal a tabular chart showing that Dr. A Rajagopala Raju had a teaching experience of 185 about 3 years 3 months as on 1st January, 1983 and with the gaining of teaching experience during the second post graduation degree of about two years, he had a total teaching experience of over five years. As regards Dr. Soghra Begum, it was averred that she already had 3 years 2 months and 16 days teaching experience as Assistant Professor of Cardiology after obtaining her post graduate degree in MD/MRCP in Medicine, when the Government deputed her to undergo further studies for the second post graduate course in DM (Cardiology) and therefore the Government, as in the case of Dr. A Rajagopala Raju, decided to count the period when she was undergoing the second post graduate course in DM (Cardiology) towards her teaching experience. It would appear from the tabular chart that Dr. G. Subramanyam who had also been promoted to the post of Professor of Cardiology was not a party to the proceedings before the Tribunal and had in fact been promoted to that post in November, 1982. In view of this, and as he was admittedly senior to the respondent Dr. R. Murali Babu Rao, he did not press his claim against Dr. G. Sai Gopal. The appellant C.H. Umesh Chandra has come up in appeal as the view expressed by the Tribunal prejudicially affects him. He obtained his post graduate degree in MD in Medicine in December, 1975 and his second post graduate degree in DM (Cardiology) in April, 1980. He had put in as Assistant Professor of Cardiology 3 years and 2 months. Even after giving credit for 1 year and 9 months i.e. the period of his second post graduation course in DM (Cardiology), the Government was of the view that he was not eligible. In view of the fact that he obtained his second post graduation degree in DM (Cardiology) in April, 1980, he seeks to support the stand of the Government as he has a better chance for promotion than the others to the promotional post of Professor of Cardiology. To appreciate the contentions advanced, it is necessary to set out the relevant provisions of the Andhra Pradesh Medical & Health Service Special Rules 1982, as amended from time to time. They are extracted below: "3. Clinical and Non Clinical Specialities: The Clinical and Non Clinical Specialities shall be as shown in Annexure I to these rules." "(4). Teaching experience for promotions: 186 (a) Professors Clinical, Non Clinical and Dental: A Deputy Civil Surgeon or an Assistant Professor shall be eligible for promotion as Professor after putting in a total teaching experience of 5 years in either or both categories in the concerned specialities. (b) Deputy Civil Surgeon (Clinical, Non Clinical, Dental): * * * * (c) The teaching experience specified in sub rules (a) and (11) above, shall be computed as on the 1st January or the 1st July of the year in which panels for promotions are prepared. " "(5) Teaching experience: Teaching experience specified in rule 4 shall mean teaching experience in the speciality concerned in a Medical College or an institute recognised by the Medical Council of India after obtaining post graduate qualification as specified in Annexure II. Provided that the teaching experience during second post graduation in a recognised College or Institute within the country or abroad in the concerned speciality of those who are: (i) Holding teaching appointments; or (ii) Holding beds under their charges or (iii)Doing tutorial work; shall count towards teaching experience for purposes of this rule." "7. Special Training: Special training specified in these rules shall mean the work done by an Assistant Professor or Deputy Civil Surgeon in the concerned recognised unit and exclusively devoted to the speciality. Teaching experience during the special training period in the speciality shall count towards the training." "(8) Preparation of panels: (1) The Government shall prepare a panel to fill up all the promotional posts included 187 in Class I available on 1st January and 1st July of the year based on the eligibility of the persons including the teaching experience as on 1st January and 1st July of the year." "(9) Qualification:(1) No person shall be eligible for promotion to the posts specified in column (3) of Annexure II unless he/she possesses the qualifications specified in the corresponding entry in column (5) thereof. (2) Preference shall be given to persons who possess the qualifications specified in item (a) over those who possess the qualifications in item (b) of Column (5) of Annexure II for the posts of Professors and Deputy Civil Surgeons belonging to the specialities specified in Annexure III. " ANNEXURE II (NON CLINICAL SPECIALITIES) See Rules 5 & 9 "section Name of Post Qualifications Degrees No. Speciality (1) (2) (3) (4) (5) 17 Cardiology Professor/ Must possess one (a) D.M Dy. Civil of the following (cardiology) Surgeon post graduate b)M.D./M.R.C.P. qualifications in in the concerned Medicine speciality from with 2 a recognised years University/Board/ training Body. in Cardiology. " The entire controversy is due to the failure of the State Government to give the benefit of the teaching experience gained by Assistant Professors after they obtained their post graduate degree in MD/ MRCP in Medicine under cl. (b) of column 5 in serial No. 17 of Annexure II. In the proceedings before the Tribunal, the State Government in the counter revealed that there was correspondence between the Directorate of Medical & Health Department with Secretary to the Medical & Health Department since the year 1981 for deletion of the alternate qualification prescribed in cl. (b) of column 5 in serial No. 17 188 of Annexure II, namely MD/MRCP in Medicine, as amended from A time to time, for all teaching appointments in the super specialities, as per the recommendations of the Medical Council of India. On the recommendation of the Directorate, it was said that the State Government had decided to delete the alternate qualification prescribed in r. 5 of the Rules for eligibility to the higher post of Professor in a super speciality, and had sent a draft amendment to the Special Rules for concurrence to the Andhra Pradesh Public Service Commission and the same was awaited. The recommendations of the Indian Medical Council had not by then i.e. till the hearing before the Tribunal, been translated into action. The judgment of the Tribunal however reveals that the alternate qualification in cl. (b) of column 5 in serial No. 17 of Annexure II i.e. MD/MRCP in Medicine with two years training in Cardiology stood deleted w.e.f. 12th December, 1983. On the crucial date however i.e. On 1st July, 1983, when the impugned panel was prepared, the alternate qualification in cl. (b) was still there. The contention on behalf of the State Government and the other appellants before us, as was before the Tribunal, is that the rules made under the proviso to article 309 of the Constitution, are subject to the recommendations made by the Medical Council of India which is invested with statutory power under section 19A of the insofar as they relate to coordination and determination of standards for medical education and in particular to prescription of qualifications for appointment to teaching posts in higher specialities. It is said that the directions of the Council, as conveyed by the Secretary by his letter dated 26th April, 1976 were mandatory, notwithstanding any provision to the contrary contained in the Andhra Pradesh Medical & Health Service Special Rules, 1982 and must therefore prevail and were binding on the Government. The Government duly considered the claims of the respondents aforesaid and came to the decision that they were ineligible for promotion to the post of Professor of Cardiology inasmuch as they did not possess the requisite five years teaching experience in the speciality concerned after obtaining their post graduation qualification within the meaning of r. 5 of the Rules i.e. second post graduation degree in DM (Cardiology). The further contention is that, at any rate the alternate qualification in cl. (b) of column 5 in serial No. 17 of Annexure II, namely, MD/MRCP in Medicine with two years training in Cardiology, having been deleted by GOMS No. 789, Medical & Health Department, dated 12th December, 1983, it was not necessary for the Government to comply with the direction made by the Tribunal to draw up a panel of the eligible candidates afresh under r. 8 of the Rules. The contention, 189 in the alternative, was that the Tribunal failed to appreciate that the teaching experience gained by Assistant Professors of Cardiology before obtaining the second post graduate degree in the speciality concerned. i.e. after the post graduate degree in MD/MRCP in Medicine, could not be taken into consideration inasmuch as under r.9(2) preference has to be given to persons who possess the qualifications specified in cl. (a) over those who possess the qualifications specified in cl. (b) for the post of Professor belonging to the speciality specified therein and therefore it was not justified in quashing the panel prepared by the State Government under r. 8. We are afraid, these contentions cannot prevail. The fallacy underlying the arguments is obvious. Rule 4 in terms speaks of the eligibility of such class of Assistant Professors of Cardiology for promotion to the post of Professor of Cardiology who possess five years teaching experience. The expression teaching experience ' as defined in r. 5 speaks of 'teaching experience in the speciality concerned in a medical college or an institute recognised by the Medical Council of India after obtaining post graduate qualification as specified in Annexure II '. The words used are 'after obtaining postgraduate qualification '; it does not speak of the second post graduate qualification. Rule 5 therefore takes in both the qualifications specified in cls. (a) and (b) of column 5 in serial no 17 of Annexure II, namely, (a) DM (Cardiology) (b) MD/MRCP in Medicine with two years training in Cardiology. On the crucial date 1st July, 1983, cl. (b) was very much there and the Government was bound to consider the claims of the aforesaid respondents like other officers belonging to that class before drawing up a panel under r. 8. There is no warrant for the submission that since under r. 9(2) an Assistant Professor with the requisite five years teaching experience after obtaining his second post graduate degree in DM (Cardiology) would have preferential claim over those having qualification mentioned in cl. (b) i.e. MD/ MRCP in Medicine with two years training in Cardiology, the State Government was entitled to ignore the claims of the latter class altogether. On its plain construction, r. 9(2) is a rule of preference and has therefore to be applied at the stage of making appointments to the post of Professor of Cardiology and not while drawing up a panel under r. 8. The Government was obviously misled by the wrongful assumption (i) that since the alternate qualification in cl. (b) of column 5 in serial No. 17 of Annexure II had been deleted by GOMS No. 789 dated 12th December, 1983, it was not necessary for it to consider the claims of the aforesaid respondents and others similarly situate in drawing up a list of eligible Assistant Professors of Cardiology to fill up 190 the promotional post of Professor of Cardiology, and (ii) that such A officers were rendered ineligible by reason of r. 9(2) and therefore their claims need not be considered. The Tribunal was therefore justified, in our opinion, in quashing the impugned panel prepared by the State Government under r. 8 of the Rules and in directing the Government to prepare a penal afresh after considering the claims of all Assistant Professors of Cardiology with five years teaching experience after their post graduation in MD/MRCP in medicine with two years training in Cardiology. There is no substance whatever in the contention that the alternate qualification in cl. (b) being in conflict with the recommendation of the Medical Council of India, must be deemed to have been repealed by implication and was non set w.e.f. 31st May, 1977. The Government had no doubt before it the recommendations of the Council as conveyed by the letter of the Secretary dated 26th April, 1976 that after 31st May, 1977, for all teaching posts higher than Tutor in higher specialities i.e. Cardiology /Neurology /Gastro Enterology/ Thoracic Surgery/ Neuro Surgery/Plastic Surgery/Paediatric Surgery/ Urology, the candidates must possess the post graduate qualification in the speciality concerned i.e. DM/M.Ch. after MD/MS or other equivalent qualification, as may be approved by the Council from time to time. The letter also went on to say that the existing qualification MD/MS or an equivalent qualification with two years special training in a recognised training centre in the speciality concerned, shall cease to be sufficient qualification for appointment to the aforesaid teaching posts from that date. Nevertheless, the Government failed to appreciate that the recommendation which was later approved of by the Government of India and acquired the status of a regulation, was only recommendatory and could not override a rule framed under the proviso to article 309 of the Constitution. The panel had to be drawn by the State Government strictly in conformity with the rules of recruitment made under the proviso to article 309 and not on the basis of the recommendations of the Council. As is manifest from the affidavit filed by the Indian Medical Council, it is only a recommendatory body. This Court has in a series of decisions defined the precise functions and duties of the Medical Council of India. The Indian Medical Council constituted under section 3 of the Act is an expert body intended and meant to control the minimum standards of medical education and to regulate their observance. We may only cite the case of State of Madhya Pradesh vs Km. Nivedita Jain. ; where the Court had to consider the effect of 191 the Regulations framed by the Medical Council and the various executive orders issued by the State Government. Analysing the various provisions of the Act in depth, it was observed as follows: "An analysis of the various sections of the Act indicate that the main purpose of the Act is to establish Medical Council of India, to provide for its constitution, composition and its functions and the main function of the Council is to maintain the medical register of India and to maintain a proper standard of medical education and medical ethics and professional conduct for medical practitioners. The scheme of the act appears to be that the Medical Council of India is to be set up in the manner provided in the Act and the Medical Council will maintain a proper medical register, will prescribe minimum standards of medical education required for granting recognised medical qualifications, will also prescribe standards of post graduate medical education and will further regulate the standards of professional conduct and etiquette and code of ethics for medical practitioners. " Emphasis supplied A fortiori, the recommendations made by the Council or the Regulations framed by it are only recommendatory and not mandatory. It is not for the Council to prescribe qualifications for recruitment to posts of Professors, Readers and Lecturers. It can only lay down broad guidelines therefor. Such qualifications have necessarily to be prescribed by the framing of Rules under the proviso to article 309. Right to be considered for promotion is a condition of service and it can only be regulated by a rule framed under the proviso to article 309. The Medical Council in its affidavit has itself said that it only prescribes broad guidelines for training in post graduate/post doctoral courses leading to post graduation in DM (Cardiology), period of study, conduct of examinations etc. It goes further and accepts that there are no special guidelines laid down for Cardiology and asserts that some universities/institutions might have prescribed the syllabus. It has listed five institutions which are imparting post doctoral training in Cardiology. Such being the legal position, the contention of the State Government and the other appellants that the recommendations of the Medical Council as conveyed by the letter of the Secretary dated 26th April, 1976 rendering Assistant Professors of Cardiology having the alternate qualification of post graduate degree in MD/MRCP in Medicine ineligible for Promotion to the post of Professor of Cardio 192 logy even though they had the requisite five years teaching experience, appears to be wholly misconceived and unwarranted. In support of the contention, learned counsel appearing for the State Government and the other appellants relied upon the following observations made by this Court in Union of India & Ors. vs S.B. Kohli & Anr. "Before the growth of specialised qualifications Surgeons obtaining the F.R.C.S. in general surgery used to specialise in orthopaedics and other specialities either by doing a diploma in orthopaedics or simply by practice and experience. The regulations framed by the Medical Council require that in addition to the general F.R.C.S., a surgeon must have a diploma in orthopaedics before he could be appointed a Professor, Reader or Lecturer in orthopaedics. That regulation has been accepted by the Government. This gives an indication of what is considered a postgraduate degree in the concerned speciality. Therefore, in the present case, a mere degree of F.R.C.S. as such cannot be deemed to be a post graduate qualification in the concerned speciality of orthopaedics. To hold otherwise would mean that a person who has the qualification of F.R.C.S. could be deemed to be specialised in Tuberculosis and orthopaedics, although he is also a specialist in general surgery. Therefore, the second Respondent does not hold a post graduate degree in the concerned speciality, orthopaedics and as such, his promotion to the post of a Professor in orthopaedics was illegal and against the Central Health Service Rules" We fail to see the relevance of these observations to the facts of the present case. In Kohli 's case, the question turned on the construction of the phrase 'a post graduate degree in the concerned speciality ' in items 2 and 3 of Annexure II of the Second Schedule of the Central Health Service Rules, 1963. The question that arose for consideration was whether the second respondent in that case who was FRCS (General Surgery) of the Edinburgh University, had a post graduate degree in the concerned speciality and was eligible for promotion to the post of Professor of orthopaedics Surgery in the Maulana Azad Medical College, New Delhi. It was conceded before the High Court on behalf of the Central Government that the amendments made in the Central Health Service Rules were intended to give effect to the Regulations framed by the Indian Medical Council. The Court held that the various 193 entries in Annexure II of the Second Schedule had to be interpreted in a reasonable manner and pointed out that the degree in FRCS was in General Surgery. The amended rule made by the Central Government was to implement the Regulation framed by the Indian Medical Council that in addition to the General FRCS, a Surgeon must have a diploma in orthopaedics before he could be appointed a Professor, Reader or Lecturer in orthopaedics In that context, the Court held that the Central Government having accepted the recommendation of the Council and framed a rule, a mere degree of FRCS as such could not be deemed to be a post graduate qualification in the concerned speciality, orthopaedics. In the present case, we are concerned with the meaning of the expression 'teaching experience ' occurring in r.5 of the Rules and with the class of officers who after their appointment as Assistant Professors of Cardiology, on having obtained post graduate degree in MD MRCP, have been teaching the subject Cardiology for years together. Indeed, the alternate qualification specified in cl. (b) of column 5 in serial No. 17 of Annexure II takes in this class of officers and makes them eligible under r. 5. We have already repelled the contention that the alternate qualification in cl. (b) being in conflict with the recommendation of the Council must be deemed to have been repealed by implication w.e.f. 31st May, 1977 or rendered non est as from that date. On the crucial date 1st July, 1983, cl (b) was still there and the Government was therefore bound to consider the claims of such officers before drawing up a panel under r. 8. Faced with this difficulty, learned counsel appearing for the State Government and the other appellants strenuously contended before us that the respondents i.e. Assistant Professors of Cardiology with the requisite teaching experience of five years after obtaining their postgraduate degree in MD/MRCP in Medicine did not come within the purview of cl. (b) of column S in serial No. 17 of Annexure II. Emphasis was laid on the words 'with two years training in Cardiology ' and it was submitted that none of the respondents had the requisite training. We enquired from the learned counsel if there was any institution imparting such training in Cardiology but they were unable to throw any light on the subject. The expression 'special training ' is defined in r. 7 to mean the work done by an Assistant Professor in the concerned recognised unit and exclusively devoted to the speciality. The question then arises for the applicability of r. 7. There are two conditions to be fulfilled, firstly, there must exist an institution set up either by the Medical Council of India or by the Government or Universities exclusively devoted to imparting teaching in different courses of Cardiology and secondly, such institution should have been recog 194 nised by the Government. There is no such material on record to establish that there is any such recognised unit either in the State of Andhra Pradesh or elsewhere. That apart, we fail to appreciate the reason why the Associate Professors, Readers, Assistant Professors of Cardiology teaching the subject Cardiology in the Medical Colleges for years together, should not be regarded as persons having special training in Cardiology within the meaning of cl. (b) of column 5 in serial No. 17 Annexure II. Any other view would lead to a very anomalous situation . It would be a travesty of justice if the officers belonging to the class like the respondents representationists Dr. R. Murali Babu Rao and Dr. G.Sai Gopal, namely, Assistant Professors of Cardiology with five years teaching experience after their post graduation in MD MRCP in Medicine as on 1st July, 1983, were not empanelled by the State Government under r. 8 to fill up vacancies in the post of Professor of Cardiology, even though they possessed the requisite qualifications under r. 5 of the Rules. It must be remembered that the alternate qualification in cl. (b), namely, MD MRCP in Medicine with two years training in Cardiology was still there and it was not open to the Government to ignore the same merely because it was in conflict with the recommendation of the Medical Council of India. as conveyed in the letter of the Secretary dated 26th April, 1976. In the world as a whole today, particularly in the developed countries, both the health and the wealth of mankind is better than it was. Even in the developing world, the health conditions of many communities have improved considerably in recent decades. For the developing countries as a whole, life expectancy at birth increased from 32 years before the Second World War, to about 49 years in the 1960s, compared with about 70 years for the industrial world. With the conquest of tuberculosis and other infectitious diseases, disorders of the blood vessels, hypertension, ischemia, acute myocardial infraction, arteriosclerosis, acute heart failure etc. are the chief causes of death in at least half of population, and perhaps a quarter as many deaths from cancer. New physiological and biophysical methods of study, together with post war developments in surgery and open heart surgery, have revolutionised the investigation and management of heart disease in the Western World. Our country is not lagging behind and during the last few decades has seen the emergence of the new class of specialised physicians dealing with cardiovascular disorders, known as Cardiologists, for the management and treatment of patients suffering from heart diseases. 195 From time to time, a personality seintillates across the medical firmament who dazzles all beholders. Few people of his generation have surpassed the eminence of Dr. S.K. Mukerji, MD/MRCP (Lond.), FRCP (Lond.), Emeritus Professor of Medicine, Medical College, Indore who perhaps today is the leading Physician and Cardiologist in the country and at whose feet many Physicians and Cardiologists have attained great distinction. He has had a remarkable ability to objectify an important clinical finding and to cite all relevant literature without disquisting the patient. Indeed his clinical analysis usually gained the confidence and respect of his patient in a most reassuring manner. His originality in selecting clinical problems and investigating them by the available physiological methods, especially disorders of the heart and circulation, are familiar to the entire medical world. He truly depicts the characteristics of a thoughtful physician excelled in the care of the sick, as delineated by T. R. Harrison . renowned physician and author of the standard text book 'Principles of Internal Medicine ' in his preface in these words: "No greater opportunity or obligation can fall the lot of a human being than to be a physician. In the care of the suffering he needs technical skill, scientific knowledge, and human understanding. He who uses these with courage, humality, and wisdom will provide a unique service for his fellow man and will build an enduring edifice of character within himself. The physician should ask of his destiny no more than this, and he should be content with no less." Another outstanding personality whose name comes to our mind is that of Dr. P.N. Laha, MD, Double MRCP (Lond.), Emeritus Professor of Medicine, Medical College, Gwalior who has taught many of the leading Cardiologists in the country. A delightful, vivacious, passionate physician, he stimulates everyone with whom he comes contact and he has placed an indelible stamp on the medical events of his days. His many illuminating articles on different branches of Cardiology appear in the authoritative text book 'Prineiples of Medicine ', edited by Dr. Rustom J. Vakil who, along with Dr. (Col.) K.K. Datey, were two of the foremost Cardiologists in the country. Two of the physicians who attained great eminence in the field of Cardiology were the late Dr. Sujoy B. Roy, Head of the Department of Cardiology, All India Institute of Medical Sciences, New Delhi and the late Dr. K.L. Wig, Professor of Medicine, Director, Post Graduate Institute of Medical Eduction and Research, Chandigarh and later Director, All India Institute of Medical Sciences, New Delhi in their 196 time. Other equally eminent Cardiologists who have brought honour to the country are Dr. P.C. Dhanda, MD/MRCP, Head of the Department of Medicine, Maulana Azad Medical College, New Delhi, Dr. (Lt. Col.) K.L. Chopra, Professor of Cardiology, Medical College, Poona. Advisor to the Armed Forces, Head of the Cardiology Department, Mool Chand Khairati Ram Hospital, President Heart Care Foundation, Dr. Padmavati, Professor & Head of the Cardiology Department, G.B. Pant Hospital, President, All India Heart Foundation, Dr. M.L. Bhatia, Head of the Cardiology Department, All India Institute of Medical Sciences, Dr. R.K. Caroli, Professor of Cardiology and Head of the Cardiology Department, Dr. Ram Manohar Lohia Hospital, Dr. S.C. Manchanda, Professor of Cardiology, All India Institute of Medical Sciences, Dr. B.K. Goyal, Visiting Professor of Cardiology in different Medical Colleges in Bombay, Dr. (Lt. Col.) K. K. Malhotra, eminent Physician and Senior Specialist and Consultant (Cardiology), Dr. Ram Manohar Lohia Hospital, Dr. P.D. Nigam, Professor of Cardiology and Head of the Department, Dr. Ram Manohar Lohia Hospital, Dr. M. Khalilullah, Director, G.B. Pant Hospital, Dr. N.S. Dixit, Head of the Cardiology Department, Batra Hospital, Dr. K. Banerji, MD, Professor of Medicine, Medical college, Jodhpur, Dr. C.E. Bhandari, Professor of Medicine, Medical College, Jabalpur, Dr. V.G. Nivasarkar, Professor of Medicine, Medical College, Gwalior, Dr. R.K. Sen, Sr. Consultant, B.L. Kapur Hospital, New Delhi, a well known Physician and Cardiologist, Dr. S.K. Minocha, MD. Physician & Cardiologist, Dr. Ram Manohar Lohia Hospital etc. We would be surprised if many of these renowned Cardiologists who are MD, MRCP (Lond.) are not examiners for DM (Cardiology). Indeed, many of their students after doing their MD in Medicine and after their post graduation go for further studies for the second post graduation in DM (Cardiology) under their direction. We have no doubt in our mind that the Medical Council of India with the best of intentions due to fall in standards of education felt it necessary in the public interest to prescribe second post graduation in a super speciality i.e. DM (Cardiology) to be an essential qualification for the promotional post of Professor of Cardiology. However, it must not be forgotten that there are many distinguished Physicians with specialisation in Cardiology, working as Professors of Medicine teaching students in different branches of Cardiology as a subject in various medical colleges throughout the country whose services are frequently called in as Consultants in cases of emergency. There are also many distinguished Assistant Professors/Readers/Associate Professors of Medicine in such medical colleges in different States teaching Cardio 197 logy as a subject who have gained sufficient expertise and knowledge in different branches of Cardiology. It would be rather unfortunate if such Assistant Professors /Readers / Associate Professors of Medicine merely because they are MD/MRCP in Medicine were considered to be ineligible for appointment to the post of Professor of Cardiology even though they may have the requisite teaching experience in many branches of Cardiology for the last 15 to 20 years in medical colleges. In view of this, the expression 'five years teaching experience ' occurring in r. 5 of the Rules as well as the phrase 'with two years training in Cardiology ' in cl. (b) of column 5 in serial No. 17 of Annexure II of the Rules must, in our opinion, receive a liberal construction. We are inclined to the view that the experience gained by them while teaching students in different branches of Cardiology should be treated as sufficient to meet the requirements of r. 5 of the Rules as well as of cl. We hope and trust that the Medical Council of India, Union Government and the State Governments, so also the State Medical Councils would give a second thought to the problem and try to evolve a solution to the problem by which the right of such persons to be considered for promotion to the post of Professor of Cardiology can be kept preserved, without allowing any fall in the standards of further education. For the reasons stated, the appeals as well as the connected special leave petitions must fail and are dismissed. There shall be no order as to costs. S.L. Appeals & Petitions dismissed.

% These appeals and the special leave petitions were directed against the judgment and order of the Andhra Pradesh Administrative Tribunal, quashing the panel of names prepared by the State Government under r. 8 of the Andhra Pradesh Medical & Health Service Special Rules, 1982 to fill up the promotional post of Professor of Cardiology as on 1st July, 1983, reckoning the teaching experience of all the Assistant Professors in that super speciality in order of seniority, holding that the Assistant Professors of Cardiology in different medical colleges in the State who had the requisite five years ' teaching experience under r. 5 of the Rules having the alternate qualification in cl. (b) of Annexure II to the Rules were eligible for promotion as such, and directing the State Government to draw up a fresh panel after considering the claims of all such Assistant Professors of Cardiology treating them as possessing the requisite teaching experience in terms of r. 5 for the promotional post of Professor of Cardiology as on 1st July, 1983. There were four vacancies in the post of Professor of Cardiology. On 1st July, 1983, the State Government prepared a panel of all Assistant Professors of Cardiology in Government Medical Colleges in the State having the requisite teaching experience under r. 5 after obtaining the post graduate qualification as specified in the Annexure II, and included in the panel the names of Dr. G. Subramanayam, Dr. A. Rajagopala Raju and Dr. Soghra Begum, Assistant Professors of Cardiology, who had on the crucial date 1st July, 1983 five years ' teaching experience after obtaining their post graduation degree in DM (Cardiology) as enjoined by r. 5 read with the first proviso thereto, and by order dated the 17th August, 1983, promoted them to the post of Professor of Cardiology. 174 The respondents Dr. R. Murali Babu Rao and Dr. G. Sai Gopal then moved the Andhra Pradesh Administrative Tribunal assailing the impugned order of promotion, characterising the action of the State Government in the matter of computation of five years ' teaching experience after post graduation degree in DM (Cardiology) as being wholly arbitrary and irrational. The appellant C.H. Umesh Chandra came up in appeal as the view expressed by the Tribunal prejudicially affected him. He had obtained his post graduate degree in MD in Medicine in December, 1975 and his second post graduate degree in DM (Cardiology) in April, 1980. In view of the fact that he had obtained his second post graduate degree in DM (Cardiology) in April, 1980, he sought to support the stand of the Government as he had a better chance of promotion to the post of Professor of Cardiology. After these matters were heard and the judgment was reserved by this Court, a similar question came up before the Court in State of Orissa vs Dr. Sivsanker Lal Bajoria & Anr. , Civil Appeal No. 4456 of 1986 by Special Leave granted to the State Government of Orissa against the judgment and order of the High Court, evolving a rule of substantial compliance, and therefore, these matters were re listed. In the Civil Appeal No. 4456 of 1986, the Court issued notice to the Medical Council of India to clarify its stand as to the eligibility of Assistant Professors/Readers in Cardiology to the promotional post of Associate Professor/Professor in Cardiology and in particular to the import of the term 'two years special training ' within the meaning of Regulation 5(2)(b) of the Indian Medical Council Regulations, 1970, framed under section 33 of the . The Court desired the Indian Medical Council to specify the particular institution where such training was imparted. An affidavit sworn to by Assistant Secretary on behalf of the Medical Council of India was filed, placing its point of view. Dismissing the appeals and the special leave petitions, the Court ^ HELD: The issue involved was of far reaching importance to the entire medical profession as similar problem was faced by the State Governments in promoting Readers / Associate Professors in a speciality to the post of Professor in that speciality in the medical colleges. [179E F] In these cases, the entire controversy was due to the failure of the 175 State Government to give the benefit of the teaching experience gained by the Assistant Professors after they had obtained their post graduate degree in MD/MRCP in Medicine under cl (b) of Column 5 in serial No 17 of Annexure II. [187G] Rule 4 of the Rules in terms speaks of the eligibility of such class of Assistant Professors of Cardiology for promotion to the post of Cardiology who possess five years ' teaching experience. The expression 'teaching experience ' as defined in r. 5 speaks of 'teaching experience in the speciality concerned in a medical college or an institute recognised by the Medical Council of India after obtaining post graduate qualification as specified in Annexure II '. The words used are 'after obtaining post graduate qualification ', it does not speak of the second postgraduate qualification. Rule 5, therefore, takes in both the qualifications specified in clauses (a) and (b) of Column 5 in serial No. 17 of annexure II, namely, (a) DM (Cardiology) and (b) MD/MRCP in Medicine with two years ' training in Cardiology. On the crucial date, 1st July, 1983, cl. (b) was very much there and the Government was bound to consider the claims of the aforesaid respondents like other officers belonging to that class before drawing up a panel under r. 8. There was no warrant for the submission that since under r. 9(2), an Assistant Professor with the requisite five years ' teaching experience after obtaining his second post graduate degree in DM (Cardiology) would have preferential claim over those having the qualification mentioned in cl. (b) i.e. MD/MRCP in Medicine with two years ' training in Cardiology, the State Government was entitled to ignore the claims of the latter class altogether. On its plain construction, r. 9(2) is a rule of preference and has, therefore, to be applied at the stage of making appointments to the post of Professor of Cardiology and not while drawing up a panel under r. 8. The Government was obviously misled by the wrongful assumption (i) that since alternate qualification in cl. (b) of Column 5 in serial 'No. 17 of Annexure II had been deleted by GOMS No. 789 dated 12th December, 1983, it was not necessary for it to consider the claims of the aforesaid respondents and others similarly situate in drawing up a list of eligible Assistant Professors of Cardiology, and (ii) that such officers were rendered ineligible by reason of r. 9(2) and, therefore, their claims needed not to be considered. The Tribunal was, therefore, justified in quashing the impugned panel prepared by the State Government under r. 8 of the Rules and in directing the Government to prepare a panel afresh after considering the claims of all the Assistant Professors of Cardiology with five years ' teaching experience after their post graduation in MD/MRCP in Medicine with 2 years ' training in Cardiology. [189C H; 190A B] 176 There was no substance whatever in the contention that the alternate qualification in cl. (b) being in conflict with the recommendation of the Medical Council of India, must be deemed to have been replaced by implication and was non est w.e.f. 31st May, 1977. The Government had no doubt the recommendations of the Council, conveyed by the letter of the Secretary dated 26th April, 1978, that after 31st May, 1977, for all teaching posts higher than Tutor in higher specialities i.e. Cardiology/Neurology/Gastro Enterology/Thoracic Surgery/ Neuro Surgery/Plastic Surgery/ Paediatric Surgery/ Urology, the candidates must possess the post graduate qualification in the speciality concerned i.e. DM/M.Ch. after MD/MS or other equivalent qualification, as might be approved by the Council from time to time. The letter also went on to say that the existing qualification MD/MS or an equivalent qualification with two years ' special training in a recognised training centre in the speciality concerned, would cease to be sufficient qualification for appointment to the aforesaid teaching posts from that date. Nevertheless, the Government failed to appreciate that the recommendation of the Council was only recommendatory and could not override a rule framed under the proyiso to article 309 of the Constitution. The panel had to be drawn up by the State Government strictly in conformity with the rules of recruitment made under the proviso to article 309 and not on the basis of the recommendation of the Council. [190C F] As was manifest from the affidavit filed by the Indian Medical Council, the Council is only a recommendatory body. Constituted under section 3 of the Act, the Indian Medical Council is an expert body intended and meant to control the minimum standards of medical education and to regulate their observance. A fortiori, the recommendations made by the Council or the Regulations framed by it are only recommendatory and not mandatory. It is not for the Council to prescribe qualifications for recruitment to posts of Professors. Readers and Lecturers; it can only lay down broad guidelines therefor. Such qualifications have necessarily to be prescribed by the framing of Rules under the proviso to article 309. The right to be considered for promotion is a condition of service and it can only be regulated by a rule framed under the proviso to article 309. The Medical Council in its affidavit accepted that there were no special guidelines laid down for Cardiology, and asserted that some Universities/Institutions might have prescribed the syllabus. The contention of the State Government and the other appellants that the recommendations of the Medical Council as conveyed by the letter of the Secretary dt. 26th April, 1975, rendering Assistant Professors of Cardiology, having the alternate qualification of 177 post graduate degree in MD/MRCP in Medicine, ineligible for promotion to the post of Professor of Cardiology even though they had the requisite five years ' teaching experience, appeared to be wholly misconceived and unwarranted. [190G H; 191E H; 192A] The present case was concerned with the meaning of the expression 'teaching experience ' occurring in r. 5 of the Rules, and with the class of officers who, after their appointment as Assistant Professors of Cardiology on having obtained post graduate degree in MD/MRCP had been teaching the subject Cardiology for years together. Indeed, the alternate qualification specified in cl. (b) of column 5 in serial No. 17 of Annexure II takes in this class of officers and makes them eligible under r. 5. On the crucial date, 1st July, 1983, cl. (b) was still there and the Government was bound to consider the claims of such officers before drawing up a panel under r. 8. [193C E] Emphasis was laid by counsel for the State Government and other appellants on the words 'with two years training in Cardiology ' with the submission that none of the respondents had the requisite training. The expression 'special training ' is defined in r. 7 as the work done by an Assistant Professor in the concerned recognised unit and exclusively devoted to the speciality. The question then arises for the applicability of r. 7, there are two conditions to be fulfilled, firstly, there must be an institution set up either by the Medical Council of India or by the Government or Universities exclusively devoted to imparting teaching in the different courses of Cardiology, and secondly, such an institution should have been recognised by the Government. There was no material on record to establish that there was any such recognised unit either in the State of Andhra Pradesh or elsewhere. That apart, it could not be appreciated why the Associate Professors, Readers, Assistant Professors of Cardiology, teaching Cardiology in the medical colleges for years together, should not be regarded as having special training in Cardiology within the meaning of cl. (b) of column 5 in the serial No. 17 of Annexure II. Any other view would lead to a very anomalous situation. It would be a travesty of justice if the officers belonging to the class like the respondents representationists Dr. R. Murali Babu Rao and Dr, G. Sai Gopal, Assistant Professors of Cardiology with five years ' teaching experience after their post graduation in MD/MRCP in Medicine as on the 1st July, 1983, were not empanelled by the State Govt. under r. 8 to fill up vacancies in the post of Professor of Cardiology, even though they possessed the requisite qualifications under r. 5 of the Rules. It must be remembered that the alternate qualification in cl. (b), namely MD/MRCP in Medicine with two years ' training in 178 Cardiology was still there and it was not open to the Government to ignore the same merely because it was in conflict with the recommendation of the Medical Council of India, as conveyed in the letter of the Secretary dated 26th April, 1976. [193F H; 194A E] There were many distinguished Assistant Professors/Readers/ Associate Professors of Medicines in the medical colleges in the different States, teaching Cardiology as a subject, who had gained sufficient expertise and knowledge in the different branches of Cardiology, and it would be unfortunate if such Assistant Professors/Readers/Associate Professors of Medicine were, merely because they were MD/MRCP in Medicine, considered ineligible for appointment to the post of Professor of Cardiology, even though they had the requisite teaching experience in the many branches of Cardiology for the last 15 to 20 years in the medical colleges. In view of this, the expression 'five years ' teaching experience ' occurring in r. 5 of the Rules as well as the phrase 'with two years ' training in Cardiology ' in cl. (b) of column 5 in serial No. 17 of Annexure II of the Rules, must receive a liberal construction. The experience gained by them while teaching in different branches of Cardiology should be treated as sufficient to meet the requirements of r. 5 of the Rules as well as of cl. The Court expressed the hope that the Medical Council of India, the Union Government and the State Governments as also the State Medical Councils would give a second thought to the problem and try to evolve a solution to the problem by which the right of such persons to be considered for promotion to the post of Professor of Cardiology could be kept preserved without allowing any fall in the standards of further education. [196H; 197A D] State of Madhya Pradesh vs Km. Nivedita Jain, ; and Union of India & Ors. vs S.B. Kohli & Anr., , referred to.

Appeal No. 390 of 1963. Appeal by special leave from the award dated December 11, 1959, of the Industrial Tribunal, Assam at Gauhati in Reference No. 7 of 1959. C.B. Agarwal, J.N. Hazarika and K.P. Gupta, for the appellants. Sankar Bannerjee, P.K. Chatterjee, D.N. Gupta and B.N.Ghosh, for the respondents. November 25, 1963. The judgment of the Court was delivered by GAJENDRAGADKAR, J. This appeal by special leave arises from an industrial dispute between the respondent, the Management of 11 Tea Estates and the appellants, their workmen. It appears that the appellants raised a dispute against the respondent in regard to the lay off declared by them in the 11 550 estates in question in February, 1959. The said (ay off lasted for 45 days and the appellants ' contention was that the lay off was not justified, and so, they were entitled to their full wages for the period of the lay off. The respondent 's Managing Agents for the nine Companies that run the 11 tea estates in question, resisted this claim on the ground that the lay off was justified and they alleged that the appellants were not entitled to anything more than the compensation prescribed by section 25C of the (hereinafter called 'the Act '). This dispute was referred to the adjudication of the Industrial Tribunal by the Governor of Assam under section 10(1)(d) of the Act. The 11 tea estates which are concerned with this dispute were described in Appendix A to the order of reference. It is common ground that these 11 tea estates ' are run by nine Companies and M/s. Macneill and Barry Ltd. are the Managing Agents of all these companies. The case for the respondent was that the tea estates in question which are all situated in Cachar District had to face a long period of depression in trade by reason of the poor prices generally commanded by the tea produced by them. In 1959, the management faced a very difficult financial position and it took the view that in the interests of the employees and its own business, it would be appropriate to lay off the workmen for a certain period in order to avoid closure of business. The circumstances which caused financial depression were beyond the control of the management and lay off was, therefore, inevitable and fully justified. On the other hand, the appellants urged that there were other tea estates in the district of Cachar which had to face similar problems; the labour costs incurred by the respondent were not higher than the corresponding costs incurred by the other tea estates, the burden of taxes was the same for all the tea estates in the district and the quality of the tea produced was relatively similar. They contended that the difficulty which the respondent had to face 551 was partly the result of its mismanagement and neglect. They pleaded that the workmen employed by the respondent had been promised continuous work throughout the year and the declaration of lay off for such a long period as 45 days exposed them to the risk of semi starvation. The appellants also urged that depression in trade or financial difficulties which may be characterised as trade reasons did not justify the lay off under the relevant Standing Order, and so, they justified their claim for full wages during the period of the lay off. The Tribunal has held that the relevant Standing Order No. 8 justified the lay off. The trade reasons resulting from the depression in trade and financial liabilities arising therefrom fell within the scope of the Standing Order; it has also held that the last clause in the Standing Order which was general in terms could be relied upon by the respondent in support of its plea that the lay off was justified. In the alternative, the Tribunal thought that even if the lay off was not justified by the relevant clause in the Standing Order, the respondent had a common law right to declare a lay off and this right was recognised by section 25C of the Act. According to the Tribunal, section 25 C recognises this common law right and since it is a statutory provision, it over rides the relevant clause in the standing Order. Having thus found that the lay off was justified, the Tribunal proceeded to examine the question as to whether the trade reasons on which the respondent relied had 'been proved. It then considered the relevant documentary evidence bearing on the point and noticed some general features applicable to all the tea companies before it. "They have suffered losses which are by no means inconsiderable", said the Tribunal, "and some of the companies have not been able to declare dividends in time during the last ten years, though others have declared them from year to year. " The Tribunal rejected the respondent 's contention that the losses were due to high labour charges, but it found that the tea companies were not making adequate profits. It was satisfied that 552 the companies had reserves and large capital assets and would not have found it difficult to raise necessary finances. On the whole, the Tribunal thought it necessary to distinguish between the different tea estates with which it was dealing, and having considered their respective individual cases, it came to the conclusion that out of the nine companies, five companies need not have declared lay off for 45 days. In its opinion, there was justification for lay off in their cases, but its duration should have been 21 days. Acting on this finding, the Tribunal has ordered that for the 24 days in excess of three weeks for which the lay off was justified the said companies should pay their workmen full wages and not merely the compensation prescribed by section 25C of the Act. In regard to the remaining four companies, the Tribunal held that the lay off was fully justified, and so, the workmen were not entitled to full wages for the period of the lay off. In other words, the award made by the Tribunal partially granted relief to the appellants inasmuch as it gave them full wages against five companies for 24 days only. These five companies are: Bhubandhar, Doyapore, Western Cachar, Borak and Koyah. The other four companies in respect of which the Tribunal has given no relief to the workmen are: Doodputlee ' Majagram, Scottpore and Tarrapore. It is this award which has given rise to the present appeal by the appellants. The first question which arises for our decision is whether the Tribunal was justified in holding that section 25C recognises the common law right of the respondent to declare a lay off for reasons other than those specified in the relevant clause of the Standing Order. While dealing with this argument, we must proceed on the assumption that the financial difficulties experienced by the respondent at the relevant time which have been compendiously described by it as constituting trading reasons for the lay off do not fall within the purview of the said relevant clause. The respondent 's argument is that though the trading reasons may not justify the declaration of the lay off 553 under the said clause, as prudent employers who must be given liberty to run their industry in the best manner they choose, they have a common law right to declare a lay off if they feel that the alternative to the lay, off would be closure and acting bonafide they want to avoid closure and adopt the lesser evil,, of declaring the lay off. Does section 25C of the, Act justify this argument? Section 25C(1) which, recognises the right of the workmen who are laid; off, for compensation, provides that whenever a workman therein specified has been laid off, he shall be paid by the employer for whole of the period of the lay off, except for such weekly holidays as may intervene, compensation at the rate prescribed by the section. The proviso to this section lays down that the compensation payable to a workman during any period of twelve months shall not be for more than; 45 days; and this proviso seems to indicate that the legislature thought that normally the period of lay off within 12 months may not exceed 45 days. Section 25C(2), however, contemplates the possibility that the period of lay off may exceed 45 days, and it lays down that if during any period of 12 months, a work , man is laid off for more than 45 days, whether continuously or intermittently, he shall be paid compensation in the manner indicated by it. Thus, the position is that workmen who are laid off are entitled to compensation and the method in which the said compensation has to be calculated has been prescribed by the two clauses of section 25C. It is, however, significant that when section 25C deals with workmen who are laid off and proceeds to prescribe the manner in which compensation should be paid to them, it is inevitably referring to the lay off as defined by section 2(kkk) of the Act. The said section defines a "lay off" (with its grammatical variations and cognate expressions) as meaning: "the failure, refusal, or inability of an employer on account of shortage of coal, power or raw materials or the accumulation of stocks or the breakdown of machinery or for any other reason 554 to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrench ed. " It would be legitimate to hold that lay off which primarily gives rise to a claim for compensation under section 25C must be a lay off as defined by section 2(kkk) If the relevant clauses in the Standing Orders of industrial employers make provisions for lay off and also prescribe the manner in which compensation should be paid to them for such lay off, perhaps the matter may be covered by the said relevant clauses; but if the relevant clause merely provides for circumstances under which lay off may be declared by the employer and a question arises as to how compensation has to be paid to the workmen thus laid off, section 25C can be invoked by workmen provided, of course, the lay off permitted by the Standing Order also satisfies the requirements of section 2(kkk). Whether or not section 25C can be invoked by workmen who are laid off for reasons authorised by the relevant clause of the Standing Order applicable to them when such reasons do not fall under section 2(kkk), is a matter with which we are not directly concerned in the present appeal. The question which we are concerned with at this stage is whether it can be said that section 25C recognises a common law right of the industrial employer to lay off his workmen. This question must, in our opinion, be answered in the negative. When the laying off of the workmen is referred to in section 25C, it is the laying off as defined by section 2(kkk), and so, workmen who can claim the benefit of section 25C must be workmen who are laid off and laid off for reasons contemplated by section 2(kkk); that is all that section 25C means. If any case is not covered by the Standing Orders, it will necessarily be governed by the provisions of the Act, and lay off would be permissible only where one or the other of the factors mentioned by section 2(kkk) is present, and for such lay off compensation would be awarded under section 25C. Therefore, we do not think that the Tribunal was right in holding that section 25C recognises the inherent right 555 of the employer to declare lay off for reasons which he may regard as sufficient or satisfactory in that behalf. No such common law right can be spelt out from the provisions of section 25C. That takes us to the question whether the lay off in the present case is justified under Rule 8 of the, Standing Orders which have been duly certified under ' the Industrial Employment (Standing Orders) Act, (No. 20 of 1946). The relevant portion of Rule 8 reads thus: "Closing and re opening of sections of the in dustrial establishments, and temporary stoppages of work, and the rights and liabilities of the employer and workmen arising therefrom. (a) (1) The Manager may at any time in the event of fire, catastrophe, break down of machinery, stoppage of power or supply, epidemic, civil commotion, strike, extreme climate conditions or other causes beyond his control, close down either the factory or field work or both without notice. In cases where workmen are laid off for short periods on account of failure of plant or a temporary curtailment of production, the period of unemployment shall be treated as compulsory leave either with or without pay, as the case may be, when, however, workmen have to be laid off for an indefinitely long period, their services may be terminated after giving them due notice or pay in lieu thereof. " It will be seen that the circumstances under which a lay off can be declared have been specifically described by Rule 8(a)(1). Two grounds have been urged before us by Mr. Banerjee in support of the Tribunal 's conclusion that the impugned lay off is justified. He contends that the clause "stoppage of supply" may cover cases of stoppage of financial assistance. The argument is that in 1959 when the lay off was declared. the companies found that they 556 could not raise enough money to carry on the operations in the tea gardens, and so, it was a case of stoppage of supply. If that be so, the lay off would be justified. In our opinion, this argument is wholly misconceived. Stoppage of supply must, in the context, mean stoppage of raw material or other such thing. In regard to the factory, the stoppage of supply may mean the stoppage of tea leaves, or in the case of field work, it may mean the stoppage of supply of other articles necessary for field operations. It is impossible to accept the argument that "supply" in the context can mean money or funds. The other argument urged before us is that the last clause of R. 8(a)(i) which refers to "other causes beyond his control" would take in the financial difficulties of the Cos. We are not inclined to accept this argument also. Other causes beyond his control for one thing should be similar to the causes that have preceded; even otherwise we see no justification for the argument that the financial difficulty which is alleged to have confronted the respondent was beyond its control. In fact, on this point the Tribunal has made a definite finding that though the respondent had produced a letter from the Chartered Bank of the 9th April, 1959 in which the Bank expressed its re luctance to afford financial facilities, it was by no means clear that the Companies acting through their Managing Agents completely failed to raise the necessary finances at the relevant time. As the Tribunal has observed, the letter written by the Bank shows that it had promised to consider the matter and write to the Companies again; no evidence was produced to show what the Bank subsequently stated and whether finances became available or not ' On the other hand, it is clear that at the end of the period of the lay off, all the Cos. started operating their tea gardens and we have been told that the operations have continued uninterrupted ever since. Besides, the letter on which reliance is placed was written in April, 1959, whereas the lay off was declared in February, 1959. Therefore, there is no evidence on the record which can justify 557 the assumption made by Mr. Banerjee when he raised the contention that the financial difficulties faced by the respondent at the relevant time were beyond its control. The fact that some of the Cos. have been incurring losses and have not made profits would not necessarily show that the financial position which they had to face at the relevant time was beyond their control. It is true, as Mr. Banerjee has pointed out, that the three Cos. Scottpore, Tarrapore and Doodputalee have not been able to pay dividends between 1951 to 1958 and it may be that with the exception of the year 1954, the position of all of them is not very satisfactory; but, on the other hand, there are other tea gardens in the same area and it is not suggested or shown that their position was any better than that of the companies before us. It is also true that at the relevant time, all the tea companies in Cachar in general, and the Managing Agents of the nine companies before us in particular M/s. Macneill and Barry Ltd. were trying their best to persuade the Assam Government to give them some relief in the matter of taxation. But the question which we have to decide is whether the financial position disclosed by the evidence on the record can be described as constitu ting a cause beyond the control of the respondent. We are not inclined to answer this question in favour of the respondent. Besides, as we have already indicated, having regard to the factors specified by Rule 8(a)(i) before the clause in regard to other causes beyond his control was introduced, it would not be easy to entertain the argument that a trading reason of the kind suggested by Mr. Banerjee can be included in that clause. Therefore, we are satisfied that the Tribunal was in error in holding that the impugned lay off could be justified by Rule 8(a)(i). Rule 8(a) (iii) which refers to temporary curtailment of production must obviously be read in the light of R. 8(a)(1) and if the case of the present lay off does not fall under R. 8 (a)(i), R. 8(a) (iii) would not improve the position. Mr. Banerjee has then urged that the present Standing Orders which were duly certified under the 558 Standing Orders Act came into force in 1950, whereas section 2(kkk) which defines a lay off was added to the Act by the Amending Act 43 of 1953 on the 24 th October, 1953. His argument is that the Standing Orders having been certified before the definition of the lay off was introduced in the Act, the respondent is entitled to rely upon the said definition in support r of the plea that the impugned lay off was justified. Basing himself on the definition of the lay off as prescribed by section 2(kkk), Mr. Banerjee urged that this definition was wider than R. 8(a)(1) of the respondent 's Standing Orders and would take in the trading reasons on which he relies. We are not prepared to accept the argument that in the present case, the respondent can rely on the definition of lay off as prescribed by section 2(kkk). It will be recalled that the Standing Orders which have been certified under the Standing Orders Act became part of the statutory terms and conditions of service between the industrial employer and his employees. Section 10(1) of the Standing Orders Act provides that the Standing Orders finally certified under this Act shall not, except on agreement between the employer and the workmen, be liable to modification until the expiry of six months from the date on which the Standing Orders or the last modification thereof came into operation. If the Standing Orders thus become the part of the statutory terms and conditions of service, they will govern the relations between the parties unless, of course, it can be shown that any provision of the Act is inconsistent with the said Standing Orders. In that case, it may be permissible to urge that the statutory provision contained in the Act should over ride the Standing Order which had been certified before the said statutory provision was enacted. Assuming without deciding that section 2(kkk) may include the trading reasons as suggested by Mr. Banerjee, the definition prescribed by section 2(kkk) is not a part of the operative provisions of the Act, and so, the argument that there is inconsistency between the definition and the relevant Rule of the Standing Orders does not assist Mr. Banerjee 's case. If there had been a provision in the Act specifically providing 559 that an employer would be entitled to lay off his workmen for the reasons prescribed by section 2(kkk), it might have been another matter. The only provision on which reliance has been placed is contained in section 25C and that, as we have already seen, merely takes in the definition of lay off inasmuch as it refers to the workmen as laid off and provides the manner in which compensation would be paid to them. An alleged conflict between the definition of lay off and the substantive rule of the Standing Orders would not, therefore, help the respondent to contend that the definition over rides the statutory conditions as to lay off included in the certified Standing Order. Therefore, we do not think Mr. Banerjee would be entitled to contend that section 2(kkk) of the Act is wider than the relevant Rule in the Standing Orders and should apply to the facts of this case. We ought to make it clear that in dealing with this argument, we have not thought it necessary to consider whether the broad and general construction of section 2(kkk) for which Mr. Banerjee contends is justified. In fact, Mr. Agarwala for the appellants has very strongly urged that the words "for any reason" found in section 2(kkk) will not take in the trading considerations. He contends and prima facie with some force that the said words must be construed ejusdem generis with the words that precede them. (vide Management of Kairbetta Estate, Kotagiri vs Rajamanickam & Ors.)(1) According to him, the circumstances specified in section 2(kkk) which justify a lay off must be integrally connected with production, and so, trading reasons cannot be included in that definition. According to this argument, the distinguishing features of the genus of which the several circumstances mentioned in the definition are different species, are: they are beyond the control of the employer, are expected to be of a short duration, and are of compulsive effect. As we have already indicated, we do not think it necessary to decide this interesting point in the present appeal because we are satisfied that the present dis (1) ; 560 pute must be governed by Rule 8(a)(1) of the respondent 's Standing Orders. In the result, we reverse the finding of the Tribunal that the lay off declared by the respondent for 45 days in 1959 was justified. That being so, it is unnecessary to consider the individual cases of the nine respective companies, because whatever may have been their respective financial position, under the relevant Rule they could not validly declare a lay off at all, nor could they have declared the lay off in exercise of their alleged common law right. The questions referred to the Tribunal must, therefore, be answered in favour of the appellants. The appeal is accordingly allowed and the appellants ' claim for full wages for the 45 days of lay off in respect of the 11 tea gardens is awarded to them. The appellants will be entitled to their costs throughout. Appeal allowed.

As a result of the lay off declared by the respondent in the II tea estates, managed by them an industrial dispute arose between the respondent and their workmen, the appellant. The respondent justified the lay off on the ground that its financial position was very difficult and that the lay off was appropriate in the interests of the employees and their own in order to avoid closure of business. The appellants urged, inter alia, that the depression in trade or financial difficulties which may be characterised as trade reasons did not justify the lay off under the relevant Standing Order, and so, they justified their claim for full wages during the period of the lay off. The Tribunal held that the relevant Standing Order No. 8 justified the lay off, and the trade reasons resulting from the depression in trade and financial liabilities arising therefrom fell within the scope of the Standing Order. Alternatively, the Tribunal thought that even if the lay off was not justified by the relevant clause of the Standing Order, the respondent had a common law right to declare a lay off and this right was recognised by section 25C of the and since it is a statutory provision, it overrides the relevant clause in the Standing Order. In appeal by special leave: Held: (i) The Tribunal was not right in holding that section 25C of the recognises the inherent right of the employer to declare lay off for reasons which he may regard as sufficient or satisfactory in that behalf. No such common law right can be spelt out from the provisions of section 25C. When the laying off of the workmen is referred to in section 25C, it is laying off as defined by section 2 (kkk), and so, workmen who can claim the benefit of section 25C must be workmen who are laid off for the reasons contemplated by section 2(kkk); that is all that section 25C means. If in any case the lay off is not covered by the Standing Orders, it will necessarily be governed by the provisions of the Act, and lay off would be permissible only where one or the other of the factors mentioned by section 2(kkk) is present, and for such lay off compensation would be awarded under section 25C. 549 (ii) "Stoppage of supply" must, in the context, mean stoppage ' of raw material or other such thing. In regard to the factory, "stoppage of supply" may mean the stoppage of tea leaves, or in the case of field work, it may mean the stoppage of supply of other articles necessary for field operations. "Supply" in the context cannot mean money or funds. (iii) The last clause of r. 8(a) (i) of the Standing Order which refers to "other causes beyond his control" would not take in the financial difficulties of the companies. Other causes beyond his control for one thing should be similar to the causes that have preceded; even otherwise there is no justification for the argument that the financial difficulty which is alleged to have confronted the respondent was beyond its control. Rule 8(a) (iii) which refers to temporary curtailment of production must obviously be read in the light of r. 8(a) (i) and if the case of the present lay off does not fall under r. 8(a) (i), r. 8(a)(iii) would not improve the position. (iv) The present dispute must be governed by r. 8(a)(i) of the respondent 's Standing Orders. It cannot be accepted that the Standing Orders having been certified before the definition of the lay off was introduced in the Act, the respondent is entitled to rely upon the said definition in support of the plea that the impugned lay off was justified. Management of Kairbetta Estate, Kotagiri vs Raja manickam & Ors., ; , referred to.

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.

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.

DICTION: Writ Petitions Nos. 7477 79 of 1981 33 (Under article 32 of the Constitution of India) AND SPECIAL LEAVE PETITION (CIVIL) NOS. 9116 & 8735 of 1981 From the judgment and order dated the 15th October, 1981 and 22nd September, 1981 of the Punjab and Haryana High Court in Civil Writ Petitions Nos. 4734/81 & 4370/81 respectively. B. Datta for the Petitioners in Writ Petitions. Ravindra Bana for the Petitioners in both SLPs. O. P. Sharma and M. section Dhillon for the Respondents. The Judgment of the Court was delivered by SEN, J. These petitions under article 32 of the Constitution and the connected special leave petitions mainly challenge the constitutional validity of the second proviso to sub cl.(1) of cl 11 of the Punjab Foodgrains Dealers Licensing and Price Control Order, 1978 (for short 'the Order '), as inserted by the Punjab Foodgrains Dealers Licensing and Price Control (First Amendment) Order, 1980, with effect from March 27, 1980, as violative of articles 14 and 19 (1) (g) of the Constitution, as also the legality and propriety of the action of the licensing authorities in suspending the licences held by the petitioners. It appears that the licences held by the petitioners who are foodgrains dealers in the State of Punjab, have been suspended by orders passed by the District Food and Supplies Controllers, Faridkot and Bhatinda, for a period not exceeding ninety days under the second proviso to sub cl. (1) of cl. 11 of the Order. The orders of suspension of licence in each of these cases rest on the allegation that the licensee has committed a breach of conditions Nos. 4, 8 and 10 of the licence. The petitioners have all been served with notices under the first proviso to sub cl. (1) of cl. 11 of the Order to show cause why their licences should not be cancelled. Some of the petitioners accept that in the recent past their licences were suspended under the second proviso to sub cl. (1) of cl. 11 of the Order for alleged breach of the licence conditions 34 for having sold large quantities of wheat to dealers outside the State without disclosing the names of the purchasers in their stock registers. It, therefore, appears that the present suspension is for a repeated breach. These petitioners have filed the petitions under article 32 of the Constitution for protection of their fundamental rights to carry on trade or business as foodgrains dealers within the meaning of article 19 (1) (g) read with article 301 thereof. The other petitioners allege that because they approached the High Court by way of petitions under article 226 of the Constitution, complaining against restrictions placed on movement of wheat by rail, their licences have been suspended under the second proviso to sub cl. (1) of cl.11 of the order as a punitive measure. Incidentally, these petitioners had first moved the High Court under article 226 of the Constitution, but the High Court dismissed their writ petitions summarily. The connected special leave petitions are directed against the order of the High Court. The State of Punjab in the counter affidavits filed by the Deputy Secretary to the Government of Punjab, Food and Supplies Department, Chandigarh, and the District Food and Supplies Controller, Faridkot, controvert the allegations of the petitioners. It is stated that the petitioners have been served with show cause notices under the first proviso to sub cl.(1) of cl. 11 of the Order for cancellation of their licences, for breach of the licence conditions. Learned counsel for the petitioners seek to assail the constitutional validity of the second proviso to sub cl. (1) of cl.11 of the Order on two grounds. First of these is that the second proviso to sub cl. (1) of cl. 11 of the Order, inserted by the Punjab Foodgrains Dealers Licensing and Price Control (First Amendment) Order, 1980, confers upon the licensing authority unguided, uncontrolled and arbitrary power to suspend a licence and it, therefore, infringes the fundamental right to carry on trade or business guaranteed under article 19 (1) (g) of the Constitution. It is also urged that the conferral of such unguided, uncanalised and arbitrary power on the licensing authority, without any guidelines whatsoever, makes the impugned proviso unconstitutional as offending article 14 of the Constitution. The second contention is that the suspension of the foodgrains dealers ' licences held by the petitioners was mala fide and motivated, as in reality it was not on account of any breach of the licence conditions on their part, but on extraneous considera 35 tions. It is said that the real purpose was to prevent them from exporting wheat from the State of Punjab to various other States in the course of inter State trade and commerce within the meaning of article 301 of the Constitution. We are unable to accept any of these contentions. To make the point intelligible, it is necessary to deal with the scheme of the Order. 3 of the Order provides that no person shall carry on business as a dealer except under and in accordance with the terms and conditions of a licence granted by the licensing authority. Cl. 7 (3) thereof provides that where an application for grant of a licence is not refused, the licensing authority shall grant a licence in Form B subject to the conditions specified therein. Condition No. 4 of the licence enjoins that the licensee shall submit to the licensing authority concerned fortnightly returns in Form C of the stock receipts and deliveries. Condition No. 8 of the licence lays down that the licensee shall exhibit the price list of foodgrains held by him for sale and it shall indicate separately the prices of different varieties of foodgrains. Condition No. 10 thereof interdicts that the licensee shall give all facilities at all reasonable times to the licensing authority or any officer authorised by it or the State Government, for the inspection of his stocks and accounts at any shop, godown or other place used by him for the storage, sale or purchase of foodgrains etc. 11 of the Order provides for cancellation or suspension of a licence. The power of cancellation or suspension of a licence which was subject to the giving of a reasonable opportunity to the lincensee of stating his case was not adequate and sufficient to effectively check and control flagrant breaches of the provisions of the order, during the pendency of the proceedings for cancellation of a licence. The State Government, therefore, inserted the second proviso to sub cl. (1) of cl. 11 of the Order. 11 of the Order, as amended, in so far as material, reads: "Cancellation or suspension of licence: (1) If a licensee or his agent or any person acting on his behalf contravenes any of the terms and conditions of his licence or any provision of this Order then, without prejudice to any action that may be taken against him, the licensing authority may by an order in writing, cancel or suspend licence in so far as it relates to the foodgrains in respect of which contravention has been made. 36 Provided that no order shall be made under this clause unless the licensee has been given a reasonable opportunity of stating his case; Provided further that the licensing authority may suspend a licence without giving a reasonable opportunity to the licensee of stating his case for a period not exceeding ninety days during the pendency or in contemplation of the proceedings for cancellation of his licence. " It is plain upon the terms of sub cl. (1) of cl. 11 of the order that it deals with the substantive punishment of cancellation or suspension of a licence. The power of cancellation or suspension of a licence of a foodgrains dealer under sub cl. (1) of cl. 11 of the Order is, however, subject to the limitation contained in the first proviso. The power of cancellation or suspension of a licence is, therefore, not exercisable by the licensing authority until it affords a reasonable opportunity to the licensee of stating his case. This necessarily entails the holding of an inquiry into the question of the alleged breach. The making of an inquiry into the breach of licence conditions by a foodgrains dealer is a time consuming process which may many a time verily frustrate the purpose and object of the Order. The State Government was evidently of the opinion in the light of the experience gained in the recent past, that for effective control and regulation of the trade in foodgrains, it was necessary and expedient that the licensing authority should be clothed with powers to suspend a licence on the spot when it detects contravention of any of the terms and conditions of the licence or any of the provisions of the Order. Otherwise, a foodgrains dealer after committing flagrant breaches of the terms and conditions of his licence and the provisions of the Order, may, with impunity, carry on his trading activities without any check or control. The power of suspension conferred by the second proviso to sub cl. (1) of cl. 11 of the Order is by way of an interim measure, pending the holding of an inquiry as to whether there is any breach which must result in cancellation of the licence. It is true that the suspension of licence is a drastic measure, if taken without affording to the dealer a reasonable opportunity of stating his case, but it is 37 a measure of social control in the interests of the community. The power of suspension is a necessary concomitant of the power to grant a privilege or a licence. By reason of cl. 3 of the Order, no dealer can engage in the business of purchase and sale of foodgrains except under and in accordance with the terms and conditions of a licence issued by the licensing authority in that behalf. The dealers are free to carry on their trade or business in foodgrains, subject to their complying with the terms and conditions of their licence and the provisions of the Order. But, if they commit a breach, they must face the consequence that their licence may be cancelled or suspended under sub cl. (1) of cl. 11 of the Order. They must face the further consequence of suspension of their licence during the pendency or in contemplation of the proceedings for cancellation of the licence, if the breach is of such a nature that it must result in the cancellation of a licence. As already stated, the power of suspension is a necessary adjunct of the power to grant a licence. In view of the acute shortage of foodstuffs in the country, the Government is bound to take all effective steps to implement the provisions of the Act and the various orders issued under section 3 thereof, from time to time. The conferral of the power of suspension of the licence of a foodgrains dealer under the second proviso to sub cl. (1) of cl. 11 of the Order during the pendency or in contemplation of the proceedings for cancellation of his licence, is an important step taken by the Government to subserve the object of the legislation and is in public interest. It cannot be said that the second proviso to sub cl. (1) of cl. 11 of the Order does not satisfy the test of reasonableness. It seeks to strike a proper balance between the freedom of trade or business guaranteed under article 19 (1) (g) and the social control permitted by cl. (6) of article 19 of the Constitution. It is, therefore, difficult to hold that the second proviso to sub cl. (1) of cl. 11 of the Order is of an excessive nature beyond what is required in the interests of the general public. There is no warrant for the submission that the second proviso to sub cl. (1) of cl. 11 of the Order confers upon the licensing authority unguided, uncontrolled and uncanalised power to suspend a licence and is, therefore, void by reason of article 14 of the Constitution. It is urged that the impugned orders of suspension in these cases are for a period of 89 days, and the licensing authority would, as in the past, pass fresh orders of suspension ad infinitum 38 completely paralysing the business of the petitioners. There is no substance in the contention that repeated orders of suspension of a licence can be passed under the second proviso in respect of the same breach. The second proviso expressly states that the licensing authority may suspend a licence for a period not exceeding ninety days. It, therefore, fixes the period of suspension. From its very terms, it is obvious that there cannot be repeated orders of suspension of a licence under the second provision in respect of the same breach. Normally, the order of suspension under the second proviso to sub cl. (1) of cl. 11 of the Order after the expiry of the period of 90 days, would automatically lapse. However, if the licensee commits another breach, after the expiry of the period of suspension, there is nothing to prevent the licensing authority to suspend his licence afresh. On a fair reading of the second proviso to sub cl. (1) of cl. 11 of the Order, it cannot be said that it commits to the unrestrained will of the District Food and Supplies Controller, who is the licensing authority, the power of suspension of a licence. It does not confer arbitrary and uncontrolled power because the suspension can only be for specified reasons and the second proviso lays down the circumstance or grounds on which the power may be exercised. Such guidelines are expressly and specifically stated. In the first place, the power of suspension is not exercisable unless there is a breach and the breach is of such a nature that it must entail cancellation of the licence. The substantive provision contained in sub cl. (1) of cl. 11 of the Order provides for the power of cancellation or suspension, if any dealer commits any contravention of the 'terms and conditions of his licence or any provision of this order '. The first proviso is in the nature of a limitation on the power contained in sub cl. (1), and there can be no cancellation or suspension of a licence unless the licensee is afforded a reasonable opportunity of stating his case. The proper function of the second proviso is to carve out an exception to the first proviso. It dispenses with the requirement of affording a reasonable opportunity to the licensee in case of suspension of his licence during the pendency or in contemplation of the proceedings for cancellation. It must, however, be read along with the main enacting provision in sub cl. (1), and, if so construed, the power of suspension during the pendency of an inquiry cannot be exercised unless there is contravention of any of the terms and conditions of the licence or any of the 39 provisions of the Order. Secondly, it provides for a reasonable safeguard, in that it limits the period of suspension. The period of suspension would necessarily depend upon the nature of the breach, and in no case, can it exceed ninety days. During this period, the licensing authority is expected to complete the inquiry and take a decision as to the cancellation or otherwise of the licence. Thirdly, as a check upon possible injustice that might result from an improper exercise of the power of suspension of a licence by the licensing authority under the second proviso, there is an additional safeguard to a dealer by way of an appeal to the Director, Food and Supplies, under cl. 13 of the Order. This Court has repeatedly laid down that where the discretion to apply the provisions of a particular statute is left with the Government or one of the highest officers, it will be presumed that the discretion vested in such highest authority will not be abused. It would, therefore, appear that the second proviso to sub cl. (1) of cl. 11 of the Order furnishes sufficient guidelines for the exercise of the power of suspension of a licence during the pendency of or in contemplation of the proceedings for cancellation thereof, and it does not suffer from the vice of arbitrariness and is, therefore, not violative of article 14 of the Constitution. On the contrary, as already indicated, it affords reasonable safeguards. There still remains the question whether the impugned orders of suspension are mala fide or motivated. We are unable to hold from the material on record that the licensing authorities acted with improper motives or were actuated with bias in directing the suspension of the licences held by the petitioners. All that is averred in para 9 is: "(Under oral instructions of the Punjab Government from the Civil Supplies and Food Department to all the Licensing Authorities, including the Food Department and Supplies Controllers, instructions were issued that if any one dealer is found exporting wheat to another State, there being no direct or indirect ban on such movement, he should be punished at the spot by way of suspension of licences so that the dealer may not export wheat to any other State for which there are no restrictions imposed by 40 any law or notified order or even the terms and conditions of the licence." The petitioners then go on to say in para 12: "Under oral instructions from the Secretary, Food and Supplies Department, the Director Food and Civil Supplies, and up to the District Food and supplies Controller, the Punjab Government has imposed restriction on inter State movement of foodgrains. There are already restrictions on stock holding and dealer to dealer sale. The petitioners have never violated any conditions of the licence except that they have been, in exercise of their fundamental rights, exporting foodgrains to various destination outside the State of Punjab. " In the case of M/s Sukhwinder Pal Bipan Kumar in support of the petition, there is an affidavit of one Raj Kumar, claiming to be a partner, who asserts that the allegations in paras 9 and 12 are 'correct to the best of my knowledge '. To say the least, this is no affidavit at all. Under order XIX, Rule 3, of the Code of Civil Procedure, 1908, it was incumbent upon the deponent to disclose the nature and source of his knowledge with sufficient particularity. The allegations in the petition are, therefore, not supported by an affidavit as required by law. That being so, the State Government was fully justified in answer, 'Denied. There is no restriction on the movement of wheat '. The Deputy Secretary in his counter affidavit has further denied that the impugned orders of suspension were passed on the direction of the State Government. In our view, the allegations in the writ petitions are not sufficient to constitute an averment of mala fides so as to vitiate the impugned orders of suspension. The Court would be justified in refusing to carry out investigation into allegations of mala fides, if necessary particulars of the charge making out a prima facie case are not given in the petition. The burden of establishing mala fides lies very heavily on the person who alleges it. The petitioners who seek to invalidate the impugned orders of suspension must establish the charge of bad faith or bias or misuse by the Government of its powers. The impugned orders of suspension ex facie show breaches of conditions Nos. 4, 8 and 10 of the licence by the petitioners. The question whether or not, they committed the breaches is a matter for 41 inquiry by the licensing authorities under sub cl. (1) of cl. 11 of the Order. In the result, the petitions must fail and are dismissed with costs. P.B.R. Petitions dismissed.

Clause 11 of the Punjab Foodgrains Dealers Licensing Price Control Order 1978 (as amended in 1980) empowers the licensing authority to cancel or suspend a licence if the licensee contravenes any of the terms and conditions of his licence or any provision of the order. The first proviso to this clause enjoins on the authority to give to the licensee a reasonable opportunity of stating his case before cancelling or suspending his licence. The second proviso provides that "the licensing authority may suspend a licence without giving a reasonable opportunity to the licensee of stating his case for a period not exceeding 90 days during the pendency or in contemplation of the proceedings for cancellation of his licence. " The petitioners, whose licences had been suspended under clause 11, contended that the second proviso to clause 11(1) of the Order conferred on the licensing authority unguided, uncontrolled and arbitrary power to suspend a licence which infringed their fundamental right under Article 19(1)(g) of the Constitution and that conferral of such unguided power offended Article 14 of the Constitution and (2) that the suspension of the licence was mala fide and motivated because it was passed on extraneous considerations namely, to prevent them from exporting wheat from the State to other parts of the country in the course of inter state trade and commerce. Dismissing the petitions, ^ HELD: The power conferred on the licensing authority under the second proviso to clause 11(1) of the Order is not of an excessive nature and beyond what is required in the interest of general public. The power of suspension conferred by the second proviso to clause 11 is by way of an interim measure, pending an enquiry as to whether there was any breach which must result in cancellation of the licence. The power of suspension is a necessary concomitant of the power to grant a privilege or a licence. 32 So long as the dealers complied with the conditions of licence and the provisions of the Order they are free to carry on their trade or business in foodgrains. If they commit a breach they must face the consequences that their licence may be cancelled or suspended and also face further consequence of suspension of their licence during the pendency or in contemplation of the proceedings for such cancellation if the breach is of such a nature that it must result in the cancellation of a licence. The power of suspension conferred under the second proviso is an important step taken by the Government to subserve the object of the legislation and in is public interest. Nor could it to be said that it does not satisfy the test of reasonableness. [37 A G] Nor again could it be said that there is warrant for the submission that the second proviso confers upon the licensing authority unguided, uncontrolled and uncanalised power to suspend a licence. It does not suffer from the vice of arbitrariness and is, therefore, not violative of Article 14 of the Constitution. [37 G] It cannot be said that licensing authority has an unrestrained power of suspension of licence because the suspension can only be for specified reasons which are spelt out in the second proviso. The power of suspension is not exercisable unless there is a breach and the breach is of such a nature that it must entail cancellation of the licence. The first proviso is in the nature of limitation on the power contained in clause 11(1) and the second proviso carves out an exception to the first proviso by dispensing with the requirement of affording a reasonable opportunity to the licensee in case of suspension of his licence during the pendency or in contemplation of the proceedings for cancellation. The power of suspension during the pendency of an enquiry cannot be exercised unless there is contravention of any of the terms and conditions of the licence or any of the provisions of the Order. Secondly, it provides for a reasonable safeguard in that it limits the period of suspension which would necessarily depend upon the nature of the breach which in no case can exceed 90 days. Thirdly, as a check on improper exercise of power of suspension by the licensing authority an additional safeguard is provided by way of appeal to the Director of Food Supplies. [38 E H] On the material on record there is nothing to show that the licensing authority acted with improper motives or was actuated with bias in directing the suspension of the licence held by the petitioners. The affidavit filed by a partner of one of the petitioners does not fulfil the requirements of Order XIX rule 3 of the Code of Civil Procedure under which it is incumbent upon the deponent to disclose the nature and source of his knowledge with sufficient particularity. The allegations in the writ petition are not sufficient to constitute an averment of mala fide so as to vitiate the orders of suspension. The burden of establishing mala fides lies very heavily on the person who alleges it. [39 E F]

etition No. 19 of 1961. Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights. A. V. Viswantha Sastri and D. N. Mukerjee, for the petitioners. Bajrang Sahai and section P. Yarma, for the respondents. 833 1962. March 14. The Judgment of the Court was delivered by AYYANGAR J. We consider that this petition under article 32 of the Constitution is entirely devoid of merits and deserves to be dismissed as misconceived as it does not involve any question of the infringement of any fundamental right. The petition is substantially for the issue of a writ of prohibition directing the Collector of Hazaribagh not to proceed with an enquiry pending before him under section 4(h) of the, Bihar Land Act and a writ of cortical to quash the proceedings. The property regarding which a tension is raised that the fundamental rights of the petitioner under Arts.19(1)(f) and 31(1) of the constitution are alleged to have been infringed, is a. plot of land within the municipal limits of Hazaribagh in Bihar together with certain buildings and structures thereon. The property originally belonged to the Ramgarh Raj. There is a dispute its to the manner in which this property was being enjoyed by the then proprietors and so we shall at this stage refrain from saying anything about it. On January 16, 1948 the Raja of Ramgarh granted a lease of this property in favour of his younger brother Basant Narain for a term of 99 years. On April 7, 1949 the Raja settled his reversionary interest in the property for the benefit of a, Trust under a registered deed of settlement The estate, of Ramgarh was notified under section 3 (1) of the, Bihar Land Reforms Act (Bihar I of 1950) for being taken over by the Government of Bihar and in consequence the estate statutorily vested in the State on and from November 3, 1951. Section 4(h) of the Bihar Land Reforms Act enacts: "The collector shall have power to make inquiries in respect of any transfer including the settlement or lease of any land comprised in such estate or the transfer of any kind of 834 interest in any building used primarily as office or kutcbery for the collection of rent of such estate or tenure or part thereof, made at any time after the first (lay of January 1946 and if he is satisfied that such transfer was made with the object of defeating any provisions of this Act or causing loss to the State or obtaining higher compensation thereunder the Collector may, after giving reasonable notice to the parties concerned to appear and be heard and with the previous sanction of the State Government, annul such transfer, dispossess the person claiming under it and take possession of such. property on such terms as may appear to the Collector. to be fair and equitable. " It will be noticed that the lease in favour of the Raja 's younger brother was dated January 16, 1948 and therefore was well within the period specified in the provision. It was the contention of the State that the buildings on the property which were the subject of the lease dated January 16, 1948 were being used by the Raj primarily as an office or kutcheri for the collection of rent a fact which however was disputed and is a subject of contest in the proceedings now sought to be quashed. On November 27, 1955 a notice was issued to Basant Narain to show cause why the lease executed in his favour on January 16, 1948 should not beset aside under the power conferred upon the Collector by section 4(h). Basant Narain submitted his objections and stated that the leased properties were not covered by section 4(b). Before however this enquiry was completed, Basant Narain surrendered his leasehold interest to the assignee of the reversion, viz., the Trust, by a registered deed dated January 1, 1957. Subsequently on June 1, 1959 the Trust which thus became entitled to the entire interest in the property in its turn leased the property to one Bansidhar and about a month later, on July 3, 1959 835 Bansidhar assigned his leasehold interest in the property to the petitioner company and that is how the petitioner came upon the scene. On November 13,1959 the Collector pawed an order cancelling the lease. The petitioner who laid claim to a title to the property under the assignment in its favour dated July 3, 1959, applied to the Collector to set aside his order both on the merits and also on the ground that the order of November 13, 1959 had been passed to its prejudice without giving it an opportunity to make its objections even though by that date it had obtained title to the property and therefore a locus standi to be heard. We are not now concerned with the correctness or otherwise of the contention raised by the petitioner, because the State of Bihar set aside the order of the Collector and directed a re enquiry and in this re enquiry the petitioner filed a petition before the Collector on August 9, 1960 setting out its case. It was during the progress of this last enquiry that the petitioner moved this Court by the present petition for the reliefs which we have already set out. Pausing here it is necessary to add that the constitutional validity of section 4(h) is not challenged and the case therefore turns on whether the property satisfies the conditions on which the section is attracted. The relief sought in this petition is based on two allegations: (1) that the land on which the buildings stand is raiyati land and therefore could not be taken possession of by the State under the Bihar Land Reforms Act and (2) that the buildings standing thereon were previously used for the residential purpose of the ' Raja and his family and not as a kutcheri. The enquiry has been proceeding before the Collector in regard to these two points and it may be mentioned that when the petitioner applied to this Court for a stay of proceedings before the Collector,, this Court passed an order permitting the enquiry to continue ' though it stayed the passing of 836 any order by the State Government. It will thus be seen that if the contention of the State is correct as regards the tenure of the property and as regards the purpose for which the buildings were used, the title of the State to the property would be made out and the petitioner could have no legitimate grievance. If, on the other hand, the petitioner establishes in the enquiry the case that it has put forward in the petition it is bound to succeed. Thus the question whether petition has any right to the property which it claims depends wholly on questions of fact which are plainly within the jurisdiction of the authorities constituted under the Bihar Land Reforms Act. Before a party can complain of an infringement of his fundamental right to hold property he must establish that he has title to that property and if his title itself is in dispute and is the subject of adjudication in proceedings legally constituted, he cannot obviously put forward any claim based on his title until as a result of that enquiry he is able to establish his title. It is only thereafter that the question whether his rights in or to that property have been improperly or illegally infringed could arise. In the circumstances we consider that the petitioner can complain of no infringement of its fundamental right, as to justify a petition under article 32. The petition is dismissed with costs. Petition dismissed.

The property regarding which the contention is raised that the fundamental rights of the petitioners under articles 19(1) (f) and 31 ( 1) of the Constitution are alleged to 832 have been infringed is a plot of land within the Municipal limits of Hazaribagli with certain buildings and structures thereon,which originally belonged to the Raja of Ramgarh. On January 16, 1948, the Raja leased this property to N for a term of 99 years and sometime thereafter settled his reversionary interest of the property for the benefit of a Trust. The estate of Ramgarh was notified under section 3(1) of the Bihar Land Reforms Act for being taken over by the Government of Bihar and in consequence, the estate statu torily vested in the State of Bihar. A notice was issued to N to show cause why the lease executed in his favour should not be set aside under s.4(h) of the act as the lease was executed well within the period specified under section 4(h). N submitted objections standing that these properties were not covered by section 4(h). During the pendency of the enquiry N surendered his leasehold to the trust. The trust leased the property to one 1, who assigned his household interest in the property to the petitioner Company. The present sought to quas the said proceedings under section 4(h) pending before the Collector wherein an enquiry was having held as to the manner in which the property in, question was being enjoyed by tile Raja of Ramgarh prior to the transfer, by lease for 99 years. The question is whether any fundamental rights of the petitioner have been infringed by the enquiry being held. Held, that before a party could complain of an infringement of his fundamental rights to hold property he must establish that be has title to that property and if that title itself is in dispute and is the subject of adjudication in proceedings legally constituted,the cannot obviously put forward any claim based on such title until as a result of that enquiry his title established. It is only thereafter that the question whether his rights in or to that property have been improperly or illegally infringed could arise.

ION: Civil Appeal Nos. 946 of 1975 & 1251 of 1975. From the Judgment and order dated 11.10.1974 of the Calcutta High Court in Estate Duty Reference No. 117 of 1971. Dr. Shankar Ghosh, D.P. Mukharji and G.S. Chatterjee for the Appellant in C.A. No. 946/75 and for Respondent in C.A. No. 1251 of 1975. C.M. Lodha, Ms. A. Subhashini and K.C. Dua for the Respondent in C.A. No.946/75 and for the Appellant in C.A. No. 1251 of 1975. The Judgment of the Court was delivered by VENKATACHALIAH, J. These appeals, by certificate, under Section 65 of the Estate Duty Act of 1953 ( 'Act ' for Short) one by the accountable person and the other by the Deputy Controller of the Estate Duty arise out of and are directed against the Judgment, dated 11.10.1974 of the High Court of Calcutta, answering, in a reference under Section 64(1) of the 'Act ', the question of law referred for its opinion. The matter pertained to the determination of the principal value of the Estate passing on the death, which occurred on 24.3.1960, of a certain Satya Charan Srimani. Dipti Narayan Srimani, appellant in CA 946/1975 is the son of the deceased and is the accountable person. The said Satya Charan Srimani during his life time had executed three trust deeds, dated, 8.12.1947, 21.9.1953 and 4.10.1959 respectively. In the proceedings, the nature and effect of the dispositions made under the deeds of the trust, dated, 21.9.1953 and 4.10.1959 fell for consideration. Under the deed, dated, 21.9.1953, Satya Charan Srimani as settlor, transferred upon trust to himself as trustee 4 items of immovable property, viz. 130 and 133, upper circular Road; and 32/5 and 32/5 Beadon Street, Calcutta. The objects and purposes of the trust, broadly stated, were: (i) the conduct of the daily worship and sevas of the Deity Sree Sridhar Jiu; 274 (ii) the carrying out of certain charitable acts, deeds and things mentioned in schedule B of the deed; (iii) the making of provision for the maintenance of himself and the persons mentioned in the said deed. The trustee was required, after defraying taxes and other out goings, to accumulate 1/4th of the net income to be set apart for purposes of effecting certain additions and alterations to the properties; to make over another 1/4th of the net income to the shebait for the conduct of the daily and periodical pujas, worship and rituals of the said deity; another 1/4th for the charities mentioned in the deed and the remaining 1/4th for the personal benefit of the settlor during his life time and to his heirs thereafter. After the developmental works were completed, the proportions of the shares allotted to various objects were suitably modified in that 7/16th share was to be made over to the shebait; 4/16th share to be spent for charitable purposes and 5/16th for the benefit of the settlor and his heirs. Under the deed dated, 4.10.1959, the settlor transferred upon trust to himself and his son Dipti Narayan Srimani as Trustees, six other properties, one of them situate in Varanasi, for the conduct of daily worship and periodical festivals, rituals and ceremonies of the deity, Shri Ishwar Gobinda Jiu; for certain charitable purposes and also for the benefit of himself and his heirs. The settlor provided for his residence, free of rent, in one room on the ground floor in the Varanasi property. A 1/4th of the net income of the trust properties, after defraying expenses and taxes, was to be paid to the shebait for the conduct of the worship, rituals and services of the deity Shri Ishwar Gobinda Jiu; another 1/4th to be spent on the charitable purposes mentioned in the deed and the balance of 1/2 for the development, additions and alterations of two of the trust properties viz. No. 41 & 42 Macleod Street Calcutta. After completion of the developments and alterations, the said 1/2 share was stipulated to go for the benefit of the settlor during his life time and thereafter to his heirs. Under both the dispensations, the settlor constituted himself the shebait. In the proceedings of assessment to estate duty, the question arose whether the trust deeds attracted and fell within Section 12(1) of the 'Act '. The accountable person contended that the four trust properties under deed dated 21.9.1953 could not be said to be "Settled Property" within the definition in Section 2(19) and that at all events what must be held to pass would only be a 1/4th share, 275 corresponding to the benefit reserved for the settlor and his heirs. Similarly, in respect of the six trust properties covered by the deed, dated 4.10.1959, it was urged that the properties were not "Settled Properties" and that at all events only 1/2 of the property so passed. The Deputy Controller of Estate Duty; the Appellate Comptroller of Estate Duty in the first appeal and the Income Tax Appellate Tribunal, Calcutta, in the second appeal, held that the entire subject matter of the two deeds must be held, or deemed, to pass on death. The value of the properties constituting the subject matter of deed dated, 21.9.1953 estimated at Rs.4,69,287 and those constituting the subject matter of the deed, dated, 5.10.1953 at Rs.1,27,400 were accordingly, included in the principal value of the estate passing on death. On 20.2.1971, the Tribunal at the instance of the accountable person stated a case and referred under Section 64 of the 'Act ' the following question of law for the opinion of the High Court: "Whether on the facts and in the circumstances of the case and on a proper interpretation of the trust deeds dated, 21.9.1953 and 4.10.1959, the properties comprised therein are dutiable under Section 12(1) of the Act. A Division Bench of the High Court by its judgment, dated 11.10.1974 held that so far as the four properties comprised in the deed, dated 21.9.1953 were concerned, they were "Settled Property" within the meaning of Section 2(19) and that Section 12(1) was attracted. The High Court observed: ". .So far as the deed dated 21.9.1953 is concerned, by the said deed the property has been made debutter and there is, therefore, a dedication in favour of the deity; and as the settlement by the said deed creates or results in a dedication or endowment, the properties settled by the said deed should, therefore, be considered to be settled properties, in view of the specific provision contained in sec. 2(19) relating to dedication or endowment . " ". The provisions contained in the deed dated 21.9.1953 which we have earlier considered, clearly indicate that the settlor has reserved to himself an interest in the properties within the meaning of section 12(1) of the Act. He has 276 expressly reserved for himself for life one fourth share of the income of the properties before development and seven sixteenth share of the income of the properties after development. Section 12(1) is therefore clearly attracted to the properties mentioned in the said deed dated 21.9.1953 . " However, the High Court took a different view in relation to the properties covered by the deed, dated 4.10.1959 and held that they were not hit by Section 12(1). The High Court said: ". As in our opinion the properties covered by the deed dated 4.10.59 are not sattled properties, section 12(1) cannot apply to the said properties . " Concluding the High Court held: ". . We must therefore, hold that section 12(1) of the Act applies to the trust deed dated 21.9.1953 and the said section has no application to the trust deed dated 4.10.1959. Accordingly we answer the question by saying that the properties comprised in the trust deed dated 21.9.1953 are dutiable under section 12(1) of the Estate Duty Act and the properties comprised in the trust deed dated 4.10.1959 are not dutiable under section 12(1) of the Estate Duty Act . " The Division Bench, however, left open the question, whether the properties, constituting the subject matter of the trust deed, dated 4.10.1959, would attract any other provision of the Act, to be decided by the appropriate authority. From this opinion expressed by the High Court, both the accountable person and Deputy Controller of the Estate Duty have come up in appeal the former aggrieved by the inclusion of the whole of the properties, comprised in the trust dated 21.9.1953 in the principal value of the estate; and the latter by the exclusion of the properties constituting the subject matter of the trust dated 4.10.1959 from the principal value of the estate. We have heard Dr. section Ghosh, learned Senior Advocate for the accountable person and Shri C.M. Lodha, learned Sr. Advocate for the Revenue. 277 Having regard to the career of this litigation and the varying shades of the legal thought attracted by it both in the statutory appeals and before the High Court, one is tempted to recall the reflections of Diplock L.J. in Re: Kilpatrick 's at 1370. "As in nearly all appeals about estate duty, I reach my decision without confidence. Were I a betting man I should lay the odds on its being right at 6 to 4 (i.e., 3 to 2) on or against. If ever a branch of law called for reform in 1966, it is the law relating to estate duty. It ought to be certain: it ought to be sensible it is neither . ." In Re Weir 's Settlement , Cross J had said: "The facts are simple enough, but it will not surprise any one acquainted with this branch of the law to learn that the argument lasted over four days during which counsel at all events wasted no words and that some thirty authorities, many of them in the House of Lords, were referred to. The law of estate duty has indeed now attained a degree of refinement which would have gladdened the heart of Lort Sd. Leonards. " The legislative expediencies in the development of the law of Death Duties in England reflect an on going, and no less interesting, interaction between the resourceful ingenuity of the conveyancing lawyer on the one hand and the legislative vigilance to plug the susceptibilities of the law that sustain tax planning, on the other. The handy tool of the conveyancing lawyer was the notion in the law of Real property that ownership was detached from 'land ' and was attached to something called the 'estate ' in land. The submissions of the learned counsel in the appeals are patterned substantially on the ground covered before the High Court. In support of the accountable person 's appeal Dr. Ghosh submitted: a) First, that, on a proper construction of the two deeds, what must be held to constitute their subject matter are only the shares in the properties corresponding to the interests intended for the benefit of the deities and the charities; and that the interest in the property correspond 278 ing to the benefit retained by the settlor was not the subject matter of the disposition at all; b) Secondly, that, even if both the documents might admit of being called "settlements" in a wider sense the properties dealt with thereunder were not "Settled Property" within the meaning of Section 2(19) as there was no in tervening limited interest before a final vestiture of the ownership; and c) Thirdly, that, at all events, what must be held to attract and fall within the mischief of Section 12(1) and be deemed to pass on death would only be the value of such share as corresponds or referable, to the quantum of interest so reserved by the settlor namely 5/16th share in the properties covered by the first document and 1/2 share in the properties comprised in the second document and not the entire value of all the properties. Shri C.M. Lodha learned Senior Counsel for the Revenue submitted that this case was frank case of what, by definition, attracted the wider net of Section 12(1) and that resort to the implications of "Settled Property" under Section 2(19) was unnecessary once it is clear that there is a "settlement" within the meaning of Section 12(1) coupled with the reservation of an interest however small. Learned Counsel submitted that the distinction made by the High Court between the properties covered by deed, dated, 21.9.1953 on the one hand and those covered under deed, dated, 4.10.1959 on the other, is, in the ultimate analysis, a distinction without a difference. 9.The first contention of Dr. Ghosh pertaining to what, according to him, should be held to be the subject matter of the trust deeds, is essentially a matter of construction of the deeds. There is, no doubt, a discernible difference between a case of settlement of property with reservation of a benefit to the settlor on the one hand and the case where what is settled is only a share or interest or part of the property, excluding the part or the share corresponding to the benefit that the settlor has chosen to retain. There is, indeed, no transfer at all in the latter case. Dr. Ghosh says that there is really no transfer of the share corresponding to the benefit reserved in both the cases. This is the construction learned counsel wants the court to place on the two deeds. 279 In St. Aubyn vs Attorney General (See 1951 (2) All England Reports 496), Lord Radcliffe brought out this distinction between what was transferred and what was retained: . .it is the possession and enjoyment of the actual property given that has to be taken account of, and that if that property is, as it may be, a limited equitable interest or an equitable interest distinct from another such interest which is not given or an interest in property subject to an interest that is retained, it is of no consequence for this purpose that the retained interest remains in the beneficial enjoyment of the person who provides the gift . " The distinction between the two types of dispositions is brought out in the context of Section 10, in Controller of Estate Duty, A.P. Hyderabad vs Smt. Godavari Bai, ; at 635: ". In other words if the deceased donor limits the interest he is parting with and possesses or enjoys some benefit in the property not on account of the interest parted with but because of the interest still retained by him, the interest parted with will not be deemed to be a part of the estate of the deceased donor passing on his death for the purpose of section 10 of the Act. It is these aspects which mark the distinction between the two leading cases, namely Chick 's case 1959 3 ITR (ED) 89 and Munro 's case ; (supra). As we shall indicate presently Chick 's case falls within the first category while Munro 's case falls within the other category . ." Again, in the Controller of Estate Duty, Kerala vs M/s. R.V. Vishwanathan & Ors., ; at 97 & 99 it was observed: "14. The question as to whether gifted property should be held to be a part of the estate of the deceased donor passing on his death for the purpose of Section 10 of the Act is not always free from difficulty. It would depend upon the fact as to what precisely was the subject matter of the gift and whether the gift was of an absolute nature or whether it was subject to certain rights. There is a fine but real distinction between the two types of cases . ." ". .To put it in other words, if the deceased owner 280 delimits the interest he is parting with and possesses and enjoys some benefit in the property not on account of the interest parted with but because of the interest still retained by him, the interest parted with shall not be deemed to be part of the estate of the deceased donor passing on his death for the purpose of Section 10 of the Act. The principle is that by retaining something which he has never given, a donor does not bring himself within the mischief of that section, nor would the provisions of the section be attracted because of some benefit accruing to the donor on account of what was retained by him . ." 10. In the present case, any possibilities of such an argument are ruled out by the explicit terms of the deeds. The subject matter of the deeds are not, respectively, 11/16 share and 1/2 share in the properties. The whole of the properties are conveyed upon trust. There is, therefore, no scope for this submission. The first contention of Dr. Ghosh, therefore, fails. The second contention of Dr. Ghosh is that provisions of section 12(1) are not attracted as the properties do not fill the bill as "Settled Properties" within the meaning of Section 2(19) of the Act. Section 2(19) which defines "Settled Properties" and 'settlement ', respectively provides: " "Settled property" means property which stands limited to, or in trust for, any persons, natural or juridical, by way of succession, whether the settlement took effect before or after the commencement of this Act; and "settlement" means any disposition, including a dedication or endowment, whereby property is settled;" The statutory definition of "Settled Property" and "settlement" is such that while it is possible to say that all "Settled Property" is the subject matter of "settlement", conversely, however, all subject matter of 'settlement ', need not necessarily and proprio vigore, become "Settled Property". The latter concept requires for its satisfaction certain specific incidents and consequences of a settlement". Section 12(1) provides: 281 12(1). Property passing under any settlement made by the deceased by deed or any other instrument not taking effect as a will whereby an interest in such property for life or any other period determinable by reference to death is reserved either expressly or by implication to the settlor or whereby the settlor may have reserved to himself the right by the exercise of any power, to restore to himself or to reclaim the absolute interest in such property shall be deemed to pass on the settlor 's death . " Section 12(1) refers to and deals with a case of property passing under a "settlement" in which the settlor had reserved to himself an interest in such property either expressly or by implication. Apparently, on its language, the section does not draw upon the incidents and implications of "Settled Property" for the satisfaction of its requirements. The passing of property under a "settlement" which means "any disposition including a dedication or endowment whereby property is settled" coupled with a reservation of an interest in the property would suffice. The further incident that the properties covered by the settlement must in addition partake of the character of "Settled Property" and accordingly, should stand "limited in trust for any person, natural or juridical, by way of succession" etc. are not to be held as part of the requirements of Section 12(1). Those incidents of "Settled Property" need not be imported into the ingredients of Section 12(1) which would be satisfied if there is a "settlement" as defined under the second part of Section 2(19) and if, there is reservation of an interest by the settlor in addition. The two deeds clearly answer the description of 'Settlement ' as defined under Section 2(19), viz. that there is a "disposition including a dedication, whereby property is settled." Indeed under both the deeds, the reservations of the benefit of the income from the trust properties were made in favour of the settlor. These reservations by themselves, in our opinion, bring the properties within the net of Section 12(1). This should dispose of the second contention of Dr. Ghosh. In addition, the settlor in this case constituted himself during his life time and thereafter constituted his heirs as the shebaits of the two deities. Indeed where while endowing properties to a deity, the settlor stipulates that he shall during his life time and thereafter his heirs be the shebaits of the deity, the settlor can possibly be said to provide not only for certain duties to be vested in connection with the endowment 282 but also secures a beneficial interest in the property. The following observations of Mukherjea, J. in Angurbala Mullick vs Debabrata Mullick, at 1132 as to the nature of the office of a shebait may be recalled: ". The exact legal position of a shebait may not be capable of precise definition but its implications are fairly well established. It is settled by the pronouncement of the Judicial Committee in Vidya Varuti vs Balusami that the relation of a shebait in regard to debutter property is not that of a trustee to trust property under the English Law. In English Law the legal estate in the trust property vests in the trustee who holds it for the benefit of cestui gue trust. In a Hindu religious endowment on the other hand the entire ownership of the dedicated property is transferred to the deity or the institution itself as a juristic person and the shebait or mahant is a mere manager. But though a shebait is a manager and not a trustee in the technical sense, it would not be correct to describe the shebaitship as a mere office. The shebait has not only duties to discharge in connection with the endowment, but he has a beneficial interest in the debutter property . " Again, in Kalipada Chakraborti & Anr. vs Palani Bala Devi & Ors., at 516 & 517 it was held: ". Whatever might be said about the office of a trustee, which carries no beneficial interest with it, a shebaitship, as is now well settled, combines in it both the elements of officer and property . " ". There could be no doubt that there is an element in the shebaiti right which has the legal characteristics of property; but shebaitship is property of a peculiar and anomalous character, and it is difficult to say that it comes under the category of immovable property as it is known in law . " 13. It is true that the reservation of "interest", so as to attract Section 12(1), must be in the property as such and that mere collateral benefits reserved by the settlor emanating from some other property or some other source, independent of the property so settled, will not 283 attract the section. In Controller of Estate Duty vs R. Kanakasabai & Ors., at 257 this Court, in the context of Section 10, observed: ". The provisions for annual payments and maintenance made in the deeds as seen earlier are not charged on the properties settled. Hence the deceased cannot be said to have retained and interest in the properties settled. Therefore, it cannot be said that he retained any benefit either in the properties settled or in respect of their possession . " But in the present case, benefits reserved emanate from the very properties constituting the subject matter of the settlements and cannot be said to be collateral in their nature. The distinction between a case of a benefit arising "collaterally" and a case of the benefit being reserved by "implication" would require to be kept clearly distinguished. Having regard to the special nature of the office of a shebait and the rights and interests that to with it, it is possible to contend that when a settlor endows the property to an idol and reserves the right of shebaitship to himself, he would be reserving an interest in the property. It is, no doubt, true that while dealing with a case of cessor of interest, under section 7 of the Act, of an elected Mahant in Math properties, it was held by this court that no interest passes on the death of Mahant duly elected, and that the provisions of the Act are not attracted (See: Controller of Estate Duty, Bihar vs Mahant Umesh Narain Puri, But the case of a settlor who himself endows property to an idol and constitutes himself a shebait is obviously different. But we need not, in this case, finally pronounce on the effect of reservation of shebaitship by a settlor in the context of Section 12(1). But even to the extent, the argument that for purpose of Section 12(1) the property must answer the description of "settled property" goes the expression "by way of succession" import of the words were stated in Attorney General vs Owen, (See 1899 2 Queen 's Bench Division 253 at 266) by Kennedy, J: ". "By way of succession" seems to me to be a phrase to which one ought, in dealing with this Act, not to assign a narrow or strictly technical meaning, but to treat it as equivalent to "successively upon death"; and substantially un 284 der the present will the property out of which the annuities are paid is property to which, so far as benefit is concerned, the annuitants are entitled during life, and which, so far as benefit is concerned, passes to the residuary devisees upon the deaths of the annuitants. There is a succession, in a popular but correct sense, in the enjoyment of this portion of the testatrix 's residuary estate which comes to them upon the decease of the annuitants . " Following this view, the Allahabad High Court in Hamid Hussain vs Controller of Estate Duty, held (See at 315): ". The settlor clearly contemplated that successive generations would enjoy the benefit of the wakf and thereafter it would pass to the persons covered by the charitable purposes. It seems to us that upon these considerations the property must be considered to be "settled property" and the wakf, being a dedication of endowment, must be considered to be a settlement within the meaning of section 2(19). Inasmuch as the property comprised in the wakf passes under a settlement, it is property which falls within the scope of section 12 . " The terms of the two documents in our opinion satisfy even this extended requirement of the case. What remains to be considered is the third contention of Dr. Ghosh. Learned Counsel says that, at all events, all the properties covered by the two settlements cannot be held to pass under Section 12(1) but only the value of the share of the properties corresponding to the benefit reserved must be held to pass. There are again certain fallacies in some of the assumptions basic to this contention. The quantum of the interest reserved does not determine the extent of the property passing under Section 12(1). This is not a case where several distinct properties or parcels are settled and a beneficial interest is reserved out of one alone when it might be possible to predicate that all properties comprised in such settlement, which must be held to be a composite deed dealing with several items do not attract Section 12(1) but only the parcel out of which an interest is carved out and reserved for the settlor 's benefit. Under Section 12(1) if the deceased makes a settlement and reserves for himself an interest therein for life or for 285 any period determinable with reference to death, the whole of the property so settled would be deemed to pass. The interest reserved might be very small indeed; but however small the interest, when by virtue of such a reservation a settlement falls within the purview of Section 12, the whole property would be deemed to pass. This is what was clarified in Attorney General vs Earl Grey, at 32. ". But it is to be observed that the words are "an interest in such property." Any interest however small will do, provided it issues out of such property that is, out of the property sought to be taxed. I agree that if several parcels of land be given by one and the same deed of gift, and an interest be reserved to the donor out of one of those parcels only, estate duty would not be payable upon the whole subject matter of the gift, but only out of that specific portion in which the interest is expressed to be reserved. But that is not the case here . " The expression 'interest ' in Section 12(1) is also not used in a restrictive sense. Wills, J. in Attorney General vs Heywood, said: ". This application of the word 'interest ' is not confined to a vested or a necessarily contingent interest. The Act was meant to cast a wider net than such a construction would imply . . . The Act of Parliament was meant to meet cases in which an interest of some sort was conferred and which were not already provided for, and I think the language used is sufficiently comprehensive to include the present case . " This colloquial and somewhat liberal connotion of 'interest ' was adopted and followed in Attorney General vs Farrel, Greer, L.J. said: "In that case the only interest which the settlor retained in the sum of money settled by him was the expectation, well founded or ill founded, that the trustees would exercise their discretion in his favour; but the trustees might quite lawfully have refused to give him anything, and have distributed the income among his wife and children. He had a mere expectation that the discretion which was vested in 286 the trustees might be exercised in his favour, either partly or entirely, and that in my judgment is exactly the position that Major Alfred Stourton was in this case. He had no legal right to force the trustees to give him anything; at the same time he had in a colloquial sense an interest in the estate, because it was an estate out of which something might be allotted to him in the discretion of the trustees. Whether that is an interest within the meaning of the Act of 1881 has, I think, been determined by Attorney General vs Heywood, and the decision has stood since the year 1887, a period of forty three years. " There is, thus, no substance in the third contention either. In the result, for the foregoing reasons, Civil Appeal 1251 of 1975 of the Deputy Controller of the Estate Duty is allowed and the question referred for the opinion is answered in the affirmative and against the assessee. We hold that while the High Court was right in its view that the properties covered by the deed dated 21.9.1953 were required to be brought to charge under Section 12(1), we are unable to agree with the reasoning of, and the conclusion reached by, the High Court in regard to the properties covered by the deed dated 4.10.1959. Accordingly while CA No. 946 (NT) of 1975 brought by the accountable person is dismissed; CA 1251 of 1975 by the revenue succeeds and is allowed and the judgment of the High Court, to the extent it pertains to the properties covered by deed, dated 4.10.1959, is set aside. In the circumstances, there will be no order as to costs in these appeals.

A person during his lifetime executed trust deeds, dated 21.9.53 and 4.10.1959 respectively. Under the Deed dated 21.9.1953 that person as settlor, transferred upon trust to himself as trustees four items of immovable property. The objects and purposes of the trust broadly stated were the conduct of the daily worship of the deity, carrying out of certain charitable acts and making of provisions for the maintenance of the settlor and some other persons. The trustee was required after defraying taxes etc. to accumulate 1/4th of the net income to be set apart for purposes of effecting certain additions and alterations to the properties; to make over another 1/4th of the net income to the shebait for the conduct of the daily pooja; another 1/4th for the charities and the remaining 1/4th for the personal benefit of the settlor during his lifetime and to his heirs thereafter. Later on the share of the settlor was changed to 5/16. Under the deed dated 4.10.1959 the settlor transferred upon trust to himself and his son, the appellant in Civil Appeal No. 946 of 1975, as trustees six other properties, almost for the same purposes and kept a fixed share for the benefit of the settlor during his lifetime and thereafter to his heirs. In the proceedings of assessment to Estate Duty the question arose whether the trust deeds attracted and fell within 270 section 12(1) of the Estate Duty Act. The Deputy Controller of Estate Duty, the Appellate Controller of Estate Duty in the first appeal and the Income tax Appellate Tribunal, Calcutta, in the second appeal held that the entire subject matter of the deeds must be held, or deemed, to pass on death and the value of the properties should be included in the principal value of the Estate passing on death. At the instance of the accountable person, a reference was made to the High Court for opinion as to whether the properties comprised in both the trust deeds were dutiable under section 12(1) of the Act. The High Court held that properties comprised in the deed dated 21.9.1953 were settled property within the meaning of section 2(19) and that section 12(1) was attracted. In relation to the properties covered by the deed dated 4.10.1959, the High Court held that Section 12(1) was not applicable to them as they were not settled properties. Feeling aggrieved, both the accountable person and the Deputy Controller of Estate Duty filed these cross appeals. Dismissing the appeal of the accountable person, allowing that of the Revenue, and answering the question referred to by the High Court for opinion in the affirmative and against the assesee, this Court, ^ HELD: The first contention of the accountable persons that the interest in the property corresponding to the benefit retained by the settlor was not a subject matter of the disposition at all is essentially a matter of construction of the deeds. There is, no doubt, a discernible difference between a case of settlement of property with reservation of a benefit to the settlor on the one hand and the case where what is settled is only a share or interest or part of the property, excluding the part or the share corresponding to the benefit that the settlor has chosen to retain. There is, indeed, no transfer at all in the latter case. The accountable person contends that there is really no transfer of the share corresponding to the benefit reserved in both the cases. [278F G] In the present case, any possibilities of such an argument are ruled out by the explicit terms of the deeds. The subject matter of the deeds are not 11/16 share and 1/2 share in the properties respectively. The whole of the properties are conveyed upon trust. There is, therefore, no scope for this submission. [280C D] St. Aubyn vs Attorney General, [1951] 2 All England Reports 496; Controller of Estate Duty, A.P. Hyderabad vs Smt. Godavari Bai; , at 635 and Controller of Estate Duty, Kerala vs M/s. R.V. Vishwanathan and Ors., ; at 97 and 99, referred to. 271 The second contention of the accountable person that provisions of section 12(1) are not attracted as the properties did not fill the bill as "Settled Properties" within the meaning of Section 2(19) has no substance. Section 12(1) refers to and deals with a case of property passing under a "settlement" in which the settlor had reserved to himself an interest in such property either expressly or by implication. Apparently, on its language, the section does not draw upon the incidents and implications of "Settled Property" for the satisfaction of its requirements. The passing of property under a "settlement" which means "any disposition including a dedication or endowment whereby property is settled" coupled with a reservation of an interest in the property would suffice. The further incident that the properties covered by the settlement must in addition partake of the character of "Settled property" and accordingly, should stand "limited in trust for any person, natural or juridical, by way of succession" etc. are not to be held as part of the requirements of section 12(1). Those incidents of "Settled Property" need not be imported to the ingredients of section 12(1) which would be satisfied if there is a "Settlement" as defined under the second part of section 2(19) and if, there is reservation of an interest by the settlor in addition. [280D; 281C E] In the instant case, the two deeds clearly answer the description of "Settlement" as defined under Section 2(19) viz. that there is a "disposition including a dedication, whereby property is settled". Indeed under both the deads, the reservations of the benefit of the income from the trust properties were made in favour of the settlor. These reservations by themselves, in our opinion, bring the properties within the net of section 12(1). In addition, the settlor in this case constituted himself during his life time and thereafter constituted his heirs as the shebaits of the two deities. Indeed where while endowing properties to a deity, the settlor stipulates that he shall during his left time and thereafter his heirs be the shebaits of the deity, the settlor can possibly be said to provide not only for certain duties to be vested in connection with the endowment but also secures a beneficial interest in the property. [281F H; 282A] Angurbala Mullick vs Debabrata Mullick, at 1132 and Kalipada Chakraborti & Anr. vs Palani Bala Devi The reservation "interest", so as to attract Section 12(1), must be in the property as such and that mere collateral benefits reserved by the settlor emanating from some other property or some other source, inde 272 pendent of the property so settled, will not attract the section. The distinction between a case of a benefit arising "collaterally" and a case of the benefit being reserved by "implication" would require to be kept clearly distinguished. [282H; 283A, C] Controller of Estate Duty vs R. Kanakasabai & Ors., at 257, referred to. The terms of the two documents satisfy even the extended requirement that for purposes of section 12(1) the settled property must be by way of succession. [284E] Attorney General vs Owen, [1899] 2 Queen 's Bench Division 253 at 266 and Hamid Hussain vs Controller of Estate Duty, at 315, referred to. There is no substance in the 3rd contention also of the accountable person that all the properties covered by the two settlements cannot be held to pass under section 12(1) but only the value of the share of the properties corresponding to the benefit reserved must be held to pass. There are certain fallacies in some of the assumptions basic to this contention. The quantum of the interest reserved does not determine the extent of the property passing under Section 12(1). This is not a case where several distinct properties or parcels are settled and a beneficial interest is reserved out of one alone when it might be possible to predicate that all properties comprised in such settlement, which must be held to be a composite deed dealing with several items do not attract section 12(1) but only the parcel out of which an interest is carved out and reserved for the settlor 's benefit. Under Section 12(1) if the deceased makes a settlement and reserves for himself an interest therein for life or for any period determinable with reference to death, the whole of the property so settled would be deemed to pass. The interest reserved might be very small indeed; but however small the interest, when by virtue of such a reservation a settlement falls within the purview of section 12, the whole property would be deemed to pass. [284F H; 285A B] Attorney General vs Earl. Grey, at 325, referred to. The expression 'interst ' in section 12(1) is also not used in a restrictive sense. [285D] Attorney General vs Heywood, and Attorney 273 General vs Farrel, , referred to.

Civil Appeal No. 50 of 1965. Appeal by special leave from the order dated January 6, 1965 of the Circuit Bench of the Punjab High Court at Delhi in Civil Writ No. 8 D of 1965. M.C. Setalvad, Ravinder Narain, J.B. Dadachanji and O.C. Mathur, for the appellant. C.K. Daphtary, Attorney General, S.V. Gupte, Solicitor General, B.R.L. lyengar and R.H. Dhebar, for the respondent No. 1. Santosh Chatterjee B. B. Ratho and M.L. Chhibber, for respondent No. 2. The Judgment of the Court was .delivered by Gajendragadkar, C.J. The principal question which this appeal by special leave raises for our decision relates to the construction of Article 192 of the Constitution. The said question arises in this way. The appellant Brundaban Nayak was elected to the Legislative Assembly of Orissa from the Hinjili 23 Constituency in Ganjam district in 1961, and was appointed one of the Ministers of the Council of Ministers in the said State. On August 18, 1964, respondent No. 2, P. Biswal, applied to the Governor of Orissa alleging that the appellant had incurred a disqualification subsequent to his election under article 191(1)(e) of the Constitution read with section 7 of the Representation of the People Act, 1951 (No. 43 of 1951) (hereinafter called the Act). In his application, respondent No. 2 made several allegations in support of his contention that the appellant had become disqualified to be a member of the Orissa Legislative Assembly. On September 10, 1964, the Chief Secretary to the Government of Orissa forwarded the ,said complaint to respondent No. 1, the Election Commission of India, under the instructions of the Governor. In this communication, the Chief Secretary stated that a question had arisen under Article 191(1) of the Constitution whether the member in 55 question had been subject to the disqualification alleged by respondent No. 2 and so, he requested respondent No. 1 in the name of the Governor to make such enquiries as it thinks fit and give its opinion for communication tO the Governor to enable him to give a decision on the question raised. On November 17, 1964, respondent No. 1 served a notice on the appellant forwarding to him a copy of the letter received by it from respondent No. 2 dated the 4th November, 1964. The notice intimated to the appellant that respondent No. 1 proposed to enquire in the matter before giving its opinion on the Governor 's reference, and, therefore, called upon him to submit on or before the 5th December, 1964, his reply with supporting affidavits and documents, if any. The appellant was also told that the parties would be heard in person or through authorised counsel at 10 30 A.M. on the 8th December, 1964. in the office of respondent No. 1 in New Delhi. On December 1, 1964, the appellant sent a telegram to respondent No. 1 requesting it to adjourn the hearing of the matter. On the same day, he also addressed a registered letter to respondent No. 1 making the same request. Respondent No. 2 objected to the request made by the appellant for adjourning the hearing of the complaint. On December 8, 1964. respondent No. 1 took up this matter for consideration. Respondent No. 2 appeared by his counsel Mr. Chatterjee, but the appellant was absent. Respondent No. 1 took the view that an enquiry of the nature contemplated by article 192(2) must be conducted as expedtiously as possible, and so, it was necessary that whatever his other commitments may be, the appellant should arrange to submit at least his statement in reply to the allegations made by respondent No. 2, even if he required some more time for filing affidavits and/or documents in support of his statement. Even so, respondent No. 1 gave the appellant time until the 2nd January, 1965, 10 30 A.M. when it ordered that the matter would be heard. On January 2, 1965, the appellant appeared by his counsel Mr. Patnaik and respondent No. 2 by his counsel Mr. Chatterjee. On this occasion, Mr. Patnaik raised the question about the maintainability of the proceedings before respondent No. 1 and its competence to hold the enquiry. Mr. Chatterjee repelled Mr. Patnaik 's contention. Respondent No. 1 over ruled Mr. Patnaik 's contention and recorded its conclusion that it was competent to hold the enquiry under article 192(2). Mr. Patnaik then asked for adjournment and made it clear that he was making the motion for adjournment without submitting to the jurisdiction of respondent No. 1. In view of the attitude adopted by Mr. Patnaik, respondent No. 1 took the view that it would be pointless to adjourn the proceedings. and so, it heard Mr. Chatterjee in support of the case of respondent No. 2. After hearing Mr. Chatterjee. respondent No. 1 reserved its orders on the enquiry and noted that its 56 opinion would be communicated to the Governor as early as possible. When matters had reached this stage before respondent No. 1, the appellant moved the Punjab High Court under article 226 of the Constitution praying that the enquiry which respondent No. 1 was holding, should be quashed on the ground that it was incompetent and without jurisdiction. This writ petition was summarily dismissed by the said High Court on January 6, 1965. Thereafter, the appellant applied to this Court for special leave on January 8, 1965, and special leave was granted to him on January 14, 1965. The appellant then moved this Court for stay of further proceedings before respondent No. 1, and the said prayer was granted. When special leave was granted to the appellant, this Court had made an order that the preparation of the record and the filing of statements of the case should be dispensed with and the appeal should be heard on the paper book filed along with the special leave petition and must be placed for hearing within three weeks. That is how the matter has come before us for final disposal. Since the Punjab High Court had dismissed the writ petition filed by the appellant in limine, neither of the two respondents had an opportunity to file their replies to the allegation made by the appellant in his writ petition. That is why both respondent No. 1 and respondent No. 2 have filed counter affidavits in the present appeal setting out all the relevant facts on which they wish to rely. The appellant has filed an affidavit in reply. All these documents have been taken on the record at the time of the hearing of this appeal. It appears from the affidavit filed by Mr. Prakash Narain. Secretary to respondent No. 1, that when notice issued by respondent No. 1 on the 17th November, 1964, was served on the appellant, through oversight the original complaint flied by respondent No. 2 before the Governor of Orissa and the reference made by the Governor to respondent No. 1 were not forwarded to the appellant. At the hearing before us, it is not disputed by the appellant that a complaint was in fact made by respondent No. 2 before the Governor of Orissa and that the Governor had then referred the matter to respondent No. 1 for its opinion. Let us then refer to Article 192 which fails to be construed in the present appeal. Before reading this articl, it is relevant to refer to article 191. Article 191(1) provides that a person shall be disqualified for being chosen as, and for being, a member of the Legislative Assembly or Legislative Council of a State if, 57 to the Governor. As we have already indicated, respondent No. 2 's case is that the appellant has incurred the disqualification under article 191(1)(e) read with section 7(d) of the Act, and this disqualification has been incurred by him subsequent to his election. It is well settled that the disqualification to which article 191(1) refers, must be incurred subsequent to the election of the member. This conclusion follows from the provisions of article 190(3)(a). This Article refers to the vacation of seats by members duly elected. Sub Article (3)(a) provides that if a member of a House of the Legislature of a State becomes subject to any of the disqualifications mentioned in clause (1) of article 191, his seat shall thereupon become vacant. Incidentally, we may add that corresponding provisions with regard to the disqualification of members of both Houses of Parliament are prescribed by Articles 101,102 and 103 of the Constitution. It has been held by this Court in Election Commission, India vs Saka Venkata Subba Rao and Union of lndia Intervener/that Articles 190(3) and 192(1) are applicable only to disqualifications to which a member becomes subject after being elected as such. There is no doubt that the allegations made by respondent No. 2 in his complaint before the Governor, prima facie, indicate that the disqualification on which respondent No. 2 relies has arisen subsequent to the election of the appellant in 1961. Reverting then to article 192, the question which we have to decide in the present appeal is whether respondent No. 1 is entitled to hold an enquiry before giving its opinion to the Governor as required by article 192(2). Let us read article 192: "(1) If any question arises as to whether a member of a House of the Legislature of a State has become subject to any of the disqualifications mentioned in clause (1) of Article 191, the question shall be referred for the decision of the Governor and his decision shall be final. (2) Before giving any decision on any such question. the Governor shall obtain the opinion of the Election Commission and shall act according to such opinion". Mr. Setalvad for the appellant contends that in the present case. no question can be said to have arisen as to whether the appellant has become subject to any of the disqualifications mentioned in clause (1) of article 191, because his case is that such a question can be raised only on the floor of the Legislative Assembly and can be raised by members of the Assembly and not by an ordinary citizen or voter in the form of a complaint to the Governor. Mr. Setalvad did not dispute the fact that this contention has not been taken by the appellant either in his writ petition before the High Court or even in his application for special leave before this Court. In fact, the case sought to be made out by the appellant in the present proceedings appears to be that though a question may have arisen about (1)[1953]S.C.R.1144. 58 his disqualification, it is the Governor alone who can hold the enquiry and not respondent No. 1. Even so, we have allowed Mr. Setalvad to raise this point, because it is purely a question of law depending upon the construction of article 192(1). In support of his argument, Mr. Setalvad refers to the fact that article 192 occurs in Chapter III of Part VI which deals with the State Legislature, and he invited our attention to the fact that under article 199(3) which deals with a question as to whether a Bill introduced in the Legislature of a State which has a Legislative Council is a Money Bill or not, the decision of the Speaker of the Legislative Assembly of such State thereon shall be final. He urges that just as the question contemplated by article 199(3) can be raised only on the floor of the House, so can the question about a subsequent disqualification of a member of a Legislative Assembly be raised on the floor of the House and nowhere else. He concedes that whereas the question contemplated by article 199(3) has to be decided by the Speaker and his decision is final, the authority to decide the question under article 192(1) is not vested in the Speaker. but is vested in the Governor. In other words, the context in which article 192(1) occurs is pressed into service by Mr. Setalvad in support of his argument. Mr. Setalvad also relies on the fact that article 192(1) provides that if any question arises, it shall be referred for the, decision of the Governor and this clause, says Mr. Setalvad, suggests that there should be some referring authority which makes a reference of the question to the Governor for his decision. According to him, this referring authority, by necessary implication, is the Speaker of the Legislative Assembly. There is another argument which he has advanced before us in support of this construction. Article 192(2) requires that whenever a question is referred to the Governor, he shall obtain the opinion of the Election Commission and Mr. Setalvad suggests that it could not have been the intention of the Constitution to require the Governor to refer to the Election Commission every question which is raised about an alleged disqualification of a member of a Legislative Assembly even though such a question may be patently frivolous or unsustainable. We are not impressed by these arguments. It is significant that the first clause of article 192(1) does not permit of any limitations such as Mr. Setalvad suggests. What the said clause requires is that a question should arise; how it arises, by whom it is raised, in what circumstances it is raised, are not relevant for the purpose of the application of this clause. All that is relevant is that a question of the type mentioned by the clause should arise; and so, the limitation which Mr. Setalvad seeks to introduce in the construction of the ' first part of article 192(I) is plainly inconsistent with the words used in the said clause. 59 Then as to the argument based on the words "the question shall be referred for the decision of the Governor", these words do not import the assumption that any other authority has to receive the complaint and after a prima facie and initial investigation about the complaint, send it on or refer it to the Governor for his decision. These words merely emphasise that any question of the type contemplated by clause (1) of article 192 shall be decided by the Governor and Governor alone; no other authority can decide it, nor can the decision of the said question as such fall within the jurisdiction of the Courts. That is the significance of the words "shall be referred for the decision of the Governor". If the intention was that the question must be raised first in the Legislative Assembly and after a prima facie examination by the Speaker it should be referred by him to the Governor, article 192(1) would have been worded in an entirely different manner. We do not think there is any justification for reading such serious limitations in article 192(1) merely by implication. It is true that article 192(2) requires that whenever a question arises as to the subsequent disqualification of a member of the Legislative Assembly, it has to be forwarded by the Governor to the Election Commission for its opinion. It is conceivable that in some cases, complaints made to the Governor may be frivolous or fantastic; but if they are of such a character, the Election Commission will find no difficulty in expressing its opinion that they should be rejected straightaway. The object of article 192 is plain. No person who has incurred any of the disqualifications specified by article 191(1), is entitled to continue to be a member of the Legislative Assembly of a State, and since the obligation to vacate his seat as a result of his subsequent disqualification has been imposed by the Constitution itself by article 190(3)(a), there should be no difficulty in holding that any citizen is entitled to make a complaint to the Governor alleging that any member of the Legislative Assembly has incurred one of the disqualifications mentioned in article l 91 (1) and should, therefore, vacate his seat. The whole object of democratic elections is to constitute legislative chambers composed of members who are entitled to that status, and if any member forfeits that status by reason of a subsequent disqualification, it is in the interests of the constituency which such a member represents that the matter should be brought to the notice of the Governor and decided by him in accordance with the provisions of article 192(2). Therefore, we must reject Mr. Setalvad 's argument that a question has not arisen in the present proceedings as required by article 192(1). The next point which Mr. Setalvad has raised is that even if a question is held to have arisen under article 192(1), it is for the Governor to hold the enquiry and not for the Election Commission. He contends that article 192(1) requires the question to be referred to the Governor for his decision and provides that his decision shall be final. It is a normal requirement of the rule of law that a person 60 who decides should be empowered to hold the enquiry which would enable him to reach his decision, and since the Governor decides the question, he must hold the enquiry and not the Election Commission. That, in substance, is Mr. Setalvad 's case. He concedes that article 192(2) requires that the Governor has to pronounce his decision in accordance with the .opinion given by the Election Commission; that is a Constitutional obligation imposed on the Governor. He, however, argues that the Election Commission which has to give an opinion, is not competent to hold the enquiry, but it is the Governor who should hold the enquiry and then forward to the Election Commission all the material collected in such an enquiry to enable it to form its opinion and communicate the same to the Governor. We are satisfied that this contention also is not well founded. The scheme of Article 192(1) and (2) is absolutely clear. The decision on the question raised under article 192(1) has no doubt to be pronounced by the Governor, but that decision has to be in accordance with the opinion of the Election Commission. The object of this provision clearly is to leave it to the Election Commission to decide the matter, though the decision as such would formally be pronounced in the name of the Governor. When the Governor pronounces his decision under article 192(1), he is not required to consult his Council of Ministers; he is not even required to consider and decide the matter himself; he has merely to forward the question to the Election Commission for its opinion, and as soon as the opinion is received, "he shall act according to such opinion". In regard to complaints made against the election of members to the Legislative Assembly. the jurisdiction to decide such complaints is left with the Election Tribunal under the relevant provisions of the Act. That means that all allegations made challenging the validity of the election of any member, have to be tried by the Election Tribunals constituted by the Election Commission. Similarly, all complaints in respect of disqualifications subsequently incurred by members who have been validly elected, have, in substance, to be tried by the Election Commission, though the decision in form has to be pronounced by the Governor. If this scheme of article 192(1) and (2) is borne in mind, there would be no difficulty in rejecting Mr. Setalvad 's contention that the enquiry must be held by the Governor. It is the opinion of the Election Commission which is in substance decisive and it is legitimate to assume that when the complaint is received by the Governor, and he forwards it to the Election Commission. the Election Commission should proceed to try the complaint before it gives its opinion. Therefore, we are satisfied that respondent No. 1 acted within its jurisdiction when it served a notice on the appellant calling upon him to file his statement and produce his evidence in support thereof. Mr. Setalvad faintly attempted to argue that the failure of respondent No. 1 to furnish the appellant with a copy of the complaint made by respondent No. 2 before the Governor and of the 61 order of reference passed by the Governor ,forwarding the said complaint to respondent No. 1, rendered the proceedings before respondent No. 1 illegal. This contention is plainly misconceived. As soon as respondent No. 1 received the complaint and the order of reference which was communicated to it by the Chief Secretary to the Government of Orissa, it was seized of the matter and it was plainly acting within its jurisdiction under article 192(2) when it served the notice on the appellant. As we have already indicated, it was through oversight that the two documents were not forwarded to the appellant along with the notice, but that cannot in any sense affect the jurisdiction of respondent No. 1 to hold the enquiry. In fact, as respondent No. 2 has pointed out in his affidavit, the fact that a reference had been made by the Governor to respondent No. 1 was known all over the State, and it is futile for the appellant to suggest that when he received the notice from respondent No. 1, he did not know that a complaint had been made against him to the Governor alleging that subsequent to his election, he had incurred a disqualification as contemplated by article 191(1)(e) of the Constitution read with section 7(d) of the Act. It would have been better if the appellant had not raised such a plea in the present proceedings. In this connection, we ought to point out that so far the practice followed in respect of such complaints has consistently recognised that the enquiry is to be held by the Election Commission both under article 192(2) and article 103(2). In fact, the learned Attorney General for respondent No. 1 stated before us that though on several occasions, the Election Commission has held enquiries before communicating its opinion either to the President under article 103(2) or to the Governor under article 192(2), no one ever thought of raising the contention that the enquiry must be held by the President or the Governor respectively under article 103(1) and article 192(1). He suggested that the main object of the appellant in taking such a plea was to prolong the proceedings before respondent No. 1. In the first instance, the appellant asked for a long adjournment and when that request was refused by respondent No. 1, he adopted the present proceedings solely with the object of avoiding an early decision by the Governor on the complaint made against the appellant by respondent No. 2. We cannot say that there is no substance in this suggestion. There is one more point to which we may refer before we part with this appeal. Our attention was drawn by the learned Attorney General to the observations made by the Chief Election Commissioner when he rendered his opinion to the Governor on May 30, 1964, on a similar question under article 192(2) in respect of the alleged disqualification of Mr. Biren Mitra, a member of the Orissa Legislative Assembly, "Where, as in the present case", observed the Chief Election Commissioner, "the relevant facts are in dispute and can only be ascertained after a proper enquiry, the Commission finds itself in the unsatisfactory position of having to give a decisive L/B(D)2SCI 6 62 opinion an the basis of such affidavits and documents as may be produced before it by interested parties. It is desirable that the Election Commission should be vested with the powers of a commission under the Commissions of Enquiry Act, 1952, such as the power to summon witnesses and examine them on oath, the power to compel the production of documents, and the power to issue commissions for the examination of witnesses". We would like to invite the attention of Parliament to these observations, because we think that the difficulty experienced by the Election Commission in rendering its opinion under article 103(2) or article 192(2) appears to be genuine, and so Parliament may well consider whether the suggestion made by the Chief Election Commissioner should not be accepted and appropriate legislation adopted in that behalf. The result is, the appeal fails and is dismissed with costs. In view of the fact that the present proceedings have unnecessarily protracted the enquiry before respondent No. 1, we suggest that respondent No. 1 should proceed to consider the matter and forward its opinion to the Governor as early as possible. It is hardly necessary to point out that in case the allegations made against the appellant are found to be valid, and the opinion of respondent No.1 is in favour of the case set out by respondent No. 2, complications may arise by reason of the Constitutional provision prescribed by article 190(3). In view of the said provision, it is of utmost importance that complaints made under article 192(1) must be disposed of as expeditiously as possible. Appeal dismissed.

The appellant was elected to the Orissa Legislative Assembly in 1961. In 1964 respondent No. 2 made a complaint to the Governor alleging that the appellant had incurred a disqualification subsequent to his election as contemplated in article 191(1)(e) of the Constitution read with section 7 of the Representation of the People Act (Act 43 of 1951). The Chief Secretary Orissa forwarded the said complaint ,to respondent No. 1, the Election Commission of India, under the instructions of the Governor, requesting it to make enquiry into the complaint and give its opinion. Accordingly respondent No. 1 served notice on the appellant and called upon him to submit his reply. The appellant challenged the jurisdiction of respondent No. 1 to conduct the enquiry and filed a writ petition in the High Court. On its being dismissed he appealed to this Court by special leave. It was contended on behalf of the appellant that no question under article 192(1) had arisen in the case as a question relating to the disqualification of a member under article 191(1)(e) could not be raised by an ordinary citizen. It was urged that considering the context of article 192 and the provisions of article 199 the question could only be raised on the floor of the House and thereafter referred to the Governor by the Speaker of the Assembly. It was further contended that only the Governor who had to give the decision could hold the enquiry, and the Election Commission was only to give its opinion on the materials forwarded to it by the Governor. HELD: (i) The argument t that no question had arisen under article 192(1) could not be accepted. What Art 192(1) requires is that a question should arise; how it arises, by whom it is raised, in what circumstances it is raised are not relevant for the purpose of the application of this clause. [59 H] The words in article 192(1) that "the question shall be referred for the decision of the Governor" merely emphasise that any question of the type contemplated in the said clause shall be decided by the Governor and Governor alone; no other authority, including the courts, can decide it. Ii the intention was that the question must b.e raised first in the legislative Assembly and after a prima facie examination by the Speaker it should be referred by him to the Governor, article 192(1) would have been worded in an entirely different manner. [59 B C] The object of Art 192 is that no member who has incurred a disqualification under article 191(1) should b.e allowed to continue as a member. The Constitution itself in Art 190(3) provides for the vacation of the seat of such a member. Further it is in the interests of the member 's constituency that no longer being entitled to the status of a member. he should be removed. In view 54 of these considerationS a citizen is certainly entitled to make a complaint to the Governor about the disqualification incurred by a member under article 191(1). E G] (ii) The enquiry for the purpose of the decision under article 192 has to be held by the Election Commission and not by the Governor. When the Governor pronounces his decision under article 192(1) he is not required to consult his Council of Ministers; he has merely to forward 'the question to the Election Commission for its opinion, and as soon as the opinion is received, "he shall act according to such opinion". It is the opinion of the Election Commission which is in substance decisive, and it is legitimate that the Commission should proceed to try the complaint before it gives its opinion. [60 D H] [Legislation to vest Election Commission with powers of a Commission under the Commissions of Enquiry Act, 1952, recommended.] [62 B]

vil Appeal No. 13041305 of 1987. From the Judgment and Order dated 7.1.1987 of the Cus toms Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. 1120/83 C and 1806 of 1983 C. Soli J. Sorabjee, Ravinder Narain, A.N. Haksar, P.K. Ram and D.N. Misra for the Appellant. A.K. Ganguli, P. Parmeshwaran, A. Subba Rao and Ms. Sushma Suri for the Respondent. The Judgment of the Court was delivered by RANGANATHAN, J. These are appeals under section 35L of the (hereinafter referred to as 'the Act '). The appellant, Tata Oil Mills Company Limited, is engaged in the manufacture of various varieties of soaps. The present dispute has arisen in relation to its factory at Ghaziabad in the State of Uttar Pradesh. The dispute pertains to the eligibility of the appellant to the concession granted by the Central Government under Rule 8(1) of the Central Excise Rules, 1944 through notifi cation No. 46 of 1972, subsequently amended by the notifica tion nos. 153 of 1973 dated 24.7.73 and 25 of 1975 dated 1.3.75. Even though there are three notifications, the point is common and both the appeals involve the same question. 841 The question arises this way. Ad Valorem excise duty at 20% is levied on soap which falls under item 15 of the first schedule to the Act. Notification No. 46 of 1972 exempts "such soap as is made from indigenous rice bran oil or or from a mixture of such oil with any other oils from so much of the duty of excise leviable thereon as is equivalent to the amount of duty calculated at the rate of one rupee and fifty paise per metric tonne of such soap for each addition al percentage point increase in the use of such rice bran oil which is in excess of fifteen per cent of the total oils used in the manufacture of such soap. " To put it in simpler words, the notification intends to grant a concession where the percentage of the rice bran oil used in the manufacture of soap exceeds fifteen per cent of the total oil consump tion in the manufacture. The extent of exemption is graded according to the percentage of rice bran oil in excess of fifteen per cent. For example, if the rice bran oil is twenty per cent of the total oils used in the manufacture, the duty exemption will be Rs.7.50 per metric tonne of soap manufactured. The 1973 notification is on the same lines with the only difference that the duty exemption per metric tonne is Rs.7.50 instead of Rs. 1.50. The notification of 1975 raised the percentage of rice bran oil referred to in the 1972 notification from fifteen per cent to twenty five per cent but reduced the duty rebate from Rs.7.50 to Rs.3.50 per metric tonne. Another notification No. 118/75 has been referred to in the papers before us but it has no relevance to the question that falls to be decided here and is left out of account. The difficulty in the interpretation has arisen because the process of manufacture of soap in the assessee 's factory at Ghaziabad did not involve the use of rice bran oil as such. This factory manufactured soap from rice bran fatty acid. The rice bran fatty acid was extracted from rice bran oil in the assessee 's factory elsewhere. Incidentally, it may be mentioned that the other factory is also licensed under the Excise Act for the manufacture of rice bran fatty acid. The excise authorities rejected the appellant 's plea for exemption under the first three notifications on the ground that rice bran fatty acid and rice bran oil are technically and commercially two separate commodities. It was pointed out that the concession under the notifications is available only where soap is made from indigenous rice bran oil and other oils. This meant that rice bran oil must form part of the process of manufacture of soap in the factory which is manufacturing the soap and claiming the exemption. The notification will not apply merely because the soap is manufactured out of rice bran fatty acid which in turn has been obtained by hydrolysis of rice bran oil in a different factory (may be one belonging to the same asses see which is a separate 842 unit of manufacture for purpose of excise duty). The Tribunal confirmed this view. It considered the terms of notification No. 25/75 and held: "We observe that the concession given under notification No. 25/75 is apparently with a view to encourage the use of rice bran oil in the soap industry. The point for consideration is whether the rice bran oil for the purpose of benefit of notification should be brought into the factory of manufacturer as such and then subjected to various pretreatments re quired for its use in the soap industry or whether the same could be treated outside the factory and the necessary fraction of the rice bran oil namely rice bran fatty acid required for the manufacture of soap alone could be brought into the factory as raw material and concession availed. It is not denied that for the use of rice bran oil, the same has neces sarily to be pre treated first and rice bran fatty acid is required to be separated from glycerine. The appellants in the instant case have only brought in the rice bran fatty acid which has been obtained from rice bran oil by a process of pre treatment in one of their other factories. It is seen that the Govern ment of India have clarified vide their letter No. P/92/2/72 CH. III dated 18.7.74 that rice bran oil as such sometimes cannot be used directly and has to be subjected to pre treat ment before use in the manufacture of soap and that the exemption will be admissible in respect of rice bran oil even after pretreat ment for use in the manufacture of soap. Thus we find that the pre treatment of rice bran oil is required to be done as a matter of necessity for its use in the manufacture of soap. The short point therefore is whether such treatment should be done in the factory of the manufacturer or could be arranged to be done outside. In the scheme of Central Excise, the various concessions, levies etc., are in respect of products manufactured by a particu lar licencee in the manufacturing unit so licensed and the necessary mechanism of con trols and accountability is with reference to a particular licensee and the manufacturer. The eligibility to or the concessional assess ment of a product manufactured by the manufac turer has to be determined with reference to the particular manufacturer subject to the fulfilment of the conditions as may be set out in the rele 843 vant concessional notification. In the instant case, a verification will be required to be done in respect of the following: (1) The nature of the oil used whether rice bran oil or otherwise; (2) The quantum used; (3) the processes of pre treatment carried out on ,the rice bran oil and the fraction thereof used for the soap making. Now, if the rice bran oil has been pre treated outside the appellant 's factory, it is not possible for (the) jurisdictional authority to verify the facts in regard to above." The Tribunal observed that concessional rates are allowed as incentives for use of certain raw materials and these rates are determined after taking into consideration the economics of operation involving the use of the said material in the manufacturing process in the manufacturer 's factory. Holding that the notification did not envisage the use of rice bran fatty acid and it is the rice bran oil which is required to be used in the manufacture of soap for concessional assess ment purposes, the Tribunal dismissed the appeals of the assessee. Hence these appeals. We are of opinion that the view taken by the Excise Authorities as well as by the Tribunal proceeds upon too narrow an interpretation of the notification. It is true, as Mr. Ganguli contended, that an assessee claiming relief under an exemption provision in a taxing statute has to show that he comes within the language of the exemption. But, in trying to understand the language used by an exemption notification, one should keep in mind two important aspects: (a) the object and purpose of the exemption and (b) the nature of the actual process involved in the manufacture of the commodity in relation to which exemption is granted. So far as (b) is concerned, it is common ground before us that rice bran oil as such is not directly used in the manufac ture of soap. Rice bran oil contains glycerol and other impurities which have to be removed by a process of hydroly sis or hydrogenation and it is only the resultant purified rice bran oil that is actually used in the manufacture of soap. In fact, the Tribunal has given a clear finding that a pre treatment to rice bran oil is required to be done as a matter of necessity for its use in the manufacture of soap. 844 Thus even a factory which consumes rice bran oil in the manufacture of soap in its factory first converts the oil into hydrogenated oil or fatty acid and then manufactures soap out of the latter. So far as (a) is concerned, the object of the notification as even the Tribunal finds is to grant a concession to a manufacturer of soap who manufac tures soap from rice bran oil to a substantial extent and thus discourage the use of edible oils in the manufacture. If these two aspects are considered together, it is clear that the emphasis in the notification is not that rice bran oil should be used as raw material in the very factory which produces the soap. The requirement is that the soap manufac ture should, to a prescribed extent, be from rice bran oil as contrasted with other types of oil. The contrast is not between the use of rice bran oil as opposed to rice bran fatty acid or hydrogenated rice bran oil; the contrast is between the use of rice bran oil as opposed to other oils. That is the ordinary meaning of the words used. These words may be construed literally but should be given their fullest amptitude and interpreted in the context of the process of soap manufacture. There are no words in the notification to restrict it to only to cases where rice bran oil is directly used in the factory claiming exemption and to exclude cases where soap is made by using rice bran fatty acid derived from rice bran oil. The whole purpose and object of the notification is to encourage the utilisation of rice bran oil in the process of manufacture of soap in preference to various other kinds of oil (mainly edible oils) used in such manufacture and this should not be defeated by an unduly narrow interpretation of the language of the notification even when it is clear that rice bran oil can be used for manufacture of soap only after its conversion into fatty acid or hydrogenated oil. The position will perhaps become clearer if we consider a case where an assessee manufactures soap out of hydroge nated rice bran oil (which process of hydrogenation, again, is akin to the process of hydrolysis which yields rice bran fatty acid). The assessee will then be clearly entitled to the exemption under the notification inasmuch as the hydrog enated rice bran oil does not cease to be rice bran oil. See in this connection: Tungabhadra Industries Ltd. vs C.T.O., ; and Collector of Central Excise vs Jayant Oil Mills etc. ,(CA 729 of 1983 and 2479 of 1987, decided by this Court on 31.3.89). The answer cannot be different where rice bran oil is treated to yield rice bran fatty acid before soap is manufactured even if it be assumed that, unlike hydrogenated oil the fatty acid is, commercially speaking, a different commodity. We are, therefore, of opinion that, construing the notifications literally but reasonably in the light of the process of manufacture is explained by the Tribunal, the soap manufactured by 845 the assessee is "soap made from indigenous rice bran oil" and is entitled to the exemption under the notifications to the extent permissible thereunder. Reference was made, in the course of the arguments before us, to a tariff advice issued as early as July, 1974 by the Ministry of Finance in relation to the notification of 1972. It reads as under: "I am directed to invite a reference to this Ministry 's notification No. 46/72 C.E. dated the 17th March, 1972, which grants exemption from duty on soap which is produced from rice bran oil or from a mixture of rice bran oil and other oils. It has been brought to the notice of this Ministry that the benefit of exemption is not being allowed by the Central Excise Officers where rice bran oil or oil mixture is hydrogenated or pre treated before the soap is produced. The matter has been considered in detail with the concerned authorities and keeping in view the technical opinion tendered by them that rice bran oil as such sometimes cannot be used directly and has to be pre treated before use in the manufac ture of soap, it is hereby clarified that the exemption will be admissible when the rice bran oil is, after processing or pre treat ment, used in the manufacture of soap. In this connection it may be stated that the exemption Notification does not preclude any processing or pre treatment including hydrogenation in the manufacture of soap if such processes are incidental and ancillary to the manufacturing operating." (Underlining ours) This circular clarifies that the exemption will be admissi ble when the rice bran oil after processing or pre treat ment that is to say, when hydrogenated rice bran oil or rice bran fatty acid is used in the manufacture of soap. But the counsel for the Union of India would have it that the circular postulates such exemption only where the pre treatment or processing is done is the same factory. He invites attention to the last sentence of the circular, underlined by us above. We do not think this is the correct interpretation of the circular. In the first place, it will be noticed that the circular does not specifically say that the pre treatment or processing should be in the same facto ry of the assessee. Secondly, no clarification by a circular or tariff advice is at all necessary to cover cases where the conversion from rice bran oil into rice bran fatty acid is done in the same factory for, to such a case, 846 the notification will clearly apply. If it had been the intention to pin down the concession to cases where the pre treatment or processing is part of the manufacturing process within the same factory, the last sentence would not have stated the obvious but would have read something like this: "In this connection it is emphasised that the exemption notification precludes any process ing or pre treatment, including hydrogenation in the manufacture of soap, except where such processes are incidental and ancilliary to the manufacturing operations. " The Tribunal has pointed out that the notification refers to the percentage of rice bran oil consumption and that, unless such oil is directly used in the factory, it will not be possible to work back, from the weight of fatty acid used by the assessee, the weight of rice bran ' oil out of which such acid had been obtained. There are two answers to this objection. One is that, if what we have stated is the correct interpretation of the notification, the mere fact that there may be some difficulty in ascertaining the weight of oil, cannot be a justification to refuse to give effect to that interpretation. The second is that a practi cal solution to this difficulty has in fact been evolved and that, too, in the case of the same assessee. Our attention has been invited to a circular issued by the Assistant Collector, Ernakulam II dated 23.6.77. This circular states that the matter had been considered pursuant to an appellate order passed in one of the cases relating to the same asses see and it had been decided to fix the formula for arriving at the correlation between rice bran oil on the one hand and hydrogenated rice bran oil or rice bran fatty acid on the other as below: (a) 100 M.T. of hydrogenated = 100 MT of rice bran oil rice bran oil (b) 100 M.T. of Fatty acid = 115 MT of raw rice bran oil The circular refers to the fact that the present assessee (in relation to its Cochin factory) had accepted the above said formula and that the formula as given above was, there fore, "finally fixed in arriving at the rice bran oil con tents of hydrogenated rice bran oil and of rice bran fatty paid for ascertaining the amount of exemption as per notifi cation nos. 45 and 46 of 1972". It is true that this is only a local instruction issued by certain assessing authorities in Cochin. It is being referred to only show that there is no insuperable difficulty in ascertaining the weight of rice bran oil that that has been converted into fatty acid and thus 847 entered the process of manufacture in the assessee 's factory particularly in view of the fact that even the process of conversion of rice bran oil into fatty acid or hydrogenated oil is carried but in a factory subject to excise jurisdic tion. The appellant has drawn our attention to certain ex tracts from a letter of the Ministry of Finance dated 6.4.76. It poses the problem thus: "A doubt has been raised whether rebate of Central Excise duty would be admissible under Notification No. 24 and 25/75 CE, dated 1 3 75 (predecessor Notification Nos. 45 and 46 of 1972) where rice bran oil and other minor oils are hydrogenated in one factory and sent to another factory for manufacture of soap. " The answer furnished is this: "The matter has been considered in the Minis try and it is felt that the purpose of rebate scheme of rice bran oil as well as other minor oils envisaged in the Notifications Nos. 24/75 and 25/75 (including their predecessor notifi cations) is to encourage the use of inedible oils in the manufacture of soap so as to relieve the pressure on edible oils. In Board 's letter F. No. 92/2/72 CX. 3 dated 18 7 74 and F. No. 92/6/74 CX. 3, dated 27 12 74, it was clarified that in respect of rice bran oil as well as other minor oils where such oils are subjected to various treatments, including hydrogenation, such treatment would not debar them from the rebate scheme in as much as such processing is essen tial in the process of manufacture of soap. As the notifications in question permit the rebate subject to identification of the oil as such, had the manufacturer placed the matter before the concerned Collector pointing out his practical difficulties, the Collector would have advised for suitable documentation (if the existing documentations are not enough) for the receipt, processing, movement and accounting of the oils for the concession in question. In the circumstances, it is felt that the benefit of rebate cannot be denied to the manufacturers for want of prescribing a satisfactory procedure, especially, when it is contended by the manufacturers that they have opted for 848 the rebate scheme, their factories are under excise control, they have sufficient documen tary evidence about the receipt, processing, movement, incorporation/use in the manufacture of soap. If, as contended by the manufactur ers, there is sufficient record maintained by them for excise purposes and the reasonable correlation is possible about the identity and use of such oils it would not be correct to deny the concession. In this connection, it is of relevance to mention that a problem of similar nature had arisen with reference to some other excisable product and the Law Ministry was also consulted. An extract of their opinion is appended. It is, therefore, requested that taking into account the local practical situations existing in his jurisdic tion, the Collector may prescribe suitable procedures for identification of such oils for a meaningful implementation of the Rebate Scheme. A copy of the Trade Notice issued in this regard by the Collector may be sent to DICCE under intimation to this Ministry. " Following this, trade notices were issued on 25.8.76 and 8.2.77 in certain central excise jurisdiction, the relevant portion of which reads thus: "A doubt has been raised whether the rebate on Central Excise Duty would be admissible under Notification No. 40/72 CE & 46/72 CE both dated 17.3.72 as amended, where the Rice Bran Oil and other Minor Oils are hydrogenated in one factory and sent to another factory for use in the manufacture of soap. It has been clarified that in respect of Rice bran oil and other Minor oils where such oils are subject to various treatment, including hydrogenation, such treatment would not debar them from the rebate scheme as envisaged in the above said Notifications. " The trade notice proceeds to set out the procedural safe guards to be followed in granting this relief which are unnecessary for our purpose. We endorse this as embodying the correct approach to the issue in this case. "This related to a claim of exemption in respect of ferti lisers (super phosphates) manufactured from sulphuric acid in a case where sulphuric acid was converted elsewhere into phosphoric acid and then used for the manufacture of the chemicals. 849 We are, therefore, of the view that the terms of the notification do not have the effect of excluding cases where the manufacture of soap is done out of rice bran oil but the entire process is not carried out by the assessee itself. The question which one has to ask is: does the assessee manufacture soap partly or wholly out of indigenous rice bran oil? and the answer, we think, can only be in the affirmative. We therefore hold that that the assessee is entitled to the exemption under the notifications referred to above and that the departmental authorities and the Tribunal erred in not granting the said exemption to the assessee. The appeals are, therefore, allowed. However, in the circumstances of the case, we make no order as to costs. R.N.J. Appeals allowed.

The petitioner appellant is engaged in the manufacture of various varieties of soaps. The dispute arose as to the eligibility of the appellants to the concession under rule 8(1) of the Central Excise Rule 1944 through Notification No. 46 of 1972 subsequently amended by Notification Nos. 153 of 1973 dated 24.7.73 of 25 of 1975 dated 1.3.75. Resolving the dispute as to the interpretation of rules whether rice bran fatty acid is different from the rice Bran Oil as held by the Tribunal the Court came to the conclusion that the view taken by the Excise authorities as well as by the Tribunal proceeded upon too narrow an interpretation of the notification and erred in not granting the exemption to the assessee. While allowing the appeals, this Court, HELD: Rice bran oil contains glycerol and other impuri ties which have to be removed by a process of hydrolysis or hydrogenation and it is only the resultant purified rice bran oil that is actually used in the manufacture of soap. [843G] A factory which consumes rice bran oil in the manufac ture of soap in its factory first converts the oil into hydrogenated oil or fatty acid and then manufactures soap out of the latter. [844A] In trying to understand the language used by an exemp tion notification one should keep in mind two important aspects; (a) the object and purpose of the exemption and (b) the nature of the actual process involved in the manufacture of the commodity in relation to which exemption is granted. [843F] Construing the notifications literally but reasonably in the light of 840 the process of manufacture as explained by the Tribunal, the soap manufactured by the assessee is "soap made from indige nous rice bran oil" and is entitled to the exemption under the notifications to the extent permissible thereunder. [844H 845A] The terms of the notification do not have the effect of excluding cases where the manufacture of soap is done out of rice bran oil but the entire process is not carried out by the assessee itself. [849A] Tungabhadra Industries Ltd. vs C.T.O., ; and Collector of Central Excise vs Jayant Oil Mills etc. , CA 729 of 1983 and 2479 of 1987) decided by this Court on 31.3.89, referred to.

Civil Appeal No. 2324 of 1980. Appeal by special leave from the judgment and order dated the 23rd April, 1979 of the Allahabad High Court in Civil Misc. Writ No. 2228 of 1979. Dr. L. M. Singhvi, and section K. Verma for the Appellant. Mrs. Shobha Dikshit for Respondent Nos. I & 2. section N. Kacker and B. R. Agarwala & P. G. Gokhale for Respondent No. 4. The Judgment of the Court was delivered by CHANDRACHUD, C. J. : The question which arises for consideration in this appeal is whether the appellant, Dr. R. K. 285 Khandelwal, is entitled to be admitted to the M. D. Course in Paediatrics of the Agra University and whether in denying him that opportunity, the State has violated any of his legal rights. The appellant passed his M.B.B.S. Examination from the section N. Medical College, Agra, in December 1976 and completed his internship in December 1977. Being desirous of prosecuting post graduate studies in Paediatrics, he took a year s house job in the Paediatrics Department of the section N. Medical College Hospital, which he completed in January 1979. He then applied for admission to the M. D. Course in Paediatrics for the academic year 1979 80. He was admitted to the D.C.H. Course but he was refused admission to the M.D. Course on two grounds: First, that amongst the applicants for the M. D. Course in Paediatrics there were four students who had secured higher marks than him in the M.B.B.S. Examination, and second, that on the basis of the 1:1 ratio between teachers and students, there were only four seats available for the post graduate course in Paediatrics. The appellant filed a writ petition in the High Court of Allahabad challenging the decision of the College by which he was denied admission to M.D. (Paediatrics). That petition was dismissed summarily by a Division Bench of the High Court on the ground that the relief of mandamus sought by the appellant could not be granted to him since he had failed to establish that any of his legal rights was violated. This appeal by special leave is directed against the High Court 's order dated April 23, 1979. The appellant, as stated earlier, was admitted to the D.C.H. Course after he had finished his house job in Paediatrics. His case is that for many years in the past, candidates who had passed the D.C.H. Examination were preferred for admission to the M. D. Course but that the University suddenly discontinued that practice, as a result of which he had to compete with others who had passed their M.B.B.S. Examination. There is no substance in this contention and in any case the appellant cannot make a grievance of a change in the practice for admission to the particular course. Admittedly, there was no rule at any time requiring that an applicant seeking admission to the M.D. Course in Paediatrics had to pass his D.C.H. Examination. All that is alleged is that such a practice was recognised over many years or at least, that such was the under standing of all concerned. Both the practice and the understanding have been denied on behalf of the College. But apart from that, 286 discontinuance of a mere practice cannot sustain a charge of injury to legal rights. The practice had not ripened into a rule and the University was under no obligation to admit only those who had passed their D.C.H. Examination. We also feel some difficulty on the facts before us in accepting the contention of the appellant that passing the D.C.H. Examination was a passport for admission to the M.D. Course. It may, at the highest, be said that it was easier for students to get admitted to the M.D. Course after passing the additional examination of D.C.H. after the M.B.B.S. Examination. The appellant applied for admission to the M.D. (Paediatrics Course for the academic year 1979 80. He had passed his M.B.B.S. Examination in December 1976. There were other students who had applied for admission to the M.D. Course in Paediatrics along with the appellant. Some of them had passed their M.B.B.S. Examination prior to December 1976 and had secured higher marks than the marks obtained by the appellant in the December 1976 Examination. The number of seats being limited, admissions were given according to merit and the four students who had secured highest number of marks were given preference to others regardless of the year in which they had passed their M.B.B.S. Examination. No one was admitted to the 1979 80 academic year for the M.D. Course in Paediatrics, who had secured lesser marks than the appellant. The four students who secured admission had obtained marks varying between 60.06% to 65.80% while the appellant had secured 58.56% marks only. He was sixth in order of merit amongst the applicants and there were only four seats available bearing in mind the ratio of 1:1 between the teachers and the students. Dr. Singhvi, who appears on behalf of the appellant, raised a further contention that the ratio 1:1 was relaxed from time to time by the University and that the appellant was discriminated against by the arbitrary refusal of the authorities to relax the ratio in his favour. We are prepared to accept that if there is a power to relax the ratio, that power must be exercised reasonably and fairly. It cannot be exercised arbitrarily to favour some students and to disfavour some others. But the difficulty in the way of the learned counsel is that this point of discrimination was not taken in the Writ Petition which was filed in the High Court, it was not argued in the High Court and is not even mentioned in the Special Leave Petition before us. The question as to whether the authorities have the power to relax the ratio and the further question as to whether that power has been exercised arbitrarily in this case raise new points 287 into which it is difficult for us to enquire for the first time. We are therefore unable to entertain the submission made by the counsel. The appellant has thus failed to make out a case of injury to any of his legal rights, for which reason the appeal must fail. The appeal is accordingly dismissed. But considering that under interim orders passed by this Court from time to time the appellant has appeared for the M.D. Examination on the completion of the Course, we hope that the University and the S.N. Medical College will take a sympathetic view of the appellant 's case and have his result declared. It may be mentioned that because of the interim orders passed by this Court directing the College and the University to admit the appellant to the M.D. Course in Paediatrics, the College cancelled the appellant 's admission to the D.C.H. Course. That may have been right because no student can do the D.C.H. Course and the M D. Course simultaneously. But the point of the matter is that if this Court were not to direct as an interim measure that the appellant should be allowed to prosecute his studies in M.D. Paediatrics (subject to the result of this Appeal), the appellant might have completed his D.C.H. Course and, subject to being admitted to the M.D. Course within a year or so from now he would have taken his M.D. Examination after passing the D.C.H. Examination. The authorities concerned will bear in mind that the appellant should not be placed in a worse position than he would have been in, had he not filed this appeal. Therefore, if the appellant has passed the examination, he should be declared to have passed it like any other student. He should not be subjected to any disadvantage for the reason that he was not entitled initially to be admitted to the M.D. Course in Paediatrics. If he has failed, he should be permitted to take the examination again (or again and again) in accordance with the rules of the University. Since the result of the other students, who had appeared for the M.D. Examination along with the appellant, was declared in February 1981, we hope that the appellant 's result would be declared forthwith. There will be no order as to costs. N.V.K. Appeal dismissed.

The appellant applied for admission to the M.D. (Paediatrics) Course for the academic year 1979 80. He had passed his M.B.B.S. Examination in December, 1976. There were other students who had applied for admission along with the appellant. Some of them had passed their M.B.B.S. Examination prior to December 1976 and had secured higher marks than the appellant. The number of seats being limited, admissions were given according to merit and four students who had secured the highest number of marks were given preference to others regardless of the year in which they had passed their M.B.B.S. Examination. The appellant filed a writ petition in the High Court challenging the E decision of the college by which he was denied admission. The petition was dismissed summarily by a Division Bench on the ground that the relief of mandamus could not be granted since the appellant had. failed to establish that any of his legal rights was violated. In the appeal to this Court it was contended on behalf of the appellant that: (a) For many years in the past candidates who had passed the D.C.H. Examination were preferred for admission to the M.D. Course but that the University suddenly discontinued that practice, as a result of which he had to compete with others who had passed their M.B.B.S. Examination, and (b) the ratio 1:1 between teachers and students was relaxed from time to time by the University and that the appellant was discriminated against by the arbitrary refusal of the authorities to relax the ratio in his favour. Dismissing the appeal, ^ HELD: The appellant has failed to make out a case of injury to any of his legal rights. Because of interim orders passed by this Court directing the College and the University to admit the appellant to M.D. Course in Paediatrics, the College cancelled the appellant 's admission to the D.C.H. Course. If the appellant has passed the M.D. Examination, he should be declared to have passed it like any other student. He should not be subjected to any disadvantage for the 284 reason that he was not entitled initially to be admitted to the M.D. Course in Paediatrics. If he has failed he should be permitted to take the examination again (or again and again) in accordance with the rules of the University. Since the result of the other students, who had appeared for the M.D. Examination along with the appellant, was declared in February, 1981 the appellant 's result to be declared forthwith. [287 B F] (a) There was no rule at any time requiring that an applicant seeking admission to the M.D. Course in Paediatrics had to pass his D.C.H. Examination. That such a practice was recognised over many years or that such was the understanding of all concerned has been denied on behalf of the College. Besides discontinuance of a mere practice cannot sustain a charge of injury to legal rights. The practice had not ripened into a rule and the University was under no obligation to admit only those who had passed their D.C.H. Examination. The appellant therefore cannot make a grievance of a change in the practice for admission to the M.D. Course. [285 G 286 B] In the instant case no one was admitted to the M.D. Course who had secured lesser marks than the appellant. He was sixth in order of merit and there were only four seats available. [286 E] (b) If there is a power to relax the ratio, that power must be exercised reasonably and fairly. It cannot be exercised arbitrarily to favour some students and to disfavour some others. [286 G] In the instant case this point of discrimination was not taken in the writ petition filed in the High Court, not argued in the High Court, and not even mentioned in the Special Leave Petition. The question as to whether the authorities have the power to relax the ratio and the further question as to whether that power has been exercised arbitrarily raise new points into which it is difficult to enquire for the first time. This plea cannot therefore be entertained. [286 H 287 A]

peaINo. 4235 of 1991. From the Judgment and Order dated 5.6.1987 of the Cal cutta High Court in original order No. 129 of 1985 and/915 of 1983. A.K. Ganguly, A.K. Chakraborty, A.D. Sikri and Ms. Mridula Ray for the Appellants. D.N. Mukherjee and Rathin Das for the Respondents. The Judgment of the Court was delivered by PUNCHHI, J. We are required in this matter to interplay some of the provisions of the Urban Land (Ceiling and Regu lation) Act, 1976 to determine whether the appellant herein had any excess vacant land. Probhavati Poddar (Proforma respondent herein) was the owner of two properties in the city of Calcutta being (i) premises No. P 290, C.I.T. Road, comprising 414.56 sq. of land of which 321 sq. was covered by a build ing, constructed thereon long before the coming into force of the Urban Land (Ceiling and Regulation) Act, 1976 (hereafter referred to as 'the Act '), with a dwelling unit therein, and (ii) property No. P 210, C.I.T. Scheme VII(M), Calcutta comprising 339.65 sq. of vacant land. Hereaf ter these would be referred to as the 'built up property ' and 'vacant property ' respectively. The exact date/period of the construction of the built up property is not available on the present record but the litigation has proceeded on the footing that it was constructed long before February 17, 1976, the day when the Act came into force in the State of West Bengal. The State 1egislatures of 11 States, including the State of West Bengal, considered it desirable to have a uniform legislation enacted by Parlia 506 ment for the imposition of ceiling on urban property for the country as a whole, and in compliance with clause (1) of Article 252 of the Constitution, passed a Resolution to that effect. Accordingly, the Urban Land (Ceiling and Regulation) Bill, 1976 was introduced in the Lock Sabha on January 28, 1976 covering all the Union Territories and the 11 resolving States. After the passing of the Bill by the Parliament, the Act came into force on February 17, 1976 at once. Later from time to time, the Act was adopted by some other States after passing Resolutions under Article 252(1) of the Constitu tion. The Act now apparently is in force in 17 States and all the Union Territories in the country. The primary object and purpose of the Act was to provide for the imposition of the ceiling on vacant land in urban ag glomerations, for the 'acquisition of such land in excess of the ceiling limit, to regulate the construction of buildings on such land and for matters connected therewith, with a view to preventing the concentration of urban land in the hands of a few persons and speculation and profiteering therein, and with a view to bringing about an equitable distribution of land in urban agglomerations to sub serve the common good, and in furtherance of the directive princi ples of Articles 39(B) & (C) of the Constitution. These features were .spelled out by this Court in Union of India etc. V.B. Chaudhary etc. [1979]3 SCR 802. That it is valid piece of legislation, save and except Section 27(1), and had received the protective umbrella of Article 31 C as it stood prior to its amendment by 42nd Amendment Act was held by this Court in Maharao Sahib Shri Bhim Singhji etc. vs Union of India & Others. [1981]1 SCC 166. "Appointed day" has been defined in Section 2 A of the Act. It means (i) in relation to any State to which the Act applies in the first instance, the date of introduction of the Urban Land (Ceiling and Regulation) Bill, 1976 in Par liament, and (ii) in relation to any State which adopts the Act under Clause (1) of Article 252 of the Constitution, the date of such adoption. In relation to the State of West Bengal, in which the town of Calcutta is situated, the "appointed day" is January 28, 1976. It is thus evident that between the appointed day and the date of enforcement of the Act, there is a 20 day 's gap. The Act ordains a ceiling limit of 500 sq. mtrs. for the urban agglomeration of Calcutta, as per item 15 of Category A in .Schedule I of the Act. Both the properties of Smt. Poddar,. the proforma respondent herein, thus became liable to be screened by the Authorities under the Act. Before hand on July 8, 1978, Smt. Poddar entered into an agreement with Smt. Meera Gupta, the appellant herein, to sell the vacant property on 507 terms entered. On November 23, 1978, the proposed vendor and the proposed vendee gave notice under Section 26 of the Act to the Competent Authority, appointed for the purpose of the proposed sale. On August 7, 1980, the competent authority in exercise of powers under Section 6(2) of the said Act, issued a notice under Section 6(1) thereof to Smt. Poddar directing her to file a statement in Form No. 1 on the basis that she held vacant land in the Calcutta Urban Area in excess of the ceiling limit of 500 sq. mtrs. Having got no response, a reminder was sent to her, but in vain. The Competent Authority thereafter initiated suomo to proceed ings against Smt. Poddar and sent her a draft statement on September 18, 1979, exercising powers under Section 8(1) of the Act intimating that she could submit her objection, if any, to the draft statement. It was specified in the said statement that she was tentatively required to surrender 254.21 sq. of land (figure arrived by totalling .414.56 sq. mtrs. of the built up property and 339.65 sq. mtrs. of the vacant property to 754.21 sq. mtrs, are substracting therefrom 500 sq. resulting in 254.21 sq. mtrs.). The objections of Smt. Poddar filed to the draft statement were rejected by the Competent Authority, who published the final statement under section 9 of the Act vesting the said 254.21 sq. of excess land in the State, and the same was communicated to Smt. Poddar on June 22, 1981. She preferred an appeal under Section 33 of the Act before the Special Secretary, Land and Land Reforms Department, Government of West Bengal, the Appellate Author ity under the Act, but the same was dismissed in default on January 18, 1983. Before hand the appellant herein filed suit No. 121 of 1981 against Smt. Poddar in the Calcutta High Court claiming specific performance of the agreement dated July 8, 1978. On August 21, 1981, a decree for specific performance was passed in favour of the appellant in the usual terms. Pursu ant to the said decree, the deed of conveyance in respect of the vacant property was executed in favour of the appellant on November 19, 1981 for a consideration of Rs.1,26,000/ paid over to Smt. Poddar. Possession of the vacant property was delivered to the appellant and necessary entries were made in the municipal and revenue registers. The appellant then got scent of the dismissal of the appeal of Smt. Poddar in default on July 2, 1983. The appel lant then filed a Review Petition before the Appellate Authority stating, inter alia, that she had become the owner of the vacant property and prayed for retrieval of the same from being treated as excess land in the hands of Smt. Podar. The Review Petition was rejected on August 10, 1983, which occasioned a petition under Article 226 of the Consti tution being filed by the appellant in the Calcutta 508 High Court on a variety of grounds. The Writ Petition was opposed on each and every ground. The learned Single Judge, before whom the writ petition was placed, taking aid from some observations in two decisions of this Court in Maharao Sahib Shri Bhim Singhji 's case (supra), and State of U.P. & Others vs L J. Johnson & Others, allowed the writ petition on November 27, 1984. On appeal by the State of West Bengal and its responding officers, a Division Bench of the High Court reversed the judgment and order of the Single Judge on June 5, 1987 in Appeal No. 129 of 1985, leading to this appeal by special leave at the instance of the appellant. The matter having come before a two Judge Bench of this Court, of which one of us was a member, on 28.7.1988, it was felt that lohnson 's case (supra) may have to be tested, and thus the matter was ordered to be heard by a larger Bench at least of three Judges. This is how the matter stands placed before us. As said at the outset, we have to interplay some of the provisions occurring in Chapter 3 titled as "Ceiling on Vacant Lands" in the Act. We shall presently set out those provisions which have a bearing in the case. But before we do that we do not wish to leave the impression that we have not viewed the statute as a whole. The endeavour on our behalf to construe the provisions has not left any part thereof altogether. So we proceed thenceforth to the interpretative process. Section 3 of the Act provides that except as otherwise provided in this Act, on and from the commencement of this Act, no person shall be entitled to hold any vacant land in excess of the ceiling limit in the territories to which this Act applies under sub section (2) of Section 1. Ceiling limit of vacant land in case of every person like the prece dessor in interest of the appellant is 500 sq. as set up under Section 4. Clauses (g) and (q) defining "vacant land" and "land appurtenant" and sub sections (9) and (11) of Section 4 which have precedence in engaging our attention are set out below, but without the Explanation to sub sec tion (11), for it is not relevant for our purpose: "2(g) "Land appurtenant", in rela tion to any building means (i) in an area where there are building regulations, the minimum extent of land required under such regulations to be kept as open space for the enjoyment of such building, which is no case shall exceed five hundred square meters; or (ii) in an area where there are no building regulations, an extent of five hundred square metres contiguous to the land oc 509 cupied by such building, and includes, in the case of any building constructed before the appointed day and with a dwelling unit therein, an additional extent not exceeding five hundred square metres of land, if any, contiguous to the minimum extent referred to in subclause (i) or the extent referred to in sub clause (ii), as the case may be; 2(q) "Vacant Land", means land, not being land mainly used for the purpose of agricul ture, in an urban agglomeration, but does not include (i) land on which construction of a building is not permissible under the building regula tions in force in the area in which such land is situated; (ii) in an area where there are building regulations, the land occupied by any building which has been constructed before, or is being constructed on, the appointed day with the approval of the appropriate authority and the land appurtenant to such building; and (iii) in an area where there are no building regulations, the land occupied by any building which has been constructed before, or is being constructed on, the appointed day and the land appurtenant to such building. 4(9) where a person holds vacant land and also holds any other land on which there is a building with a dwelling unit therein, the extent of such other land occupied by the building and the land appurtenant thereto shall also be taken into account in calculat ing the extent of vacant land held by such person. 4(11) For the removal of doubts it is hereby declared that nothing in sub sections (5), (6), (7), (9) and (10) shall be construed as empowering the competent authority to declare any land referred to in sub clause (ii) or sub clause (iii) of clause (q) of section 2 as excess vacant land under this Chapter. " To begin with "vacant land" as per the definition given in clause (q) of Section 2 means land as such, not being land mainly used for the put 510 pose of agriculture, but situated in an urban agglomeration. "Vacant Land", however, does not include, as per the defini tion, land of three categories. The first category is land on which construction of a building is not permissible under the building regulations in force in the area in which such land is situated. But this is a category with which we are not concerned in the instant case. Johnson 's case (supra) is of this category. The second category is of land occupied by any building in an area, where there are building regula tions, which has been constructed upon, or is under con struction on the appointed day, with the approval of the appropriate authority, and the land appurtenant to such building. This means that if the building stood constructed on the land prior to January 28, 1976, the land occupied under the building is not vacant land. It also covers the land on which any building was in the process of construc tion on January 28, 1976 with the approval of the appropri ate authority. That too is not "vacant land". Additionally, the land appurtenant to these two kinds of buildings is also not "vacant land". The third category likewise conditioned is of land occupied by any building in an area where there are no building regulations, which has been constructed before January 28, 1976 or is in the process of construction on such date, and the land appurtenant to these two kinds of buildings. The aforesaid three categories of lands would otherwise be "vacant land" but for the definitional exclusion. The specific non inclusion of these three categories of land is by itself an integral part of the definitional and function al sphere. The question that arises what happens to lands over which buildings are commenced after the appointed day and the building progresses to complete thereafter. On the appointed day, these lands were vacant lands, but not so thereafter because of the surface change. Here the skill of the draftsman and the wisdom of the legislature comes to the fore in cognizing and filling up the gap period and covering it up in the scheme of sub section (9) of Section 4. The visible contrast between "vacant land" and "any other land" held by a person on which there is a building with a dwell ing unit therein becomes prominent. The said "any other land" is reckoned and brought at par with the "vacant land" for the purpose of calculating the final extent of vacant land. It seems to us that the expression "vacant land" in the first portion of the provision connotes land minus land under buildings constructed or in the process of construc tion before and on the appointed day, and the expression "vacant land" in the latter portion of the provision con notes the sum total of "vacant land" of the first order and distinctly the "other land" on which is a building with a dwelling unit therein of which construction commenced after the appointed day, and the land appurtenant thereto. Such an interpretation is required by the conext 511 as otherwise the concept of the appointed day and the gap period would be rendered otiose. The legislature cannot be accused to have indulged in trickery or futility in giving something with one hand and taking it away with the other. "Any other land"in the sequence would thus mean any other built upon land except the one excluded from the expression "vacant land" on account of it being occupied by a building which stood constructed, or was in the process of construc tion, on the appointed day. Such interpretation of ours finds support from Section 5 of the Act which pursues and does not leave alone transfer of vacant land in the gap period. It provides as follows: "5. TRANSFER OF VACANT LAND (1) In any State to which this Act applies in the first in stance, where any person who had held vacant land in excess of the ceiling limit at any time during the period commencing on the appointed day and ending with the commencement of this Act, has transferred such land or part thereof by way of sale, mortgage, gift, lease or otherwise, the extent of the land so trans ferred shall also be taken into account in calculating the extent of vacant land held by such person and the excess vacant land in relation to such person shall, for the pur poses of this Chapter, be selected out of the vacant land held by him after such transfer and in case the entire excess vacant land cannot be so selected, the balance, or, where no vacant land is held by him after the trans fer, the entire excess vacant land, shall be selected out of the vacant land held by the transferee: Provided that where such person has trans ferred his vacant land to more than one per son, the balance, or, as the case may be, the entire excess vacant land aforesaid, shall be selected out of the vacant land held by each of the transferees in the same proportion as the area of the vacant land transferred to him bears to the total area of the land trans ferred to all the transferees. (2) Where any excess vacant land is selected out of the vacant land transferred under sub section (1), the transfer of the excess vacant land so selected shah be deemed to be null and void. (3) In any State to which this Act applies in the first instance and in any State which adopts this Act under clause (1) of Article 252 of the Constitution, no person holding vacant land 512 in excess of the ceiling limit immediately before the commencement of this Act shall transfer any such land or part thereof by way of sale, mortgage, gift, lease or otherwise until he has furnished a statement under Section 6 and a notification regarding the excess vacant land held by him has been pub lished under sub section (1.) of Section 10; and any such transfer made in contravention of this provision shall be deemed to be null and void." [Underlining ours]. The underlining is reflective of the scheme of the Act in as much as transfers of vacant land within the gap period are ignorable, and likewise, in our view, vacant land brought under construction of building by a person within the gap period is also ignorable for the purposes of calcu lating the extent of vacant land, so that the provisions of law are not defeated by human ingenuity. At this juncture, sub section (11) of Section 4 may be noticed. It provides removal of doubts declaring. inter alia, that nothing in sub section (9) shall be construed as empowering the competent authority to declare any land referred to in sub clause (ii) or sub clause (iii) of clause (q) of Section 2 as excess vacant land under this Chapter. Though this provision is not happily worded, yet when mean ingfully construed in the context, it means that a building which gets excluded by virtue of the definition of "vacant land" gets clothed with the protective cloak for not being reckoned again as any other land, over which there is a building with a dwelling unit therein. Sub section (11) of Section 4 means to convey that what is not vacant land under sub clauses (ii) and (iii) of clause (q) of Section 2 cannot go to add up as "vacant land" under sub section (9) of Section 4 by descriptive overlapping. If we wipe out the distinction of "vacant land" and "any other land" as demon strated in sub section (9) of section 4, we strangulate and destroy the spirit and life blood of the "appointed day" and the gap period. We would loathe giving such a construction and would rather opt for a construction which carries out the objectives of the Act, primary of which is to fix a ceiling limit on the holding of vacant lands, conditioned as they are on the appointed day, and as held on the date of the commencement of the Act. It would be worthwhile at this stage to take note of the expression "land appurtenant" as defined in Section 2(g). When related to any building in an area where there are building regulations, as well as in an area where there are no building regulations, the additional extent as permitted is based on the principle of contiguity. The expression applies to buildings constructed before the "appointed day" as well as to buildings, construction of which commenced before the "appointed day", and was in progress on that day. It, no doubt, applies to buildings, constructed thereafter too. 513 When we import this understanding to sub section (9) of Section 4, two different results discernably follow, based on the commencement of the construction. If the construction of a building with a dwelling unit therein had begun after the appointed day, then it is all the same "any other land" to be reckoned for calculating the extent of vacant land held by a person. And if the construction of a building with a dwelling unit therein on land had been completed or was in progress by and on the appointee day, then is not "any ' other land" to be reckoned for calculating the extent of vacant land held by a person. This is the interpretation which commends to us of sub section (9) of Section 4 as also of sub section (11) of Section 4 and the definitive expres sions used therein as explained and highlighted earlier. Applying that interpretation on the facts found by the High Court we hold that the built up property, which in any event had been built up prior to the commencement of the Act, and it is nobody 's case that construction thereof had begun after the "appointed day", is outside the purview of "vacant land". If that is excluded from being reckoned towards calculating the extent of vacant land held by the predeces sor in interest of the appellant, the vacant land in the vacant property cannot be declared excess for that is within the permissible limits. Even if no land is left as land appurtenant to the built up area, then 93.56 sq. mtrs, the remainder plus 339.65 sq. mtrs, of the unbuilt property would total up to the figure less than 500 sq. ; again within the permissible limit. Therefore, interpretation to the contrary of the dealt with provisions by the Division Bench of the High Court, bereft as it is of the concept of the appointed day and the gap period, would have to give way, meriting the acceptance of this appeal and setting aside of the judgment of the Division Bench of the High Court by issuing the necessary writ, direction and order so as to quash the entire proceedings towards declaring excess land in the hands of the appellant and her predecessor in title. We order accordingly. The interpretation we have put to the provisions pertinently relate to sub clause (ii) and (iii) of clause (q) of Section 2. This interpretation in express terms cannot apply to sub clause (i) of clause (q) of Section 2. Johnson 's case (supra) as said before, is a case under sub clause (i) of clause (q) of Section 2. In the instant case, there appears to be no occasion to test its correctness or even to dilate upon the judgments of the High Courts reported in AIR 1981 Madhya Pradesh 17, AIR 1984 Bombay 122 and AIR 1987 Allahabad 272, cited at the bar. As a result, this appeal is allowed. The appellant shall have her costs throughout. T.N.A. Appeal allowed.

The appellant 's predecessor in interest, respondent herein, was the owner of two properties consisting of a 'built up property ' and a 'vacant property ' in the city of Calcutta. The built up property comprised of 414.56 sq. mtrs. of land of which 321 sq. was covered by a build ing with a dwelling unit therein and the said property was constructed long before the Urban Land (Ceiling and Regula tion) Act, 1976 came into force. The second property com prised of 339.65 sq. of vacant land. The Act came into force on February 17, 1976 but under Section 2A of the Act the appointed day in relation to State of West Bengal was 28th January, 1976. Thus between the appointed day and the date of enforcement of the Act there was a 20 days ' gap. On 8th July, 1978 the respondent entered into an agree ment with the appellant to sell the vacant property. Since both the properties were covered by the Urban agglomeration as specified in category 'A ' in Scheduled 1 to the 1976 Act, under which the ceiling limit prescribed was 500 sq. , the appellant and the respondent gave a notice of the pro posed sale under Section 26 of the Act to the competent authority. The competent authority held that the respondent was holding 25421 sq. of land in excess of the ceiling limit. The excess land was determined by totalling 414.56 sq. of the built up property and 339.65 sq. mtrs. of vacant property to 754.21 sq. , and substracting 502 therefrom 500 sq.mtrs. resulting in 254.21 sq. mtrs. in excess of the ceiling limit. Accordingly the competent authority issued order vesting the excess land in the State. Against the decision of the competent authority the respond ent preferred an appeal before the Appellate Authority which was dismissed in default. In the meantime the appellant filed a suit against the respondent for specific performance of the agreement dated 8th July, 1978 which was decreed and consequently a deed of conveyance was executed in favour of the appellant and the possession of the property was also given to her. Subsequently the appellant came to know of the dis missal of the respondent 's appeal. Thereupon she filed a Review Petition before the Appellate Authority stating that she had become the owner of the vacant property and prayed for retrieval of the same from being treated as excess land in the hands of respondent which was dismissed. The appel lant filed a writ petition in the High Court and a Single Judge allowed the same. On appeal by State a Division Bench of the High Court reversed the judgment of the Single Judge. Against the decision of the Division Bench, appeal was filed in this Court. Setting aside the judgment of the Division Bench of the High Court and allowing the appeal, this Court, HELD: 1. The primary objective of the Urban Land Ceiling and Regulation Act, 1976 is to fix a ceiling limit on the holding of vacant lands, conditioned as they are on the appointed day, and as held on the date of commencement of the Act. [512 F] 2. Under Section 3 of the Urban Land (Ceiling and Regulation) Act, 1973 no person is entitled to bold any vacant land in excess of the ceiling limit. Ceiling limit of vacant land in case of every person like the predecessor in interest of the appellant is 500 sq. as set up under Section 4. [508 E F] 2.1 However, as per Section 2(g), 'Vacant land ' does not include land of three categories. The first category is land on which construction of a building is not permissible under building regulation in force in the area in which such land is situated. The second category is of land occu pied by any building in an area, where there are building regulations, which has 503 been constructed upon, or is under construction on the appointed day, with the approval of the appropriate authori ty, and the land appurtenant tO such building. Thus if the building stood constructed on the land prior to January 28, 1976, the land occupied under the building is not vacant land. It also covers the land on which any building was in the process of construction on January 28, 1976 with the approval of the appropriate authority. Additionally, the land appurtenant to these two kinds of buildings is also not "vacant land". The third category likewise conditioned is of land occupied by any building in an area where there are no building regulations, which has been constructed before January 28, 1976 or is in the process of construction on such date, and the land appurtenant to these two kinds of buildings. [510A D] 2.2 The expression "land appurtenant" as defined in Section 2(g) when related to any building in an area where there are building regulations as well as in an area where there are no building regulations reveals that the addition al extent as permitted is based on the principle of conti guity. The expression applies to buildings constructed before the "appointed day" as well as to buildings, con struction of which commenced before the "appointed day", and was in progress on that day. Therefore, if the construction of a building with a dwelling unit therein had begun after the appointed day, then it is all the same "any other land" to be reckoned for calculating the extent of vacant land held by a person. And if the construction of a building with a dwelling unit therein on land had been completed or was in progress by and on the appointed day, then it is not "any other land" to be reckoned for calculating the extent of vacant land held by a person. [512G H, 513A B] The built up property in question had been constructed prior to the commencement of the Act. Therefore, it is outside the purview of "vacant land". If that is excluded from being reckoned towards calculating the extent of vacant land held by the predecessor in interest of the appellant, the vacant land in the vacant property cannot be declared excess for that is within the permissible limits. Even if no land is left as land appurtenant to the built up area, then 93.56 sq. mtrs. the remainder plus 339.65 sq. of the unbuilt property would total up to the figure less than 500 sq. ; which is again within the permissible limit. Accordingly the entire proceedings towards declaring excess land in the hands of the appellant and her predecessor in title are quashed. [513C E] 504 State of U.P. & Or3. L.J. Johnson & Ors. , held inapplicable. Union of India etc. V.B. Chaudhary etc. ; ; Maharao Sahib Shri Bhim Singhji etc. vs Union of India & Ors., , referred to. Eastern Oxygen vs State AIR 1981 M.P. 17; Prabhakar Narhar Pawar vs State, AIR 1984 Bom. 122; State vs Radha Raman Aggarwal, AIR 1987 All. 272, cited. In the scheme of sub section (9) of Section 4 of the Act the visible contrast between "vacant land" and "any other land" held by a person on which there is a building with a dwelling unit therein is prominent. The said "any other land" is reckoned and brought at par with the "vacant land" for the purpose of calculating the final extent of vacant land. The expression "vacant land" in the first portion of the provision connotes land minus land under buildings constructed or in the process of construction before and on the appointed day, and the expression "vacant land" in the latter portion of the provision connotes the sum total of "vacant land" of the first order and distinctly the "other land" on which is a building with a dwelling unit therein of which construction commenced after the appointed day, and the land appurtenant thereto. Such an interpreta tion is required by the context as otherwise the concept of the appointed day and the gap period would be rendered otiose. The legislature cannot be accused to have indulged in trickery in giving something with one hand and taking it away with the other. "Any other land" in the sequence would thus mean any other built upon land except the one excluded from the expression "vacant land" on account of it being occupied by a building which stood constructed. or was in the process of construction, on the appointed day. [510F H, 511A B] 4. Section 5 is reflective of the scheme of the Act in as much as transfers of vacant land within the gap period are ignorable, and likewise, vacant land brought under construction of building by a person within the j gap period is also ignorable for the purposes of calculat ing the extent of vacant land, so that the provision of law are not defeated by human ingenuity. [512 BC] 5. Though Sub section (11) of Section 4 is not happily worded, yet when meaningfully construed in the context, it means that a building which 505 gets excluded by virtue of the definition of "vacant land" gets clothed with the protective cloak for not being reck oned again as any other land, over which there is a building with a dwelling unit therein. This provision means to convey that what is not vacant land under sub clauses (ii) and (iii) of clause (q) of Section 2 cannot go to add up as "vacant land" under sub section (9) of Section 4 by descrip tive overlapping. To wipe out the distinction of "vacant land" and "any other land" as demonstrated in sub section (9) of section 4 is to strangulate and destroy the spirit and life blood of the "appointed day" and the gap period. [512 D F]

87 of 1957. Petition under article 32 of the Constitution of India for enforcement of fundamental rights. B. D. Sharma, for the petitioner. N. section Bindra, R H. Dhebar and T. M. Sen, for the respondents. March 7. The Judgment of the Court was delivered by MUDHOLKAR, J. In this petition under article 32 of the Constitution the petitioner contends that the provisions of the (XXXI of 1950) and in particular those of section 2 (d) and sub section (4) of section 40 are unconstitutional. According to him the effect of the order passed against him by the Custodian of Evacuee Properties under sub section (4) of section 40 of the Act is to take away his 191 property without the authority of law. He further contends that the order of the Custodian amounts to discrimination in practice against the petitioner. These are the two main heads under which the arguments advanced before us could be classified. The relevant facts may now be stated. The petitioner purchased 195 51 acres of land in the former Bhopal State from one Babu Rehmatullah on June 23, 1950, for a consideration of Rs. 3,500. Rehmatullah was declared to be an intending evacuee by the Assistant Custodian of Evacuee Property. Eventually he left India for Pakistan on June 20, 1951. On June 12, 1951, the Assistant Custodian of Evacuee Property issued a notice to the petitioner to show cause why the land which he had purchased from Rehmatullah should not be declared to be "evacuee property". After hearing the petitioner the property was declared to be evacuee property on August 8, 1951. The petitioner challenged that order in appeal as well as in revision as provided in the Act but was unsuccessful. A writ petition preferred by him before the Judicial Commissioner, Bhopal, was dismissed in limine on July 14, 1954. He has, therefore, come up to this Court under article 32 of the Constitution. The first point pressed 'before us by Mr. B. D. Sharma, on behalf of the petitioner is that the provisions of the Evacuee Property Act and particularly those of sections 2 (d) and 40 (4) are unconstitutional, because they enable the State to take away property without paying any compensation therefore as required by article 31 (2) of the Constitution. The short answer to this contention is that the provisions of a law made in pursuance of any agreement entered into between the Government of India and the Government of any other country or otherwise With respect to property declared by law to be evacuee property will not be affected by the provisions of cl. 2 of article 31. This is clear from the provisions of article 31(5)(b)(iii) which rules is thus: "Nothing in clause (2) shall affect 192 (b) the provisions of any law which the State may hereafter make (iii) in pursuance of any agreement entered into between the Government of the Dominion of India or the Government of India and the Government of any other country, or otherwise, with respect to property declared by law to be evacuee property. Mr. Sharma, however, contends that the protection afforded by the aforesaid clause must be limited to a law which itself declares any property to be evacuee property and not to a law which empowers an authority to declare any property as evacuee property. We cannot accept the contention. The words "property declared by law to be evacuee property" would necessarily include property which could be declared as evacuee property. A law relating to evacuee property would concern itself with laying down the criteria for determining what property is to be considered as evacuee property and could not be expected to specify the particular properties which are to be treated as evacuee properties. The protection afforded by the constitutional provision which we have quoted above is not restricted as suggested by Mr. Sharma but extends to a law which provides for the determination of the criteria for declaring property to be evacuee property. The next argument of learned counsel is that the property in question is not evacuee property and that the provisions of article 31(1) of the Constitution are a bar against taking it away. It is difficult to appreciate the argument. What article 31(1) prohibits is "deprivation of property save by authority of law". No doubt the petitioner can say that he is deprived of his property because of the declaration made by the Custodian that it is evacuee property. But then this declaration has been made in pursuance of a law enacted by Parliament. If, as contended by him, we had held that the law is unconstitutional the position would have been different. The next contention of learned counsel is that cls. (a) and (c) of section 40, sub section (4) are ultra vires because 193 they confer arbitrary power upon the Custodian. The reason for raising the contention is that an application made by the petitioner to the Custodian under section 40 for confirming the sale in his favour was rejected by him on the ground that the evacuee did not act , in good faith in effecting the sale. Sub section (4) of section 40 P.reads thus: "The Custodian shall hold an inquiry into the application in the prescribed manner and may reject the application, if the is of opinion that: (a) the transaction has not been entered into in good faith or for valuable consideration, or (b) the transaction is prohibited under any law for the time being in force, or (c) the transaction ought not to be confirmed for any other reason. " We are concerned here only with cl. (a) of section 40(4) to which the Custodian resorted and not with cl. We would, therefore, limit our remarks to el. Subsection (4) of section 40 enables the Custodian to hold an inquiry regarding the genuineness or validity of a transaction sought to be confirmed and cl. (a) empowers him to refuse to confirm it if he finds that it was not entered into in good faith. According to learned counsel the words "good faith" are vague and "slippery" and do not furnish any standard or a norm which has to be conformed to by the Custodian. Apart from the fact that the words "good faith" occur in a number of statutes and have acquired a definite meaning in courts of law, it may be pointed out that the power conferred by sub section (4) of section 40 is in the nature of a judicial power and, therefore, the absence of a standard for the determination of the question would not render the provision unconstitutional. Learned counsel wanted to contend that the absence of good faith on the part of the transferee was not sufficient and could not be regarded as a ground for refusing recognition to the transfer and that unless it is shown that the transferee was also lacking in good faith the transfer had to be confirmed under sub section (4) of section 40. He, however, did not press the contention 194 when it was pointed out to him that in Rabia Bai vs The Custodian General of Evacuee Property (1), this Court has upheld the order of the Custodian refusing to confirm the transfer on the ground that the evacuee had effected it in bad faith. The last contention of learned counsel is that he has been discriminated against by the Custodian in the matter of confirmation of the transaction. He said that prior to the sale of the land to him by Rehmatullah, the latter had sold a house to some nurses and that sale was found to be for inadequate consideration but in spite of that it was confirmed by the Custodian while the sale in his favour, though found to be for an adequate consideration was not confirmed. We would repeat that the order of the Custodian is a judicial order and merely because he may have gone wrong in dealing with one case we cannot hold that the petitioner has been discriminated against. The petition is wholly without basis and is accordingly dismissed without costs. Petition dismissed.

The petitioner purchased some land from R. R. was declared to be an intending evacuee and be left for Pakistan. The Assistant Custodian issued a 'notice to the petitioner to show cause why the land should not be declared to be evacuee property, and after hearing the petitioner he declared the land to be evacuee property. An appeal and a revision against the order were unsuccessful. The petitioner also applied to the Custodian under section 40 Of the , for confirmation of the sale but his application was rejected under section 40(4)(a) on the ground that the evacuee did not act in good faith in effecting the sale. The petitioner contended that section 2(d) of the Act defining evacuee property and section 40(4) empowering the custodian to reject an application for confirmation violated article 31(2) as they enabled the State to take away property without the authority of law. Held, that the provisions Of SS. 2(d) and 40(4) were not affected by article 31(2) in view of article 31(5)(b)(iii) of the Constitution. The protection of article 31 (5)(b)(iii) was not limited to a law which itself declared any property to be evacuee property but extended to a law which empowered an authority to declare any property as evacuee property and laid down the criteria for the declaration. Section 40(4)(a) of the Act which empowered the Custodian to reject an application for confirmation on the ground that the transaction had not been entered into in good faith could not be challenged as conferring arbitrary powers on the Custodian. The power was in the nature of a judicial power and the absence of a standard for the determination of the question could not render the provision unconstitutional.

ivil Appeal No. 1020 of 1975. (Appeal by Special Leave from the Judgment and Order dated the 18 4 1975 of the Maharashtra State Co op. Appel late Court in Appeal No. 54 of 1975.) J. L. Nain, U. R. Lalit, and V. N. Ganpure, for the appel lant. V.M. Tarkunde, Sharad Manohar, P.H. Parekh and Miss Manju Jetley, for respondent No. 1. M.C. Bhandare, Mrs. section Bhandare, N.S. Narasimhan, K.C. Sharma, ,A. K. Mathur and ,4. K. Sharma, for respondent No. 2. 343 The Judgment of the Court was delivered by RAY, C.J. This appeal by special leave is from the judgment dated 18 April 1975 of the Maharashtra State Co operative Appellate Court. The question for consideration in this appeal is whether a mortgagor can exercise his right of redemption after a mortgagee under an English Mortgage with power to sell mortgaged property without the intervention of the court gives notice to the mortgagor to sell the mortgaged property by public auction and sells it by public auction. The appellant is the auction purchaser. The respondents are Flora Co operative Housing Society in liquidation the mortgagors (hereinafter referred to as the Society) and the Maharashtra Co operative Housing Finance Society Ltd., the mortgagee (hereinafter referred to as the mortgagee). In 1964 the Society was registered as a Housing Society with 12 members. The paid up capital of the Society was Rs.21,000/ . The Society wanted 12 flats to be constructed in one structure of ground and two upper floors. The Society purchased plot No. 153 in Santa Cruz at Bombay, measuring 1002 sq. yards. The price was Rs.1,02,000/ . In 1966 the Society mortgaged the land and the incomplete structure in favour of the mortgagee. The mort gage was for the sum of Rs.70,000/ . It was an English mortgage. In 1968 the mortgagee advanced a further sum of Rs.42,000/ . In 1966 Fair Deal Builders entered into a contract with Society to build. The work was stopped. Thereafter in 1967 the Society entrusted the work to Maharaja Builders. In 1968 the contract with Maharaja Builders was terminated. The work was given in 1969 to Kamal Construction Company, who abandoned it in incomplete stage. On diverse dates between 29 August 1967 and 29 November 1970, notice was given by the mortgagee to the Society for non payment to the mortgagor and to sell the property by public auction. On 9 March 1971 the Assistant Registrar of Co opera tive Societies, Maharashtra, appointed a Special Liquidator of the Society under section 102 of Maharashtra Co operative Societies Act, 1960. The Assistant Registrar communicated the order of appointment liquidator to the mortgagee on 22 April 1971. The order of appointment of a liquidator was published in Maharashtra Government Gazette on 29 April 1971. The mortgagee advertised through Government auc tioner for public auction of the property. The public auction was held on 14 April 1971. The claim was for Rs.1,22,888.22 paise. The appellant was declared the highest bidder for Rs.1,31,001/ . The terms of sale inter alia were that 25 per cent was to be paid in advance and the balance in 30 days. The sum of Rs.33,000/ was paid as 6 1546SCI/76 344 25 per cent advance and the balance purchase price of Rs.98,001/was paid to attorneys of the mortgagee. The auction purchaser took possession on 17 April 1971. On 13 August 1971 the Society filed a dispute before the Officer on Special Duty under the Maharashtra Co operative Societies Act against the auction purchaser and the mortga gee for injunction against completing sale. The Society obtained an ex parte injunction restraining transfer. On 29 September 1971, the interim injunction was vacated. Thereafter the Society filed an appeal against the said order before the Appellate Tribunal. In the meantime the appellant filed a writ petition in the Bombay High Court under Article 227 of the Constitution. On 16 June 1972 there was an interim order by the High Court in the writ petition. The Society undertook not to dispose of property until disposal of dispute. Both par ties were allowed to keep watchmen. The Society borrowed a sum of Rs.1,31,000/ and paid the same to the mortgagee on 15 October 1972. On 16 January 1975 the Officer on Special Duty delivered judgment. He held that the dispute was maintain able under section 91 of the Maharashtra Co operative Socie ties Act. The Society was held not competent to challenge the auction sale held on 14 April 1971. It was also held that the validity of auction was not affected. The mortgagee was held entitled to exercise power of sale as a secured creditor without being affected by the winding up order against the Society. It was also held that the mortgagee did ' not commit any breach of the statutory provisions of section 69 of the . The sale was pot vitiated. It was found that there was no irregularity at the auction and there is no ground for setting aside the sale. The society was entitled to redeem the proper ty because the conveyance was not complete. The auction purchaser filed before the Maharashtra State Cooperative Appellate Court an appeal against the said order. In appeal the plaint was allowed to be amended and prayer for redemption was allowed to be introduced. On 18 April 1975 the Maharashtra State Cooperative Appellate Court dismissed the appeal and held that the dispute as initiated by the Society fell within the ambit of section 97 of the Maharashtra Cooperative Societies Act. The Appel late Court further held that there was no complete sale within the meaning of section 69(3) of the and the equity of redemption was therefore not lost. It was further held that the auction price was grossly inadequate. The auction sale was not a sale after a fair competition. The Mortgage Deed provided inter alia as follows : 345 "it is hereby agreed and declared that it shall be lawful for the mortgagees at any time without any further consent on the part of the mortgagors to sell the said mortgaged premises . . The aforesaid power shall be deemed to be a power to sell or concur in selling the said mortgaged premises in default of payment of the mortgage money without the intervention of the court within the meaning of section 69 of the . " Clauses (7), (8) and (33) in the Conditions of Sale may be referred to. Clause (7) provided as follows. Upon payment of the balance Of the purchase price, the purchaser shall be enti tled to a conveyance from the vendors. The vendors shall in the conveyance of the property purchased by purchaser give the usual covenant required of a limited owner against encumbrances. The vendors shall give no other covenant required of an absolute of full owner. The vendors shall not be required to procure the consent of the mortgagors or of any other person in the conveyance. Clause (8) was as follows. After payment of the balance of the purchase money the purchaser shall be entitled to the rents and profits of the said property. The vendors as the mortgagees are not in possession of the property and will not do anything to deliver possession of the proper ty to the purchaser. The vendors as the mortgagees shall not be able to give vacant or symbolic possession of the property to the purchaser. On payment of the balance of the purchase price the purchaser shall at his own cost be at liberty to take such steps as the purchaser may deem neces sary for obtaining possession of the property from the mortgagors. Clause (33) provided as follows. If the mortgagors shall deposit all the amounts due to the vendors as mortga gees in court or pay the same to the vendors or their attor neys between the date of sale and the completion thereof and if as a result thereof the vendors have to reconvey the property to them or if the vendors cannot thus proceed with the sale and the sale is not completed on that account the vendors shall return the said deposit to the purchaser without any interest and/or costs and the vendors as such mortgagees shall not be held liable for any damage. Counsel for the appellant advanced these contentions. First, under section 69 of the a mortgagor confers on the mortgagee a power of sale through Court Or without intervention of court. The power of sale is of the entire legal estate of the mortgagor. Second, when such a power is conferred it is agency coupled with interest under section 202 of the , the agency cannot be revoked without payment to mortgagee. Third,if the power is acted upon revocation even on payment cannot nullify acts pursuant to powers. Reliance was placed on sections 203 and 204 of the . Fourth, if the act done pursuant to power is that the property is put up for sale and it is knocked down it is an act done by the mortgagee for mortgagor In 346 other words it is as if an act done by the mortgagor. The, sale pursuant to the power is a subsequent act within the meaning and this subsequent act will extinguish the mortgagor 's right of redemption. Fifth, in a suit for specific performance by auction pur chaser the purchaser will be entitled to specific perform ance because it is a sale by mortgagor. Counsel for the appellant relied on two English deci sions. These are: Waring (Lord) vs London and Manchester Assurance Co. (1), and Property & Bloodstock Ltd. vs Emer ton(2) in support of the propositions that the mortgagor 's right to redemption would be extinguished when the mortgagee exercised the power of sale and the third party entered into a binding contract to purchase the property. The English decisions are based on the provisions of the English Law of Property Act. The provisions create a statu tory power of sale, which gives to a mortgagee power to sell the mortgaged property, and it means that the mortgagee has power to sell out and out by private contract or by auction, and subsequently to complete the conveyance. The English decisions are that if a mortgagee exercises power under section 100(1)(i) of the Law of Property Act, 1925, to sell the mortgaged property by public auction or by private contract it is binding on the mortgagor before completion unless it is proved that he exercised it in bad faith. It was said in the Property & Bloodstock case (supra) that the contract for sale by the mortgagees to the pur chaser precludes the mortgagor from his right of redemp tion pending completion even if the property is sold subject to one or more conditions. The English decision naturally notices distinction between condition precedent and the terms of contracts of sale, namely, conditions dealing with matters of title for carrying out the contract. The mere fact that the label "condition" happens to be attached to conditions does not preclude its being in the latter catego ry of "condition" or matter of title. The condition that the sale is subject to the reversioner 's licence being obtained where necessary. is held in the English decision to be commonly regarded as no more than a term of the contract relating to title. The provisions in the relevant to the purpose of present appeal are sections 54, 60 and 69. Under section 54 of the , sale is a transfer of ownership in exchange for a price paid or promised or part paid and partpromised. Such transfer in the case of tangible immovable property of the value of one hundred rupees and upwards, or in the case of a rever sion or other intangible thing can be made only by a regis tered instrument. A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. An English Mortgage is defined in section 58(e) of the . Where the mortgagor binds himself to repay the mortgage money on a certain date, and transfers the mortgaged pro (1) (1935) Chancery 310. (2) (1968) L.R. Chancery 94. 347 perty absolutely to the mortgagee, but subject to a proviso that he will retransfer it to the mortgagor upon payment of the mortgagemoney as agreed, the transaction is called an English mortgage. The Rights and Liabilities of Mortgagor are dealt with in section 60 of the . It is that at any time after the principal money has become due, the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgagemoney, to require the mortgagee (a) to deliver to the mortgagor the mortgage deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee, (b) where the mortgagee is in possession of the mortgaged property to deliver possession thereof to the mortgagor and (c) at the cost of the mortgagor either to re transfer the mortgaged property to him or to such third person as he may direct, or to execute and to have registered an acknowledgement in writing that any right in derogation of his interest transferred to the mortgagee has been extinguished. There is a proviso that the right conferred by this section has not been extinguished by the act of the parties or by decree of a Court. The right conferred by section 60 of the Trans fer of Property Act is called a right to redeem. Therefore, the said section 60 provides for a right of redemption provided that the right has not been extinguished by the act of parties. Section 69 of the deals with mortgagees ' power of sale. Under the said section 69(1)(c), a mortgagee has power of sale without the intervention of the Court where power is conferred by the mortgage deed and the mortgaged property or any part thereof was on the date of the execution of the mortgage deed, situate within the towns of Calcutta, Madras, Bombay or in any other town or area which the State Government, may, by notification in the official Gazette, specify. The principal question in this appeal is whether the right to redemption has been extinguished by any act of the parties. The English decisions are based on the provisions of the Law of Property Act, 1925. In England sale is ef fected by the contract of sale, and in India an agreement for sale is not a sale or transfer of interest. In England, a mortgagee gets an equitable interest in the property. Under the English doctrine a contract of sale transfers an equitable estate to the purchaser. The Court does not assist the mortgagor by granting him a remedy unless there is collusion on the part of the mortgagee. In India there is no equity or right in property created in favour of the purchaser by the contract between the mortgagee and the proposed purchaser. In India, there is no distinction between legal and equitable estates. The law of India knows nothing of that distinction between legal and equitable property in the sense in which it was under stood when equity was administered by the Court of Chan cery in England. Under the Indian law, there can be but one owner that is, the legal owner. See Rani Chhatra Kumari vs Mohan Bikram (1) (1) (1931) 58 I.A. 279. 348 A contract of sale does not of itself create any inter est in, or charge on, the property. This is expressly declared in section 54 of the . See Rambaran Prasad vs Ram Mohit Hazra(1) & Ors. C) The fidu ciary character of the personal obligation created by a contract for sale is recognised in section 3 of the and in section 91 of the Trusts Act. The personal obligation created by a contract of sale is de scribed in section 40 of the as an obligation arising out of contract and annexed to the owner ship of property, but not amounting to, an interest or easement therein. In India, the word "transfer" is defined with reference to the word "convey". The word "transfer" in English law in its narrower and more usual sense refers to the transfer of an estate in land. Section 205 of the Law of Property Act in England defines: "Conveyance" includes a mortgage, charge, lease, assent, vesting declaration, vesting instru ment. The word "conveys" in section 5 of the transfer of Property Act is used in the wider sense of conveying owner ship. The right of redemption which is embodied in section 60 of the is available to the Mortga gor unless it has been extinguished by the Act of parties. The combined effect of section 54 of the Transfer of Proper ty Act and section 17 of the Indian Registration Act is that a contract for sale in respect of immovable property of the value of more than one hundred rupees without registration cannot extinguish the equity of redemption. In India it is only on execution of the conveyance and registration of transfer of the mortgagor 's interest by registered instru ment that the mortgagor 's right of redemption will be extin guished. The conferment of power to sell without interven tion of the Court in a Mortgage Deed by itself will not deprive the mortgagor of his right to redemption. The extinction of the right of redemption has to be subsequent to the deed conferring such power. The right of redemption is not extinguished at the expiry of the period. The equity of redemption is not extinguished by mere contract for sale. The mortgagor 's right to redeem will survive until there has been completion of sale by the mortagee by a registered deed. In England a sale of property takes place by agreement but it is not so in our country. The power to sell shall not be exercised unless and until notice in writing requir ing payment of the principal money has been served on the mortgagor. Further section 69(3) of the Transfer of Proper ty Act shows that when a sale has been made in professed exercise of such a power, the title of the purchaser shall not be impeachable on the ground that no case had arisen to authorise the sale. Therefore, until the sale is complete by registration the mortgagor does not lose right of redemp tion. It is erroneous to suggest that the mortgagee is acting as the agent of the mortgagor in selling the property. The mortgagor exercises his right under a different claim. The mortgagee 's right is different from, (1) ; 349 the mortgagor 'section The mortgagee exercises his right under a totally superior claim which is not under the mortgagor, but against him. In other words, the sale is against the mort gagor 's wishes. Rights and interests of the mortgagor and the mortgagee in regard to sale are conflicting. In view of the fact that only on execution of convey ance, ownership passes from one party to another it cannot be held that the mortgagor lost the right of redemption just because the property was put to auction. The mortgagor has a right to redeem unless the sale of the property was complete by registration in accordance with the provisions of the Registration Act. The decision in Abraham Ezra Issac Mansoor vs Abdul Latiff Usman(1) is correct law that the right to redeem a mortgage given to a mortgagor under section 60 of the , is not extinguished by a contract of sale of the mortgaged property entered into by a mortga gee in exercise of the power of sale given to him under the mortgage deed. Until the. sale is completed by a registered instrument, the mortgagor can redeem the mortgage on payment of the requisite amount. The Madras decision reported in Meenakshi Velu & Ors. vs Kasturi Sakunthala & Ors.(2) on which counsel for the appellant relied is contrary to the view expressed in Ellappa Naiker and others vs Sivasubramania Maniagaran,(3) and the aforesaid Bombay decision. We are entirely in agreement with the Bombay decision. The Madras decision Meenakshi Velu & Ors. vs Kasturi Sakun thala & Ors. (2) which holds a contrary view on which coun sel for the appellant relied is wrong. For the foregoing reasons, the appeal is dismissed with costs to respondent no 1. P.H.P. Appeal dismissed. (1)I.L,R, (2) 1.1 .R, (1967) 3 Madras 161. (3) (1936) 71 Madras Iaw Journal 607.

In 1964, respondent No. 1 Society was registered as a Housing Society. The Society wanted 12 plots to be con structed for its 12 members. The Society, therefore, pur chased a plot of land. In 1966, the Society mortgaged the land and the incomplete structure in favour of respondent No. 2. In March, 1971, the Special Liquidator of the Socie ty was appointed under section 102 of the Maharashtra Co operative Societies Act, 1960. The mortgagee after demand ing the dues from the mortgagor advertised the public auc tion for the sale of the property. In the auction sale the appellant was declared as the highest bidder. The auction purchaser took the possession of the land and the incomplete structure. Society filed a dispute before the Officer on Special Duty under the Maharashtra Co operative Societies Act against the auction purchaser and the mortgagee praying for an injunction against the completion of the sale. The Society in the meanwhile paid the mortgage money to the mortgagee. The Officer on Special Duty delivered his judg ment in January 1975 and held that the Society was entitled to redeem the property because the conveyance was not com plete. The appellant filed an appeal before the Maharashtra State Co operative Appellate Court. In the appeal, plaint was allowed to be amended and a prayer for redemption was allowed to be introduced. The appellate Court held that there was no complete sale within the meaning of section 69(3) of the and the equity of redemption was, therefore, not lost and that the auction price was grossly inadequate and that the sale was not after a fair competition. One of the conditions of auction sale was that if the mortgagor deposited the mortgage money in court between the date of the sale and completion thereof and if as a result thereof the mortgagee was to reconvey the property to the mortgagor the auction purchaser Would be entitled to the refund of the amount paid without any inter est and/or cost. In an appeal by Special Leave the appellant contended: (1) When under section 69 of the a mortgagor confers on the mortgagee a power of sale through court or without intervention of court, the power of sale extends to the entire legal estate of the mortgagor. (2) When such a power is conferred it is agency coupled with interest under section 202 of the . If the power is acted upon revocation even on payment of mortgage money cannot nullify acts already done pursuant to the said powers. (3) Knocking down at an auction sale by the mortgagee pursuant. to the power of sale extinguishes the mortgagor 's right of redemption. (4) In a suit for specific performance by auction pur chaser, the purchaser will be entitled to specific perform ance because it is a sale by mortgagor. Dismissing the appeal, 342 HELD: (1) Under section 69(1)(c) a mortgagee has power to sell without intervention of the court where power is con ferred by the mortgage deed and the mortgaged property or any part thereof was on the date of the execution of the mortgage deed situated in certain big towns. [347D E] (2) In India the word "transfer" is defined with refer ence to the word ,"convey". The word "transfer" in English law in its narrower and more usual sense refers to the transfer of an estate in the,land. Section 205 of the Law of Property Act in England defines "conveyance as including mortgage, charge, lease, assent vesting declara tion, vesting instrument". The word "conveys" in section 5 of the and section 17 of the Indian Registration Act is that contract for sale in respect of immovable property of the value of more than Rs.100 without registration cannot extinguish the equity of redemption. In India it is only on execution of the conveyance and regis tration of transfer of the mortgagor 's interest by regis tered instrument that mortgagors right of redemption will be extinguished. The conferment of power to sell without intervention of the Court in a mortgage deed by itself will not derrive the mortgagor of his right to redemption. The extinction of the right of redemption has to be subsequent to the deed conferring such power. The right of redemp tion is not extinguished at the expiry of the period. The equity of redemption is not extinguished by mere contract for sale. [348B, D E] Abraham Ezra Issac Mansoor vs Abdul Latif Usman I.L.R. 1944 Bombay 549, approved. Meenakshi Velu & Ors. vs Kasturi Sakunthala & Ors. I.L.R. , overruled. Ellappa Naiker and Ors. vs Sivasubramania Manisaran , approved. (3) Under the English doctrine, a contract of sale transfers an equitable estate to the purchaser. In India there is no equity or right in property accrued is favour of the purchaser by the contract between the mortgagee and the proposed purchaser. In India there is no distinction be tween legal and equitable estates. In India there can be but one owner i.e. legal owner. [347G H] Rani Chhotra Kumari vs Mohan Bikram (1931) 58 I.A. 279 and Rambaran Prasad vs Ram Mohit Hazra & Ors. (1967) I SCR 293, followed. (4) Under section 100(1)(i) of the Law of Property Act, 1925, if a mortgagee exercises power to sell the mortgaged proper ty by public auction or by private contract it is binding on the mortgagor before completion of the sale unless it is proved that the power was exercised in bad faith. The English decisions are based on the said provision of the English Law of Property ,Act and, therefore, they are not applicable to India. [346 B D] Waring (Lord) vs London and Manchester Assurance Co. (1935) Chancery 310 and Property & Bloodstock Ltd. vs Emer ton (1968) L.R. Chancery 94 distinguished.

Appeal No. 475 of 1960. Appeal by special leave from the Award dated March 31, 1960, of the Industrial Tribunal, Bombay, in Reference (I. T.) No. 227 of 1959. M. C. Setalvad, Attorney General for India, G. B. Pal and J. B. Dadachanji, for the appellant. I. N. Shroff, for the respondents. December 15. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. This appeal by special leave arises from an industrial dispute between the appellant, the Alembic Chemical Works Co. Ltd., and the respondents, its workmen. The said dispute related to a single demand made by the respondents with regard to leave. This demand consisted of three parts, (a) one month 's privilege leave with full salary and dearness allowance on completion of eleven months service in a year with a right to accumulate upto six months, (b) one month 's sick leave with full salary and dearness allowance for each year of service with right to accumulate for the entire period of service, and (c) every workman should be entitled to take leave in proportion to the number of days he is in service of the company at the time of his application for the same. This dispute was referred by the Government of Bombay for adjudication before the Industrial Tribunal under section 10(1)(d) of the XIV of 1947. The Tribunal considered the contentions raised by the appellant against the respondents ' demands, took into account awards or agreements between employers and their employees in comparable concerns and made its award. In regard to privilege leave the Tribunal has ordered that leave should be granted to the staff members covered by the reference as follows: Privilege leave upto 3 . 16 days as at present completed years of service per year. Up to 9 completed years. 22 days per year. And thereafter . One month for every 11 months of service. 299 The award allows accumulation of privilege leave upto three years. As regards sick leave, the Tribunal has ordered that the appellant should give its staff covered by the present award 15 days sick leave in a year with full pay and dearness allowance with a right to accumulate upto 45 days. It has also directed that no medical certificate should be demanded if sick leave for three days or less is asked for. In regard to the third item of demand concerning leave in proportion the Tribunal has made appropriate direction which it is unnecessary to set out for the purpose of this appeal. Before the Tribunal the main contention raised by the appellant was in regard to the propriety and reasonableness of the demand and in regard to the practice prevailing in comparable concerns. Before this Court, however, the provision made by the award in regard to privilege leave has been attacked mainly on the ground that the Tribunal had no jurisdiction to make such an award having regard to the provisions of section 79 of the (63 of 1948) (hereafter called the Act). It is urged that section 79 of the Act has made exhaustive and self contained provisions with regard to the granting of annual leave with wages to the employees to whom the said Act applies, and the effect of section 79 is to introduce standardisation in the matter of leave; which means neither the employer voluntarily, nor an Industrial Tribunal by its award, can add to the leave prescribed by the, said section. In the matter of leave section 79 is a complete code, and no additions to the said leave can be made either by a contract or by an award. It is common ground that the respondents are governed by the pro visions of the Act. This point was not raised before the Tribunal, but since it is a point of law which arises on admitted facts we have permitted the learned Attorney General to argue it before us. The Act was first enacted in 1934 as Act 25 of 1934. Since then it has been amended from time to time. Its main object is to consolidate and amend the law regulating labour in factories. For the purpose of determining which concerns and which employees 300 would be governed by the Act section 2(m) and (1) define "factory" and "worker" respectively. Even a broad view of the scheme of the Act and a perusal of its provisions would clearly indicate that the Act is a beneficent measure and its policy is to make reasonable provisions for the preservation of health of the workmen, their safety and their welfare. With that object in view, the Act has made provisions for the regulation of working hours of adults, has regulated the employment of young persons, and has also provided for annual leave with wages to the workmen. The amendments made in the relevant provisions of the Act from time to time indicate that the Act has been pursuing its beneficent policy slowly but steadily and is attempting to provide for the workmen better and larger amenities in their employment. It is in the light of this obvious policy and object of the Act that we have to decide the question raised before us by the appellant. Section 79(1) occurs in Chapter VIII which deals with annual leave with wages. It provides thus: "79. Every worker who has worked for a period of 240 days or more in a factory during a calendar year shall be allowed during the subsequent calendar year, leave with wages for a number of days calculated at the rate of (i). if an adult, one day for every twenty days of work performed by him during the previous calendar year; (ii). if a child, one day for every fifteen days of work performed by him during the previous calendar year. Explanation 1 For the purpose of this sub section (a) any days of lay off, by agreement or contract or as permissible under the standing orders; (b) in the case of a female worker, maternity leave for any number of days not exceeding twelve weeks; and (c). the leave earned in the year prior to that in which the leave is enjoyed; shall be deemed to be days on which the worker 301 has worked in a factory for the computation of the period of 240 days or more, but he shall not earn, leave for these days. " This section has 11 other sub sections which deal with different aspects and make relevant provisions in regard to annual leave with wages. It is not disputed that the award purports to make provisions for privilege leave in excess of the annual leave sanctioned by section 79. Can the Industrial Tribunal direct the appellant to provide such additional privilege leave to its employees?; in other words, does section 79 purport to standardise annual leave with wages so that no departure from the said standard is permissible either way? The appellant 's contention is that except for pre existing awards, agreements, contracts or except for pre existing law no departure from the standardised provision is permissible after section 79 was enacted. This argument raises the question of construing section 79 in the light of the other relevant provisions of the Act. It may be conceded that the provisions made by section 79 are elaborate, and in that sense may be treated as self contained and exhaustive. It is also clear that section 79(1) does not use the expression "not more than or not less than" as it might have done if the intention of the Legislature was to make its provisions correspond either to the minimum or the maximum leave claimable by the employees; but even so, when section 79(1) provides that every worker shall be allowed leave as therein prescribed, the provision prima facie sound,% like a provision for the minimum rather than for the maximum leave which may be awarded to the worker. If the intention of the Legislature was to make the leave permissible under section 79(1) the maximum to which a workman would be entitled, it would have used definite and appropriate language in that behalf. We are, therefore, inclined to think that even on a plain construction of section 79(1) it would be difficult to accede to the argument that it prescribes standardised leave which inevitably would mean the maximum permissible until section 79(1) itself is 302 Even on the basis that section 79(1) is capable of the construction sought to be placed on it by the appellant, the question would still remain whether the Raid construction should be preferred to the alternative construction which, as we have just indicated, is reasonably possible. The answer to this question must be in the negative for two reasons; first, having regard,to the obvious policy and object of the Act, if section 79(1) is capable of two constructions that construction should be preferred which furthers the policy of the Act and is more beneficial to the employees in whose interest the Act has been passed. It is well settled that in construing the provisions of a welfare legislation courts should adopt what is sometimes described as a beneficent rule of construction; but, apart from this general consideration about the policy and object of the Act, sections 78 and 84 occurring in the same Chapter as section 79 clearly indicate that section 79(1) is not intended to standardise leave provisions as contended by the appellant, and that is the second reason why the appellant 's argument cannot be accepted. Let us then consider the provisions of Bs. 78 and 84. Section 78(1) provides that the provisions of Chapter VIII shall not operate to the prejudice of any right to which a worker may be entitled under any other law, or under the terms of any award, agreement or contract of service. There is a proviso to this sub section which lays down that when such award, agreement or contract of service provides for longer annual leave with wages than provided in this Chapter the worker shall be entitled only to such longer annual leave. Section 78(2) exempts specified workers from the operation of Chapter VIII. The first difficulty which this section raises against appellant 's argument is that it undoubtedly recognises exceptions to the leave prescribed by section 79(1). It is well known that standardisation of conditions of service in industrial adjudication generally does not recognise or permit exceptions; if the hours of work are standardised, for instance, or the wage structure is standardised, it is intended to make hours of work and wages uniform in the whose industry brought 303 under the working of standardisation Standardisation thus inevitably means levelling up of those whose terms and conditions of service were less favourable than the standardised ones, and levelling down those of such others whose terms and conditions were more favourable than the standardised ones. That being so, if section 79(1) intended to standardise annual leave with wages it would normally not have made provisions in regard to exceptions as section 78(1) obviously does. Besides, the scope and extent of the exceptions recognised by section 78(1) are decisively against the appellant 's construction of section 79(1). The learned Attorney General has strenuously contended that the saving provision of section 78(1) applies only to existing law and existing awards, agreements or contracts of service; in other words, his argument is that the Legislature has deliberately decided to except pre existing arrangements and in that sense it is a departure from the usual concept of standardisation. In our opinion, the assumption that section 78(1) is confined to existing arrangements is plainly inconsistent with a fair and reasonable construction of the said provision. When s.78(1) refers to any other law it could not have been intended that it is only to existing laws that the reference is made and that the idea underlying the provision was that no law can be passed in future which would grant more generous leave to the employees. Such a restriction on the legislative activities of the appropriate Legislatures cannot obviously have been intended. If the reference to law is not confined only to existing law there is no reason why reference to any award, agreement or contract of service should be similarly circumscribed or limited. We feel no difficulty in holding that what section 78(1) protects are laws, awards, agreements or contracts of service which were then existing or which would come into existence later; that is to say section 78(1) does not affect preexisting arrangements and does not also prohibit future arrangements which would be more generous than section 79(1). A law may be passed making more generous provisions, or agreements or contracts may 304 be entered into or awards made with the same result. If that be the true position section 78(1) clearly negatives the theory that section 79(1) provides for standardisation of annual leave with wages. The provisions of section 84 would also lead to the same result. Section 84 provides that where the State Government is satisfied that the leave rules applicable to workers in a factory provide benefits which in its opinion are not less favourable than those for which Chapter VIII makes provision it may by written order exempt the factory from all or any of the provisions of Chapter VIII subject to such conditions as may be specified in the order. Now, the power to exempt factories has to be exercised having regard to the effect of the totality of the benefits which may be afforded to the workers by their respective factories. This power to exempt also necessarily postulates the existence of better amenities than those guaranteed by Chapter VIII, and that means that if a factory provides better leave amenities to its employees, the State Government may in the interest of the employees exempt the factory from the operation of this Chapter. The scope of section 84, like the scope of section 78, cannot be limited only to the more favourable benefits which may be existing at the date when the Act was passed. What is true about the existing benefits would be equally true about the benefits which may be granted by an employer to the employees in future. Let us illustrate what the con sequence would be if the appellant 's argument is accepted. Take the case of an employer who has been exempted under section 84 on the ground that the benefits of leave conferred by him on his employees are more favourable to them. In such a case, the employer may make his benefits still more favourable after exemption is accorded to him; but an employer who has already not provided more favourable benefits would be effectively precluded from making any such provisions in future. It is difficult to imagine that such a consequence could have been intended by the provisions of this welfare legislation. 305 The history of the amendments made in the relevant provisions of the Act also indicates that the Act has been gradually making more liberal provisions in ' the interest of workmen to whom it applies. In the original Act as it was passed (25 of 1934) section 34 provided for weekly holiday but no provision was made for holidays with pay. When the said Act was amended by Act 3 of 1945, section 49A which is equivalent to present section 78(1) without the proviso was inserted; and section 49B provided, inter alia, that every worker who has completed a period of twelve months continuous service in a factory shall be allowed during the subsequent period of twelve months holidays for a period of ten days. That is how provision for holidays came to be made. By the ; 'amending Act 63 of 1948, section 78 with the present proviso was enacted; and section 79 made a provision for annual leave with wages. While making provision for annual leave with wages the section then prescribed a minimum of ten days; subsequently, by amending Act 25 of 1954, section 79 as it stands at present was enacted; and in section 78 the word "annual" has been added to qualify leave in the proviso. We have thus briefly referred to some changes made in the Act from time to time in order to show that subsequent amendments have sought to make the provisions more liberal. There is one more point which may incidentally be mentioned whilst we are considering the amendments made in the Act from time to time. Section 49A which broadly corresponds to section 78 of the present Act saved other laws and terms of any award, agreement or contract of service just as section 78(1) does. Now, if the said section is construed on the lines which the appellant wants us to construe section 78(1) it would only be arrangements existing at the date when the said amending Act came into force on January 1, 1946, that would be protected and saved, and nothing that happened either by way of legislation or by way of awards or contracts subsequent to the said date would attract the provisions of the said section 49A or section 78 which subsequently took its place. This obviously is not 39 306 intended by the Legislature which incidentally shows that section 78(1) cannot be confined to existing arrangements or laws, but takes within its sweep future laws, agreements, contracts or awards. Therefore, the challenge to the validity of the award based on the assumption that section 79(1) provides for standardised award of annual leave with wages fails. Then it is urged that the provision made by the award for privilege leave introduces discrimination between the clerical staff covered by the present reference and operatives covered by the earlier awards made by the same Tribunal. We were told that operatives had made a similar claim for privilege leave before the same Tribunal, and the said claim had been rejected. The argument is that the provision for privilege leave made by the present award would create discontent amongst the operatives to whom similar leave has been denied, and that would disturb industrial peace. We are not impressed by this argument. It is not seriously disputed that a distinction has generally been made between operatives who do manual work and clerical and other staff; in fact the appellant 's standing orders themselves make different relevant provisions for the two categories of its employees. It is also not disputed that in practice such distinction is made by comparable concerns, and awards based on the same distinction are generally made in respect of the two separate categories of employees. We are, therefore, unable to appreciate the argument that in granting privilege leave to the present staff the Tribunal has either overlooked its earlier award or has made a decision which suffers from the vice of discrimination. The practice prevailing in comparable concerns and the trend of awards both seem to show that a distinction is generally made between the two categories of employees, and since the said distinction is perfectly justifiable no question of discrimination can arise. It is then argued that making liberal provisions for privilege leave and sick leave are really opposed to the modern trend in industrial thought, and so such liberal awards should be discouraged and corrected. 307 There is no doubt that when industrial adjudication seeks to do social justice it cannot ignore the needs of national economy; and so in considering matters of leave, either in the form of privilege leave or sick leave, the Tribunals should not ignore the consideration that unduly generous or liberal leave provisions would affect production and obviously production of essential commodities is in the interest of not only the employers and the employees but also of the general community; but it is difficult for us to accept the argument that we should make suitable modifications in the provisions made by the award in regard to privilege leave or sick leave. These are matters primarily for the Industrial Tribunal to consider and decide. The Tribunal is more familiar with the trend prevailing in comparable concerns, and unless it appears that the impugned provisions cannot be sustained on any reasonable ground or that they mark a violent departure from the prevailing practice or trend, we would be reluctant to interfere with the decision of the Tribunal. After all, in deciding what ,would be a reasonable provision for privilege leave or sick leave, the Tribunal has to take into account all relevant factors and come to its own decision. As we have already indicated, in making the present award the Tribunal has considered previous decisions which were relevant and prevailing agreements in comparable concerns. We have carefully considered the criticism made by the learned Attorney General against the provisions contained in the award, but we are not satisfied that a case has been made out for interference in an appeal under article 136. The result is the appeal fails and is dismissed with costs. Appeal dismissed.

It is not correct to say that section 79 of the , standardises the grant of annual leave with wages to employees to whom the Act applies and that neither the employer by voluntary agreement nor the Industrial Tribunal by its award can vary that standard. It is well settled that in construing the provisions of a welfare legislation, such as the Act in question which has for its object the preservation of the health, safety and welfare of the workmen, courts should apply the rule of beneficent construction and moreover, sections 78 and 84 of the Act put it beyond doubt that section 79(1) is not intended to standardise annual leave with wages by providing the maximum. Rightly construed section 78(1) of the Act not only protects past laws, awards, agreements and contracts but also those that are to come into existence in the future and does not prohibit a more generous agreement than that prescribed by section 79(1). Likewise the scope of section 84 of the Act which, in empowering the State to exempt a factory from all or any provisions of Ch. VIII of the Act, contemplates better amenities than those guaranteed by the Chapter, cannot be limited to benefits existing at the date of the Act but must also apply to future benefits which an employer may grant to his employees. Consequently, in a case where the Industrial Tribunal, on a consideration of awards and agreements between employers and employees in comparable concerns, awarded annual leave in excess of what is prescribed by section 79(1), Held, that the award was not open to challenge. Held, further, that the distinction generally made between operatives doing manual work and clerical and other staff is perfectly justifiable and so the award of privilege leave to the clerical staff could not be said to be discriminatory. Although the Industrial Tribunals in awarding privilege leave or sick leave must not fail to consider their effect on production and so on the interest of the community in general, this Court would be reluctant under article 136 of the Constitution to interfere with an award unless its provisions are unsustainable on any reasonable grounds and make a violent departure from the practice and trend prevailing in comparable concerns. 38 298

minal Appeal No. 185 of 1957. Appeal by special leave from the judgment and order dated the 6th December, 1955, of the Punjab High Court (Circuit Bench) at Delhi, in Criminal Revision No. 122 D of 1955, arising out of the judgment and order dated July 29, 1955, of the First Additional Sessions Judge, Delhi, in Cr. A. No. 367/55. Mohan Behari Lal and Eluri Udayarathnam, for the appellant. N. section Bindra and R. H. Dhebar, for the respondent. September 15. The Judgment of the Court was delivered by SUBBA RAO J. This appeal by special leave is directed against the order of the High Court of Punjab (Circuit Bench), Delhi confirming the conviction of the appellant and the sentence passed on him by the 757 Magistrate, First Class, Delhi, under section 6(1 A) of the (XVII of 1933) (hereinafter called " the Act "). Jethanand, the appellant herein, was prosecuted, along with another, in the Court of the Magistrate, First Class, Delhi, under section 6(1 A) of the Act for possessing a wireless transmitter in contravention of the provisions of section 3 of the Act, and was sentenced to six months rigorous imprisonment. On appeal, the learned First Additional Sessions Judge, Delhi, upheld the conviction but reduced the sentence to the period of imprisonment already undergone plus a fine of Rs. 500. On revision, the High Court confirmed both the conviction and the sentence. On an application filed for special leave, this Court gave the same, but limited it to the question of sentence. Learned Counsel raised before us the following contentions: (1) section 6(1 A) of the Act was repealed, and, therefore, neither the conviction nor the sentence thereunder could be sustained; and (2) if section 6(1 A) of the Act was repealed, this Court in limiting the appeal to the question of sentence only went wrong, for, if that section was not on the statute book at the time of the alleged commission of the offence, not only the sentence but also the conviction thereunder would be bad. Both the contentions raised turn upon the same point. The different steps in the argument may be stated thus: In the Act XVII of 1933, as it originally stood, there was no specific provision making the possession of wireless transmitter an offence. By the Indian Wireless Telegraphy (Amendment) Act, 1949 (XXXI of 1949) (hereinafter called the " 1949 Act"), section 6(1 A) was inserted in the Act, whereunder the possession of a wireless transmitter was constituted a separate offence. The amending Act was repealed by the Repealing and Amending Act, 1952 (XLVIII of 1952) (hereinafter called the " 1952 Act "), with the result that on the date of the alleged commission of the offence the said section was not on the statute book. If that was the legal position, the limitation on the leave granted by this Court would result in an 96 758 anomaly, namely, that the conviction would stand but the sentence would be quashed. The argument so presented appears to be plausible, but, in our view, not sound. There is a real justification for this Court limiting the scope of the special leave. The High Court by mistake cited in its judgment the provisions of section 6(1) of the Act instead of section 6(1 A) thereof. If the conviction was under section 6(1), the maximum sentence permissible on the first offence thereunder was only fine which may extend to Rs. 100. Presumably on the assumption that the conviction could be sustained under section 6(1), even if section 6(1 A) was not on the statute book there may be justification for this view, as the words it wireless telegraphy apparatus " in section 6(1) are comprehensive enough to take in " wireless telegraphy transmitter " this Court gave leave limited to the question of sentence. The inconsistency, if any, was the result of the appellant 's presentation of his case at that stage, and he cannot now be allowed to take advantage of his default to enlarge the scope of the appeal. That apart, there are no merits in the contention. At the outset it would be convenient to read the relevant provisions of the three Acts: The . section 3 : Save as provided by section 4, no person shall possess wireless telegraphy apparatus except under and in accordance with a licence issued under this Act. section 6(1): Whoever possesses any wireless telegraphy apparatus in contravention of the provisions of section 3 shall be punished in the case of the first offence, with fine which may extend to one hundred rupees, and, in the case of a second or subsequent offence, with fine which may extend to two hundred and fifty rupess. The Indian Wireless Telegraphy (Amendment) Act, 1949. section 5. Amendment of section 6, Act XVII of 1933. In section 6 of the said Act, * * * 759 (ii) after sub section (1), the following sub section shall be inserted, namely: "(1A) whoever possesses any wireless transmitter in contravention of the provisions of section 3 shall be punished with imprisonment which may extend to three years, or with fine which may extend to one thousand rupees, or with both." REPEALING AND AMENDING ACT, 1952. section 2: The enactments specified in the First Schedule are hereby repealed to the extent mentioned in the fourth column thereof The First Schedule Year No. Short title Extent of repeal (1) (2) (3) (4) 1949 XXXI The Indian Wireless Telegraphy The whole (Amendment) Act, 1949. section 4: The repeal by this Act of any enactment shall not affect any other enactment in which the repealed enactment has been applied, incorporated or referred to; * * * The substance of the aforesaid provisions may be stated thus: The Act of 1949 inserted section 6 (1 A) in the Act of 1933. The 1949 Act was repealed by the 1952 Act, but the latter Act saved the operation of other enactments in which the repealed enactment has been applied, incorporated or referred to. The first question that arises for consideration is whether the amendments inserted by the 1949 Act in the 1933 Act were saved by reason of section 4 of the 1952 Act. The general object of a repealing and amending Act is stated in Halsbury 's Laws of England, 2nd Edition, Vol. 31, at p. 563, thus: "A statute Law Revision Act does not alter the law, but simply strikes out certain enactments which have become unnecessary. It invariably contains elaborate provisos. " In Khuda Bux vs Manager, Caledonian Press Chakravartti, C.J., neatly brings out the purpose and (1) A.I.R. 1954 Cal. 760 scope of such Acts. The learned Chief Justice says at p. 486: " Such Acts have no Legislative effect, but are designed for editorial revision, being intended only to excise dead matter from the statute book and to reduce its volume. Mostly, they expurgate amending Acts, because having imparted the amendments to the main Acts, those Acts have served their purpose and have no further reason for their existence. At times inconsistencies are also removed by repealing and 'amending Acts. The only object of such Acts, which in England are called Statute Law Revision Acts, is legislative spring cleaning and they are not intended to make any change in the law. Even so, they are guarded by saving clauses drawn with elaborate care,. It is, therefore, clear that the main object of the 1952 Act was only to strike out the unnecessary Acts and excise dead matter from the statute book in order to lighten the burden of ever increasing spate of legislation and to remove confusion from the public mind. The object of the Repealing and Amending Act of 1952 was only to expurgate the amending Act of 1949, along with similar Acts, which had served its purpose. The next question is whether section 4 of the Act of 1952 saved the operation of the amendments that had been inserted in the Act of 1933 by the repealed Act. The relevant part of section 4 only saved other enactments in which the repealed enactments have been applied, incorporated or referred to. Can it be said that the amendments are covered by the language of the crucial words in section 4 of the Act of 1952, namely, applied, incorporated or referred to". We think not. Section 4 of the said Act is designed to provide for a different situation, namely, the repeal of an earlier Act which has been applied, incorporated or referred to in a later Act. Under hat section the repeal of the earlier Act does not affect the subsequent Act. The said principle has been succinctly stated in Maxwell on Interpretation of Statutes, 10th Edition, page 406: Where the provisions of one statute are, by reference, incorporated in another and the earlier 761 statute is afterwards repealed the provisions so in corporated obviously continue in force so far as they form part of the second enactment. " So too, in Craies on Statute Law, 3rd Edition, the sama idea is expressed in the following words, at p. 349: " Sometimes an Act of Parliament, instead of expressly repeating the words of a section contained in a former Act, merely refers to it, and by relation applies its provisions to some new state of things created by the subsequent Act. In such a case the is rule of construction is that where a statute is incorporated by reference into a second statute, the repeal of the first statute by a third does not affect the second ". The Judicial Committee in Secretary of State for India in Council vs Hindusthan Co operative Insurance Society, Ltd. (1) endorsed the said principle and restated the same, at p. 267, thus: " This doctrine finds expression in a common form section which regularly appears in the amending and repealing Acts which are passed from time to time in India. The section runs: " The repeal by this Act of any enactment shall not affect any Act. . . in which such enactment has been applied, incorporated or referred to." The independent existence of the two Acts is therefore recognized; despite the death of the parent Act, its offspring survives in the incorporating Act. Though no such saving clause appears in the , their Lordships think that the principle involved is as applicable in India as it is in this country. " It is, therefore, manifest that section 4 of the 1952 Act has no application to a case of a later amending Act inserting new provisions in an earlier Act, for, where an earlier Act is amended by a later Act, it cannot be said that the earlier Act applies, incorporates or refers to the amending Act. The earlier Act cannot incorporate the later Act, but can only be amended by it. We cannot, therefore, agree with the view expressed by the Punjab High Court in Mohinder Singh vs Mst. (1) L.R. 58 I.A. 259. 762 Harbhajan Kaur (1) and in Darbara Singh vs Shrimati Karnail Kaur(2)that section 4 of the Repealing and Amending Act of 1952 applies to a case of repeal of an amending Act. This legal position does not really help the appellant, for the case on hand directly falls within the four corners of section 6 A of the (X of 1897). The above section reads: "Where any Central Act or Regulation made after the commencement of this Act repeals any enactment by which the text of any Central Act or Regulation was amended by the express omission, insertion or substitution of any matter, then, unless a different intention appears, the repeal shall not affect the continuance of any such amendment made by the enactment so repealed and in operation at the time of such repeal." As, by the amending Act of 1949, the text of the Act XVII of 1933, was amended by the insertion of 6 (1 A) therein, the repeal of the amending Act by the 1952 Act did not affect the continuance of the amendment made by the enactment so repealed. It is said that for the application of section 6 A of the , the text of any enactment should have been amended; but in the present case the insertion of section 6 (1 A) was not a textual amendment but a substantial one. The text of an enactment, the argument proceeds, is the phraseology or the terminology used in the Act, but not the content of that Act. This argument, if we may say so, is more subtle than sound. The word " text ", in its dictionary meaning, means " subject or theme ". When an enactment amends the text of another, it amends the subject or theme of it, though sometimes it may expunge unnecessary words without altering the subject. We must, therefore, hold that the word " text " is comprehensive enough to take in the subject as well as the terminology used in a statute. Another escape from the operation of section 6 A of the is sought to be effected on the basis of the words " unless a different intention (1) I.L.R. 1955 Punj. (2) 763 appears ". The repealing Act does not indicate any intention different from that envisaged by the said section. Indeed, the object of the said Act is not to give it any legislative effect but to excise dead matter from the statute book. The learned Counsel placed before us the historical background of the amending Act with a view to establish that the intention of the legislature in passing the said Act was to expurgate section 6 (1 A) from the statute as it was redundant and unnecessary. It is said that the (XIII of 1885) provided for the offence covered by section 6 (1 A), and, therefore, the legislature though, by the Act of 1948, inserted the said section in the Act of 1933, removed it in the year 1952 as the said amendment was unnecessary and redundant. There is no foundation for this argument, and the entire premises is wrong. Section 20 of Act XIII of 1885 reads; section 20 (1): If any person establishes, maintains or works a telegraph within India in contravention of the provisions of section 4 or otherwise than as permitted by rules made under that section, he shall be punished, if the telegraph is a wireless telegraph with imprisoment which may extend to three years, or with fine, or with both, and in any other case, with a fine which may extend to one thousand rupees. Though the words are comprehensive enough to take in a wireless transmitter, the section does not prohibit the possession of a wireless apparatus. As the Act only gave power to control the establishment, maintenance and working of wireless apparatus, in practice it was found that the detection of unlicenced apparatus and the successful prosecution of the offenders were difficult, with the result that the State was losing revenue. To remove this defect, Act XVII of 1933 was passed to prohibit the possession without licence of a wireless apparatus. Under section 6, the penalty for such illegal possession of a wireless telegraphy apparatus was made an offence, but the sentence prescribed was rather lenient. Subsequently, the legislature thought that the possession of a wireless transmitter 764 was a graver offence; sometimes involving the security of the State, and so an amendment was introduced in 1949 constituting the possession of such apparatus a graver offence and imposing a more severe punishment. Therefore, it cannot be said that section 6(1 A), inserted in the Act XVII of 1933 by the amending Act of 1949, is either covered by the provisions of the , or a surplusage not serving any definite purpose. Even from the history of the legislation we find it not possible to say that it disclosed an intention different from that envisaged in section 6 A of the . For the aforesaid reasons, we hold that section 6 (1 A) of the Act continued to be on the statute book even after the amending Act of 1949 was repealed by Act XLVIII of 1952, and that it was in force when the offence was committed by the appellant. The appeal fails and is dismissed.

Section 3 of the provided that no person shall possess wireless telegraphy apparatus without a licence and section 6 made such possession punishable. The Indian Wireless Telegraphy (Amendment) Act, 1949, introduced section 6(1A) in the 1933 Act, which provided for a heavier sentence for possession of a wireless transmitter without a licence. The Repealing and Amending Act, 1952, repealed the whole of the Amendment Act of 1949, but by section 4 provided that the repeal shall not affect any other enactment in which the repealed enactment had been applied, incorporated or referred to. The appellant was convicted under section 6(1A) for being, in possession of a wireless transmitter on July 31, 1953. He contended that section 6(1A) had been repealed and his conviction and sentence thereunder could not be sustained. Held, that section 6(1A) was saved by section 6A of the , though section 4 of the Repealing and Amending Act, 1952, did not save it. 756 The object of the Repealing and Amending Act, 1952, was to strike out unnecessary Acts and to excise dead matter from the statute book. Khuda Bux vs Manager, Caledonian Press, A.I.R. 1954 Cal. 484, referred to. Section 4 of the Repealing and Amending Act, 1952, only saved other enactments in which the repealed enactment had been applied, incorporated or referred to. It had no application to the case of a later amending Act inserting a new provision in an earlier Act as it could not be said that the earlier Act applied, incorporated or referred to the Amending Act. Secretary of State for India in Council vs Hindusthan Co operative Insurance Society, Ltd., L.R. 58 I.A. 259, followed. Mohinder Singh vs Mst. Harbhajan Kaur, I.L.R. 1955 Punj. 625 and Darbara Singh vs Shrimati Karnail Kaur, 61 P.L.R. 762, disapproved. Section 6A of the provided that when any Central Act repealed any enactment by which the text of any Central Act was amended then unless a different intention appeared the repeal would not affect such amendment. The word " text " in section 6A was comprehensive enough to include the subject as well as the terminology used in a statute, and the insertion of section 6(1A) in the 1933 Act was an amendment in the text. No different intention appeared either from the repealing Act or from the history of the legislation and section 6A applied to the repeal of the Amendment Act, 1949.

Appeal Nos. 4452 53 of 1986 463 From the Judgment and Order dated 16.6.1986 of the Bombay High Court in Appeal No. 216 of 1986. D.R. Dhanuka, V.M Tarkunde, and Dr. L.M. Singhvi, Pramod Swarup, Milind Sathe, P.N. Gupta, P.C. Srivastava, U.S. Prasad, A.M. Singhvi, C. Mughopadhaya, Raian Karanjawala, Mrs. Manik Karanjawala, Hardeep section Anand, Ejaz Moqbool, section Radhakrishn anand Surya Kant for the appearing parties. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. These two special leave peti tions arise out of the decision of the Bombay High Court in the appeal No. 216 of 1986. Leave as asked for is granted in both and appeals arising therefrom are disposed of by this judgment. The first appeal was filed by the appellant Shivajirao Nilangekar Patil who was at the. relevant time the Chief Minister of the State Maharashtra and the second one was filed by Dr. Mahesh Madhav Gosavi, the applicant in the original writ petition out of which appeal ultimately came to the Division Bench of the Bombay High Court resulting in Civil Appeal No. 216 of 1986. The controversy in this case centers round the conduct, if any, of the appellant in the first appeal in the M.D. Theory examination in the discipline of Gynaecology and Obstetrics held by the University of Bombay on 14th to 17th October, 1985. In that subject, the practical examination was held by the University at K.E.M. Hospital, Bombay. This is a well known hospital in Bombay and we are told that it is run by the Municipality. The total number of candidates registered for the examination was 52 of which 5 remained absent. One Dr. Mahesh Madhav Gosavi, original petitioner, who was at the relevant time Assistant Medical Officer of K.E.M. Hospital, Bombay was the petitioner. He and Smt. Dr. Chandrakala Patil alias Dawale, a Junior Assistant Medical Officer in the said K.E.M. Hospital, Bombay, who was re spondent No. 4 to the original petition and one Dr. Mrs. Smita Thakkar who was respondent No. 5 were three candidates amongst others who had appeared for the examination. One Dr. M.Y. Rawal was the head of the Department of Gynaecology and Obstetrics in the said hospital and was the convener of the Board for the said examination. Respondent No. 4 of the original petition, Smt. Chandrakala Patil is the daughter of the appellant, the erstwhile Chief Minister of Maharashtra. The appellant was at the relevant time the Chief Minister of Maharashtra. On 15th November, 1985, a circular was issued by the Univer sity of 464 Bombay convening a meeting of local examiners for the final isation of M.D. results on 18th November, 1985. On the said 18th November, 1985, the meeting was attended only by Dr. Rawal as Dr. Mukherjee, another coexaminer was not available at Bombay. On 30th November, 1985 the result of M.D. exami nation was declared. Out of the 47 candidates who had ap peared for the examination, 34 candidates were declared successful including Dr. Chandrakala Patil alias Dawale and Dr. Mrs. Smita Thakkar. The petitioner, Dr. Gosavi was declared to have failed. Upon these, a petition was filed by Dr. Gosavi under article 226 of the Constitution of India in the High Court of Bombay. Our attention was drawn to the fact that in the affida vit in support of the petition one Dr. Manikant Mishra had stated that he had approached Dr. Rawal to find out whether his wife had appeared in the said M.D. examination and it was alleged that on this occasion he had over heard certain alleged conversation between Dr. Rawal and Smt. Chandrakala Patil, daughter of the Chief Minister. It transpired later that Mrs. Kalpna Misra wife of the said Manikant Misra was not even registered as a candidate. In the petition under, article 226 of the Constitution filed before the High Court of Bombay on 16th January, 1986 Dr. Gosavi challenged the results declared in the said examination. The petitioner had claimed that he had been working as a junior Assistant Medical Officer and that he had done his housemanship in the Department of Obstetrics and Gynaecology at K.E.M. Hospital Respondent No. 2 i.e. Dr. Rawal was the Head of the Department of the same. It was further the case of the petitioner that due to some reasons the petitioner had no good terms with the said respondent No. 2. The petitioner had passed the MBBS examination in April, 1981 and after completion of internship got registra tion for M.D. (Obstetrics and Gynaecology) in June, 1982. It was further the case of the petitioner that the petitioner had completed all the requirements and conditions for ap pearing for the M.D. examination. The petitioner stated that the University had declared examination programme and the petitioner thereafter had appeared for the said M.D. exami nation in the month of October/November, 1985. There are several allegations made by the petitioner about the irregularities and it was further alleged, inter alia, that the grade sheets were manipulated and tampered with as a result of which the said Dr. Chandrakala Patil and Dr. Smita Thakkar were passed by respondent No.2 Dr. Rawal at the instance and behest of respondent No. 3 in that petition, the appellant in the first appeal, being the Chief Minister of Maharashtra at the relevant time. He prayed that the record of grade sheet submitted to the University of Bombay 465 by all the four examiners of M.D. in Obstetrics and Gynae cology examination, necessary papers and rules and regula tions, should be produced and to set aside the result of the M.D. examination to the extent that those students who had secured P minus grade be disqualified. It was further asked to declare those students who secured upto any number of P minus to be passed. A prayer was made in the writ petition filed in the High Court for producing grade sheets. The petitioner incidentally verified the petition stat ing that the contents of paragraphs 1 to 22 and paragraphs 24 to 30 were true to his own knowledge while various other relevant paragraphs were verified as information received from reliable sources but the source was not disclosed. In these circumstances the petitioner claimed that the results declared in respect of some of the candidates declared failed should have been declared passed. The allegations had been made against the appellant in paragraphs 14 and 25 of the petition. In paragraph 14 it was alleged that after these irregularities came to light, the petitioner in the original petition had started enquiring.as to the way in which respondent No. 2 had committed these irregularities. The petitioner thereafter learnt that one Sree P.K. Shah who happened to be a good friend of Dr. M.Y. Rawal, respondent No. 2 in the original petition and also happened to be a good friend of respondent No. 4 as they were together as the assistant medical officers at K.E.M. Hospital, Bombay. The petitioner also learnt that the said Dr. P.K. Shah and Dr. M.Y. Rawal though not permitted by Rules and Regulations had been practising in Zaveri Clinic for Dr. C.L. Zaveri, since long time, and thus they became dose friends. It is also learnt that on behalf of Dr. (Mrs.) Chandrakala Patil, who is the daughter of erstwhile Chief Minister of Maharashtra the said P.K. Shah met respondent No. 2 and requested him that Dr. (Mrs.) Chandrakala Patil had appeared several times for M.D. Examination (Obs. & Gyn.) but could not get through and therefore she should be shown some favour. It was learnt that the respondent No. 2 informed the said Dr. P.K. Shah that he would definitely favour Dr. Mrs. Chandrakala Patil if she failed, provided the Chief Minister himself phoned him personally. The respondent No. 2 also told the said Dr. P.K. Shah that he would come to know about the result only after the submission of the grade sheet to the University because thereafter only one would know the position with regard to the names of the students who have failed and till that time he would not know. It was further stated that it was learnt that the respondent No. 2 also informed the said Dr. P.K. Shah that he would take the risk only if the Chief Minister gave him a telephone ring otherwise he would not. It was alleged that the respondent No. 3 in the original petition and the appellant herein after receiving this message from the respondent No. 4 and from Dr. P.K. Shah accordingly contacted respondent No. 2 and requested him to favour his daughter. 466 In paragraph 25 of the petition, the petitioner stated as follows: "The petitioner states that on the basis of information from reliable source, the peti tioner has made allegations on Chief Minister of Maharashtra, therefore, he has been made respondent No. 3 in this writ petition. " These were the only allegations upon which the petition was factually based. The necessary verification has been set out hereinbefore. The appellant Shri Shivajirao Nilengekar Patil filed an affidavit denying the allegations in para graphs 14 and 25 of the application stating that he had played no part in the said examination as alleged or other wise. It was also stated in the aforesaid affidavit that the petitioner has not disclosed the 'so called ' reliable sources of information. No affidavit was filed by the peti tioner himself. The alleged source of information was not disclosed at any time. As mentioned hereinbefore an affida vit was filed by one Dr. Manikant Mishra on 28th February, 1986 in support of the allegations. Further affidavit was sought to be tendered on behalf of the petitioner to the learned single judge regarding certain additional facts after the final hearing had started before the learned single judge of the High Court of Bombay. It may be men tioned as a matter of historical record that Dr. M.S. Gore, Vice Chancellor of University of Bombay resigned. The learned single judge by his judgment held that the evidence of the petitioner as well as of Dr. Misra were unsatisfactory and unreliable. Reference was made to the submissions of the petitioner 's counsel relying under sec tion 114 of the Evidence Act. In para 18 of the judgment it was held that it could be reasonably inferred that altering and tampering of the gradesheets were done by Dr. Rawal at the behest of respondents No. 3 and 4. On 7th March, 1986 the day after the judgment, the appellant Shivajirao Ni langekar Patil resigned as the Chief Minister of State of Maharashtra in view of the Judgment. It may be mentioned that on or after 14th April, 1986 certain affidavits were sought to be filed on behalf of the petitioner in pending appeals purporting to rely upon certain allegations in writ petition No. 1709 of 1985 filed by Sub Inspector Lambe challenging the order of transfer and also an article which had appeared in INDIA TODAY. The Division Bench of the Bombay High Court rejected the prayer to adduce the additional evidence. We have perused the nature of the additional evidence which were sought to be adduced as is apparently from the special leave applica tion by Dr. Gosavi, the original petitioner in the writ petition and the respondent in the first appeal herein. These deal with the alleged involvement of the erstwhile Chief Minister of Maharasthra in the matter of 467 the careers of his son, his son in law and in respect of transfer of one Inspector Lambe. As the additional evidence were not admitted and the appellant in the first appeal herein had no opportunity to deal with the same, it would not be, fair to take these allegations into consideration. But these if true make dismal reading and give a sordid picture of the state of administration prevailing at that time in the State of Maharashtra. But as the High Court did not admit these, perhaps because these were belated and perhaps would have unnecesserily prolonged the trial and were not directly connected with the immediate issues before the High Court, this Court in the exercise of its jurisdic tion under Article 136 of.the Constitution would not inter fere with the decision of non admission of these additional evidence and say no more. On 16th June, 1986, the Division Bench of the Bombay High Court in appeal No. 216 of 1986 delivered judgment holding in para 35 of the judgment that the conclusion arrived at against Shri Nilangekar Patil was to be regarded merely as an adverse comment and not as a finding of fact. To that extent the finding of the learned single judge was upset. The special appeal has been preferred by the original petitioner against the appellant challenging the findings respectively. In the appeal by the original petitioner an affidavit had been filed in this case claiming the right to adduce additional evidence. The controversy before this court is rather narrow namely; was there justification for the remarks made by the learned trial judge against the appellant Patil in his judgment to the extent that manipulations in the grade sheets of M.D. examination was done at the behest of the appellant, the then Chief Minister of Maharashtra to help respondent No. 4 to pass the M.D examination can the same be justified either as a finding of fact or as a comment? In order to consider the same must be examined in little de tail. "Something is rotten in the state of Denmark" sensed Marcellus in Scene V of Act 1 in Shakespeare 's Hamlet. It can well be lamented that there was something rotten in once premier and prestigious University of Bombay: as the facts reveal. Justice Pendse of the Bombay High Court, the learned single judge before whom the matter came up for hearing has in an exhaustive discussion narrated the sad state of af fairs in this University of Bombay which has produced so many eminent professors and students. The University of Bombay conducts M.D. examinations, inter alia, in the disciplines of Obstetrics and Gynaecology in the Faculty of Medicine. The theory examination consists of four papers, of which paper No. IV is of Essay. The theory papers 1 to 111 consist of three questions each. The practical clinical examination consists of a long and short case in obstetrics and a long and short case in Gynaecology and Viva. The theory papers are assessed by individual 468 examiners and the grades are allotted in respect of each question in each paper n accordance with the provisions set out in the note giving special instructions to the examiners in the Faculty of Medicine. The M.D. theory examination in the instant case was held between 14th October and 17th October, 1985 and was followed by practical examination which was held between 4th November and 9th November, 1985. The University had appointed four paper setters and examin ers in accordance with the necessary provisions of the Act, two of which were internal examiners, namely Dr. M.Y. Rawal as mentioned hereinbefore and one Dr. S.N. Mukherjee from Indian Navy. There were two external examiners who were Dr. (Mrs.) A. Nafeesa Beebi from Madras and gr. S.T. Watwe of Sangli. It is not necessary to deal in more detail with the 7actual aspects which as mentioned hereinbefore have been exhaustively set out in the judgment of the learned single judge, and which were not disputed before us by any of the parties. We may mention that grading had to be made on the following lines as noted in the judgment of the trial judge: "G" Good. "p" Little better than passing. , 'p" Passing Border line failure "F" Failure. The learned single judge noted that 37 candidates had been declared successful including respondent No. 4 being Chandrakala Patil and respondent No. 5 Dr. Mrs. Smita Thak ker. The other respondents No. 6 to 15 mentioned hereinbe fore were other successful candidates whose result came to be nullified and made subject to re examination by the judgment of the learned single judge. We are not concerned with this aspect or with them any more. The petitioner had claimed that he had wrongly been declared as failed. The petitioner stated that he had some doubts as to whether his code number was properly decoded and he made various other allegations. The petitioner complained and the gravamen of his charges was that there were large number of irregulari ties in the declaration of result and mark sheet was tam pered in favour of respondent No. 4 Chandrakala Patil who is the daughter of the erstwhile Chief Minister and that Dr. Rawal was instrumental in tampering with the result which was done at the behest of the then Chief Minister. The learned judge came to the conclusion that Dr. Rawal alone was responsible for tampering with and altering the tabulat ed grade sheet of theory examination. After discussing all these aspects in detail at the concluding paragraph 15 of the judgment, the learned judge had observed that he had no hesitation in concluding that Dr. Rawal was responsible for manipulating the result by tampering with and altering the grade sheet so as to favour respondent No. 4 469 and respondent No. 5 in the writ petition namely Chandrakala Patil and Dr. Smita Thakkar. The next question, and which is the main issue before us, to which the learned judge 's attention was drawn was whether the manipulation was done by Dr. Rawal at the in stance of or behest of respondent No. 3, the appellant herein, the then Chief Minister of Maharashtra. The learned judge discussed the evidence in great detail. The allega tions in respect of the same are contained in paragraph 14 of the petition which have been set out hereinbefore. The learned judge noted after setting out the gist of the allegation in paragraph 14 of the petition that the averments made in that paragraph were wholly unsatisfactory and insufficient because the petitioner to the writ petition and the respondent herein had not disclosed from whom he had learnt what he had averred. We are in entire agreement with that conclusion of the learned single judge. Indeed this aspect was not disputed by any of the parties before us. The learned single judge further noted that the allegations were not only denied by Dr. Rawal, Dr. Shah and Chandrakala Patil but also by the Chief Minister, the appellant, on oath by filing affidavit. Dr. Shah had claimed that he had never contacted Dr. Rawal in connection with the examination of respondent No. 4 and so was the claim of respondent No. 4 and of Dr. Rawal. The appellant in his affidavit dated 26th January, 1986 had stated that Dr. Shah did not send any message nor did be contact Dr. Rawal at any stage. An effort was made by the original petitioner, respondent herein to establish by direct evidence the link between Dr. Rawal and respondent No. 4 by relying upon the evidence of one Dr. Mishra sworn on 28th February, 1986. Dr. Mishra had claimed that his wife who is a doctor had left home to appear in M.D. examination in November, 1985, but subsequently the wife declined to answer as to whether she had appeared or not. Dr. Mishra claimed that he went to Dr. Rawal to enquire and he noticed that respondent No. 4 was sitting in the doctor 's chamber. Dr. Mishra claimed that he over heard Dr. Rawal telling respondent No. 4 about her poor performance in the examination and suggested that he could do something only if her father, the Chief Minister, gave any message. The learned single judge observed in his judgment the less said about this affidavit was better. The learned judge further observed that it was impossible to place any reli ance on the evidence of Dr. Mishra as it was not known how he came to contact the original petitioner respondent herein or why he did not choose to file affidavit till 28th February, 1986. Dr. Rawal had denied in his evidence that this Mishra came to see him and pointed out that on that relevant date, that he was heavily occupied and he had hardly any time to contact any visitor. Chandrakala Patil also denied the meeting that 'transpired between her and Dr. Rawal. In the judgment of the learned trial 470 judge, it was unsafe to place any reliance on the words of Mishra. We respectfully agree. The learned judge thereafter concluded that there was no direct evidence to establish the involvement of respondent No. 3, the erstwhile Chief Minis ter or the daughter, respondent No. 4 in the original writ petition in securing favourable result from Dr. rawal. The learned judge noted that counsel appearing on behalf of the petitioner before the trial judge had accepted this position but had urged that it was not possible or in any event extremely difficult to establish by direct evidence the link between the wrong doer and the benefit seeker in such cases. It was, therefore, submitted that it was necessary for the court to draw inference from the probabilities of the case as well as the surrounding circumstances. Reliance was placed on the principles of section 114 of the Indian Evi dence Act and it was claimed that from the facts found by the High Court, the inference was irresistible that the results were tampered with or altered at the behest of the erstwhile Chief Minister and his daughter. After referring to the factual position and noting the principles of law, the learned judge observed that undoubt edly there was no direct evidence that the result of re spondent No. 4 namely Smt. Chandrakala Patil was tampered with at the behest of the appellant, Shivajirao Nilangekar Patil, respondent No. 3 in the original petition but that would not automatically lead to the conclusion that the charges against the said respondents No. 3 and 4 to the original petition were not established. The learned judge went on to observe that it would be a mockery of justice if the courts chose to close their eyes to the facts which were brought on record by the University by producing the origi nal documents etc. The learned judge observed that it, in the facts and circumstances of this case, could reasonably be inferred that the alteration was done at the behest of Nilangekar Patil, erstwhile Chief Minister and her daughter, Chandrakala Patil. It could not be overlooked, according to the learned judge, that only these three were interested in securing favourable result at the examination According to the learned judge there were two contingencies which had to be taken into consideration. The first was that respondent No. 4, Smt. Chandrakala Patil, might have used the name of her father, the erstwhile Chief Minister to secure favour able result from Dr. Rawal and secondly, the appellant, the erstwhile Chief Minister might have used his office to obtain a favourable result for his daughter. Learned counsel on behalf of the original petitioner had urged before learned trial single judge that the third contingency could not be overlooked that it was probable that Dr. Rawal on his own did all these. Learned trial judge rejected the third contingency as wholly improbable. He was of the view that Dr. Rawal was an experienced examiner and he was not young or immature and it was impossible to accept the view that a person like Dr. Rawal would proceed to do a criminal act and tamper with the record of the examination on his own with a view merely to 471 please the people in power. No same person, according to learned judge, was likely to take such risk unless he was prompted to do so and given an assurance of protection by the persons in power. The learned judge was of the view that the risk involved in what Dr. Rawal had done was so enormous that it was difficult to conceive that he did it on his own. It was further urged by learned counsel before learned trial judge that respondent No. 4, Chandrakala Patil had failed in the examination on three previous occasions when her father was Law Minister and yet previously the said Nilangekar Patil, respondent No. 3 had not used his influence and power, therefore it was difficult to accept the position that he would do it on this occasion. This hypothetical question, according to the learned trial judge, overlooked the fact that every examiner was not necessarily obliging or subservient as Dr. Rawal was. The learned judge, therefore, concluded that the corollary of this finding was that Dr. Rawal had done it at the behest of either the appellant Nilangekar Patil or Chandrakala Patil or both of them. Then the learned judge passed some strictures on Dr. Rawal and suggested some punishment and gave certain directions about examination of 12 other candidates whose results were also affected by the conduct of Dr. Rawal. As these appeals are not concerned with the same, it is not necessary to refer to these. The learned judge directed that the result declared on 30th November, 1985 in respect of respondents nos. 4 to 15 be revoked and that there should be fresh examination by the other examiners. These appeals are also not concerned with such direction. It may be mentioned that an application was made before the learned trial judge for adducing certain additional evidence on behalf of the petitioner. As the learned trial judge thought that it would prolong the trial and for other reasons, he declined to admit the additional evidence. As mentioned hereinbefore there are three appeals filed namely appeal No. 214 of 1986 by Dr. Rawal, appeal No. 215 of 1986 by Chandrakala Patil and appeal No. 216 of 1986 by Nilangekar Patil. These appeals came up before a division bench consisting of Kania, Ag. C.J. Shah, J. of the Bombay High Court. By a judgment delivered on 16th June, 1986, these appeals were disposed of. So far as appeal No. 214 of 1986 by Dr. Rawal was concerned, the division bench found that some of the remarks against Dr. Rawal were too harsh and the punishment was too severe. They directed that enquiry be held against him. These appeals are not concerned with this. So far as appeal No. 215 of 1986 preferred by Chandrakala Patil was concerned, the same was dismissed with no order as to costs. No appeal had been preferred to this Court from the said decision, So far as appeal No. 216 of 1986 before the divi sion bench was concerned, the learned judges pointed out after discussing the evidence and the principles of law that there was no direct 472 evidence that the alterations in the grades of Chandrakala Patil were made at the instance of the appellant. According to the division bench, the reasoning of the learned trial judge in coming to the conclusion that respondent Nos. 3 and 4 to the original petition were responsible for getting Dr. Rawal to alter the grades aforesaid was based on certain contingencies. According to the division bench the reason ings adopted by the learned trial judge were too tenuous for the conclusion based on such reasoning to amount to a posi tive finding. The Division Bench observed that merely be cause respondent No. 3 in the original petition had held a position of great power and would have been happy to see that his daughter respondent No. 4 and passed the M.D. examination, it was little difficult to conclude as a find ing of fact that he must have influenced respondent No. 2 to alter the grades of his daughter. The learned Division Bench noted that it was true that a seasoned examiner like Dr. Rawal would not have taken the risk involved in altering the grades except under a great pressure of persuasion. The position that grades were altered was upheld by the division bench. The Division Bench, however, was of the opinion that there might have been various motives which might have induced Dr. Rawal to take the risk and alter the grades. The division bench observed that theoretically it was possible to conclude as was urged by Mr. Dhanuka, the learned coun sel, that the respondent No. 4 might have used the name of her father and persuaded Dr. Rawal to alter the grades or some other influential person might have intervened and persuaded Dr. Rawal to alter the grades on the footing that respondent No. 3 would be very happy to see his daughter passed and would reward Dr. Rawal or take care of him or there might be some other inducement. However, the Division Bench was of the view that in a11 probability Dr. Rawal would not have acted unless he had made him assured that the appellant in the first appeal was behind the person who persuaded him to alter the grades. In the view of the Divi sion Bench therefore the conclusion of the learned trial judge that the grades of respondent No. 4 must have been altered by respondent No. 2 at the instance of respondent No. 3 by using his official position under a promise of protection was certainly not one which could properly amount to a finding. The Division Bench further observed that the evidence in support of such a conclusion is too slender to support a finding of such gravity. The Division Bench was of the view that merely because the appellant held a position of great prestige and power, it could not be said that the action of Dr. Rawal must have been induced by him and in fact when allegation of this type is made against anyone holding a position of prestige and power, it was necessary that the evidence should be closely examined before holding such allegation well founded. The Division Bench in its exhaustive judgment noted various decisions of this Court as well as of the English Courts. The High Court referred to the decision of this Court in Niranjan Patnaik vs Sashibhu shan Kar and Another, ; , a decision in which the judgment was delivered by one of us (section Natarajan, J.). 473 The High Court observed that the remarks made against the appellant, Nilangekar Patil cannot be supported as conclu sions arrived at against him but these can be regarded as comments and not finding of fact and such comments were not wholly unjustified in the facts of this case. The said appeal No. 216 of 1986 was disposed of accordingly. The Division Bench also upheld the finding of the learned single judge that there was tampering with the grade sheets. The Division Bench also uphold the finding that Dr. Rawal was mainly responsible for the same. The setting aside of the results of Smt. Chandrakala Patil and Smt. Smita Thakkar was also upheld. So far as the learned trial judge, held that the same was done at the behest of the erstwhile Chief Minister, the same was not upheld as a finding of fact but remarks to that fact made by the learned trial judge were not interfered with. An affidavit was filed claiming the right to adduce certain additional evidence and introducing certain writings from the magazine INDIA TODAY etc. Such additional evidence were sought to be introduced as part of the claim of public interest litigation because it involved the conduct of the Chief Minister in respect of the affairs of the University. Such claim for introduction of additional evidence, was, however, not entertained by the Division Bench. The Division Bench, however, in its judgment noted that the appellant was party to the writ petition and had an opportunity of explaining and defending himself. There were materials on record bearing on his conduct justifying the remarks which the Division Bench characterised as comments and not findings. A prayer was made before the Division Bench for deletion of such remarks. The Division Bench was of the view that as the appellant had opportunity to meet such remarks and such remarks were made upon hearing of the petition the question as to the conduct of the appellant in the episode was a matter of argument and it naturally fell for consideration before the Court. Judging the conduct of respondent No. 2 i.e. Dr. Rawal the part played by the appellant, erstwhile Chief Minister naturally fell for con sideration. If the finding of the learned trial judge, according to the Division Bench, was looked upon as more adverse comments and not as a finding as such, there could not be any objection to the same. The Division Bench was further of the view that the circumstances noted by the learned judge against the appellant Nilangekar Patil, afore said, formed a reasonable and cogent basis for adverse comment on his conduct. However, the Division Bench made it clear that these were merely in the nature of adverse com ments and based on the material on record and at the hearing of a proceeding which involved the taking of evidence merely on affidavits. According to the Division Bench, a fuller enquiry might lead to a conclusion that the comment was not justified. In view of this, the Division Bench had asked the learned counsel for the appellant Shri Dhanuka, whether the appellant desired that there should be a full fledged factu al enquiry into the charges of the alteration of the grades of respondent No. 4 having been altered as aforesaid with a view to pass respondent No. 4, Smt. Chandrakala Patil and 474 further that this was done at the instance of the erstwhile Chief Minister. The Division Bench noted that the appellant made no request for any such enquiry and he was merely taking a stand on the footing that the evidence on record did not justify any conclusion being arrived at or a comment being made against respondent No. 3. The Division Bench suggested that even at that stage, if the appellant wanted a full fledged enquiry and requested the University to hold the same, the University might hold such an enquiry into the results of M.D. examination in Gynaecology and Obstectrics held in November, 1985, particularly in respect of the results of respondents Nos. 4 & 5, but if such an enquiry was held, the person designated to hold the enquiry should be selected with the consent of the Chief Justice of the Bombay High Court. Two appeals one arising out of Special Leave Petition (Civil) No. 7568 of 1986 filed by Shivajirao Nilangekar Patil against the alleged adverse remarks and the other arising out of Special Leave Petition (Civil) No. 10665 of 1986 by the original petitioner are before this Court. There is an application for introduction of additional evidence. There are three points involved in these two appeals. Firstly, we have to determine in the appeal by the appel lant, Nilangekar Patil, the erstwhile Chief Minister of Maharashtra, whether the observations made by the division bench about the comments on the conduct of the Chief Minis ter were justified or not or should be expunged. Secondly, and connected with the first question is the question wheth er the Division Bench of the Bombay High Court was right in upsetting the finding that the tampering with the grade sheets was done at the behest of the Chief Minister was a finding based on no evidence; and thirdly whether, in the facts and circumstances of this case the court was justified in refusing to admit additional evidence and whether we should at this stage admit additional evidence. The additional evidence as we have mentioned hereinbe fore consist of certain report in INDIA TODAY and certain other Magazines and certain affidavits. The basic principle of admission of additional evidence is that the person seeking the admission of additional evidence should be able to establish that with the best efforts such additional evidence could not have been adduced at the first instance. Secondly the party affected by the admission of additional evidence should have an opportunity to rebut such additional evidence. Thirdly, that additional evidence was relevant for the determination of the issue. The additional evidence sought to be introduced mainly consist of alleged instances when the Chief Minister on previous occasions had in respect of some criminal proceedings and other matters pending used his influence to drop those proceedings. Now about these, these are controvertial allegations. There is no satisfacto ry explanation that these so called material in the form of 475 additional evidence could not have been obtained before the institution of the petition in the High Court. To this Mr. Tarkunde 's submission was that it was difficult to gather evidence against a Chief Minister in office but as the case had gathered momentum, people had come in and after decision of the learned trial judge, the Chief Minister had resigned and there was an atmosphere of belief for offering to adduce evidence which people were hesitant to give before that. We are of the opinion that at this belated stage there was not sufficient material ground on which additional evidence should be admitted for the determination of the issues involved in these appeals. In the appeal filed by the original petitioner Dr. Mahesh Madhav Gosavi, it was submitted that there were sufficient materials upon which the conclusion arrived at by the learned trial judge that the tampering was done at the behest of the erstwhile Chief Minister and the Division Bench was in error in deciding that, that was not the find ing of fact. Mr. Tarkunde conceded, and in our opinion rightly, that the view of the Division Bench that the obser vation of the learned single judge that tampering of the grade sheets in M.D. examination was done at the behest of the Chief Minister was in the nature of a comment and not a finding was a distinction without any difference. We are of the opinion that he is right in this submission. We are also of the opinion that the Division Bench was right in holding that there was no direct evidence. We are conscious that in a situation of this type it is difficult to obtain direct evidence. So far as admission of additional evidence is concerned, we are unable to accept the position that such additional evidence should have been admitted in order to show the nature of the conduct of the Chief Minister in other cases in similar situations. The admissibility of evidence as to 'similar fact ' has been considered by the courts. In this connection it may be instructive to refer to the observations of Lord Denning in Mood Music, Publishing Co. Ltd. vs Dc. Wolfe Ltd., [1976] 1 All England Law Reports 763 at 766. , to the following ef fect: "The admissibility of evidence as to 'similar facts ' has been much considered in the crimi nal law. Some of them have reached the highest 'tribunal, the latest of them being Boardman vs Director of Public Prosecutions (1974)3 All ER 887, (1975) A C 421. The criminal courts have been very careful not to admit such evidence unless its probative value is so strong that it should be received in the interests of justice: and its admission will not operate unfairly to the accused. In civil cases the courts have followed a similar line but have not been 476 so chary of admitting it. In civil cases the courts will admit evidence of similar facts if it is logically probative, that is if it is logically relevant in determining the matter which is in issue, ' provided that it is not oppressive or unfair to the other side; and also that the other side has fair notice of it and is able to deal with it. " On this aspect cross On Evidence, Sixth Edition page 346 has observed that although in some early Civil cases in England rejected similar fact evidence as res inter alias act, it was soon accepted that the rule of exclusion was certainly no stricter than that in criminal cases. The real question was whether there was a special rule of exclusion at all, or whether it were not rather a question of simple relevance in each case. The learned author noted that in more recent time, there has been a further relaxation of the exclusionary rules in civil cases. Cross at page 346/347 further noted that the aforesaid observations of Lord Den ning might be interpreted as applying in civil cases a similar sort of balancing approach to the rules for the admissibility of similar fact evidence as applied in crimi nal cases. The factors to be weighed were however different on account of the peculiar position of the accused in crimi nal cases. The learned author noted that there was very high authority accounting for the existence of an exclusionary discretion in criminal cases solely by reference to the accused 's vulnerability to prejudice. Applying the aforesaid principles to the facts as we have mentioned hereinbefore, we are of the opinion that the allegations of alleged conduct of the appellant in similar cases would not be a safe basis upon which to admit addi tional evidence, in this case having regard to the issues involved and nature of the issues involved in these matters and at the stage when these were sought to be introduced. In support of the appellant in Civil Appeal arising out of Special Leave Petition No. 7568 of 1986, Dr. Singhvi submitted that the petitioner/appellant had suffered and would continue to suffer serious civil consequences on account of findings or adverse comments or strictures made by the learned single judge. It was in those circumstances that this appeal had been filed, The appellant had resigned as Chief Minister and he is due, according to Dr. Singhvi, to contest the bye election in November, 1986. He has fur ther submitted that the question in these appeals had to be viewed in the perspective of law and strictly on the basis of the record and should not be permitted to be politicised either by extraneous allusions or by. presumptions and pre suppositions inconsistent with legal principles or by an attempt by political opponents to convert the proceedings into a political trial. It was his submission that the averments and the supporting affidavits which formed the 477 basis of the allegations against the appellant were dealt with in the two courts below in the manner as we have indi cated. He specially referred to the observations of the learned single judge about the affidavit in support of these allegations. He also relied on the observation on Dr. Mi shra 's affidavit and the adverse comments made by the learned single judge on Dr. Mishra 's affidavit. He also referred to the finding of the Division Bench that the petitioner had no personal knowledge of this incident nor had he disclosed the source of the information. That the petitioner had filed the affidavit of one Manikant Misra and then drew our attention to the various allegations and infirmities of the affidavit and specially relied on the various motives which might have induced Dr. Rawal, respond ent No. 2 in the original petition to take the risk and alter the grades and also he referred us to the finding at page 132 of the Paper Book of the Division Bench that the evidence was much too slender in support of the charge against the appellant. He emphasised that these appeals arose out of exercise of extra ordinary jurisdiction by the civil court, not by trial on examination and cross examina tion of evidence but an exercise of extra ordinary jurisdic tion on the basis of the affidavit, and the court should insist that there should be 'commensurate ' proof for judi cial certitude and that the distinction between 'finding ' and 'adverse comment ' was a distinction without any differ ence because it was throughout recognised as a finding. The Division Bench in Appeal No. 216 of 1985 has held that the conclusion arrived at against Shri Nilangekar Patil was a comment and not a finding of fact. Dr. Singhvi re ferred extensively to the affidavit of Dr. Mishra and com ments of learned single judge and the Division Bench as to how unreliable such affidavit was. It was submitted that in view of the infirmities of the affidavit of Dr. Mishra upon which the original petitioner, Dr. Mahesh Madhav Gosavi based his own petition was of such an unreliable credience that the courts should not have entertained the application. The Division Bench was unable to accept that position. We are in agreement with the Divi sion Bench. The allegations made in the petition disclose a lament able state of affairs in one of the premier universities of India. The petitioner might have moved in his private inter est but enquiry into the conduct of the examiners of the Bombay University in one Of the highest medical degrees was a matter of public interest. Such state Of affairs having been brought to the notice of the court, it was the duty of the court to the public that the truth and the validity of the allegations made be inquired into. It was in furtherance of public interest that an enquiry into the state of affairs of public institution becomes necessary 478 and private litigation assumes the character of public interest litigation and such an enquiry cannot be avoided if it is necessary and essential for the administration of justice. The allegations of the petitioner have been noted about the role of the Chief Minister. It is well to remember that Rajagopala Ayyangar, J. Speaking for this Court in CS. Rowjee & Ors., vs Andhra Pradesh State Road Transport Corpo ration observed at page 347 of the report that where allegations of this nature were made, the court must be cautious. It is true that allegation of mala fides and of improper motives on the part of those in power are frequently made and their frequency has increased in recent times. This Court made these observations as early as 1964. It is more true today than ever before. But it has to be borne in mind that things are happening in public life which were never even anticipated before and there are several glaring instances of misuse of power by men in authority and position. This is a phenomenon of which the courts are bound to take judicial notice. In the said deci sion the court noted that it is possible to decide a matter of probabilities and of the inference to be drawn from all circumstances on which no direct evidence could be adduced. The court further noted that it was somewhat unfortunate that allegations of mala fide which could have no foundation in fact were made and several cases which had come up before this Court and other courts and it had been found that these were made merely with a view to cause prejudice or in the hope that whether they have basis in fact or not some of which might at least stick. It is therefore the duty of the courts, warned this Court in the said decision, to scruti nize these allegations with care so as to avoid being in any manner influenced by them in cases where they have no foun dation in fact. In this task which is cast on the courts, it will be conducive to have disposal and consideration of them if those against whom allegations are made came forward to place before the court either the denials or their version of the matter so that the courts might be in a position to judge whether the onus that lay upon those who make allega tions of mala fides on the part of the authorities had been discharged in proving it. Of course, the facts in the in stant case are different. It is true that the basis of the allegations being the affidavit of Dr. Mishra was considered by the learned single judge as well as the Division Bench to be thoroughly unreliable. In this case there was specific and categorical denial by the erstwhile Chief Minister that tampering was done at his behest. Therefore, while the court should be conscious to deal with the allegations of mala fide or cast aspirations on holders of high office and power, the court cannot ignore the probabilities arising from proven circumstances. Our attention was drawn by learned counsel Dr. Singhvi on the observations of this Court in The Barium Chemicals Ltd. and Anr., vs The 479 Company Law Board and Others, [1966] Supp. SCR 311 where at page 352 of the report the Court observed that where evi dence was adduced by affidavits, such affidavits might be properly verified either on knowledge or from sources. But the basis of such knowledge or source of information must be clearly stated. This was laid down as early as 1909 by Jenkins, C.J. and Woodroofe, J. in Padmabati Dasi vs Rasik Lal Dhar, [ILR XXXVII Calcutta 259] where the Division Bench of the Calcutta High Court observed that the provisions of Order XIX, rule 3 of the Code of Civil Procedure, must be strictly observes: every affidavit should clearly express how much is a statement of the deponent 's knowledge and how much of the statement was in his belief, and the grounds of belief must be stated with sufficient particularity. This has been followed more or less universally by courts in matters where reliance is placed on affidavits. This view has been reiterated by this Court in The State of Bombay vs Purushottam Jog Naik. ; It is on this principle that Dr. Singhvi urged that the original petition should not have been entertained because of the defective affidavit in this case. Undoubtedly the affidavit and the petition were defective as mentioned hereinbefore. But the court has taken cognizance of the matter and certain inferences followed from the inherent nature of facts apparent from the facts brought before the Court. Reliance was also placed on the observations of this Court in E.P. Royappa vs State of Tamil Nadu & Anr., ; The Facts or that case need not be referred in detail except to mention that there allegation was made against the Chief Minister by a member of the Indian Admin istrative Service in the cadre of the State of Tamil Nadu for not appointing him as the Chief Secretary. Ray, C.J. noted in the judgment several facts which were alleged as instances indicating mala fide. It was stated that those instances gave rise to the wrath of the Chief Minister against the petitioner in that case. After noting the al leged incidents, the Chief Justice rejected these events and indicated that from the affidavit evidence it could not have been said that the Chief Minister had committed acts of violence or intimidation and the entire affidavit evidence established beyond any measure of doubt that the allegations of the petitioner in that case imputing mala fides against the Chief Minister were baseless. In a judgment concurring Bhagwati, J. as the learned Chief Justice then was, observed at page 389 of the report that in dealing with the allega tion of mala fide, it was necessary to bear in mind two important considerations; that the court was not concerned to investigate into the acts of maladministration by the political Government headed by the Chief Minister at that time. It was not within the province of the court to embark on a far flung enquiry into the facts of commission and. omission charged against the Chief Minister in the adminis tration of the affairs of Tamil Nadu. That was not the scope of the inquiry before the court and the court must decline to enter upon any such. inquiry. It was one thing to say that the Chief Minister had 480 malus animus against the petitioner in that case. The court was only concerned with the later limited issue and not with the former popular issue. The court cannot permit the peti tioner to side track the issue and escape the burden of establishing hestility and malus animus on the part of the Chief Minister by diverting courts attention to incidents of suspicious exercise of executive power. It is perhaps on this basis that the Division Bench of the Bombay High Court in the instant case rejected the application for additional evidence and rejected the contention in support of the view of misrule or misconduct by the erstwhile Chief Minister of Maharashtra, Nilangekar Patil, the appellant in the first appeal. The same principles in respect of affidavit evidence were reiterated in different context by this Court in Tara Chand Khatri vs Municipal Corporation of Delhi & Ors., [1977] 2 SCR 198. This Court reiterated that the High Court was not too wrong in dismissing the writ petition in limine in that case because a prima facie case requiring investiga tion had not been made out by the appellant. This Court reiterated that the High Court would be justified in refus ing to carry on investigation into the allegations of mala fide if necessary particulars of the charge making out a prima facie case Were not given in the petition. Since the burden of establishing mala fide lay very heavily on the person who alleged and the allegations made in regard there to in the writ petition were not sufficient in that case to establish malus animus, this Court found that the High Court was justified in dismissing the petition without issuing notice. Dr. Singhvi submitted that precisely the same was the position in the instant case. Reliance was also placed on Sukhvinder Pal Bipan Kumar vs State of Punjab & Ors., ; where at page 40 of the report after dealing with the allegations in the writ petition, this Court observed that the allegations in the writ petition were not sufficient to constitute an averment of mala fides so as the vitiate the orders of suspension issued in that case. In such a situation the court was justified in refusing to carry out investigation into the allegations of mala fides if necessary particulars of the charge making a prima facie case were not there in the petition. This Court reiterated that burden of mala fide prima facie lay very heavily on the person who alleged it. There the petitioner sought to invalidate certain orders of suspension and it was the onus on them to establish the charge of bad faith or misuse of its power by the govern ment. Halsbury 's laws of England, Fourth Edition, Volume 17 page 16 paragraph 19 deals with the standard of proof neces sary in these types of cases. It has been stated that in civil cases the standard of proof is satisfied on a balance of probabilities. However, even within this formula, there are variations depending upon the subject matter of allega tions. 481 About the adverse remarks being made against the erst while Chief Minister, we were reminded of the observations of this Court in The State of Uttar Pradesh vs Mohammad Naim 363 where this Court reiterated that it is a principle of cordinal importance in the administration of justice that the power, freedom of judges and Magistrates must be maintained and they must be allowed to perform their functions freely and without interference by any body, even by this Court. But it is equally necessary that in express ing their opinions, Judges and Magistrates must be guided by considerations of justice, fair play and restriant. Judicial pronouncements must be judicial in nature, and should ' not normally depart from sobriety, moderation and reserve. In that case this Court found that the remarks in the judgment in respect of the entire police force of the State were not justified in the facts of the case, nor were they necessary for the disposal of the case and should have been expunged. We are clearly of the opinion that the principle enunciated by that decision can have no application in the facts of this case. In the instant case, the first issue was whether there was tampering of the gradesheet, a fact which has been found by the learned single judge and by the Division Bench and which is not in dispute in any of these appeals before us. The other dispute was the allegation and the finding of the learned single judge was that the same was at the behest of the appellant in the first appeal and the respondent in the second appeal, Nilangekar Patil, the erstwhile Chief Minister. This point was very much in issue. He was a party. He had been heard on this point. So, therefore, whether the remarks were correct or not, is another issue but there was, no question of the remarks being beyond the issue and no question of the party against whom the remarks had been made had not been given an opportunity. Our attention was drawn to the decision of this Court in Vineet Kumar vs Mangal Sain Wadhera AIR [1985] SC 817 in aid of the submission that additional evidence should have been allowed but in our opinion the context in which the said observation was made was entirely different and cannot have any relevance to the facts of this Case. The Privy Counsil in The Bank of India and Others vs Jamesetji A.H. Chinoy and Messers. Chinoy and Co. AIR reiterated that speculation is not enough to bring home the charge of fraudulent conspiracy. In a different context dealing with the election matter in Sri Harasingh Charan Mohanty vs Sh. Surendra Mohanty, ; the question arose was whether the consent or agency was there. This Court observed that consent or agency of Shri Biju Patnaik could not be inferred from mere close friendship or other relationship or political affilia tion. However, close was the relationship, unless there was evidence to prove that the person publishing or 482 writing the editorial was authorised by the returned candi date or he had undertaken to be responsible for all the publications, no consent could be inferred. In our opinion, the observations must be read in the context of the facts of that case. Seth Gulabchand vs Seth Kudilal and Others ; at 629] was a case under the Contract Act, 1872 where under section 3 of the applied the same standard of proof in all civil cases. There this Court after referring to certain observations referred to the observations of the Division Bench of the Calcutta High Court in Jarat Kumari Dassi vs Bissesur. ILR C.W.N. 265. The Court thereafter referred to the definition of section 3 of the words 'proved ', 'disproved ' and 'not proved '. Reference was made to the decision of the Patna High Court by Meredith, J. at page 630 in Raja Singh vs Chaichoo Singh AIR 1940 Patna 281 at 203 where it was ob served by Meredith, J. that it was well settled that where fraud had to be inferred from the circumstances and was not directly proved, those circumstances must be such as to exclude any other reasonable possibility. In other words, the criterion was similar to that which was applicable to circumstancial evidence in criminal cases. This Court ob served that this Court was unable to agree with those obser vations. In that case this Court observed in respect of the allegation that a party had accepted bribe in a civil case did not convert it into a criminal case and ordinarily rule of civil cases would apply. Reliance was placed on the observations of this Court in the case of Niranjan Patnaik vs Sashibhushan Kur and Another (supra) to which one of us (section Natarajan, J.) was a party where this Court dealt with certain adverse remarks made against the Minister. This Court reiterated that the High Court and this Court must be deemed to have power to see that the courts below do not unjustly and without any lawful excuse take away the character of a party or of a witness or of a counsel before it. The observations in that case in our opinion are inapplicable in the instant case. There an adverse remark had been made which the court found to be unjustified which was not relevant to the issue in point and the party 'against whom such observations having been made was not a party to the said proceedings but only a witness. Our attention was also drawn to certain English eases which have been noted by the Division Bench in the order under appeal and it is not necessary for us to refer to these in detail. The Division Bench noted that this Court had in the case of State of Uttar Pradesh vs Mohammad Naim (supra) had exhaustively dealt with the limitation in making these remarks i.e. (1) whether a party whose conduct in question was before the court had an opportunity of explaining or defending himself; (2) whether there was evidence on record hearing on that conduct 483 justifying the remarks; (3) whether it was necessary for the decision of the case as an integral part thereof to refer to that conduct; and (4) the observations must be judicial in nature. These tests, the Division Bench observed were satis fied in respect of the remarks made by the learned single judge. The Division Bench was of the view that the circum stances relied before the learned single judge formed a reasonable and cogent basis for the adverse comment on the conduct of the appellant herein in the first appeal. Howev er, the Division Bench made it clear that it was merely in the nature of an adverse comment based on the material on record and at the hearing of a proceeding which involved the taking of evidence merely on affidavit. A fuller enquiry might lead to a conclusion that the comment was not justi fied. In that view of the matter the Division Bench asked the learned counsel whether the appellant in the first appeal desired that there ' should be a full fledged factual enquiry into the charge of the grades of respondent No. 4 having been altered as aforesaid. Such enquiry, however, must be done by a body, the Division Bench suggested, nomi nated by the Chief Justice of Bombay High Court. Counsel for the appellant in the first appeal before us made no request for such an enquiry, however, must be done by a body, the Division Bench suggested, nominated by the Chief Justice of Bombay High Court. Counsel for the an enquiry, before the High Court. In other words, he was not willing to invite an enquiry to clear his image. Shri Tarkunde, appearing on behalf of the respondent in the first appeal and appellant in the second one, submitted before us that there was sufficient substantial evidence before the learned single judge to come to the conclusion that the tampering was done at the behest of the erstwhile Chief Minister of Maharashtra. He submitted it was a finding of fact based on substantial evidence and there was clear material on such evidence. He further submitted that in a matter of this nature where public interest was involved namely, state of affairs in the University of Bombay in respect of a high degree in the medicine and in which the conduct of the Chief Minister was involved, public interest demanded that the High Court should have investigated the matter even though there might be some infirmities in the affidavit supporting the petition. He submitted that in this case that after the initiation of the proceeding, public interest was involved and the High Court was justified in entertaining the application. He, therefore, submitted that the second appeal arising out of Special Leave Petition No. 10665 of 1986 should be allowed. He further submitted that in a case of this nature, additional evidence should have been admitted. It was further submitted by Mr. Karanjawala, counsel, that even if this Court was inclined to accept that there was no distinction between a comment and a conclusion of fact in view of the facts disclosed in this case, this Court in exercise of its judicial discretion under article 136 of the 484 Constitution should not interfere in the facts and circum stances of this case. He urged that neither the cause of justice nor public interest demanded interference under Article 136 of the Constitution. It is true that exercise of the power under article 136 of the Constitution is discre tionary. There is no question in this case of giving any clean chit to the appellant in the first appeal before us. It leaves a great deal of suspicion that tampering was done to please Shri Patil or at his behest. It is true that there is no direct evidence. It is also true that there is no evi dence to link him up with tampering. Tampering is estab lished. The relationship is established. The reluctance to face a public enquiry is also apparent. Apparently Shri Patil, though holding a public office does not believe that "ceaser 's wife must be above suspicion". The erstwhile Chief Minister in respect of his conduct did not wish or invite an enquiry to be conducted by a body nominated by the Chief Justice of the High Court. The facts disclose a sorry state of affairs. Attempt was made to pass the daughter of the erstwhile Chief Minister who had failed thrice before by tampering the record. The person who did it was an employee of the Corporation. It speaks of a sorry state of affairs and though there is no distinction between comment and a finding and there is no legal basis for such a comment, we substitute the observations made by the aforesaid observa tions as herein. This Court cannot be oblivious that there has been a steady decline of public standards or public morals and public morale. It is necessary to cleanse public life in this country along with or even before cleaning the physical atmosphere. The pollution in our values and standards is an equally grave menace as the pollution of the environment. Where such situations cry out the Courts should not and cannot remain mute and dumb. In that view of the matter, we dispose of the two ap peals and application for adducing additional evidence with the observations made aforesaid. In the facts and circum stances of this case, there will be no order as to costs.

Dr. Mahesh Madhay Gosavi appellant in CA 4453/86 and respondent in CA 4452/86 was a failed candidate at the M.D. examination in the speciality of Gynaecology and Obstetrics held in the year 1985. He filed a writ petition under Arti cle 226 of the Constitution of India in the High Court of Bombay challenging the results of the M.D. examination held in November ' 85. He alleged that favouritism was shown by one Dr. Rawal who went to the extent of tampering with grade sheets of the examinees so as to clear unsuccessful candi dates and in particular Smt. Chandrakala Patil daughter of the Chief Minister of Maharashtra appellant in CA 4452/86 and respondent in cross appeal CA 4453/86. In support of the writ petition alleging how the malpractice took place, he filed an affidavit (hearsay evidence) of one Dr. Manikant Mishra, who is supposed to have heard certain talks that took place between Dr. Rawal and Smt. Chandrakala Patil at Dr. Rawals ' Chambers and that what the deponent heard came to be proved by the M.D. (Gynae) results in which one Dr. Smita Thakkar and Smt. Chandrakala Patil who could not clear the said examination thrice were shown to have passed. It was alleged that the tampering of the grade sheets were done by Dr. Rawal at the behest of the appellant in C.A. 4452/86. The said allegations were refuted by the appellant Shivaji Rao Patil, Smt. Chandrakala Patil, his daughter, Dr. Rawal and another Dr. Shah on oath by filing their affidavits. The 459 respondent, though he had verified his petition, did not disclose the so called reliable source of information de rived by him. (about the allegations made against the appel lant & others. The learned Single Judge held: (i) that the evidence of Respondent Madhav Gosavi as well as of Dr. Mishra were unsatisfactory and unreliable: (ii) that it was impossible to place any reliance on the evidence of Dr. Mishra as it was not known how he came to contact Dr. Gosavi or why he did not choose to file affidavit till 28.2.1986 when the appellant Patil had already filed his affidavit on 26.1.86; (iii) that the allegation and the averments made in para graph 14 of the writ petition were wholly unsatisfactory and insufficient because the Respondent petitioner had not disclosed from whom he derived them; (iv) that there was tampering with grade sheets of Respondents 4 to 15 by Dr. Rawal and (v) that in the facts and circumstances of this it could reasonably be inferred that the alteration was done at the behest of the appellant in CA 4452/86 and her daughter Chandrakala. This was because Dr. Rawal was an experienced examiner, not young or immature and a person like him would not proceed to do a criminal act and tamper with the record of the examination on his own with a view merely to please the people in power. The risk involved in what Dr. Rawal had done was so enormous that it was difficult to conceive that he did it on his own. Accordingly he allowed the writ peti tion, passed some structures against Dr. Rawal and the appellant in CA 4452/86 and gave certain directions about examination of 12 other candidates whose results were also affected by the conduct of Dr. Rawal. An application made before the Judge for adducing cer tain additional evidence was rejected. After the judgment the Vice Chancellor and the Chief Minister resigned from their posts. Three appeals, No. 214/86 by Dr. Rawal No. 215/86 by Dr. Chaodrakala Patil and No. 216/86 by the appellant Shivaji Rao Patil, were heard and disposed of by the Division Bench consisting of the Acting Chief Justice Kania and Shah J. of the Bombay High Court on 16th June, 1986. So far as appeal No. 216 of 1986 is concerned, according to the Division Bench; (i) there was no direct evidence that the alterations in the grades of Chandrakala Patil were made at the instance of the appellant; (ii) the reasonings of the trial Judge in coming to the conclusion that respondents No. 3 and 4 the original petition were responsible for getting Dr. Rawal to alter the grades was based on certain contingencies and were too tenuous for the conclusion based on such reasoning to amount to a positive finding; (iii) Merely because respond ent No. 3 to the original petition held a position of great power and would have been happy to see that his daughter had passed the M.D. examination, it was difficult to conclude, as a finding of fact that he must have 460 influenced Dr. Rawal to alter the grades of his daughter; (iv) it was true that a seasoned examiner like Dr. Rawal would not have taken the risk involved in altering the grades except under a great pressure or pursuation, but it cannot be ruled out the possibility of various motives which might have induced Dr. Rawal to take the risk of altering the grades; (v) however in all probability Dr. Rawal would not have acted unless he had made him assured that the appellant Shivaji Rao Patil was behind the person who pur suaded him 'to alter the grades; (vi) that when allegation of this type is made against anyone holding a position of prestige and power, it was necessary that the evidence should be closely examined before holding such allegation well founded. Therefore the Bench observed that the remarks made against the appellant. Nilangekar Patil cannot be supported as conclusions arrived at against him but these can be regarded as adverse comments and not finding of fact and such comments were not wholly unjustified in the facts of this case. However, the Division Bench refused to enter tain an application to introduce additional evidence as part of the claim of public interest litigation. Hence the appeal No. CA 4452/86 by Nilangekar Patii against the adverse comments were allowed to remain and there was a cross appeal 4453/86 by Dr; Madhav Gosavi against refusal to accept additional evidence. Dismissing the appeals by special leave, the Court, HELD: 1.1 The basic principle of admission of addition al evidence is that the person seeking the admission of additional evidence should be able to establish that with the best efforts such additional evidence could not have been adduced at the first instance. Secondly the party affected by the admission of additional evidence should have an opportunity to rebut such additional evidence. Thirdly that additional evidence was relevant for the determination of the issue. [474 G] Here, the additional evidence sought to be introduced mainly consist of alleged instances when the appellant on previous occassions had in respect of some criminal proceed ings and other matters pending used his influence to drop those proceedings. Applying the principle as to admission of "similar fact evidence" it must be held that the allegations of the alleged conduct of the appellant in similar cases would not be a safe basis upon which to admit additional evidence in this case having regard to the issues involved and nature of the issues involved in these matters and at the stage when these were sought to be introduced. [474 H, 476 E] Mood Music Publishing Co. Ltd. vs De Wolfe Ltd., @ 766, quoted with approval. 461 2. The mere fact that several infirmities were noticed in the affidavit of Dr. Mishra upon which the original petitioner Dr. Gosavi based his own petition could not lead to the argument that the entertainment of the petition itself was wrong. The allegations made in the petition disclose a lamentable state of affairs in one of the premier universities of India. The petitioner might have moved in his private interest but enquiry into the conduct of the examiners of the Bombay University in one of the highest medical degrees was a matter of public interest. Such state of affairs having been brought to the notice of the court, it was the duty of the court to the public that the truth and the validity of the allegations made be inquired into. It was in furtherance of public interest that an enquiry into the state of affairs of public institution becomes necessary and private litigation assumed the character of public interest litigation and such an inquiry cannot be avoided if it is necessary and essential for the administra tion of justice. [477F, 477G 478A] 3.1 It is true that exercise of the power under Article 136 of the Constitution is discretionary. There is no ques tion in this case of giving any clean chit to the appellant in the first appeal. It leaves a great deal of suspicion that tampering was done to please Shri Patil or at his behest. It is true that there is no direct evidence. It is also true that there is no evidence to link him up with tampering. Tampering is established. The relationship is established. The reluctance to face a public enquiry is also apparent. Apparently Shri Patii, though holding a public office does not believe that "ceaser 's wife must be above suspicion". The erstwhile Chief Minister in respect of his conduct did not wish or invite an enquiry to be conducted by a body nominated by the Chief Justice of the High Court. The facts disclose a sorry state of affairs. Attempt was made to pass the, daughter of the erstwhile chief Minister who had failed thrice before by tampering the record. The person who did it was an employee of the Corporation. It speaks of a sorry state of affairs and though there is no distinction between comment and a finding and there is no legal basis for such a comment. [484A D] 3.2 The court cannot be oblivious that there has been a steady decline of public standards or public morals and public morale. It is necessary to cleanse public life in this country along with or even before cleaning the physical atmosphere. The pollution in the values and standards is an equally grave menace as the pollution of the environment. Where such situations cry out the Courts should not and cannot remain mute and dumb. [484 E] 3.3 Where allegations of mala fide were made, the Court must be cautious. It is true that allegation of mala fides and of improper motives on the part of those in power are frequently made and their frequency has increased 462 in recent times. In this task which is cast on the courts, it will be conducive to have disposal and consideration of them if those against whom allegations are made came forward to place before the court either the denials or their ver sion of the matter so that the courts might be in a position to judge whether the onus that lay upon those who make allegations of mala fides on the part of the authorities had been discharged in proving it. It is true that the basis of the allegations being the affidavit of Dr. Mishra was con sidered to be thoroughly unreliable. In this case there was specific and categorical denial by the erstwhile Chief Minister that tampering was done at his behest. Therefore, while the court should be conscious to deal with the allega tions of mala fide or cast aspirations on holders of high office and power, the court cannot ignore the probabilities arising from proven circumstances. [478 B, F G] C.S. Rawjee & Ors. vs Andhra Pradesh State Road Trans port Corporation, , referred to. 3.4 Where evidence was adduced by affidavits, such affidavits might be properly verified either on knowledge or from sources. Here it is true that undoubtedly the affidavit and the petition were defective, but the court has taken cognizance of the matter and certain inferences followed from the inherent nature of facts apparent from the facts brought before the court. [479A. D] The Barium Chemicals Ltd. & Anr. vs The Company Law Board & Ors., [1966] Supp. SCR 311; Padmabati Dasi vs Rasik Lal Dhar, ILR XXXVII Calcutta 259; The State of Bombay vs Purushottam Jog Naik; , ; E.P. Royappa vs State of Tamil Nadu & Anr. ; ; Tara Chand Khatri vs Municipal Corporation of Delhi & Ors., [1977] 2 SCR 198; and Sukhvinder Pal Bipan Kumar vs State of Punjab & Ors., ; ; Seth Gulabchand vs Seth Kudilal & Ors., ; at 629; Jarat Kumari Dassi vs Bissesur, ILR 39 Cal. 245:16 C.W.N. 265; Raja Singh vs Chaichoo Singh, AIR 1940 Patna 281 at 203, referred to. The State of Uttar Pradesh vs Mohammad Naim, ; Vineet Kumar vs Mangal Sain Wadhera, AIR 1985SC817; The Bank of lndia & Ors., vs Jamesetji A.H. Chiney and Messrs. Chinoy and Co., AIR 1950 PC 90; Sri Harasingh Charan Mohantv vs Sh. Surendra Mohanty, ; ; Niranjan Patnaik vs Shashibhushan Kar and Anr. , distinguished.

Appeal No. 1313 of 1973. (From the Judgment and Order dated 7 9 1972 of the Calcutta High Court in Income Tax Reference No. 208 of 1966). V.P. Raman, Addl. Solicitor Genl. and M.N. Shroff for the Appellant. K. Ray and D.N. Gupta, for the Respondent. The Judgment of the Court was delivered by KHANNA, J. This appeal on certificate, by the Commissioner of Income tax, is against the judgment of the Calcutta High Court whereby the High Court answered in a reference under the Income tax Act the following question in favour of the assessee respondent and against the revenue: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that in making the reassessment under section 147(b) of the Income tax Act, 1961, the Income tax Officer could not depart from the method of computation permitted in Rule 33 of the Income tax Rules and followed in the original assessment, and adopt an alternative method of computation also permitted under the said Rules (corresponding to Rule 10 of the Income tax Rules, 1962) ?" The matter relates to the assessment year 1959 60, the corresponding financial year for which ended on March 31, 1959. The assessee is a non resident company carrying on business as construc tion engineers. The Income tax Officer made the original assessment on May 31, 1960 on a total income of Rs. 21,49,169. On November 5, 1962 the Income tax Officer initiated proceedings under section 147(b) of the Income tax Act, 1961 (herein after referred to as the Act) and completed the assessment on February 29, 1964 on a total income of Rs. 69,85,097. At the time of the original assessment the assessee filed the return of income along with the auditor 's certificate of the trading results of the various contracts. One of those contracts was in respect of work at Durgapur with the Hindustan Steel Ltd. In respect of that work 209 the assessee filed a provisional estimate of income which was arrived at "by calculating the income that could be attributable in relation to the tax deducted under section 18(B) by the Hindustan Steel Ltd." The Income tax Officer computed the income from that contract at Rs. 5,33,164. The income from the other contracts was computed at Rs, 16,16,005 "as per audited statements. " In the reassessment proceedings the Income tax Officer purported to find as under: (i) That the assessee 's outlay in India to the total outlay in various contracts represented a fair index of operations carried out in India and as such 60 per cent of the profits attributable to sterling payments and claimed to be exempt related to operations in India and fell to be included in the assessee 's total income; (ii) that the figure of depreciation required to be changed; and (iii) that some portion of the income had to be assessed under section 4(1)(A) on receipt basis. The total income of the assessee, as already mentioned, was determined as a result of reassessment to be Rs. 69,85,097. In arriving at the figure of the total income the Income tax Officer estimated the income in respect of Durgapur contract to be Rs. 5,33,164 as had been done in the original assess ment. Regarding the other contracts, the Income tax Officer determined the income of the assessee in reassessment pro ceedings to be Rs. 64,51,933. The difference in the income computed at the time of the original assessment and at the time of reassessment was due to the fact that the Income tax Officer at the time of original assessment adopted one method of computation under rule 33 of the Income tax Rules, 1922 while the Income tax Officer making reassessment adopt ed another method under that rule. On appeal it was submitted before the Appellate Assist ant Commissioner on behalf of the assessee that the action of the Income tax Officer in reopening the assessment under section 147(b) was without jurisdiction and that the Income tax Officer had no jurisdiction to change the method of computation as originally adopted in the revised proceedings. The Appellate Assistant Commissioner held that the proceedings under section 147(b) were bad and that the Income tax Officer could not adopt an alternative method of computation in the reassessment proceedings. He, therefore, allowed the appeal. The Appellate Assistant Commissioner at the same time observed that the Income tax Officer would be justified in computing the income to be Rs. 22,23,231 and that the assessee had no objection to such a revision. In appeal before the Tribunal the department urged that the Appellate Assistant Commissioner was not justified in holding that the Income tax Officer (i) had no jurisdic tion to start proceedings under section 147(b) of the Act; and (ii) that the Appellate Assistant 210 Commissioner had erred in allowing deductions in the income of the assessee. The Tribunal held on the first ground that proceedings under section 147(b) had been validly initiat ed. Regarding the second ground, the Tribunal observed in agreement with the Appellate Assistant Commissioner that the mode of computation adopted in the original assessment was one permitted under rule 33 of the Income tax Rules 1922 and that the mode adopted in reassessment was another alterna tive method. The tribunal held that both the methods being permissible, it could not be said that any mistake was committed in computing the income at the time of the origi nal assessment on a particular basis adopted with reference to rule 33. In the opinion of the Tribunal, the Income tax Officer could not in reassessment proceedings depart from the method of computation adopted in the original assess ment. The Tribunal directed that the reassessment be made "adopting the same method of computation as in the original assessment subject to any adjustments which may be justified such as excess depreciation being charged in the account and so on." At the instance of the revenue, the question reproduced above was referred to the High Court. The High Court, while answering the question against the revenue, referred to the connotation of the words "escaped income" and observed " . it means an income which the asses see has succeeded in getting away with or has eluded observation or search or notice of the tax authorities. In other words, it cannot mean an item of income which has not been taxed by purusing a method approved by law. In the instant case, the excess income was not taxable under the third method but it has become taxable by following another method sanctioned by the same rule, namely, rule 33. This is not, therefore, a case of escaped income which has not been brought into the orbit of taxation in the reassessment proceedings. " In appeal before us learned Additional Solicitor General has assailed the judgment of the High Court and has contended that the High Court was in error in holding that the instant case was not one of income escaping assessment. As against that, Mr. Ray on behalf of the assessee respondent has canvassed for the correctness of the view taken by the High Court. Before dealing with the contentions advanced, it may be apposite to refer to the relevant provisions. According to section 4(1 )(c) of the Indian Income tax Act, 1922, subject to the provisions of that Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived which if such person is not resident in the taxable territories during such year, accrue or arise or are deemed to accrue or arise to him in the taxable territories during such year. Sub section (1) of section 42 of the Act of 1922, inter alia, provides that all income, profits or gains accruing or arising, whether directly or indirectly, through or from any business connec tion in the taxable territories, shall be deemed to be income 211 accruing or arising within the taxable territories, and where the person entitled to the income, profits or gains is not resident in the taxable territories, shall be chargeable to income tax either in his name or in the name of his agent. According to sub section (3) of section 42, in the case of a business of which all the operations are not carried out in the taxable territories, the profits and gains of the business deemed under this section to accrue or arise in the taxable territories shall be only such profits and gains as are reasonably attributable to that part of the operations carried out in the taxable territories. The assessee respondent in the present case carried on business as construction engineers both in India and other parts of the world. The Income tax Officer, it seems, found that the provisions of section 42 of the Act of 1922 did not provide sufficient criteria for computing the profits and gains of business deemed to accrue or arise in India. Resort was accordingly had to rule 33 of the 1922 Rules. The above rule has been made to meet such an eventuality, and reads as under: "In any case in which the Income tax Officer is of opinion that the actual amount of the income, profits or gains accruing or arising to any person residing out of the taxable territories whether directly or indirectly through or from any business connection in the taxable territories or through or from any property in the taxable territories, or through or from any asset or source of income in the taxable territories, or through or from any money lent at interest and brought into the taxable territories in cash or in kind cannot be ascer tained, the amount of such income, profits or gains for the purposes of assessment to income tax may be calculated on such percentage of the turnover so accruing or arising as the Income tax Officer may consider to be reasonable, or on an amount which bears the same proportion to the total profits of the business of such person (such profits being computed in accordance with the provisions of the Indian Income tax Act) as the receipts so accruing or arising bear to the total receipts of the busi ness or in such other manner as the Income tax Officer may deem suitable. " Shorn of the parts with which we are not concerned, the rule provides that in any case in which the Income tax Officer is of the opinion that the actual amount of income, profits or gains accruing or arising to any person residing out of the taxa ble territories, whether directly or indirectly, through or from any business connection in the taxable territories cannot be ascertained, the amount of such income, profits or gains for the purpose of assessment to income tax may be calcu lated (i) on such percentage of the turnover so accruing or arising as the Income tax Officer may consider to be reasonable, or (ii) on an amount which bears the same propor tion to the total profits of the business of such person (such 212 profits being computed in accordance with the provisions of the Indian Income tax Act) as the receipts so accruing or arising bear to the total receipts of the business, or (iii) in such other manner as the Income tax Officer may deem suitable. The above rule makes it clear that if other condi tions mentioned in the rule are satisfied, it would be open to the Income tax Officer in computing the income, profits or gains to apply one of the three methods mentioned in the rule. It is the common case of the parties, and that is also the underly ing assumption of the question referred to the High Court, that the Income tax Officer in making the original assessment adopted one method while the Income tax Officer making reassessment adopted another method contemplated by rule 33. The ques tion with which we are concerned is whether it would be a case of income escaping assessment if the Income tax Officer adopts a method of computa tion which is permissible under the law but which method results in lower tax liability compared to the other method which too is permissible in law. According to the learned Additional Solicitor General, the adoption of a method even though permitted by rule 33 which results in lower tax liability of the assessee compared to the other method mentioned in the rule would warrant the conclusion that income has escaped assessment and as such section 147 of the Act of 1961 would get attracted. After giving the matter our earnest consideration, we find it difficult to accept the above contention. It was open, as already men tioned, to the Income tax Officer at the time of making the original assessment to adopt one of the three methods mentioned in rule 33 for computing the taxable income of the assessee. Discretion was vested by rule 33 in the Income tax Officer for the purpose of making his choice of the methods, and the same was to be exercised in a proper and judi cious manner. There is nothing before us to show that the discretion was not exercised by the said officer in a proper or judicious manner. It is also not suggested that the Income tax Officer was actuated by some oblique motive. From the mere fact that the method selected by him was such as result ed in lower tax liability of the assessee compared to the liability which would have resulted from the adoption of other method, it would not follow that the discretion was not exercised in a proper and judicious manner. The taxing authorities exercise quasi judicial powers and in doing so they must act in a fair and not a partisan manner. Although it is part. of their duty to ensure that no tax which is legitimately due from an assessee should remain unrecovered, they must also at the same time not act in a manner as might indicate that scales are weighted against the assessee. We are wholly unable to subscribe to the view that unless those authori ties exercise the power in a manner most beneficial to the revenue and consequently most adverse to the assessee they should be deemed not to have exer cised it in a proper and judicious manner. The order made by the Income tax Officer at the time of the original assessment was a legally correct order and was not vitiated 213 by any error. The absence of an error in that order would justify the inference that the present is not a case of income escaping assessment. There is necessarily an element of error in cases of income escaping assessment mentioned in section 147(b) of the Act of 1961. Such error resulting in income escaping assessment becomes manifest in the light of information coming subsequently into the possession of the Income tax Officer. Where, as in the present case, the order making the original assessment was a legally correct order and was not vitiated by any error, the case would not be one which would fall within the ambit of section 147(b) of the Act of 1961 or section 34(1)(b) of the Act of 1922. We may add that the Income tax Officer ordering reassess ment ' does not sit as a court of appeal over the Income tax Officer making the original assessment. Nor is it open to the Income tax Officer ordering reassessment to substitute his own opinion regarding the method of computing the income for that of the Income tax Officer who made the original assessment, especially when the method of computation adopt ed at the time of original assessment was permissible in law. The fact that the adoption of a different method of computation would have resulted 'in higher yield of tax would not in such a case justify the reopening of the as sessment. It has been argued on behalf of the appellant that reassessment under section 147(b) would be justified where in the original assessment income liable to tax has escaped assessment due to oversight, inadvertence or a mistake committed by the Income tax Officer. The present however, we find, is a case which does not fall in any of those categories. We would, therefore, uphold the judgment of the High Court and dismiss the appeal with costs. V.P.S. Appeal dis missed.

Section 42, Income tax Act, 1922, provides for assessing the income, profits gains deemed to accrue or arise in the taxable territories to a person not resident in the taxable territories. RuLe 33 of the 1922 Rules is made for comput ing the profits and gains of business deemed to accrue or arise in India in cases where the income tax officer finds that the provisions of section 42 do not provide sufficient criteria. The rule mentions three methods and it would be open to the income tax officer to select and apply one of the three methods mentioned in the rule. The assessee respondent in the present case, is a non resident company carrying on business as construction engi neers both in India. and in other parts of the world. The Income tax Officer found that section 42 of the 1922 Act did not provide sufficient criteria for computing the profits and gains of the assessee deemed to accrue or arise in India and, therefore, assessed the income applying one of the three methods mentioned in r. 33. As it resulted in lower tax liability, his successor initiated proceedings under section 147(b), Income tax Act, 1961, adopted another method contem plated by r. 33. and assessed the income at a higher figure. The Appellate Assistant Commissioner, the Tribunal and High Court held that in making the reassessment the Income tax Officer could not depart from the method of computation followed in the original assessment, and adopt an alterna tive method of computation though permitted by the rule. In appeal to this Court, it was contended that the lower tax liability in the original assessment showed that it was a case of escaped assessment and as such section 147 of the 1961 Act was attracted. Dismissing the appeal, HELD: It is open to the Income tax Officer at the time of making the original assessment to adopt one of the three methods mentioned in r. 33 for computing the taxable income of the assessee. From the mere fact that the method select ed by him resulted in lower tax liability compared to the liability which would have resulted from the adoption of another method under the rule, it would not follow that the discretion was not exercised by the Income tax Officer in a proper and judicious manner, and that it would be a case of income escaping assessment. [212 E F] (1) The discretion to choose one of the methods in r. 33 ought to be exercised by the Income tax Officer in a proper and judicious manner. In the present ease, there is nothing to show that the discretion was not so exercised by the Income tax Officer, nor was it suggested that he was actuat ed by any oblique motive. The Income tax Officer ordering reassessment does not sit as a Court of appeal over the officer making the original assessment, nor is it open to him to substitute his own opinion regarding the method of computation of the income especially when the method of computation adopted at the time of original assessment was permissible in law. The taxing authorities exercise quasi judicial powers, and in doing so, they must act in a fair and not a partisan manner. Although it is part of their duty to ensure that no tax, which is legitimately due from an assessee, should remain unrecovered, they 208 must also at the same time not act in a manner which indi cates that the scales are weighted against the assessee. It is not correct to say that unless. the authorities exercise the power in a manner most beneficial to the revenue and consequently most adverse to the assessee, they should be deemed not to have exercised their discretion in a proper and judicious manner. [213C, 212G] (2) The original order of the first Income tax Officer was a legally correct order and was not vitiated by any error. The absence of an error would justify the inference that it is not a case of income escaping assessment. There is necessarily an element of error which becomes in cases of income escaping assessment mentioned in section 147(b) of Act of 1961 manifest in the light of subsequent information re ceived by the Income tax Officer. In the present case, no income has escaped assessment due tO oversight, inadvertence or a mistake committed by the first Income Tax Officer. Therefore, the case would not fall within the ambit of section 147(b) of the 1961 Act or section 34(1)(b) of the 1922 Act. [213A B]

Appeal No. 649 of 1964. Appeal by special leave from the judgment and order dated March 30, 1963 of the Andhra Pradesh High Court in W.P. No. 1061 of 1962. Arun B. Saharya and Sardar Bahadur, for the appellant. P. Ram Reddy and T. V. R. Tatachari, for respondent No. No. 1. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal by special leave against the judgment of the Andhra Pradesh High Court. The appellant manufactures drugs in Hyderabad and among the drugs manufactured by it is chloral hydrate. In September 1962, the State of Andhra Pradesh issued rules called the Andhra Pradesh (Telangana Area) Chloral Hydrate (Chloral) Rules, 1962 with respect to manufacture, possession, sale, import, export and transport of chloral hyd 12 rate (hereinafter referred to as the Rules). We shall refer to the Rules in detail later; but in brief they provide that the manufacture of chloral hydrate shall take place only in accordance with the conditions of a licence granted by the Excise Commissioner and only on payment of excise duty of Rs. 5001 per annum. The Rules also provide for possession, import, export, sale and transport of chloral hydrate. In consequence of the issue of the Rules, the appellant was called upon to take out a licence and pay the necessary excise duty. The appellant refused to do so and in November 1962 filed a writ petition in the High Court challenging inter alia the validity of the Rules. It may be mentioned that the Rules were issued under the Andhra Pradesh (Telangana Area) Intoxicating Drugs Act, No. IV of 1333 Fasli, (hereinafter referred to as the 1333 F Act) as amended by the Hyderabad Opium and Intoxicating Drugs (Amendment) Act, No. XXII of 1953. The main contention of the appellant in the High Court was that the 1333 F Act had been repealed in toto on the introduction of the Dangerous Drugs. Act, No. 2 of 1930 by the Opium and Revenue Laws (Extension of application) Act, No. 33 of 1950, and of the Drugs Act, No. 23 of 1940 by the Part B States (Laws) Act, No. III of 1951, and therefore there was no power in the Hyderabad legislature to amend it by Act 22 of 1953. In consequence there was no law in force on the basis of which the Rules could be promulgated in 1962. Secondly, it was contended that even if the 1333 F Act did not stand repealed as above, the Rules framed by the State of Andhra Pradesh in 1962 with respect to chloral hydrate were not within the powers conferred by the 1333 F Act as amended in 1953, as chloral hydrate was not a narcotic or narcotic drug and was not covered by item 51 of List II of the Seventh Schedule to the Constitution. The petition was opposed on behalf of the State, and it con tended that there was no repeal of the 1333 F Act by the introduction of the Dangerous Drugs Act 1930 and the Drugs Act, 1940, and consequently the amendment of the 1333 F Act by the Hyderabad Act No. 22 of 1953 was good, and the 1333 F Act as amended was in force in 1962 when the Rules were framed. It was further contended that the Rules were intra vires the 1333 F Act as amended in 1953 as chloral hydrate was a narcotic and an intoxicating drug. The High Court repelled the contentions raised on behalf of the appellant and dismissed the writ petition. The appellant then applied for a certificate for leave to appeal to this Court, which was 113 refused. It then obtained special leave from this Court; and that is how the matter has come before us. Before we consider the points raised in the High Court which have also been raised before us, we should like to refer to certain provisions in the three legislative Lists in the Seventh Schedule to the Constitution dealing with various aspects that arise in this case. The first of these provisions is item 59, List I, which deals with "cultivation, manufacture, and sale for export, of opium". Then there are. two items in List 11, item 8 which deals with "intoxicating liquors, that is to say, the production, manufacture, possession, transport and sale of intoxicating liquors" and item 51 which deals with "duties of excise on the following goods manufactured or produced in the State. : (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics; but not including medicinal and toilet preparations containing alcohol or any substance included in sub paragraph (b) of this entry". Lastly reference may be made to item 19 of List III, which deals with "drugs and poisons, subject to the provisions of entry 59 of List I with respect to opium". It will be seen from a perusal of these entries that a substance may fall in a number of them. For example, opium falls under item 59 of List I for certain purposes mentioned therein but also falls in item 51 of List II for the purpose of duties of excise thereon and for such control as may be required for the purpose of collecting the duties of excise. Thus for the purpose of cultivation and manufacture opium is exclusively a Union subject but for the purpose of duties of excise it is an exclusive State subject. Take another substance like chloral hydrate with which we are concerned in the present appeal. It is undoubtedly a drug and therefore falls under item 19 of List Ill. Drugs being in the Concurrent List both the Union and the States can legislate thereon. There are two Central Acts which deals with drugs, namely, the Dangerous Drugs Act 1930 and the Drugs Act, 1940. Now a substance may fall under the Dangerous Drugs Act if it is so defined there. It may also fall under the Drugs Act and may be subject to its pro visions if so indicated therein. But at the same time a substance which is a drug may also fall under item 51 of List 11 if it is a narcotic or is a narcotic drug. Even intoxicating liquor which falls under entry 8 of List II as well as under entry 51 of List II may fall under entry 19 of List III if it is a drug. This will show that even if a substance is governed by the Dangerous Drugs Act and the Drugs Act it may well be liable to duties of excise under entry 114 51 of List II and of such control as is incidental thereto. It is in this background that we have to consider the points raised on behalf of the appellant. We now come to the first point raised on behalf of the appellant, namely, whether the 1333 F Act survived the introduction of the Dangerous Drugs Act and the Drugs Act in the State of Hyderabad. The 1333 F Act was in force in Hyderabad State as it was before the Constitution from 1924. At that time the, State of Hyderabad was a sovereign State and had full power to deal with all subjects now contained in Lists 1, II and III of the Seventh Schedule to the Constitution subject of course to British paramountly and effect thereof on the sovereignty of the Hyderabad State. The 1333 F Act dealt with opium and intoxicating drugs. Intoxicating drugs were defined in this Act as meaning "ganja, bhang, charas, cocaine and all such things which are prepared therefrom and will also include such intoxicating substances which the Government may, by gazette notification, include in it, (section 2)". This definition shows that besides the four substances mentioned therein, intoxicating drugs could include other substances if a notification was issued by the Government in that behalf. We do not know as a fact whether any notification was issued after 1924 and before the Constitution came into force under this provision. But in any case the 1333 F Act applied not only to the four substances mentioned therein but also to others which might be notified. The 1333 F Act further provided that "save as authorised under this Act or rules thereunder, no person shall possess sell, manufacture, opium or intoxicating drug, (s ' 4)". The Government was also given the power to make rules regarding administration and supervision, grant of licences and collection of duties of excise, (section 5)". The 1333 F Act also provided for punishment for the contravention of the Act and the Rules and for confiscation under certain circumstances, (sections 7 to 11). It gave powers to excise officers for search of houses and arrest of accused persons, (section 16). It also provided for other powers for such officers, (section 17). There were other provisions therein to which it is unnecessary to refer. It will" be seen from this brief analysis of the 1333 F Act that it was in the nature of an excise Act and provided for licences and collection of duties of excise and made provisions incidental thereto. We have already said that this Act applied not only to opium and 'he four intoxicating drugs mentioned therein but also to other substances which might be notified thereunder. It continued in force in the Part B State of Hyderabad after the Constitution came into force in January 1950. 115 In 1950, Parliament applied the Opium Act (No. 13 of 1857), the Opium Act (t of 1878) and the Dangerous Drugs Act (No. 2 of 1930) to the Part B State of Hyderabad by Central Act 33 of 1950. Section 4 of this Act inter alia provided that if immediately before the commencement of this Act there was in force in any Part B State, other than Jammu and Kashmir, any law corresponding to any of the Acts specified therein, that law would upon the commencement of this Act, stand repealed. The Dangerous Drugs Act deals with coca leaf, coca derivative, hemp including bhang, siddhi, ganja, charas, medicinal hemp, opium and opium derivative. It also gave power to Central Government to notify any other narcotic substance as a manufactured drug under certain circumstances. The Dangerous Drugs Act thus deals, among others, with coca leaf, hemp, opium and all manufactured drugs therefrom, though there is power in the Central Gov ernment to notify other substances. The Act further provides for prohibition and control of these drugs. Further section 39(1) lays down that "nothing in this Act or in the rules made thereunder shall affect the validity of any Provincial Act or an Act of any State Legislature for the time being in force, or of any rule made thereunder, which imposes any restriction not imposed by or under this Act, or imposes a restriction greater in degree than a corresponding restriction imposed by or under this Act, on the consumption of or traffic in any dangerous drug within India". It will be seen that the Dangerous Drugs Act provides for prohibition or control, creates offences, provides for penalties and lays down procedure in that behalf. It is not an Act imposing duties of excise. Therefore, when this Act deals with hemp, which includes ganja, bhang and charas, it does not deal with that aspect of hemp which is concerned with the imposition and collection of duties of excise on it and with incidental provisions in that behalf. We have already said that a substance can come both under the Dangerous Drugs Act as well as under the Drugs Act and may also be liable to duties of excise under entry 51 of List II of the Seventh Schedule. The fact that hemp is defined as a dangerous drug under this Act would not therefore in any way affect any law dealing with the imposition and collection of duties of excise on hemp. Consequently when the Dangerous Drugs Act was introduced in the Part B State of Hyderabad in 1950, it could not affect that part of the 1333 F Act which dealt with ganja, bhang and charas, as intoxicating drugs and provided for grant of licences and collection of duties of excise thereon. Similarly, with the introduction of the Dangerous Drugs Act, the operation of the 1333 F Act could not be affected with respect even to opium insofar as that Act dealt with grant of licence and 116 collection of duties of excise thereon, though insofar as it dealt with manufacture of opium which comes under entry 59 of List 1, there was a repeal of the provisions relating to manufacture contained in the 1333 F Act and the Rules. We are therefore of opinion that the introduction of the Dangerous Drugs Act in the Part B State of Hyderabad in 1950 did not result in complete effacement of the, 1333 F Act. It remained alive even so far as opium, charas, bhang and ganja were concerned for the purpose of collection of duties of excise thereon. It also remained alive with respect to other substances which might be notified as intoxicating drugs under the 1333 F Act. If there was any such notifica tion between 1924 and 1950 that notification would remain valid and the 1333 F Act would apply ' to it. If there was no such notification, the 1333 F Act would remain on the statute book as a conditional statute under which a notification in respect of any substance could be issued. The argument that the introduction of the Dangerous Drugs Act in 1950 completely repealed the 1333F Act has no force and must fail. Then we come to the Drugs Act of 1940 which was extended to the Part B State of Hyderabad by the Central Act III of 1951. Section 6 of the 1951 Act provides that "if immediately before the appointed day, there is in force in any Part B State any law corresponding to any of the Acts or Ordinances now extended to that State, that law shall, save as otherwise expressly provided in this Act, stand repealed". It is not in dispute that chloral hydrate was controlled under the Drugs Act, and the argument on behalf of the appellant is that on the coming into force of the Drugs Act, the 1333 F Act so far as it applied to intoxicating drugs which could be notified thereunder, must be deemed to have been repealed. We are of opinion that there is no force in this argument either. The Drugs Act is mainly concerned with standard and quality of drugs manufactured in this country and therefore controls the manufacture, sale and distribution of drugs. It has nothing to do with duties of excise and with their imposition on 'narcotics and narcotic drugs. We have already indicated that narcotics and %,narcotic drugs are to be found in entry 51 of List II, which provides for imposition of duties of excise on such drugs. If a substance is a narcotic drug, it is liable to be controlled under the Drugs Act as a drug. But at the same time it is liable to duties of excise under entry 51 of List 11, and such duties can be imposed only by the State legislature. Further the State legislature will have power to enact necessary provisions for the imposition and collection of duties of excise and for all incidental matters which might be neces 117 sary for such imposition and collection. The fact that the Drugs Act was introduced in the Part B State of Hyderabad in 1951 would not therefore affect in any way that part of the 1333 F Act which dealt with collection of duties of excise and provided for licences in that connection. As we have said before, the 1333 F Act is more in the nature of an excise Act while the Drugs Act has nothing to do with the collection of duties of excise. Further section 2 of the Drugs Act specifically provides that "the provisions of this Act shall be in addition to, and not in derogation of, the Dan gerous Drugs Act, 1930, and any other law for the time being in force. " Therefore even if section 6 of the Central Act III of 1951 cad be said to have repealed any provision of the 1333 F Act which is concerned with matters other than collection of duties of excise thereunder, that will not affect the later amendment made in the 1333 F Act by the Hyderabad Act No. 22 of 1953, for that amendment will be treated in addition to the provisions of the Drugs Act so long as the 1333 F Act was not completely dead before the Hyderabad Act No. 22 of 1953 was passed. We have already said when dealing with the Dangerous Drugs Act that the introduction of that Act could not be said to have completely repealed the 1333F Act which dealt with matters not covered by the Dangerous Drugs Act at all, (namely, collection of duties of excise and matters incidental thereto). The same in our opinion applies to the Drugs Act which did not deal at all with the collection of duties of excise on drugs covered by it. Therefore the 1333 F Act insofar as it deals with the collection of duties of excise on any drugs which are narcotics or narcotic drugs would remain alive to that extent. There can be no doubt therefore that the 1333 F Act continued in existence so far as it dealt with collection of duties of excise on substances covered by it and it could therefore be amended by Hyderabad Act No. 22 of 1953. This brings us to the second point raised in the present appeal, namely, that even if the 1333 F Act had not been completely repealed by the introduction of the Dangerous Drugs Act and the Drugs Act and could be properly amended by the Hyderabad Act of 1953, the Rules were not within the power conferred by the Act. For that purpose we have to look at the 1333 F Act as it stands after the amendment of 1953. The amended Act defines "intoxicating drugs" to mean (i) Indian hemp including all forms known as bhang, sendhi or ganja, (ii) charas, (iii) any mixture of the above or any drink prepared therefrom, and (iv) any other intoxicating and narcotic substance which the Government may by notification declare to be an intoxicating drug, such substance not being opium, 118 coca leaf or a manufactured drug as defined in section 2 of the Dangerous Drugs Act. The amended Act is also clearly an excise Act as will be clear from the definition of "intoxicating drugs revenue" in section 2(2) which means revenue from any duty, fee, tax, fine or confiscation imposed, or ordered under the provisions of this Act. It was therefore open to the State Government to declare by notification any substance as an intoxicating drug within the meaning of the Act provided it was an intoxicating and narcotic substance, If such a declaration is made, the substance will be liable to excise duty under the amended Act and the Rules framed thereunder and will be liable to such incidental control as may be necessary for the collection of duties. Further, drugs being in the Concurrent List, the provisions of the 1953 amendment Act will also be a law under item 19 of List III and will be in addition to the Drugs Act of 1940 by virtue of section 2 thereof. Now, it appears that chloral hydrate has been notified by the Government of Andhra Pradesh as an intoxicating drug within the meaning of the amended Act. It was thereafter that the Rules were framed. The Rules provide for the manufacture of chloral hydrate under a licence and for payment of duties of excise of Rs. 500 per year on such manufacture. They also provide for possession, sale, import, export and transport. If chloral hydrate is a narcotic drug or a narcotic within the meaning of entry 51 of List II of the Seventh Schedule and is an intoxicating drug and narcotic substance within the meaning of section 2(1) (iv) of the Amended Act, it could be notified under the amended Act and on such notification it would be liable to excise duty and to such incidental control as may be necessary for the purpose of collection of excise duty. We are in the present case mainly concerned with the grant of licence and imposition of excise duty of Rs. 5001per annum. If chloral hydrate is an intoxicating and narcotic substance, the Rules could be framed with respect to its control and the appellant could be asked to take out a licence and pay excise duty on the manufacture thereof, even though chloral hydrate may be a drug which is controlled under the Drugs Act. The case of the State Government in this connection is that chloral hydrate is a narcotic drug or a narcotic within the meaning of entry 51 of List II of the Seventh Schedule. Its further case is that it increases intoxication if mixed with liquor and that it is being produced in large quantities in order that it may be mixed with liquor. That is the reason why the State has framed the Rules to control the production of chloral hydrate. The appellant in its writ petition admitted that chloral hydrate was used in small doses as a hypnotic and sedative. Now the dictionary meaning of 119 the word "narcotic" is a substance which relieves pain, produces sleep, and in large doses brings on stupor, coma, and even death, as opium, hemlock, alcohol etc. Obviously, therefore, if chloral hydrate is hypnotic and sedative as admitted by the appellant, it would be a narcotic. The appellant however relies on the statement in the affidavit filed on behalf of the State to show that chloral hydrate is not a narcotic or a narcotic drug within the meaning of entry 5 1 of List II, for if it is not a narcotic or a narcotic drug within that meaning no duty of excise can be imposed by the State legislature thereon. The part of the affidavit on behalf of the State relied upon by the appellant was dealing with a vague allegation of the appellant that chloral hydrate was a medicinal preparation. In that connection it was submitted on behalf of the State that chloral hydrate was not a medicinal or toilet preparation coming within the definition of the Medicinal and. Toilet Preparations (Excise Duties) Act, 16 of 1955 "as this substance in a finished form does not contain either alcohol, opium, Indian hemp or other narcotic drug or narcotics". These last words were taken from the schedule to the Act of 1955 which mentions any medicinal preparation not containing alcohol but containing opium, Indian hemp or other narcotic drug or narcotic. In the 1955 Act narcotic drug or narcotic has been defined as meaning a substance (other than alcohol) which when swallowed or inhaled by, or injected into, a human being induces drowsiness, sleep, stupefaction or insensibility in the human being and which is a dangerous drug within the meaning of the Dangerous Drugs Act, 1930. Obviously, therefore, the words " narcotic drug" and "narcotic" used in the 1955 Act have a special meaning and this was all that was intended when in the affidavit filed by the State these words were used. But all narcotics or narcotic drugs are not covered by the Dangerous Drugs Act and there, can be narcotics and narcotic drugs which are not covered by the Dangerous Drugs Act. There can be no other conclusion on the evidence in the present case than that chloral hydrate is a narcotic or a narcotic drug within the meaning of entry 51 of List 11 of the Seventh Schedule. It also has intoxicating effect when mixed with liquor and so is an intoxicating drug within the meaning of the amended Act. The appellant also relies on the , No. 16 of 1955, in this Court. It is true that the appellant stated in its writ petition that it was holding a licence under the 1955 Act; but there was no clear averment in the petition that chloral hydrate was being manufactured as a medicinal preparation under the 1955 Act. The licence which has been produced shows that chloral hydrate is being manufactured under the 120 Drugs Act and the rules framed thereunder. Further the judgment of the High Court shows that no argument was raised before it to the effect that choral hydrate was a medicinal preparation under the 1955 Act. In the circumstances we are not prepared to allow the appellant to raise this point for the first time before us, even though there was some kind of denial on this point by the State Government in its affidavit to which we have already referred. In the result the appeal fails and is hereby dismissed with costs. Appeal dismissed.

The appellant was a manufacturer of drugs, (including chloral hydrate) in Hyderabad. In 1962, the State of Andhra Pradesh issued the Andhra Pradesh (Telangana Area). Chloral Hydrate (Chloral) Rules with respect to manufacture, possession, sale import, export and transport of chloral hydrate under the Andhra Pradesh (Telangana Area) Intoxicating Drugs Act of 1333 Fasli, as amended by the Hyderabad Opium and Intoxicating Drugs (Amendment) Act of 1953. The Rules provided that the manufacture of chloral hydrate shall be in accordance with the conditions of a licence granted by the Excise Commissioner on payment of the excise duty of Rs. 500 per annum. The appellant refused to take licence and challenged the validity of the Rules by a writ petition, but the High Court dismissed the petition. In appeal to this Court, the appellant contended that (i) the 1333 F Act had been repealed in toto by the introduction into the State of the Dangerous Drugs Act, 1930 and the Drugs Act 1940, and therefore. , there was no power in the Hyderabad legislature to amend the 1333 F Act by the 1953 Act, and in consequence; there was no law in force on the basis of which the Rules could be promulgated in 1962; and (ii) even if the Act was not repealed, the Rules were not within the powers conferred by the 1333 F Act as amended in 1953, as chloral hydrate was not a narcotic or narcotic drug within the meaning of item 51, List II of the 7th Schedule to the Constitution. HELD: The 1333 F Act continued in existence in so far as it dealt with collection of duties of excise on substances covered by it and it could therefore be amended by the 1953 Act. [117 F] The 1333 F Act was in the nature of an excise Act and provided for licences and collection of duties of excise and made provisions incidental thereto. It applied to the intoxicating drugs mentioned therein and other intoxicating drugs which might be notified by the Government. The Act continued in force in Hyderabad after 26th January 1950. In 1950, the Dangerous Drugs Act was applied by Parliament, to Hyderabad, by Central Act 33 of 1950. This Act however. is not an Act imposing duties of excise. Consequently., it could not affect that part of the 1333 F Act which dealt with the grant of licences, and collection of duties of excise. Further, as a result of section 39(1) of the Dangerous Drugs Act dealing 'With the saving of local and special laws and entry 51 of List II, the introduction of the Act in Hyderabad did not result in complete effacement of the 1333 F, Act. It remained alive with respect to substances which might be notified as intoxicating drugs under the 1333 F Act. If there was any such notification before 1950, that notification would be valid and the Act would apply to it. If there was no such notification, the Act would remain on the statute book as a conditional statute under which a notification could be issued. , [114 G H; 115 E F; 116 A C] 111 The Drugs Act was extended to Hyderabad by Central Act 3 of 1951. This Act is mainly concerned with the standard and quality of drugs manufactured and therefore controls the manufacture, sale and distribution of drugs. It has also nothing to do with duties of excise and with their imposition on narcotics and narcotic drugs. Therefore, the fact that this. Act was introduced into Hyderabad in 1951 would not affect in any way that part of the 1333 F Act which dealt with collection of excise duties and provided for licences in that connection, as such duties can be imposed only by the State legislature under item 51 of List II. Hence, the 1333 F Act in so far as it deals with the collection of duties of excise on any drugs which are narcotics or narcotic drugs would remain alive to that extent. [116 D G; 117 D F] (ii) Narcotic is a substance which in small doses relieves pain and produces sleep and since it was admitted by the appellant that chloral hydrate is hypnotic and sedative, it would be a narcotic within the meaning of entry 51 of List II. The statement in the respondents ' affidavit that it did not contain narcotic or a narcotic drug was only made in reply to the appellants allegation that chloral hydrate was a medicinal preparation. All that was intended by the State by using those words was that chloral hydrate did not contain any narcotic drug or narcotic is defined in the . Chloral hydrate has also an intoxicating effect when mixed with liquor and so is an intoxicating drug within the meaning of the Amendment Act. [119 A F] The 1333 F Act after the amendment of 1953 is also an excise Act and defines intoxicating drugs to mean inter alia any intoxicating and narcotic substance which the Government may by notification declare to be an intoxicating drug. [118 A B] Since chloral hydrate is an intoxicating and narcotic substance it could be notified under the Amendment Act. It would be liable to excise duty and therefore the Rules could be framed with respect to its control, and the appellant could be asked to take out a licence and pay excise duty on the manufacture thereof. [118 D F]

Civil Appeals NOS. 1311 and, 1312 of 1973. From the Judgment and Order dated 26/27.6.1972 of the Gujarat High Court at Ahmedabad in Wealth Tax Reference Nos. 3, 4, 20, 25, 29, 32, 32 & 36 of 1970 and 1 of 1971. S G. Manchanda, B.B. Ahuja, R.N. Poddar and Miss A. Shubhashini for the Appellant. S.T. Desai Mrs. A.K. Verma and K.J. John for the Respondents. These appeals are directed against the judgment of the Gujarat High Court disposing of a wealth tax reference and answering the following question of law against the Revenue "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the provisions of section 2 (m) (iii) (a) were not applicable in respect of liabili 300 ties arising under the wealth tax assessments of the asses see for the assessment years 1960 61 and 1961 62 ?" For the purpose of determining the assessee 's net wealth in assessment proceedings under the Wealth Tax Act in respect of the assessment years 1961 62 and 1962 63, the corresponding valuation dates being March 31, 1961 and March 31, 1962, the assessee claimed a deduction of certain sums representing the estimated liabilities on account of income tax and wealth tax. The claim was rejected by the Wealth Tax Officer in both assessments. On appeal by the assessee the Appellate Assistant Commissioner of Wealth Tax allowed a part of the claim. In the appeal pertaining to the assessment year 1961 62, he allowed a deduction of Rs. 22,679 on account of wealth tax relating to the assessment year 1960 61, Rs.39,692 on account of wealth tax relating to the assessment year 1961 62 and Rs. 2,25,053 on account of income tax for the assessment year 1961 62. In the appeal pertaining to the assessment year 1962 63, the Appellate Assistant Commissioner allowed the total claim of Rs. 9,02,377 comprising a deduction of Rs 39,692 on account of wealth tax relating to the assessment year 1961 62, Rs. 77,716 on account of wealth tax for the assessment year 1962 63 and the balance on account of income tax for the assessment year 1962 63. The Revenue appealed to the Appellate Tribunal. In the appeal for the assessment year 1961 62 in contended inter alia, that the assessee was not entitled to a deduction of the wealth tax liability of Rs. 22,679 in respect of the assessment year 1960 61 because he had disputed the said liability in appeal and, therefore, the deduction was barred by reason of section 2(m) (iii) (a) of the Wealth Tax Act. Similarly, in the appeal for the assessment year 1962 63, the Revenue urged that the assessee was not entitled to a deduction of the wealth tax liability of Rs. 39,692 for the assessment year 1961 62 as he had disputed that liability in appeal and the deduction was barred by section 2(m) (iii) (a) of the Act. The Appellate Tribunal did not accept the contention of the Revenue and held that s.2(m) (iii) (a) was not attracted in respect of those liabilities as they had `G not become payable on the relevant valuation dates. At the instance of the Revenue, a reference, being Wealth Tax Reference No. 20 of 1970, was made to the Gujarat High Court for its opinion on the question of law set forth earlier. It may be mentioned that another question was also framed in that reference, and that this reference along with several other 301 references were disposed of together by the Gujrat High Court by, its judgment in Commissioner of Wealth Tax vs Kantilal Manilal.1 Against that judgment corresponding special leave petitions were filed by the Revenue in this Court, but all the special leave petitions, except Special Leave Petitions (Civil) Nos 505 and 506 of 1973, arising out of Wealth Tax Reference No. 20 of 1970, were dismissed on the merits, and in respect of these two special leave petitions the grant of special leave was restricted to the consideration of the question set forth earlier. While dealing with the question whether the provisions of section 2(m) (iii) (a) of the Wealth Tax Act barred the deduction of the wealth tax liabilities claimed by the assessee the High Court held that as the liabilities were not outstanding on the respective valuation dates section 2(m) (iii) (a) was not attracted even though the assessee had challenged in appeal that the liabilities were not payable by him. In these appeals, Shri S.C. Manchanda, appearing for the Revenue, contends that the High Court has erred insofar as it has held that the wealth tax liabilities were not outstanding on the valuation dates. His case is that the bar imposed by section 2(m) (iii) (a) operates against the claim to deduction made by the assessee. Shri S.T. Desai, appearing for the assessee, urges that section 2(m) (iii) (a) is not attracted because no amount of tax was outstanding on the respective valuation dates and in any event, he says, the appeals challenging those liabilities were not pending on the valuation dates, and therefore the further requirement, according to him, of the statute was not satisfied. Section 2(m) of the Wealth Tax Act provides: "(m) "net wealth" means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under (z this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than (i) xx xx xx (1) (1973). , z z 302 (ii) XX XX XX (iii) the amount of the tax, penalty or interest payable in consequence of any order passed under or in pursuance of this Act or any law relating to taxation of income or profits, or the (34 of 1953), the Expenditure Tax Act, , or the (18 of 1958), (a) which is outstanding on the valuation date and is claimed by the assessee in appeal, revision or other proceeding as not being payable by him; or (b) which, although not claimed by the assessee as not being payable by him, is nevertheless outstanding for a period of more than twelve months on the valuation date " In the process of computing the net wealth, the statute requires the aggregation of the value of all the debts owed by the assessee on the valuation date, except those debts which are specifically described in sub clauses (i), (ii) and (iii). We are concerned with sub clause (iii) (a).A debt which ordinarily falls within the scope of the substantive provision of section 2(m) cannot be taken into account for the purpose of determining the net wealth if it falls within the term of sub clause (iii) (a) of section 2(m). Sub clause (iii) (a) speaks the amount of the tax, penalty or interest payable in consequence of any order passed under or in pursuance of any of the tax laws mentioned therein, which is outstanding on the valuation date and is claimed by the assessee in appeal, revision or other proceeding as not being payable by him. For the assessment years 1961 62 and 1962 63 under reference, the corresponding valuation dates, as we have mentioned earlier are March 31,1961 and March 31, 1962 respectively The claim to deduction in the wealth tax liability for the assessment year 1961 62 relates to Rs. 22,679 representing the wealth tax liability for the assessment year 1960 61. The assessment order for the assessment year 1960 61 was made on March 24, 1961 but the notice of demand was served on the assessee on April 11, 1961. It is apparent that the notice of demand was served some days after the valuation date, March 31, 1961. In the wealth tax assessment of the assessment year 1962 63 the deduction claimed relates to the wealth tax liability of Rs. 39,692 for the assessment year 1961 62. The assessment order 303 on March 23, 1962 but the notice of demand was served on April 11, 1962 and that notice of demand was also served a few days after the relevant valuation date, March 31,1962. Therefore, the notice of demand in each case was served after the valuation date had passed. There was no demand already subsisting on the respective valuation dates. In order to invoke section 2 (m) (iii) (a) the Revenue must establish that an amount of the tax was outstanding on the valuation date. An amount of tax is outstanding if it is payable and has remained unpaid. In other words, if there is a debt due and there has been no payment of the debt. In a case under the Indian Income Tax Act, 1922, Doorga Prasad vs The Secretary of State, (1) the Privy Council laid down that an income tax liability becomes a debt due when payment of the tax is demanded by a notice issued under section 29 of the Act. There are three stages in respect of an income tax liability. The tax liability comes into existence on the last day of the previous year relevant to the assessment year. Thereafter when the assessment proceedings take place, an assessment order is made quantifying the assessable income and determining the tax payable. Thereupon, a notice of demand is served for payment of the tax, and the tax then becomes payable and a debt becomes due to the Revenue. That was the position under the Indian Income Tax Act, 1922 and continues to be the position under the Income Tax Act, 1961.A survey of the provisions of the Wealth Tax Act will demonstrate that in all material respects the scheme of the Wealth Tax Act is in this regard substantially the same as that incorporated in the Income Tax Act. The provisions for the assessment are of an assessee are contained in sections 14 to 17A of the Wealth Tax Act. The notice of demand requiring payment of the tax, interest or penalty is issued pursuant to section 30 of the Act. If the amount remains unpaid within the period specified in the notice the amount of the tax is said to be outstanding. A question was raised whether for the purposes of attracting section 2(m) (iii) (a) it is not sufficient that the tax liability has 6 accrued and it is necessary that a tax demand should have been made by the assessing authority. It seems to us that section 2(m) (iii) (a) comes into play only after a demand for payment of tax has been made. The clause, read in its entirety, speaks of a debt owed by the (1) 304 assessee represented by an amount of tax "payable in consequence of any order" passed under the relevant tax statute "outstanding on the valuation date". The expression "debt owed" has been held by this Court in Kesoram Industries & Cotton Mills Ltd. vs Commissioner of Wealth Tax (Central), Calcutta, (1) to mean a debt which the assessee is under an obligation to pay and, therefore, it includes both a liability to pay in praesenti as well as a liability to pay in future an ascertainable sum of money. Both kinds of liabilities are included within the expression "debt owed". But when we refer to the clause under consideration, it narrows the scope down to a liability which exists in present time. That is so because the clause speaks of tax outstanding in consequence of an order passed under the relevant taxing statute. As discussed earlier, tax becomes payable in consequence of such order when a notice of demand is served on the assessee. In the present case, it is clear that as the notices of demand respecting the wealth tax liability of Rs 22,679 and Rs. 39,692 were served on the assessee subsequent to the valuation dates, it can not be said that on the respective valuation dates the amounts of tax were outstanding. In the result a material requirement of section 2 (m) (iii) (a) is not satisfied and therefore that provision cannot be invoked by the Revenue. We now propose to consider the other point in controversy. As is apparent. if the Revenue desires to invoke section 2 (m) (iii) (a), it must establish not only that the amount of the tax, penalty or interest envisaged in that provision is outstanding on the valuation date but it must also show that the amount is claimed by the assessee in appeal, revision or other proceeding as not being payable by him. The question is whether it is a necessary requirement of the provision that the appeal, revision or other proceeding should be pending on the valuation date itself or it suffices that the appeal, revision or other proceeding is filed subsequent to the valuation date. In the present case the appeal against the wealth tax assessment order for the assessment year 1960 61 was filed on May 9, 1961, and the appeal against the wealth tax assessment order for the assessment year 1961 62 was filed on May 9, 1962. Both the appeals were filed, therefore, after the respective valuation dates, March 31, 1961 and March 31, 1962 corresponding to the assessment years 1961 62 and 1962 63 (1) ; 305 under reference. But for section 2(m) (iii) an amount of a tax outstanding on the valuation date would constitute a debt owed by the assessee on the valuation date, and the assessee would be entitled to claim its deduction in the process of computing his net wealth. Parliament, however, intended that if the amount of the tax was challenged by the assessee as not being payable by him by recourse to any of the statutory remedies prescribed in the relevant Act, such 1 claim to deduction would be barred. Plainly, in order to give full effect to that intent it is immaterial whether the statutory remedy is being availed of on the valuation date or has been taken thereafter. A challenge by the assessee that the amount outstanding is not payable by him is sufficient to bar his claim to deduction whether the challenge is subsisting on the valuation date or is initiated after the valuation date has passed. Accordingly, we are of opinion that the appeals in the present case, though filed subsequent to the respective valuation dates, would nonetheless have sufficed to bring the second requirement of section 2(m)` (iii) (a) into operation. The contrary view in respect of section 2 (m) (iii) (a) adopted by the Madras High Court in Late P. Appavoo Pillai vs Commissioner of Wealth Tax, Madras(4) appears to us to be incorrect. However, as in order to invoke the bar prescribed by section 2 (m) (iii) (a), it is necessary for the Revenue to establish that both requirements are satisfied, that is to say, that an amount of the tax is outstanding on the valuation date and further that the amount is claimed by the assessee in an appeal as not being payable by him, and the Revenue has been unable to show that in the present case the sum of Rs. 22,679 and Rs. 39,692 representing the wealth tax liabilities for the assessment years 1960 61 and 1961 62 were outstanding on the respective valuation dates corresponding to the assessment year under reference, the Revenue must fail. In the result, the appeals are dismissed. S.R. Appeals dismissed.

For the assessment years 1961 62 and 1962 63, the corresponding valuation dates of which were March 31, 1961 and March 31, 1962, assessment orders were made under the Wealth Tax Act on March 24, 1961 and March 23, 1962 respectively while the notice of demands were served on the assessee on April 11, 1961 and April 11, 1962 respectively. Against the said notices of demand the assessee preferred appeals on May 9, 1961 and May 9, 1962 respectively. For the purpose of determining the assessee 's net wealth, the assessee 's claim for a deduction of certain sums representing the estimated liabilities on account O? ' income tax and wealth tax was rejected in both assessments by the Wealth Tax Officer. On appeal by the assessee, the Appellate Assistant Commissioner of Wealth Tax allowed a part of the claim. In appeal before the Appellate Tribunal, the Revenue contended that since the assessee had disputed the wealth tax liability of Rs. 22,679/ in respect of the assessment year 1960 61 and the sum of Rs. 39,692/ in respect of the assessment year 1961 62, he was not entitled to a deduction of the same, being barred by reason of the provisions of section 2(m) (iii) (a) of the Wealth Tax Act. The Tribunal rejected the said contention and held that section 2 (m)(a) was not attracted as the tax had not become payable on the relevant valuation dates. The Wealth Tax References made at the instance of the Revenue were decided in favor of the assessee by the High Court of Gujarat by its common judgement in Commissioner of Wealth Tax vs Kantilal Manilal reported in The present appeal by special leave arises therefrom. Dismissing the appeal, the Court ^ HELD: 1.1 In order to invoke the bar prescribed by Section 2(m) (iii) (a) of the Wealth Tax Act it is necessary for the Revenue to establish that both 298 requirements therein are satisfied, that is to say, that an amount of the tax is outstanding on the valuation date and further that the amount is claimed by the assessee in an appeal as not being payable by him. [302E F] 1.2 An amount of tax is outstanding if it is payable and has remained unpaid. In other words, if there is a debt due and there has been no payment of the debt. There are three stages in respect of an income tax liability. The tax liability comes into existence on the last day o f the previous year relevant to the assessment year. Thereafter when the assessment proceedings take place an assessment order is made quantifying the assessable income and determining the tax payable. Thereupon, a notice of demand is served for payment of the tax, and the tax then becomes payable and a debt becomes due to the Revenue. A survey of the provisions of the Wealth Tax Act contained in Sections 14 to 17 and Section 30 makes it clear that in all material respects the scheme of the Wealth Tax Act is in this regard substantially, the same as that incorporated in the Income Tax Act. The notice of demand requiring payment of the tax, interest or penalty is issued pursuant to Section 30 of the Act. If the amount remains unpaid within the periods specified in the notice the amount of the tax is said to be outstanding [303D F] 1.3 Section 2(m)(iii)(a) of the Wealth Tax Act comes into play only after a demand for payment of tax has been made. The clause, read in its entirety, speaks of a debt owed by the assessee represented by an amount of tax "payable in consequence of any order" passed under the relevant tax statute and "outstanding on the valuation dates." [303H; 304A] 1.4 The expression "debt owed" is a debt which the assessee is under an obligation to pay and, therefore, it includes both a liability to pay in present as well as a liability to pay in future an ascertainable sum of money. Both kinds of liabilities are included within the expression "debt owed". But Section 2(m)(iii)(a) narrows the scope down to a liability which exists in present time because the clause speaks of tax outstanding in consequence of an order passed under the relevant taxing statute. [304B C] 1.5 In the present case, the notice of demand in each case was served after the valuation date had been passed. There was no demand already subsisting on the respective valuation dates. As the notices of demand respecting the wealth tax liability of Rs. 22,679 and Rs. 39,692 were served on the assessee subsequent to the valuation dates, if cannot be said that on the respective valuation dates the amount of tax were outstanding. In the result a material requirement of Section 2(m) (iii) (a) is not satisfied and therefore, it cannot be invoked by the Revenue. [304D E] Commissioner of Wealth Tax vs Kantilal Manilal, , approved. Doorga Prasad vs The Secretary of State, , quoted with approval 299 Kesoram Industries & Cotton Mills Ltd. vs Commissioner of Wealth Tax (Central), Calcutta, ; , followed. 1.6 The appeals in the present case, though filed subsequent to the respective valuation dates, would none the less have sufficed to bring the second requirement of section 2 (m) (iii) (a) into operation. But for Section 2 (m) (iii) (a) an amount of a tax outstanding on the valuation date would constitute a debt owed by the assessee on the valuation date, and the assessee would be entitled to claim its deduction in the process of computing his net wealth. Parliament, however, intended that if the amount of the tax was challenged by the assessee as not being payable by him by recourse to any of the statutory remedies prescribed in the relevant Act, such claim to deduction would be barred. Plainly, in order to give full effect to that intent it is immaterial whether the statutory remedy is being availed of on the valuation date or has been taken thereafter. A challenge by the assessee that the amount outstanding is not payable by him is sufficient to bar his claim to deduction whether the challenge is subsisting on the valuation date or is initiated after the valuation date has passed. [305 D; A C] Late P. Appauoo Pillai vs Commissioner of Wealth Tax, Madras, overtuled.

ivil Appeal No. 5055 of 1989. From the Judgment and Order dated 27.2.1989 of the Allahabad High Court in C.M.W.P. No. 12322 of 1984. Satish Chandra, E.C. Agarwala, Atul Sharma, Ms. Purnima Bhatt and V.K. Pandita for the Appellants. G.L. Sanghi, B.D. Agarwal, G. Ganesh, K.L. John and Ms. Shobha Dikshit for the Respondents. 531 The Judgment of the Court was delivered by SHARMA, J. This case arises out of a proceeding under the Indian Stamp Act, 1899. Special leave is granted. A dispute between the appellants and the respondent No. 1, who are members of a family, was referred to an arbitrator, who made an award on 9.10.1973, and filed the same within a few days before the civil court for making it a rule of the court. On objection by the present appellants, the prayer was rejected on 18.3.1976 and the order was confirmed by the High Court on 3.7.1981 in a regular first appeal. An application for special leave was dismissed by this Court on 18.4.1983 and a prayer for review was also rejected. It is stated on behalf of the appellants that in the meantime the respondent No.1 applied before the Collec tor for summoning the award and realising the duty and penalty. A copy of the award was annexed to the application. The respondent 's prayer was opposed by the appellants but was allowed by the Collector on 15.7.1983; and, on a request made to the civil court for sending the award, the civil court asked the office to do so. The appellants moved the Chief Controlling Revenue Authority under section 56 of the Indian Stamp Act (hereinafter referred to as the Act) against the Collector 's order dated 15.7.1983. The Authority in exercise of its revisional power set aside the impugned order of the Collector, inter alia, on the ground of lack of jurisdiction. The respondent challenged this judgment before the High Court in a writ case which was allowed by the impugned judgment dated 27.2.1989. The matter was remanded to the Collector to decide the case afresh in the light of the observations. The High Court also doubted the power of the Chief Controlling Revenue Authority to entertain the appellants ' application under section 56 of the Act. This judg ment is the subject matter of the present appeal. Mr. Satish Chander, the learned counsel for the appellants, contended that there cannot be any doubt about the power of the Chief Controlling Authority to correct an erroneous order of the Collector. Emphasis was laid on the language of section 56 suggesting its wide application. The learned counsel was also right in arguing that the Authority is not only vested with jurisdiction but has the duty to quash an order passed by the Collector purporting to be under Chapters IV and V of the Act by exercising power beyond his jurisdiction. To hold otherwise will lead to an absurd situation where a subordinate authority makes an order beyond its jurisdiction, which will have to be suf fered on account of its unassailability before a higher 532 authority. This Court in Janardan Reddy and Others vs The State of Hyderabad and Others, ; , after refer ring to a number of decisions, observed that it is well settled that if a court acts without jurisdiction, its decision can be challenged in the same way as it would have been challenged if it had acted with jurisdiction, i.e., an appeal would lie to the court to which it would lie if its order was with jurisdiction. We, therefore, agree with the appellants that the Chief Controlling Revenue Authority had full power to interfere with the Collector 's order, provided it was found to be erroneous. Their difficulty, however, is that we do not find any defect in the Collector directing to take steps for the realisation of the stamp duty. It was contended on behalf of the appellants that the respondent No. 1 had no locus standi to move the Collector for impounding the award and sub section (1) of section 33 of the Act had no application. The learned counsel proceeded to say that in the circumstances it has to be assumed that the Collector acted suo motu under sub section (4) of the said section and since the proviso to sub section (5) directs that no action under sub section (4) shall be taken after a period of four years from the date of execution of the instrument, the Collector had no authority to pass the impugned order after about a decade. In reply, Mr. G.L. Sanghi urged that the order for impounding the award was passed by the civil court itself on 18.3.1976, and the further orders of the Collector dated 22.7.1983 and of the civil court dated 27.8.1983 were passed merely by way of implementing the same. The learned counsel is right in relying upon the concluding portion of the order of the civil court dated 18.3.1976 directing the impounding of the award and sending it to the Collector for necessary action. It is true that further steps in pursuance of this judgment were not taken promptly and it was the respondent No. 1 who drew the attention to this aspect, but it cannot be legiti mately suggested that as the reminder for implementing the order came from the respondent, who was motivated by a desire to salvage the situation to his advantage, further steps could not be taken. There is no question of limitation arising in this situation and it cannot be said that what had to be done promptly in 1976 would not be done later. The orders of the Collector dated 15.7.1983 and 22.7.1983 must, therefore, in the circumstances, be held to have been passed as the follow up steps in pursuance of the civil court 's direction dated 18.3.1976, and no valid objection can be taken against them. The Collector, therefore, shall have to proceed further for realisation of the escaped duty. It was next contended that in any event the Collector did not 533 have the power to enquire into the correct valuation of the property which was the subject matter of the award. Reliance was placed on the observations in Himalaya House Co. Ltd. Bombay vs Chief Controlling Revenue Authority, There is no merit in this point either. The case comes from Uttar Pradesh where express provisions have been made by the insertion of section 47 A, authorising the Collector to examine the correctness of the valuation. Lastly Mr. Satish Chandra argued that the respondent No. 1 is taking keen interest in the present proceeding in an attempt to illegally re open the question of making the award a rule of the court, which stood concluded by the impugned judgment of the High Court and the order of this Court dismissing the special leave petition therefrom and he can not be allowed to do so. The reply of Mr. Sanghi has been that this aspect is not relevant in the present pro ceeding for realisation of the duty and need not be decided at this stage. His stand is that an award which is not made rule of the court is not a useless piece of paper and can be of some use, say by way of defence in a suit. He said that this question will have to be considered if and when the occasion arises. Having regard to the limited scope of the present proceeding, we agree with Mr. Sanghi that we may not go into this aspect in the present case, but we would clari fy the position that on the strength of the present judgment it will not be open to the respondent to urge that the effect of the High Court decision dated 8.7.1981 and the orders of this Court dismissing the special leave petition therefrom and later the review application has disappeared or has got modified. The appeal is disposed of in the above terms, but the parties are directed to bear their own costs of this Court. G.N. Appeal disposed of.

A dispute between the appellants and respondent No. 1 was referred to an arbitrator who made an award and filed it before the civil court. On objection by the appellants, the prayer for making the award a rule of the court was reject ed. On appeal, the High Court confirmed the same. This Court refused special leave and a petition for review was also dismissed. Meanwhile, respondent No. 1 applied to the Collector for summoning the award and for realising the escaped duty and penalty. The application was allowed. The appellants moved the Chief Controlling Revenue Authority under Section 56 of the Indian Stamp Act, 1899 and the authority set aside the Collector 's order. The respondents challenged the said order in a writ petition before the High Court which allowed the same and remanded the case to the Collector for deciding it afresh. Aggrieved, the appellants filed this appeal by special leave, contending inter alia, that; (a) Respondent No. 1 had no locus standi to move the Collector for impounding the award: (b) the Collector had no authority to pass the im pugned order after a decade; and (c) the Collector did not have the power to enquire into the correct valuation of the property which was subject matter of the award. Disposing of the appeal, this Court, HELD: 1.1 It is well settled that if a court acts with out jurisdiction, its decision can be challenged in the same way as it would have been challenged if it had acted with jurisdiction, i.e. an appeal would lie to the court to which it would lie if its order was with jurisdiction. [532A] 530 1.2 There is no question of limitation arising and it cannot be said that what had to be done promptly in 1976 could not be done later. The orders of the Collector dated 15.7.1983 and 22.7.1983 were passed as the follow up steps in pursuance of the civil court 's direction dated 18.3.76 and no valid objection can be taken against them. The Col lector, therefore, shall have to proceed further for reali sation of the escaped duty. [532G] 1.3 The Chief Controlling Revenue Authority had full power to interfere with the Collector 's order, provided it was found to be erroneous. But this Court does not find any defect in the Collector directing taking of steps for reali sation of the stamp duty. [532B] Janardan Reddy and Ors. vs State of Hyderabad and Ors. , ; , relied on. The instant case comes from Uttar Pradesh where express provisions have been made by the insertion of Sec tion 47 A, authorising the Collector to examine the correct ness of the valuation. Hence the Collector had the power to enquire into the valuation of the property which was the subject matter of the award. [533A B] Himalaya House Co. Ltd., Bombay vs Chief Controlling Revenue Authority, , referred to. It is clarified that on the strength of the present judgment it will not be open to the respondent to urge that the effect of the High Court decision dated 8.7.1981 and the order of this Court dismissing the special leave petition therefrom and later the review application have disappeared or have got modified. [533D E]

140 and 177 to 191 of 1959. Petitions under Article 32 of the Constitution of India for enforcement of Fundamental Rights. M. R. M. Abdul Karim and K. R. Choudhury, for petitioners. K. N. Rajagopala Sastri and D. Gupta, for respondents. 513 1961. March 22. The Judgment of the Court was delivered by KAPUR, J. These are sixteen petitions under article 32 of the Constitution challenging the legality of the imposition of surcharge imposed on the income of the assessees under the Finance Acts of 1942, 1943, 1944 and 1945. The assessment relates to four assessment years 1942 43, 1943 44, 1944 45 and 1945 46. The petitioners are four partners of a firm named Mohammedaly Sarafaly & Co., Madras, which was carrying on business in hardware, stocks, shares, etc. For the assessment years 1942 43 to 1945 46 this firm was treated as a registered firm under the Indian Income tax Act and therefore the partners were assessed on their respective shares of the profits from the business of the firm. All assessments were completed before 1949 and total income for the purpose of assessment for those four years was about Rs. 29,00,000. In 1955 the petitioners under a 'Voluntary Disclosure Scheme ' with regard to profits which had escaped assessment made a disclosure of their income and proceedings were taken under section 34 of the Income tax Act. In the month of April, 1959, there was a reassessment on all the four partners and the total income for the four assessment years thus came to about Rs. 35 lakhs which included Rs. 29 lakhs already assessed. On that income, income tax, super tax, and surcharge were levied. The surcharge, according to the petition was Rs. 3,82,791. It is this surcharge which is impugned as being, without the authority of law inasmuch as the then Federal Legislature, it is submitted, was not competent to levy the surcharge. Provision for surcharge was made under section 8(1) of the Finance Act, 1942 (Act XII of 1942). This section may now be quoted: Section 8(1) "Subject to the provisions of sub sections (2) and (3), (a) income tax for the year beginning on the 1st day of April, 1942, shall be charged at the rates specified in Part I of Schedule II increased in the cases to which subparagraph (b) of paragraph A 65 514 and paragraph B of that part apply with a sur charge for the purposes of the Central Government at the rate specified therein in respect of each such rate of income tax, and (b) rates of super tax for the year beginning on the 1st day of April, 1942, shall, for the purpose of section 55 of the Indian Income tax Act, 1922, be those specified in Part II of Schedule II increased in the cases to which paragraphs A, B and C of that Part apply by a surcharge for the purposes of the Central Government at the rate specified therein in respect of each such rate of super tax. " It was contended that the Federal Legislature had no power under the Government of India Act, 1935,(25 and 26 Geo V, Ch. 42), to impose a surcharge "for the purposes of the Central Government". The legislative power of the Federal Legislature was given in section 100 of the Government of India Act, 1935, and the power to tax income was contained in item 4 of List I of the Seventh Schedule which was as follows: "Taxes on income other than agricultural income. " Part VII of the Government of India Act, 1935, deals with Finance, Property and Suits and the first chapter deals with Finance. The relevant section which has been relied upon by the petitioners, i.e., section 138(1) of that Act, is in that Part which deals with Distribution of Revenues between the Federation and the Federal Units. That section reads: Section 138(1) "Taxes on income other than agricultural income shall be levied and collected by the Federation. . . . Provided that (a). . . . . . . . . . . (b) the Federal Legislature may at any time increase the said taxes by a surcharge for Federal purposes and the whole proceeds of any such surcharge shall form part of the revenues of the Federation. " It was submitted that according to this section the power of the Federal Legislature to impose a surcharge was only for Federal purposes; that by section 8(1) of the Finance Act, 1942, and similar provisions in 515 the other Finance Acts of three following years, the surcharge had been levied "for the purposes of the Central Government" and that the terms "the purposes of the Central Government" and "for Federal purposes" were not the same but were two different concepts. Section 311 of the Government of India Act, 1935, deals with Interpretation but "Federal purposes" is Dot defined in that section. In subsection (3) of section 313 which is in Part XIII, dealing with Transitional Provisions, it is provided: Section 313(3) "References ' in the provisions of this Act for the time being in force to the Governor General and the Federal Government shall, except as respects matters with respect to which the Governor General is required by the said provisions to act in his discretion be construed as references to the Governor General in council, and any reference to the Federation, except where the reference is to the establishment of the Federation, shall be construed as a reference to British India, the Governor General in Council, or the Governor general, as the circumstances and the context may require. " On the basis of this section it was urged that the term "Federal purposes" in section 138(1)(b) of the Government of India Act, 1935, means the purposes of the Federal Government, i.e., of the Governor General in Council or the Governor General as the case may be and that in the context it is a term of lesser amplitude than the term "purposes of the Central Government". "Central Government" in section 3(8ab)(a) of the , was defined as follows: Section 3 (8ab) "Central Government ' shall (a) in relation to anything done or to be done after the commencement of of the Government of India Act, 1935, mean the Federal Government;". "Federal Government" was defined in the in section 18 a as follows: Section 18 a " 'Federal Government ' shall (a) in relation to anything done or to be done after the commencement of of the Government of India Act, 1935, but before the establishment of the Federation, mean, as respects matters 516 with respect to which the Governor General is by and under the provisions of the said Act for the time being in force required to act in his discretion, the Governor General and as respects other matters, the Governor General in Council; and shall include (i) in relation to functions entrusted under section 124(1) of the said Act to the Government of a Province, the Provincial Government acting within the scope of the authority given to it under that subsection; and (ii) in relation to the administration of a Chief Commissioner 's Province, the Chief Commissioner acting within the scope of the authority given to him under section 94(3) of the said Act;". From these sections it was argued that the term "Federal Government" in the Government of India Act 1935, only meant the Governor General or the Governor General in Council as the case may be but under the definition in the the term "Central Government" did not only denote the Governor General or the Governor General in Council as the case may be but also included for certain purposes the Provincial Governments acting within the scope of the authority given to them under a. 124(1) of the Government of India Act, 1935. This argument, in our opinion, is wholly fallacious. The power of the Federal Legislature to legislate was conferred by section 100, sub sections (1) and (2). The first sub section deals with the power of the Federal Legislature to legislate in regard to items contained in the First List which was exclusively within the power of the Federal Legislature. The Federal Legislature therefore had the power to legislate in regard to any subject contained in List I and item 54 relating to taxes on income was in that List. It has been held that the items have to be given the widest possible amplitude. But it was submitted that the power under item 54 howsoever wide it may be is subject to the limitation contained in section 138(1), proviso (b). Now "Federal purposes" is not defined in the Government of India Act, 1935, nor is it defined in the General 517 Clauses Act. But there is sufficient indication in section 138 itself that the amounts recovered as surcharge were to form part of the Revenues of the Federation and such Revenues were to be expended for the purposes there indicated. Under section 124(4) of the Government of India Act, 1935, where powers and duties are conferred by section 124 upon a Province or a Federated State there shall be paia by the Federation to the Province or the Federated State such sum as may be agreed Hence by the definitions given in . . . Hence by the given in the no different concept of the words "purposes of the Central Government" was intended from what was intended by the use of the words "Federal purposes" in section 138(1)(b) of the Government of India Act, 1935. These petitions therefore fail and are dismissed with costs. One hearing fee. Petitions dismissed.

The petitioners as partners of a registered firm were assessed to income tax for the relevant assessment years. Thereafter they made a disclosure of their income under a "Voluntary Disclosure Scheme" regarding profits which had escaped assessment, and on reassessment of the disclosed income income tax, super tax and surcharge were levied. The levy of surcharge but not income tax and super tax was challenged as unauthorised. Held, that the power to legislate for levy of tax on income was conferred upon the Federal Legislature by section 100 sub sections (1) and (2) of the Government of India Act, 1935, and item 54 of List I of the Seventh Schedule and the Federal Legislature was competent under that entry to legislate in regard to the levy of a surcharge on tax; section 138(1) proviso (b) did not restrict the amplitude of that legislative power. The term "Federal purposes" in section 138 is not defined in the Government of India Act nor in the ; but there is sufficient indication in the section itself that surcharges were to form part of the Revenues of the Federation and such Revenues were to be expended for the purposes therein mentioned. The concept of the words "purposes of the Central Government" under the was not different from what was intended by the use of the words "Federal purposes" in section 138(i) proviso (b) of the Government of India Act.

tions (Crl.) Nos. 526 27 of 1988. [Under Article 32 of the Constitution of India). Ram Jethmalani. Shanti Bhushan, Ms. Rani Jethmalani, R.M. Tewari, P.K. Dey. Sanjay Karol. Ms. Lata Krishnamurthy, Dr. B.L. Wadhera. Ms. Nandita Jain and Mahesh Jethmalani for the Petitioners. K. Parasaran, Attorney General, G. Ramaswamy, Additional Solocitor General, Ms. A Subhashini and Parmeshwaran for the Respondents. The Judgment of the Court was delivered by PATHAK, CJ. On 22 January, 1986 Kehar Singh was convicted of an offence under section 120 B read with section 302 of the Indian Penal Code in connection with the assassination of Smt. Indira Gandhi, then Prime Minister of India, on 31 October, 1984 and was sentenced to death by the learned Additional Sessions Judge, New Delhi. His appeal was dismissed by the High Court of Delhi, and his subsequent appeal by special leave [Criminal Appeal No. 180 of 1987 to this Court was dismissed on 3 August, 1988. A Review Petition filed thereafter by Kehar Singh was dismissed on 7 September, 1988 and later a writ petition was also dismissed by this Court. On 14 October, 1988 his son, Rajinder Singh, presented petition to the President of India for the grant of pardon to Kehar Singh under article 72 of the Constitution. In that petition reference was made to the evidence on the record of the criminal case and it was sought to be established that PG NO 1107 Kehar Singh was innocent, and that the verdict of the Courts that Kehar Singh was guilty was erroneous. It was urged that it was a case for the exercise of clemency. The petition included a prayer that Kehar Singh 's representative may be allowed to see the President in person in order to explain the case concerning him. The petition was accompanied by extracts of the oral evidence recorded by the trial court. On 23 October. 1988 counsel for Kehar Singh wrote to the President requesting an opportunity to present the case before him and for the grant of a hearing in the matter. A letter dated 31 October, 1988 was received from the secretary to the President referring to the 'mercy petition ' and mentioning that in accordance with "the well established practice in respect of consideration of mercy petitions, it has not been possible to accept the request for a hearing". On 3 November. 1988 a further letter was addressed to the President counsel refuting the existence of any practice not to accord a hearing On a petition under article 72 and requesting him to re consider his decision to deny a hearing. On 15 November, 1988 the Secretary to the President wrote to counsel is follows: "Reference is invited to your letter dated November 3, 1988 on the subject mentioned above. The letter has been perused by the President and its contents carefully considered. The President is of the opinion that he cannot go into the merits of a case finally decided by the Highest Court of the Land. Petition for grant of pardon on behalf of Shri Kehar Singh will be dealt with in accordance with the provisions of the Constitution of India". Thereafter the President rejected the petition under article 72, and on 24 November, 1988 Kehar Singh was informed of the rejection of the petition. His son, Rajinder Singh, it is said, came to know on 30 November, 1988 from the newspaper media that the date of execution of Kehar Singh had been fixed for 2 December, 1988. The next day, 1 December, 1988 be filed a petition in the High Court of Delhi praying for an order restraining, the respondents from executing the sentence of death, and on the afternoon of the same day the High Court dismissed the petition. Immediately upon dismissal of the writ petition, counsel moved this Court and subsequently field Special Leave Petition [Crl. No. 3084 of 1988 in this Court along with Writ Petitions Nos. 526 27 of 19888 under article 32 of the Constitution. During the preliminary hearing late in the afternoon of the same day 1 December, 1988 this Court decided to entertain PG NO 1108 the writ petition and made an order directing that the execution of Kehar Singh should not be carried out meanwhile. Some of the issues involved in these writ petitions and appeal were, it seems, raised in earlier cases but this Court did not find it necessary to enter into those questions in those cases. Having regard to the seriousness of the controversy we have considered it appropriate to pronounce the opinion of this Court on those questions. The first question is whether there is justification for the view that when exercising his powers under article 72 the President is precluded from entering into the merits of a case decided finally by this Court. It is clear from the record before us that the petition presented under article 72 was specifically based on the assertion that Kehar Singh was innocent of the crime for which he was convicted. That case put forward before the President is apparent from the contents of the petition and the copies of the oral evidence on the record or the criminal case. An attempt was made by the learned Attorney General to show that the President had not declined to consider the evidence led in the criminal case, but on a plain reading of the documents we are unable to agree with him. Clause (I) of Art 72 of the Constitution with which we are concerned, provides. "The President shall have the power to grant pardon, reprieves, respites or remissions of punishment or to suspend, remit or commute the sentence of any person convicted of any offence: (a) in all cases where the punishment or sentence is by Court Martial: (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. " The Constitution of India, in keeping with modern constitutional practice, is a constitutive document, fundamental to the governance of the country, whereby, according to accepted political theory, the people of India PG NO 1109 have provided a constitutional polity consisting of certain primary organs, institutions and functionaries to exercise the powers provided in the Constitution. All power belongs to the people, and it is entrusted by them to specified institutions and functionaries with the intention of working cut, maintaining and operating a constitutional order. The Preambular statement of the Constitution begins with the significant recital: "We, the people of India, having solemnly resolved to constitute India into a Sovereign Socialist Secular Democratic Republic . do hereby adopt, enact and give to ourselves this Constitution. " To any civilised society, there can be no attributes more important than the life and personal liberty of its members. That is evident from the paramount position given by the Courts to article 21 of the Constitution. These twin attributes enjoy a fundamental ascendancy over all other attributes of the political and social order, and consequently, the Legislature, the Executive and the Judiciary are more sensitive to them than to the other attributes of daily existence. The deprivation of personal liberty and the threat of the deprivation of life by the action of the State is in most civilised societies regarded seriously and recourse, either under express constitutional provision or through legislative enactment, is provided to the judicial organ. But, the fallibility of human judgment being undeniable even in the most trained mind, a mind resourced by a harvest of experience, it has been considered appropriate that in the matter of life and personal liberty, the protection should be extended by entrusting power further to some high authority to scrutinise the validity of the threatened denial of life or the threatened or continued denial of personal liberty. The power so entrusted is a power belonging to the people and reposed in the highest dignitary of the State. In England, the power is regarded as the royal prerogative of pardon exercised by the Sovereign, generally through the Home Secretary. It is a power which is capable of exercise on a variety of grounds, for reasons of State as well as the desire to safeguard against judicial error. It is an act of grace issuing from the Sovereign. In the United States, however, after the founding of the Republic, a pardon by the President has been regarded not as a private act of grace but as a part of the constitutional scheme. In an opinion, remarkable for its erudition and clarity, Mr. Justice Holmes, speaking for the Court in W.I. Biddle vs Vuco Perovich, ; enunciated this view and it has since been, affirmed in other decisions. The power to pardon is a part of the constitutional scheme, and we have no doubt, in our mind, that it should be so treated PG NO 1110 also in the Indian Republic. It has been reposed by the people through the Constitution in the Head of the State, and enjoys high status. It is a constitutional responsibility of great significance, to be exercised when occasion arises in accordance with the discretion contemplated by the context. It is not denied, and indeed it has been repeatedly affirmed in the course of argument by learned counsel, Shri Ram Jethmalani and Shri Shanti Bhushan, appearing for the petitioners that the power to pardon rests on the advice tendered by the Executive to the President, who subject to the provisions of article 74(1) of the Constitution, must act in accordance with such advice. We may point out that the Constitution Bench of this Court held in Maru Ram vs Union of India? ; that the power under article 72 is to be exercised on the advice of the Central Government and not by the President on his own, and that the advice of the Government binds the Head of the State . To what areas does the power to scrutinise extend? In Ex parte William Wells, ; the United States Supreme Court pointed out that it was to be used "particularly when the circumstances of any case disclosed such uncertainties as made it doubtful it there should have been a conviction of the criminal, or when they are such as to show that there might be a mitigation of the punishment without lessening the obligation of vindicatory justice". And in Ex parte Garland, ; at 370 decided shortly after the Civil War, Mr. Justice Field observed: "The inquiry arises as to the effect and operation of a pardon, and on this point all the authorities concur. A pardon reaches both the punishment prescribed for the offence and the guilt of the offender; and when the pardon is full, it releases the punishment and blets out of existence the guilt, so that in the eye of the law the offender is as innocent as if he had never committed the offence. .if granted after conviction, it removes the penalties and disabilities, and restores him to all his civil rights . " The classic exposition of the law is to be found in Exparte Philip Grossman; , ; where Chief Justice Taft explained: "Executive clemency exists to afford relief from under harshness or evident mistake in the operation or the 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 PG NO 1111 monarchies, to vest in some other authority than the courts power to ameliorate or avoid particular criminal judgments The dicta in Ex parte Philip Grossman (supra) was approved and adopted by this Court in Kuljit Singh vs Ll. Governor of Delhi., [1982] 3 S.C.R. 58. In actual practice, a sentence has been remitted in the exercise of this power on the discovery of a mistake committed by the High Court in disposing of a criminal appeal. See Nar Singh vs State of Uttar Pradesh, [ 1955] l S.C.R.238. We are of the view that it is open to the President in the exercise of the power vested in him by article 72 of the Constitution to scrutinise the evidence on the record of the criminal case and come to a different conclusion from that recorded by the court in regard to the guilt of, and sentence imposed on, the accused. In doing so, the President does not amend or modify or supersede the judicial record. The judicial record remains intact, and undisturbed. The president acts in a wholly different plane from that in which the Court acted. He acts under a constitutional power, the nature of which is entirely different from the judicial power and cannot be regarded as an extension of it. And this is so, notwithstanding that the practical effect of the Presidential act is to remove the stigma of guilt from the accused or to remit the sentence imposed on him. In U.S. vs Benz; , at 358 Sutherland, J. observed: "The judicial power and the executive power over sentences are readily distinguishable. To render judgment is a judicial function. To carry the judgment into effect is an executive function. To cut 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 a judgment. To reduce a sentence by amendment alters the terms of the judgment itself and is judicial act as much as the imposition of the sentence in the first instance. " The legal effect of a pardon is wholly different from a judicial supersession of the original sentence. It is the nature of the power which is determinative. In Sarat Chandra Rabha and Others vs Khagendranath Nath and Others, [196] 2 S.C.R. 133 at 138 140, Wanchoo, J. speaking for the Court addressed himself to the question whether the order of remission by the Governor of Assam had the effect of reducing the sentence imposed on the apellant in the same way in which an order of an appellate or revisional criminal PG NO 1112 court has the effect of reducing the sentence passed by a trial court, and after discussing the law relating to the power to grant pardon, he said: " . Though, therefore, the effect of an order of remission is to wipe out that part of the sentence of imprisonment which has not been served out and thus in practice to reduce the sentence to the period already undergone, in law the order of remission merely means that the rest of the sentence need not be undergone, leaving the order of conviction by the court and the sentence passed by it untouched. In this view of the matter the order of remission passed in this case though it had the effect that the appellant was released from jail before he had served the full sentence of three years ' imprisonment and had actually served only about sixteen months ' imprisonment, did not in any way affect the order of conviction and sentence passed by the Court which remained as it was . " and again: " . .Now where the sentence imposed by a trial court is varied by way of reduction by the appellate or revisional court, the final sentence is again imposed by a court; but where a sentence imposed by .1 court is remitted in part under scction 401 of the Code of Criminal Procedure that has not the effect in law of reducing the sentence imposed by the court, though in effect the result may be that the convicted person suffers less imprisonment that that imposed by the court. The order of remission affects the execution of the sentence imposed by the court but does not affect the sentence as such, which remains what it was in spite of the order of remission. ." It is apparent that the power under article 72 entitles the President to examine the record of evidence of the criminal case and to determine for himself whether the case is one deserving the grant of the relief falling within that power. We are of opinion that the President is entitled to go into the merits of the case notwithstanding that it has been judicially concluded by the consideration given to it by this Court. In the course of argument, the further question raised was whether judicial review extends to an examination of the PG NO 1113 order passed by the President under article 72 of the Constitution. At the outset we think it should be clearly understood that we are confined to the question as to the area and scope of the President 's power and not with the question whether it has been truly exercised on the merits. Indeed, we think that the order of the President cannot be subjected to judicial review on its merits except within the strict limitations defined in Maru Ram, etc. vs Union of India. ; at 1249. The function of determining whether the act of a constitutional or statutory functionary falls within the constitutional or legislative conferment of power, or is vitiated by self denial on an erroneous appreciation of the full amplitude of the power is a matter for the court. In Special Reference No. 1 of 1964; , at 446, Gajendragadkar, C.J., speaking for the majority of this Court, observed: ". .Whether or not there is distinct and rigid separation of powers under the Indian Constitution, there is no doubt that the Constitution has entrusted to the Judicature in this country the task of construing the provisions of the Constitution . ." This Court in fact proceeded in State of Rajasthan and Others vs Union of India, [1978] I S.C. R. 1 at 80 81 to hold: ". So long as a question arises whether an authority under the Constitution has acted within the limits of its power or exceeded it, it can certainly be decided by the Court. Indeed it would be its Constitutional obligation to do so . .this Court is the ultimate interpreter of the Constitution and to this Court is assigned the delicate task of determining what is the power conferred on each branch of Government, whether it is limited, and if so. what are the limits and whether any action of that branch transgresses such limits. It is for this Court to uphold the Constitutional values and to enforce the Constitutional limitations. That is the essence of the Rule of Law . " and in Minerva Mills Ltd. vs Union of India. [1981] 1 section C. R. 206 at 286 287, Bhagwati, J. said: ". the question arises as to which authority must decide what are the limits on the power conferred upon each organ or instrumentality of the State and whether such PG NO 1114 limits are transgressed or exceeded . The Constitution has, therefore, created an independent machinery for resolving these disputes and this independent Machinery is the judiciary which is vested with the power of judicial review. ." It Will be noted that the learned Judge observed in S.P. Sampath Kumar vs Union of India, ; that this was also the view of the majority Judges in Minerva Mills Ltd. vs Union of India, (supra). The learned Attorney General of India contends that the power exercised under article 72 is not justiciable, and that article 72 is an enabling provision and confers no right on any individual to invoke its protection. The power, he says, can be exercised for political considerations, which are not amenable to judicially manageable standards. In this connection, he has placed A.K. Roy, etc. vs Union of India and Anr. , ; before us. Reference has also been made to D K.M. Nanavati vs The State of Bombay, [ i961] 1 SCR 497 to show that when there is an apparent conflict between the power to pardon vested in the President or the Governor and the judicial power of the Courts and attempt must be made to harmonise the provisions conferring the two different powers. On the basis of Gopal Vinayak Godse vs The State of Maharashtra and Ors., [ ; he urges that the power to grant remissions is exclusively within the province of the President. He points out that the power given to the President is untrammelled and as the power proceeds on the advice tendered by the Executive to the President, the advice likewise must be free from limitations, and that if the President gives no reasons for his order, the Court cannot ask for the reasons, all of which, the learned Attorney General says, establishes the non justiciable nature of the order. Then he refers to the appointment of Judges by the President as proceeding from a sovereign power, and we are referred to Mohinder Singh vs State of Punjab, A.I.R. 1976 SC 2299; Joseph Peter vs State of Goa, Daman and Diu, ; as well as Riley and Others vs Attorney General of Jamaica and Another, [ and Council of Civil Service Unions and Others vs Minister for the Civil Service, ; besides Attorney General vs Times Newspapers Ltd., Our attention has been invited to paragraphs 949 to 951 in 8 Halsbury 's Laws of England to indicate the nature of the power of pardon and that it is not open to the Courts to question the manner of its exercise. Reference to a passage in 104 Law Quarterly Review was followed by Horwitz vs Connor, Inspector General of Penal Establishments PG NO 1115 of Victoria; , Reliance was placed on the doctrine of the division of powers in support of the contention that it was not open to the judiciary to scrutinise the exercise of the "mercy" power, and much stress was laid on the observations in Michael De Freitas also called Michael Abdul Malik vs George Ramoutar and Ors., , 394., in Bandhua Mukti Morcha vs Union of India, ; , 161 and in Rai Sahib Ram Jawaya Kapur and Ors. vs The State of Punjab, 11955] 2 S.C.R. 225, 235 6. It seems to us that none of the submissions outlined above meets the case set up on behalf of the petitioner. We are concerned here with the question whether the President is precluded from examining the merits of the criminal case concluded by the dismissal of the appeal by this Court or it is open to him to consider the merits and decide whether he should grant relief under article 72. We are not concerned with the merits of the decision taken by the President, nor do we see any conflict between the powers of the President and the finality attaching to the judicial record, a matter to which we have adverted earlier. Nor do we dispute that the power to pardon belongs exclusively to the President and the Governor under the Constitution. There is also no question involved in this case of asking for the reasons for the President 's order. And none of the cases cited for the respondents beginning with Mohinder Singh (supra) advance the case of the respondents any further. The point is a simple one, and needs no elaborate exposition. We have already pointed out that the Courts are the constitutional instrumentalities to go into the scope of article 72 and no attempt is being made to analyse the exercise of the power under article 72 on the merits. As regards Michael de Freitas, (supra), that was, case from the Court of Appeal of Trinidad and Tobago, and in disposing it of the Privy Council observed that the prerogative of mercy lay solely in the discretion of the Sovereign and it was not open to the condemned person or his legal representatives to ascertain the information desired by them from the Home Secretary dealing with the case. None of these observations deals with the point before us, and therefore they need not detain us. Upon the considerations to which we have adverted, it appears to us clear that the question as to the area of the President 's power under Article 72 falls squarely within the judicial domain and can be examined by the court by way of judicial review. The next question is whether the petitioner is entitled to an oral hearing from the President on his petition PG NO 1116 invoking the powers under Article 72. It seems to us that there is no right in the condemned person to insist on an oral hearing before the President. The proceeding before the President is of an executive character, and when the petitioner files his petition it is for him to submit with it all the requisite information necessary for the disposal of the petition. He has no right to insist on presenting an oral argument. The manner of consideration of the petition lies within the discretion of the President, and it is for him to decide how best he can acquaint himself with all the information that is necessary for its proper and effective disposal. The President may consider sufficient the information furnished before him in the first instance or he may send for further material relevant to the issues which he considers pertinent, and he may, if he considers it will assist him in treating with the petition, give an oral hearing to the parties. The matter lies entirely within his discretion. As regards the considerations to be applied by the President to the petition, we need say nothing more as the law in this behalf has already been laid down by this Court in Maru Ram 's case (supra). Learned counsel for the petitioners next urged that in order to prevent an arbitrary exercise of power under article 72 this Court should draw up a set of guidelines for regulating the exercise of the power. It seems to us that there is sufficient indication in the terms of article 72 and in the history of the power enshrined in that provision as well as existing case law, and specific guidelines need not be spelled out. Indeed, it may not be possible to lay down any precise, clearly defined and sufficiently channelised guidelines, for we must remember that the power under Article 72 is of the widest amplitude, can contemplate a myriad kinds and categories of cases with facts and situations varying from case to case. in which the merits and reasons of State may be profoundly assisted by prevailing occasion and passing time. And it is of great significance that the function itself enjoys high status in the constitutional scheme. Finally, an appeal was made by Shri Shanti Bhushan to us to reconsider the constitutional validity of the statutory provisions in the Indian Penal Code providing for the sentence of death. The learned Attorney General, with his usual fairness did not dispute Shri Shanti Bhushan 's right to raise the question in this proceeding. Shri Shanti Bhushan has laid great emphasis on the dissenting judgment in Bachan Singh vs State of Punjab, [ ; We have considered the matter, and we feel bound by the law laid down by this Court in that matter. The learned Attorney General has drawn our attention to the circumstance that PG NO 1117 only six sections, 120B, 121, 132, 302, 307 and 396, of the Indian Penal Code enable the imposition of the sentence of death, that besides the doctrine continues to hold the field that the benefit of reasonable doubt should be given to the accused, and that under the present criminal law the imposition of a death sentence is an exception (for which special reasons must be given) rather than the rule, that the statistics disclose that a mere 29 persons were hanged when 85,000 murders were committed during the period 1974 to 1978 and therefore, the learned Attorney General says, there is no case for reconsideration of the question. Besides, he points out, Articles 21 and 134 of the Constitution specifically contemplate the existence of a death penalty. In the circumstances, we think the matter may lie where it does. In the result, having regard to the view taken by us on the question concerning the area and scope of the President 's power under Article 72 of the Constitution, we hold that the petition invoking that power shall be deemed to be pending before the President to be dealt with and disposed of afresh. The sentence of death imposed on Kehar Singh shall remain in abeyance meanwhile. These Writ Petitions and the Special Leave Petition are concluded accordingly.

The Supreme Court dismissed an appeal by special leave filed by Kehar Singh, against his conviction and sentence of death awarded under section 120 B read with section 302 of the Indian Penal Code in connection with the assassination of the then Minister of India. Indira Gandhi. A Review Petition filed thereafter by Kehar Singh was dismissed on 7th September, 1988 and later a writ petition was also dismissed by this Court. On 14th October, 1988 Kehar Singh 's son presented a petition to the President of lndia for the grant of pardon to Kehar Singh under Article 72 of the Constitution on the ground that the evidence on record of the criminal case established that Kehar Singh was innocent and the verdict of the courts that Kehar Singh was guilty, was erroneous. In the petition, he also urged that it was a fit case of clemency and prayed that Kehar Singh 's representative may be allowed to see the President in person in order to explain the case concerning him. His request for hearing was not accepted on the ground that it was not in accordance with "the well established practice in respect of consideration of mercy petitions". Thereafter, in response to a further letter written by counsel for Kehar Singh to the President of India refuting the existence of any practice not to accord a hearing on a petition under Article 72, the Secretary to the President wrote to counsel that the President is of the opinion that he cannot go into the merits of a case finally decided by the highest Court of the land and that the petition for grant of pardon on behalf of Kehar Singh will be dealt with in accordance with the provisions of the Constitution of lndia. The President of India thereafter rejected the said petition. Hence these writ petitions and the special leave petition to this Court. PG NO 1102 PG NO 1103 The main issues involved in the writ petitions and the S.L.P. were: (a) whether there is justification for the view that when exercising his powers under article 72, the President is precluded from entering into the merits of a case decided finally by the Supreme Court; (b) to what areas does the power of the President to scrutinise extend; and (c) whether the petitioner is entitled to an oral hearing from the President in his petition invoking the powers under article 72. Disposing of the petitions, HELD: 1(i) The power to pardon is a part of the constitutional scheme and it should be so treated also in the Indian Republic. It has been reposed by the people through the Constitution in the Head of the State, and enjoys high status. It is a constitutional responsibility of great significance, to be exercised when occasion arises in accordance with the discretion contemplated by the context. [1109H; 1110A B] W. I. Biddle vs Vuco Perovich, ; referred to. 1 (ii) The power to pardon rests on the advice tendered by the Executive to the President, who subject to the provisions of article 74(1) of the Constitution. must act in accordance with such advice. [1110B] Maru Ram vs Union of lndia; , followed. 2[i] It is open to the President in the exercise of the power vested in him by article 72 of the Constitution of scrutinise the evidence on the record of the criminal case and come to a different conclusion from that recorded by the court in regard to the guilt of, and sentence imposed on, the accused. In doing so, the President does not amend or modify or supersede the judicial record. The judicial record remains intact. and undisturbed. The President acts in a wholly different plane from that in which the court acted. He acts under a constitutional power, the nature of which is entirely different from the judicial power and cannot be regarded as an extension of it. And this is so, notwithstanding that the practical effect of the Presidential act is to remove the stigma of guilt from the accused or to remit the sentence imposed on him. [111lC D] 2(ii) The legal of a effect of a pardon is wholly different from a judicial supersession of the original sentence. It is the nature of the power which is determinative. [1111G] Kuljit Singh vs Lt. Governor of Delhi, [1982] 3 S.C.R. 58; Nar A Singh vs State of Uttar Pradesh, [19S5] I S.C.R. PG NO 1104 238 and Sarat Chandra Rabha and Others vs Khagendranath Nath and Others, ; , followed. Ex Parte William Wells, ; , Ex Parte Garland, ; at 370; Ex Parte Philip Grossman, ; ; B and U.S. vs Benz, ; at 358 referred to. 3(i) There is no right in the condemned person to insist on an oral hearing before the President. The proceeding before the President is of an executive character, and when the petitioner files his petition, it is for him to submit with it all the requisite information necessary for the disposal of the petition. He has no right to insist on presenting on oral argument. [1116A B] 3(ii) The manner of consideration of the petition lies within the discretion of the President, and it is for him to decide how best he can acquaint himself with all the information that is necessary for its proper and effective disposal. The President may consider sufficient the information furnished before him in the first instance or he may send for further material relevant to the issues which he considers pertinent, and he may, if he considers it will assist him in treating with the petition, give an 'oral hearing to the parties. The matter lies entirely within his discretion. [1116B C] 3(iii) As regards the considerations to he applied by the President to the petition, the law in this behalf has already been laid down by this Court in Maru Ram etc. vs Union of India [1981] I S.C.R. 1196. [1116D] 4. There is sufficient indication in the terms of article 72 and in the history of the power enshrined in that provision as well as existing case law, and specific guidelines need not be spelled out for regulating the exercise of the power by the President. Indeed, it may not be possible to lay down any precise, clearly defined and sufficiently channelised guidelines, since the power under Article 72 is of the widest amplitude, can contemplate a myriad kinds and categories of cases with facts and situations varying from case to case, in which the merits and reasons of State may be profoundly assisted by prevailing occasion and passing time. [1116F F] 5. The question as to the area of the President 's power under Article 72 falls squarely within the judicial domain and can be examined by the court by way of judicial review. However, the order of the President cannot be subjected to PG NO 1105 judicial review on its merits except within the strict limitations defined in Maru Ram etc. vs Union of India ; at 1249. The function of determining whether the act of a constitutional or statutory functionary falls within the constitutional or legislative conferment of power, or is vitiated by self denial on an erroneous appreciation of the full amplitude of the scope of the power is a matter for the court. [1115G; 1113B C] Special Reference No. I of 1964, [1965j I S.C.R. 413 at 446; State Rajasthan and Ors. vs Union of India, ; at 80 82; Minerva Mills Ltd. vs Union of India, ; at 286 287; S.P. Sampath Kumar vs Union of India, [1987] I S.C.C. 124; A.k. Roy, etc. vs Union of India and Anr., ; and K.M. Nanavati vs The State of Bombay, [1961] I S.C.R. 497, referred to. Gopal Vinayak Godse vs The State of Maharashtra and Ors., ; ; Mohinder Singh vs State of Punjab, A.I.R. , Joseph Peter vs State of Goa, Daman and Diu, ; ; Riley and Others vs Attorney General of Jamaica and Another, ; Council of Civil Service Unions and Others vs Minister for the Civil Service, ; ; Attorney General vs Times Newspapers Ltd. ; Horwitz vs Connor Inspector General of Penal Establishments of Victoria, [1908] 6 C.I.R. 38; Michael De Feritas also called Michael Abdul Malik y. Ceorge Ramoutar and Ors., , 394, Bandhua Mukti Morcha vs Union of India, ; , 161 and Rai Sahib Ram Jawaya Kapur and Ors. vs The State of Punjab, , 235 6, distinguished. In the instant case, having regard to the view taken on the question concerning the area and scope of the President 's power under article 72 of the Constitution, the Court directed that the petition invoking that power shall be deemed to be pending before the President to be dealt with and disposed of afresh. The sentence of death imposed on Kehar Singh shall remain in abeyance meanwhile. [1117C D] The Constitution of India, in keeping with modern constitutional practice, is a constitutive document, fundamental to the governance of the country, whereby, according to accepted political theory, the people of India have provided a constitutional polity consisting of certain primary organs, institutions and functionaries to exercise the powers provided in the Constitution. [1108H; 1109A] PG NO 1106 All power belongs to the people, and it is entrusted by them to specified institutions and functionaries with the intention of working out, maintaining and operating a constitutional order. [1109B ] To any civilised society, there can be no attributes more important than the life and personal liberty of its members. That is evident from the paramount position given by the Courts to article 21 of the Constitution. [1109C] The Courts are the constitutional instrumentalities to go into the scope of Article 72. [1115B]

Civil Appeal No. 681 of 1978. Appeal by special leave from the judgment and order dated the 2nd day of September, 1976 of the Punjab & Haryana High Court in Letters Patent Appeal No. 208 of 1974. Y.S. Chitale, Mrs. A.K. Verma and Ashok Gupta for the Appellant. Hardev Singh and R.S. Sodhi for the Respondents. The Judgment of the Court was delivered by VARADARAJAN, J. This appeal by special leave is directed against the judgment of a Division Bench of the Punjab and Haryana High Court at Chandigarh in Letters Patent Appeal No. 208 of 1974 by the respondent in that appeal. The appellant who filed the Writ Petition, has its head office at Kanpur and is running two woollen mills, one at Dhariwal, in the name and style of New Egerton Woollen Mills ' (hereinafter referred to as 'Dhariwal Mills ') and another at Kanpur in the name and style of 'Lal Imli Cawnpore Woollen Mills ' (hereinafter referred to as 'Kanpur Mills '). The case of the appellant company was that after the purchase of raw material made by its head office at Kanpur the raw material is sent from various centres in India as well as from abroad to both the mills in accordance with their requirements and no raw material used in the Dhariwal Mills is purchased locally or within the area of the Market Committee, Dhariwal excepting that during the years 1969 and 1970 two contracts for the purchase of raw wool of the value of Rs. 6,000/ and Rs. 5,000/ were entered into within the area of the said Market Committee. The appellant 's case was that no purchase or sale of the raw material received by the Dhariwal Mills takes place within the area of the Market Committee and that, however, the Market Committee made a demand for payment of market fee on all raw wool purchased by the appellant from 7.3.1962 to 29.6.1968 by a letter dated 21.6.1968 on pain of 161 recovery of that amount and penalty as arrears of land revenue, if not paid within the specified time. After a series of correspondence between the appellant and the Market Committee first respondent, the latter made an assessment of market fee due from the appellant and demanded a sum of Rs. 3,67,200/ made up for Rs. 2,44,800/ being fee payable for the period from 26.5.1961 to 31.12.1970 and Rs. 1,22,400/ being penalty. As the amount was not paid the Market Committee took steps under section 41 (2) of the Punjab Agricultural Produce Markets Act, 1961 for the recovery of the amount as arrears of land revenue. It is in these circumstances that the appellant filed a Writ Petition No. 4247 of 1971 which was dismissed as infructuous on 15.11.1972 as the Market Committee agreed to withdraw the assessment and to make a fresh assessment according to the rules. The appellant contended in the present Writ Petition out of which this appeal has arisen that although it made all efforts for associating itself with the fresh assessment proceedings by producing the necessary records, the Market Committee once again levied market fee of Rs. 4,26,000/ and penalty of a like sum and made a demand for the total sum of Rs. 8,52,000/ by notice dated 16.8.1973. The present Writ Petition was filed under Articles 226 and 227 of the Constitution for quashing that demand notice and restraining the Market Committee from recovering the amount. The learned Single Judge allowed the Writ Petition on a legal point that the assessment order made is not accordance with the provisions of the aforesaid Act and the Rules, without expressing any opinion on the merits of the case. The Market Committee, therefore filed the aforesaid Letters Patent Appeal. There is no dispute that the raw material received by the Dhariwal Mills is an agricultural produce as defined is section 2A of the Act and that the said commodity after being received by the Dhariwal Mills is weighed within the notified area of the Market Committee. The contest between the parties is on the question whether in the circumstances of the case the provisions of section 23 of the Act were attracted or not. Section 23 of the Act reads thus: "A Committee shall, subject to such rules as may be made by the State Government in this behalf, levy on ad 162 valorem basis fees on the agricultural produce bought or sold by licensees in the notified market area at a rate not exceeding two rupees and twenty paise for every one hundred rupees. Provided that: (a) no fee shall be leviable in respect of any transaction in which delivery of the agricultural produce bought or sold is not actually made; and (b) a fee shall be leviable only on the parties to a transaction in which delivery is actually made. " A perusal of the records produced by the appellant reveals the existence of a number of original contracts entered into by the appellant at Kanpur with various suppliers of raw wool in India with a provision practically in all the transactions that 80 per cent of the goods was payable against the documents and the balance after receipt and examination of the goods which were to be despatched to Dhariwal Mills directly. There are certain terms and conditions on the back of the contract forms in regard to the procedure for scouring yield. It will be necessary to state only a few of those terms and conditions. Clause A relating to the procedure for scouring yield read thus: (A) Two bales at random are taken and issued to Scouring Department. The weight recorded at the time of receipt of the consignment is taken. After scouring in three bowl Scouring Machine using warm water, the wool is dried in the dryer and spread in a covered place for about 12 hours to regain normal moisture. The wool is then weighed and yield calculated". Clauses 2 and 3 read thus: '2. The Mills have every right to reject a portion or bulk if the quality is not up to the suppliers ' samples given at the time of offers. Weight received in the mills will be taken as final weight. " 163 Rule 29 of the Punjab Agricultural Produce Market (General) Rules 1962 framed under the Act provides for levy of the fees on agricultural produce bought or sold by licensees in the notified market area. Rule 29 (7) read thus: "29 (7) For the purposes of this rule agricultural produce shall be deemed to have been bought or sold in a notified market area: (a) if the agreement of sale or purchase thereof is entered into the said area; (b) if in pursuance of the agreement of sale or purchase the agricultural produce is weighed in the said area; or (c) if in pursuance of the agreement of sale or purchase the agricultural produce is delivered in the said area to the purchaser or to some other person on behalf of the purchaser. " Clauses (b) and (c) would be attracted bringing the transaction within the term 'bought or sold ' if in pursuance of the agreement of sale or purchase, even if entered into at Kanpur, the agricultural produce is weighed in the market area or if in pursuance of the agreement of sale or purchase the agricultural produce is delivered in the said area to the purchaser or to some other person on behalf of the purchaser. The Division Bench of the High Court in the Letters Patent Appeal was of the opinion that both clauses (b) and (c) are applicable to the facts of the present case even on the admitted facts of this case as the transaction of sale is completed immediately on the delivery of the goods to the Dhariwal Mils. In that view the learned Judges allowed the appeal and set aside the judgment of the learned Single Judge and left it open to the appellant company to satisfy the Market Committee in respect of any transaction which does not fall within the scope of their judgment. The question is as regards the sites of the sale. If the sale transaction took place within the Market Committee either by delivery of the goods or by weighment thereof, the transaction would fall within the ambit of Rule 29 (7). After having heard 164 learned counsel for the parties we are of the opinion that no interference with the judgment under appeal is called for except that it is necessary to make it clear that the delivery and weighment to be taken into consideration by the market Committee in respect of the past transactions regarding which the demand has been made and also future transactions must be delivery an/or weighment without which there will be no sale at all in law. Subject to this clarification we dismiss the appeal and direct the parties to bear their own costs. P.B.R. Appeal dismissed.

The appellant, with its head office at Kanpur in U.P., runs two woollen mills one of which is in Dhariwal in the State of Punjab. The raw material purchased by the head office at Kanpur was sent from various centres to the mills and no raw material used in the mills was purchased locally or within the area of the Market Committee. On demand of market fee by the Committee under section 23 of the Punjab Agricultural Produce Markets Act, 1961 the appellant stated that no purchase or sale of the raw material received by the mills took place within the area of the Market Committee and that for this reason the Committee had no jurisdiction to levy any fee in respect of those materials. A Writ Petition filed by the appellant in the High Court was dismissed a infructuous since the Market Committee agreed to withdraw the assessment and to make fresh assessment according to the rules. Some time later, however, the Market Committee once again levied market fee and penalty. A single Judge of the High Court quashed the demand notice of the Market Committee on the ground that the assessment order was not in accordance with the provisions of the Act and Rules. But a Division Bench of the High Court allowed the Committee 's Letters Patent Appeal. On the question whether the Market Committee was competent to levy fees. Dismissing the appeal, ^ HELD: Clauses (b) and (c) of rule 29 (7) of the Punjab Agricultural Produce Markets (General) Rules, 1962 would be attracted bringing the transaction within the term 'bought or sold ' if in pursuance of the agreement of sale or purchase, even if entered at the head office of the mills at Kanpur, the agricultural produce was weighed in the market area or if in pursuance of the 160 agreement of sale or purchase the agricultural produce was delivered in the said area to the purchaser or to some other person on behalf of the purchaser. [163 E F] In the instant case both clauses (b) and (c) would be applicable provided the transaction of sale was completed immediately on the delivery of the goods to the mills on weighment within the market area, if the delivery and/or weighment are such that without both or either of them there will no sale at all in law. [164 A B]

Civil Appeal Nos. 2332 1970, 2432,2784 2877 of 1981 and 7447 to 7497 of 1983 Appeals by Special leave from the Judgment and Order dated the 19th June, 1981 of the Madras High Court in Writ Petition Nos. 338, 4263 of 1977, 4028/80, 2662/78, 4056, 2171, 2170/80, 4136/78,4339/80, 2028/78,2085/80, 2178/78,1590/76,3164, 2426/80, 2122/80, 2452/78, 4414/80, 2073/78, 1598/76, 1596/76, 4257/80, 614/79, 4057, 4254, 4411, 1732/80, 1597/76, 4259/80, 2664/78, 4252, 2175/80,2058/78, 3972/80, 26/79,4410/80,1592/76,3571, 4259, 4058, 3570, 2007/80,2169/78, 2135, 4331/80, 2665/78, 2006, 4255, 4022/80, 1595/76, 4054/80, 1594/76, 4026,2174/80, 2168/78, 3567/80,2172/78, 2133/80, 2469/78, 5470/78, 1593/76, 3569/80, 1551/76, 1591/76, 2008, 3156, 4029, 3165, 4055, 4409, 4408, 2427, 3412, 4024,4023,4412,3166/80,2663/78, 4225, 2134, 3157,4253/80, 2454/78,4027/80,2471/78, 1959/80,1635/76, 2453/78,2172,3163/80,2461/78,3158, 4053,4413/80,2073/78, 3568, 2005/80,1542, 1540, 1378, 1377/78,492, 339,340/77, 1541,1379/78, 3041/77,226/79, 3050,3056,3034 3038,3037/77,3767,4261,3058/77,168/79, 3766, 3039/77,3048, 3035, 3047, 4262, 4259, 3988, 3053, 4260, 4383/77,265/79, 4258, 2967,3055,3052, 3280, 3033, 3032, 3036, 3051,3049,3040,4381,4382, 3042/1977 & 264 of 1979. WITH Civil Appeal Nos. 2985 87, 3398 3410 of 1981, 369 410, 450 59, 3091 3092 of 1982, 60/83, 2560/83, 10778 of 1983, Appeals by Special leave from the Order of the Appellate Authority, Under the payment of Gratuity Act, Madras dated 29th May, 31st January, 27th February, of 1981, 17th, & 30th April 16th December & 20th December, 1982 in P.G.A. Nos. 24/81, 31/80,90/80,138,132, 131, 134, 139, 129, 137, 92, 133,91,136, 135, of 1980, 19 23, 25 28, 30,29,31 39 of 1981, 61, 69, 101, 98,66, 73, 50, 63, 60, 32, 33, 34, 35, 36, 57, 58, 59, 62, 64, 65; 67,68,74 79, 97, 668 99, 100 & 49 of 1980 2 & 6 of 1981, 458/81, 48/82 and 12 of 1981 AND Civil Appeal No. 2559 of 1984. Appeal by Special leave from the Judgment and Order dated 22nd March, 1984, of the Appellate Authority and the Regional Labour Commissioner (Central) Madras Under the in Appeal No 17 of 1983. AND Special Leave Petition (Civil) Nos. 1819, 3324, 11382 84, 14754 of 1982 and 4940 of 1984. From the Orders dated the 19th July, 1981, 28th July & 12th August, 1982 and 16th February, 1984, of the Appellate Authority and the Regional Labour Commissioner (Central) Madras Under the in P.G.A. Nos. 20/81, 1/77, 9/82, 10 & 11/82 and 16 of 1983 Soli J. Sorabjee, A.N. Haksar, section Ramasubramaniam, Sanjay Mohan & D.N. Gupta for the Appellants in CAS. 1970/81 & 2560/83. Dr. Y.S. Chitale, section Ramasubramaniam, Sanjay Mohan, D.N. Gupta for the Appellants in CAS. 2432/81, 10778/83 & 2559/84. section Padmanabhan, section Ramasubramaniam, Sanjay Mohan & D.N. Gupta for the Appellants in CA. 2332/81 & 2985 of 1981 section Ramasubramaniam, Sanjay Mohan & D.N. Gupta for Appellants in rest of the Appeals and for Petitioners in Special Leave Petitions. S.H. Mehta & M.C. Tiwari for Respondent No. I in CA. No. 3091/82. H.S. Parihar for Respondent in CA. 60 of 1983. Ambrish Kumar for the Respondent. The Judgment of the Court was delivered by 669 SEN, J. These appeals by special leave and the connected special leave petitions from the judgment and order of the Madras High Court dated June 19, 1981 raise a question of substantial importance. The question is whether the words "fifteen days ' wages" occurring in sub section (2) of s.4 of the payment of Gratuity Act, 1972 (hereinafter referred to as the 'Act ') in the case of monthly rated employes, can only mean half a month 's wages, i.e., wages which they would have earned in a consecutive period of 15 days or in 13 working days and therefore, in calculating the amount of gratuity payable to such employees, the rate of wages earned by them has to be multiplied by 'thirteen" there being 26 working days in a month and not by "fifteen". A subsidiary question arises as to whether the words "twenty months ' wages" occurring in sub section (3) thereof would only mean wages for 520 working days taking the actual working days in 20 months or must mean 600 days taking that a month consists of 30 days. It is not necessary to state the facts in any great detail. In all these appeals, the respondent in each case was a monthly rated employee and the appellant, a public limited company, was his employer. The facts in each of these cases are more or less similar and it will suffice to state the facts in one of them. In Civil Appeal No. 2332 of 1981 Messrs Jeeva lal (1929) Ltd. vs The Appellate Authority under the , Madras & Ors, the respondent ceased to be an employee on attaining the age of superannuation after completing 35 year of service. Since he was entitled to payment of gratuity under the Act, the appellant calculated the amount of gratuity payable to him under sub section (2) of section 4 on the basis that "fifteen days ' wages" meant half of the monthly wages last drawn by him, i.e., for 13 working days, there being 26 working days in a month. Being dissatisfied with such payment, the respondent made a claim under sub section (1) of section 7 of the Act before the Controlling Authority, Madras for determination of the amount of gratuity payable to him. He made a demand for payment of an additional sum as gratuity on the ground that his daily wages should be ascertained on the basis of what he actually got for 26 working days and the amount of "fifteen days ' wages" should be calculated accordingly, not by just taking half of his wages for a month of 30 days or fixing his daily wages by dividing his monthly wages by 30. The appellant contested the claim contending that the words "fifteen days ' wages" occurring 670 in sub section (2) of section 4 of the Act only meant half a month 's wages and since a month consisted of 26 working days, the amount ' of gratuity was rightly arrived at by multiplying the daily wages by 'thirteen '. The Controlling Authority by its order dated September 23, 1978 held that for the purposes of calculating "fifteen days ' wages" it was necessary to ascertain one day 's wage and since a month consists of 26 working days, the amount of gratuity should be calculated accordingly, i.e., by dividing the monthly wages last drawn by 26 multiplied by 'fifteen ' and not by just taking half of his wages for a month of 30 days or by dividing such monthly wages by 30. It accordingly directed the appellant to pay Rs. 6069.00 as gratuity under sub section (1) of section 4 of the Act. On appeal the Appellate Authority, Madras by its order dated July 12, 1976 held that there was an error in the mode of computation of the amount of gratuity payable to the respondent. According to it, the gratuity payable to the respondent would have to be calculated at half of his monthly rate of wages, i.e., wages he would have earned in a consecutive period of 15 days and his daily wages had to be multiplied by "thirteen" and not by "fifteen" for ever completed year of service or part thereof not exceeding six months. It accordingly reduced the amount of gratuity payable to Rs. 5259.80 p. It, however, appears that the Appellate Authority in several other cases took a view to the contrary such as the one in Civil Appeal No. 2432 of 1981 relating to the same employer, Messrs Jeevanlal (1929) Ltd. as also in Civil Appeal No. 1970 of 1981 relating to another employer, Messrs Madura Coats Ltd. as also in Civil Appeal No. 2559 of 1984 relating to M/s Binny Ltd. and upheld the orders of the Controlling Authority. As a result of these conflicting orders passed by the Appellate Authority, the employers in some of these cases and the employes in others had to file petitions in the High Court under Article 226 of the Constitution and they have been disposed of in the judgment under appeal. The High Court following the decision of this Court in Shri Digvijay Woollen Mills Ltd. etc. vs Mahendra Prataprai Buch etc. and that of the Bombay High Court in Lakshmi Vishnu Textile Mills vs P.S. Mavlankar held that in order to determine "fifteen days ' wages" of a monthly rated employee under sub section (2) of section 4 of the Act, it was necessary 671 to determine one day 's wage last drawn by him and then multiply the same "fifteen" times, and the resultant sum had to be multiplied by twenty to arrive at the maximum amount of gratuity payable under sub section (3) of section 4 of the Act. It accordingly restored the orders of the Controlling Authority. In support of these appeals, learned counsel for the appellants submitted that the decision of this Court in Shri Digvijay Woollen Mills Ltd. case does not lay down any principle but, on the contrary the Court expressly observed that ' it was not necessary to go into the question as to the correctness of the conflicting views taken by different High Courts. ' Reliance was placed on the decision of the learned Single Judge of the Andhra Pradesh High Court in Associated Cement Co. Ltd. Kistna Cement Works, Kistna, Guntur Distt. vs The Appellate Authority under (Regional Assistant Commissioner of Labour, Guntur) & Ors. which was approved by a Division Bench of the same High Court in Swamy & Ors vs Controlling Authority under & Ors. In all fairness to the learned counsel, it must be said that they also brought to our notice the decisions of the Calcutta High Court in Hukamchand Jute Mills Ltd. vs State of West Bengal & Ors. that of the Bombay High Court in Lakshmi Vishnu Textile Mills ' case and that of the Gujarat High Court in Shri Digvijay Woollen Mills ' case taking a view to the contrary. It is urged that the words, 'fifteen days ' wages" occurring in sub s.(2) of s.4 of the Act are clear and unambiguous and must mean half a month 's wages and therefore there was no scope for an artificial calculation being made by dividing the wages for a month by the number of working days viz., 26 for determining the daily wages and multiplying the same by "fifteen" to determine the amount representing 15 days wages inasmuch as the wages of a monthly rated employee were for all the 30 days of a month and not 26 working days alone and therefore "fifteen days ' wages" in his case, would amount only to half a month 's wage. It is further urged that Parliament amended sub s.(3) of s.4 of the Act on recommendation of the Select Committee and raised the ceiling of gratuity from 15 months ' wages to 20 months ' wages and the reason given by the Select Committee was that there should be an incentive for 672 employees to serve beyond a period of 30 years. It is submitted that by providing for a maximum gratuity of 20 months ' wages the Select Committee meant that it should be payable for a service of 40 years; and that, if the contention of the employees were to prevail, the maximum gratuity would become payable even after completion of 34 years and 8 months instead of 40 years. We are afraid, this contention cannot prevail. These submissions, broadly stated, give rise to two question. The first is whether for the purpose of computation of "fifteen days ' wages" of a monthly rated employee under sub s.(2) of s.4 of the Act, the monthly wages last drawn by him should be treated as wages for 26 working days and his daily rate of wages should be ascertained on that basis and not by taking the wages for a month af 30 days or fixing his daily wages by dividing his monthly wages by 30. The second question is whether the words "twenty months ' wages" occurring in sub s.(3) of s.4 of the Act must be construed to mean wages for 520 days taking the actual working in days in twenty months or must mean wages for 600 days taking that a month consists of 30 days. As regards the first, the answer must be in the affirmative in view of the decision of this Court in Shri Digvijay Woollen Mills 's case, but learned counsel for the appellant want us to take a second look at is as, according to them, nothing was settled in that case. As regards the second question, the learned counsel contend that sub ss.(2) and (3) of s.4 of the Act must receive a harmonious construction as they provide for the mode of calculating the total amount of gratuity payable to an employee upon termination of his services under sub s.(l) of s.4 of the Act and it is said that a month cannot mean 26 working days for the purpose of sub s.(2) and 30 days for the purpose of sub s.(3). The is enacted to introduce a scheme for payment of gratuity for certain industrial and commercial establishments, as a measure of social security. It has now been universally recognized that all persons in society need protection against loss of income due to unemployment arising out of incapacity to work due, to invalidity, old age etc. For wage earning population, security of income, when the worker becomes old or infirm, is of consequential importance. The provisions of social security measures, retiral benefits like gratuity, provident fund and pension (known as the triple benefits) are of special importance. In 673 bringing the Act on the statute book, the intention of the legislature was not only to achieve uniformity and reasonable degree of certainty, but also to create and bring into force a self contained, all embracing, complete and comprehensive code relating to gratuity. The significance of this legislation lies in the acceptance of the principle of gratuity as a compulsory statutory retiral benefit. As is true in every case involving construction of a statute, our starting point must be the language employed by the legislature. It is necessary to set out the relevant statutory provisions of the Act. Sub s.(1) of s.4 of the Act reads: "4(1): Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years: (a) on his superannuation, or (b) on his retirement or resignation, or (b) on his death or disablement due to accident or disease. Provided that the completion of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement: Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs. Explanation For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement." Sub ss.(2) and (3) of s.4 of the Act provide as follows: "4(2): For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days ' wages based on the rate of wages last drawn by the employee concerned: Provided that in the case of a piece rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately proceeding the termination of his employment, 674 and, for this purpose, the wages paid for any overtime work shall not be taken into account: Provided further that in the case of an employee employed in a seasonal establishment, the employer shall pay the gratuity at the rate of seven days ' wages for each season. ' "4(3): The amount of gratuity payable to an employee shall not exceed twenty months ' wages. " The term 'wages ' is defined in s.2(s) as follows: "2(s): "wages" means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance. " In dealing with interpretation of sub ss.(2) and (3) of s.4 of the Act, we must keep in view the scheme of the Act. Sub section (1) of s.4 of the Act incorporates the concept of gratuity being a reward for long, continuous and meritorious service. Sub section (2) of s.4 of the Act provides for payment of gratuity at the rate of "fifteen days ' wages" based on the rate of wages last drawn by the employee concerned for every completed year of service. The legislative intent is obvious. Had the legislature stopped with the words "fifteen days ' wages" occurring in sub section (2) of s.4 of the Act there was something to be said for the submission advanced by the learned counsel for the appellants based upon the decision of learned Single Judge of the Andhra Pradesh High Court in Associated Cement 's case which was later approved by a Division Bench of that Court in Swamy 's case. But the legislature did not stop with the words "fifteen days ' wages" in sub section (2) of s.4 of the Act. The words "fifteen days ' wages" are preceded by the words "at the rate of" and qualified by the words "based on the rate of wages last drawn" by the employee concerned. The emphasis is not on what an employee would have earned in the course of fifteen days during the month when his employment was last terminated, but on the rate of fifteen days ' wages for every completed year of service, based 675 on the rate of wages last drawn by the employee concerned. The word 'rate appears twice in sub section (2) of s.4 and it necessarily involves the concept of actual working days. In Shri Digvijay Wollen Mills ' case the Court rightly observed that although a month is understood to consist of 30 days, gratuity payable under the Act treating the monthly wages as wages for 26 working days is not new or unknown. In construing a social welfare legislation, the court should adopt a beneficent rule of construction and if a section is capable of two constructions, that construction should be preferred which fulfils the policy of the Act, and is more beneficial to the persons in whose interest the Act has been passed. When, however, the a language is plain and unambiguous, the Court must give effect to it whatever may be the consequence, for, in that case, the words of the statute speak the intention of the legislature. When the language is explicit, its consequences are for the legislature and not for the courts to consider. The argument of inconvenience and hardship is a dangerous one and is only admissible in construction where the meaning of the statute is obscure and there are two methods of construction. In their anxiety to advance beneficent purpose of legislation, the courts must not yield to the temptation of seeking ambiguity when there is none. It is not correct to say that the decision in Shri Digvijay Woolen Mills ' case does not lay down any principle. Gupta, J. speaking for the Court set out the following passage from the Judgment of the Gujarat High Court in Shri Digvijay Woollen Mills ' case: "The employer is to be paid gratuity for every completed year of service and the only yardstick provided is that the rate of wages last drawn by an employee concerned shall be utilized and on that basis at the rate of fifteen days wages for each year of service, the gratuity would be computed. In any factory it is well known that an employee never works and could never be permitted to work for all the 30 days of the month. He gets 52 Sundays in a year as paid holidays and, therefore, the basic wages and dearness allowance are always fixed by taking into consideration this economic reality. A worker gets full month 's wages not by remaining on duty for all the 30 days within a 676 month but remaining on work and doing duty for only 26 days. The other extra holidays may make some marginal variation into 26 working days, but all wage boards and wage fixing authorities or Tribunals in the country have always followed this pattern of fixation of wages by this method of 26 working days. " And then observed: "The view expressed in the extract quoted above appears to be legitimate and reasonable." The learned Judge then went on to say: "Ordinarily of course a month is understood to mean 30 days, but the manner of calculating gratuity payable under the Act to the employees who work for 26 days a month followed by the Gujarat High Court cannot be called perverse." He further observed that it was not necessary to consider whether another view was possible and declined to interfere under article 136 in a matter where the High Court had taken a view favourable to the employees and the view taken could not be said to be in any way unreasonable and perverse, and then added: "Incidentally, to indicate that treating monthly wages as wages for 26 working days is not anything unique or unknown. " We find that the same view has been taken by as many as three High Courts viz. by the Calcutta, Bombay and Gujarat High Courts in the cases referred to at the Bar. We find no compelling reason to take a view different from the one expressed by this Court in Shri Digvijay Woollen Mills ' case. The intention of the legislature enacting sub section (2) of section 4 of the Act was not only to achieve uniformity and reasonable degree of certainty, but also to create and bring into force a self contained, all embracing, complete and comprehensive code relating to gratuity as a compulsory, retiral benefit. The quantum of gratuity payable under sub section (2) of s.4 of the Act has to be fifteen days ' wages based on the rate of wages last drawn by the employee concerned for every completed year of service or more in excess of six 677 months ' subject to the maximum of 20 months ' wages as provided by sub section (3) thereof. The whole object is to ensure that the employee concerned must be paid gratuity at the rate of fifteen days ' wages for 365 days in a year of service. The total amount of gratuity payable to such employee at that rate has to be multiplied by the number of years of his service subject to the ceiling imposed by sub section (3) of s.4 of the Act viz., that such amount shall not exceed 20 months ' wages. The construction of sub section (2) of s.4 of the Act adopted by the learned Single Judge of the Andhra Pradesh High Court in Associated Cement Company 's case, and later approved by a Division Bench of that Court in Swamy 's case would make it utterly unworkable. If the determination of the amount of gratuity payable under sub section (2) of s.4 depends on the number of calendar days in a month in which the services of the employee concerned terminates, the quantum of gratuity payable would necessarily vary between an employee and an employee, belonging to the same class, drawing the same scale of wages, with like service for the same number of years. Obviously, this could not have been the legislative intention. The next question is: whether a month cannot mean 26 working days for purposes of sub section (2) of s.4 of the Act and 30 days for purposes of sub section (3) thereof. It is said that if a month under sub section (2) connotes 26 working days in a month for purposes of calculating the amount of gratuity, then the rule of harmonious construction requires that the words "20 months ' wages" in sub section (3) thereof must mean wages for 520 working days taking the actual working days in 20 months and not 600 days taking that a month consists of 30 days. The contention is wholly misconceived. Sub sections (2) and (3) of s.4 of the Act are designed to achieve two separate and distinct objects and they operate at two different stages. While sub section (2) provides for the mode of calculation of the amount of gratuity, sub section (3) seeks to impose a ceiling on the amount of gratuity payable at 20 months wages. It is meant to provide an incentive to employee to serve for the period of 30 years or more By no rule of construction, sub section (2) of s.4 of the Act which uses the words "fifteen days ' wages" and not half a months wages, be called in aid for construction of the words "20 months ' wages" appearing in sub section (3) of s.4 of the Act. We do not think it necessary to deal at length with the last and 678 third question raised in some of these appeals viz, the objection to the jurisdiction of the Controlling Authority under section 3 of the Act to entertain the claim against some of the appellants. It is said that Messers Jeevanlal (1929) Ltd. is an all India concern having its branches in more than one State and therefore the 'appropriate government ' within the meaning of s.2 (a) (1) (b) of the Act in relation to them is the Central Government for purposes of section 3. The appropriate government is the Central Government in relation to an establishment belonging to or under the control of the Central Government or having branches in more than one State or of a factory belonging to, or under the control of the Central Government or in the case of a major port, mine, oil field, or railway company. Section 2 (a) (1) of the Act reads as follows: "2: In this Act, unless the context otherwise requires (a) "appropriate government" means (i) in relation to an establishment (a) belonging to, or under the control of, the Central Government, (b) having branches in more than one State, (c) of a factory belonging to, or under the control of, the Central Government, (d) of a major port, mine, oil field or railway company, the Central Government, (ii) in any other case, the State Government: It would appear that the definition of appropriate government in s.2 (a) (1) in relation to an establishment makes a distinction between establishments and factories. In relation to an establishment belonging to, or under the control of, the Central Government and of a factory belonging to, or under the control of, the Central Government, the appropriate government is the Central Government. But the Central Government is the appropriate government only in relation to an establishment having branches in more than one State. There is no like provision made in relation to such an establishment having factories in different States. We feel that the point relating to the jurisdiction of the Controlling Authority under s.3 of the Act. does not really arise. It appears that Messrs Jeewanlal(1929) Ltd 679 have their registered and head office at Calcutta and branch offices and factories at Calcutta, Bombay and Madras and sales offices at Delhi, Hyderabad and Cochin. It has also two factories in Madras viz., Shree Ganeshar Aluminium Works and Messrs Mysore Premier Metal Factory. It employs about 300 members of clerical staff at the head office and its branch offices throughout the country as well as in its two factories and employs about 1300 workmen in its factories at Calcutta, Bombay and Madras. We are inclined to the view that the Controlling Authority had jurisdiction to entertain the claim of an employee working in an office attached to a factory as such an office would be an adjunct of the factory but that is not the question before us. The Controlling Authority has in fact, confined the adjudication of claims in relation to workmen who were employed at the two factories at Madras but declined to entertain the claims of employees who were working either at the branch office at Madras or at the office attached to the factories in question. That being so, the contention relating to jurisdiction of the Controlling Authority under s.3 of the Act must fail. It has been our unfortunate experience that a beneficient measure like providing for a scheme of retiral benefit, has been be set with many difficulties in its application. It need not be over emphasised that a legislation of this kind must not suffer from any ambiguity. In the recent past, the Court in Lalappa Lingappa and Ors. vs Laxmi Vishnu Textile Mills Ltd. faced with the problem as to whether the expression "actually employed" in Explanation I to s.2 (c) of the Act must, in the context in which it appeared, meant "actually worked". The inclusive part of the definition of 'continuous service ' in s.2 (c) is to amplify the meaning of the expression by including interrupted service under certain contingencies which, but for such inclusion, would not fall within the ambit of the expression 'continuous service '. But the use of the words 'actually employed ' in Explanation 1 to s.2 (c) of the Act created a difficulty. The Court observed that it was not permissible to attribute redundancy to the words 'actually employed ' and, accordingly, held that the expression 'actually employed ' in Explanation I to s.2 (c) of the Act meant 'actually worked '. The law declared by this Court in Lalappa Lingappa 's case, supra, resulted in denial of gratuity to a large number of permanent 680 employees, whose short term absence had remained unregularised, due to lack of appreciation of the significance for the purpose of working out their entitlement to gratuity. It is to be regretted that the Government waited for a period of three years before introducing the Payment of Gratuity (Amendment) Bill, 1984 to remove the lacuna in the definition of continuous service in s.2 (c) of the Act by specifically providing that a period of absence in respect of which no punishment or penalty has been imposed would not operate to interrupt the continuity of service for the purpose of payment of gratuity. It also amplified the definition of continuous service under s.2 (c) of the Act. Such a belated legislation must have worked great injustice to a large number of permanent employees. In these cases now before us, the Court is faced with the problem of determining the mode of calculating the amount of gratuity payable to the employees concerned under sub section (1) of s.4 of the Act upon the termination of their services. It turns on the much vexed question as to the true meaning of the words "fifteen days ' wages" occurring in sub section (2) of s.4 of the Act. The section does not specify how the rate of wages last drawn by such employees are to be determined for the purpose of determining the rate of "fifteen days ' wages" under sub section (2) of s.4 of the Act. This gave rise to some doubt and difficulty amongst different High Courts in computation of the retiral benefit. It is always an unequal struggle between the capital and labour, and these cases furnish an instance where workmen after putting in long and meritorious service for over 30 years or more have been driven from one court to another for the last 12 years due to the reason that the words "fifteen days ' wages" occurring in sub section (2) of s.4 of the Act were susceptible of two possible conflicting constructions. In a situation like this, the Government should have intervened at once to introduce a Bill for inserting an appropriate provision in the Act specifying the mode of calculating the rate of wages last drawn by such employees for the purpose of determining the rate of "fifteen days ' wages" under sub section (2) of s.4 of the Act. In retrospect, we wish to impress upon the Government that whenever such doubt or difficulty is expressed by the High Courts in the application of provisions of social security measures viz., retiral benefits, gratuity, provident fund and pension and the like, 681 they must always introduce legislation to cure the defect rather than wait for judicial interpretation by the highest Court. We may also add that the Government may consider the desirability of setting up a National Labour Commission which may be entrusted not only with the task of making periodical review of such social welfare legislations from time to time but also to suggest radical reform of the laws relating to industrial relations which must be brought in tune with the changing needs of the society. In the result the appeals as well as the special leave petitions must fail and are dismissed with costs throughout. The costs are quantified at the sum of Rs. 10,000 two thirds of which shall be deposited with the Supreme Court Legal Aid Committee of which Shri Subba Rao is the Hony. Secretary and the remaining one third shall be paid to the respondent. N.V.K. Appeals and petitions dismissed.

The respondent a monthly rated employee of the appellant a public limited company, ceased to be an employee on attaining the age of superannuation after completing 35 years of service. Since he was entitled to payment of Gratuity under the , the appellant calculated the amount of gratuity payable under sub s.(2) of s.4 on the basis that 'fifteen days ' wages" meant half of the monthly wages last drawn i.e., for 13 working days. there being 26 working days in a month, The respondent being dissatisfied with this payment, made a claim under sub s(1) of s.7, before the Controlling Authority, for payment of an additional sum of gratuity on the ground that the daily wages should be ascertained on the basis of what he actually got for 26 days and the amount of "fifteen days ' wages" should be calculated accordingly, not by just taking half of his wages for a month of 30 days or fixing his daily wages by dividing his monthly wages by 30. The Controlling Authority held; that for the purpose of calculating "fifteen days ' wages" it was necessary to ascertain one day 's wage and since a 665 month consists of 26 working days, the amount of gratuity should be calculated by dividing the monthly wages last drawn by 26 and multiplying by 'fifteen '; and not by just taking half of the monthly wages or by dividing such monthly wages by 30. On appeal, the Appellate Authority, held that there was an error in the mode of computation of the amount of gratuity that was payable, and held that the gratuity payable would have to be calculated at half of the monthly rate of wages, i.e. wages earned in a consecutive period of 15 days and the daily wages had to be multiplied by "thirteen" and not by "fifteen" for every completed year of service or part thereof not exceeding six months. The amount of gratuity payable was accordingly reduced. The High Court under Article 226, held following the decision of this Court in Shri Digvijay Woollen Mills Ltd. etc. vs Mahendra Prataprai Buch etc. ; that in order to determine "fifteen days ' wages" of a monthly rated employee under sub s.(2) of s.4 of the Act, it was necessary to determine one day 's wages last drawn by him, and them multiply the same "fifteen ' times. and the resultant sum has to be multiplied by twenty to arrive at the maximum amount of gratuity payable under sub s.(3) of s.4 of the Act. The orders of the Controlling Authority were restored. In the Appeals and Special Leave Petitions it was contended on behalf of the Management: that the words "fifteen days ' wages" occurring in sub s.(2) of s.4 of the Act are clear and unambiguous and must mean half a month 's wages and therefore there was no scope for an artificial calculation being made by dividing the wages for a month by the number of working days. Dismissing the Appeals and Special Leave Petitions, ^ HELD: 1.(i) The was enacted to introduce a scheme for payment of gratuity for certain industrial and commercial establishments as a measure of social security. The significance of this legislation lies in the acceptance of the principle of gratuity as a compulsory statutory retiral benefit. [672G; 673B] (ii) In construing a social welfare legislation, the Court should adopt a beneficent rule of construction and if a section is capable of two constructions, that construction should be preferred which fulfils the policy of the Act, and is more beneficial to the persons in whose interest the Act has been passed. When the language is plain and unambiguous. the Court must give effect to it whatever may be the consequence. The argument of inconvenience and hardship is only admissible in construction where the meaning of the statue is obscure and there are two methods of construction. In an anxiety to advance the beneficent purpose of the legislation, the Court must not yield to the temptation of seeking ambiguity when there is none. [675B D] 2.(1) The intention of the Legislature in enacting sub s.(2) of s.4 of the Act was not only to achieve uniformity and reasonable degree of certainty, but 666 also to create and bring into force a self contained, all embracing, complete and comprehensive code relating to gratuity as a compulsory, retiral benefit. The quantum of gratuity payable under sub s(2) of s.4 of the Act has to be "fifteen days ' wages" based on rate of wages last drawn by the employee concerned for every completed year of service or more in excess of six months 'subject to the maximum of 20 months ' wages as provided by sub section [676G H; 677A] Shri Digvijay Woollen Mills Ltd. etc. vs Mahendra Prataprai Buch etc. ; , , referred to. Associated Cement Co. Ltd. Kistna Cement Works, Kistna Guntur Distt. vs The Appellate Authority under (Regional Assistant Commissioner of Labour, Guntur) & Ors. and Swamy & Ors. vs Controlling Authority under & Ors. , [1978] 52 IFJ 138 over ruled. (ii) The word 'rate ' appears twice in sub s.(2) of s.4 and it necessarily involves the concept of actual working days. Although a month is understood to consist of 30 days, gratuity payable under the Act treats the monthly wages as wages for 26 working days. [675A] (iii) Sub ss.(2) and (3) of the Act are designed to achieve two separate and distinct objects and they operate at two different stages. While sub section (2) provides for the mode of calculation of the amount of gratuity, sub s:(3) seeks to impose a ceiling on the amount of gratuity payable at 20 months wages. It is meant to provide in incentive to employees to serve for the period of 30 years or more. Sub s.(2) of s.4 of the Act which uses the words "fifteen days ' wages" and not half a months wages, cannot be called in aid for construction of the words "20 month ' wages ', appearing in sub s.(3) of s.4 of the Act. [677F G] 3. The definition of 'appropriate government ' in s.2(a)(1) in relation to an establishment makes a distinction between establishments and factories. In relation to an establishment belonging to, or under the control of, the Central Government and of a factory belonging to, or under the control of, the Central Government, the appropriate government is the Central Government. But the Central Government is the appropriate government only in relation to an establishment having branches in more than one State. There is no like provision made in relation to such an establishment having factories in different States. [678F G] 4. Whenever doubt or difficulty is expressed by the High Courts in the application of provisions of social security measures, namely, retiral benefits, gratuity, provident fund etc., the Government must always introduce legislation to cure the defect rather than wait judicial interpretation by the highest Court. [680H] Lalappa Lingappa and Ors. vs Laxmi Vishnu Textile Mills., Ltd. referred to. 667 5. The Government may consider the desirability of setting up a National Labour Commission which may be entrusted not only with the task of making periodical review of social welfare legislations from time to time but also to suggest radical reform of the laws relating to industrial relations which must be brought in tune with the changing needs of the society. [681A B]

Civil Appeal No. 5 of 1969. 126 From the Judgment and Order dated 20th June, 1968 of the Bombay High Court in Appeal No. 48/66. K. Jayaram, Amicus Curiae for the Appellant. Y. section Chitaley, M. V. Goswami and Ambrish Kumar for the Respondent. The Judgment of the Court was delivered by UNTWALIA, J. The plaintiff appellant filed a suit in the Trial Court in the year 1963 alleging certain unjustifiable and illegal actions on the part of his employer, the respondent in this appeal. The reliefs claimed in the suit were the following: "(a) That it may be declared that the defendant has removed the plaintiff from service illegally and without any reason. (b) That it may be declared that the defendant failed and neglected to re employ the plaintiff although the defendant restarted the factory. (c) That the defendant be ordered to reinstate the plaintiff to his former job with due benefits and advantages. (d) In the alternative the defendant may be ordered to pay to the plaintiff such compensation as to the Hon 'ble Court may deem fit. (e) For costs of the suit. (f) For such further and other reliefs as this Hon 'ble Court may deem fit. " On contest by the respondent, the Trial Court held that the dispute raised by the appellant was in the nature of an industrial dispute and hence the Civil Court had to jurisdiction to try it. The appellant took the matter in appeal before the First Appellate Court. It allowed the appeal and held that the dispute raised was of a civil nature and the case was cognizable by a Civil Court. The respondent filed the second appeal in the High Court and the High Court has agreed with the view of the Trial Court. It has said that the appellant had not claimed damages by pleading wrongful dismissal and breach of the contract of his service. The facts pleaded by him all converged to show that the dispute was an industrial dispute cognizable only by an industrial court and not by a Civil Court. The appellant has presented his appeal in this Court by a certificate granted by the High Court. 127 The Court is obliged to Mr. K. Jayaram for assisting it as Amicus Curiae in this case. After having appreciated the entire facts and the circumstances of the case, we are of the opinion that it is not quite correct to say that the suit filed by the appellant is not maintainable at all in a Civil Court. The correct position of law is that the main reliefs asked for by him which when granted will amount to specific performance of the contract of service and therefore they cannot be granted. There are a number of decisions of this Court to that effect; to wit Dr. section B. Dutt vs University of Delhi(1), section R. Tiwari vs District Board Agra & Anr.(2) and Indian Airlines Corporation vs Sukhdeo Rai.(3) Reference was also be made in this connection to the decision of this Court in Premier Automobiles Ltd. vs Kamlekar Shantaram Wadke of Bombay and Ors.(4) But then in the alternative, the appellant had also prayed for awarding compensation to him. And reading the plaint as a whole, it can legitimately be culled out that he had made out a case, whether it was right on fact or not, that is a different question, that he was wrongfully dismissed from service. This relief could be granted by the Civil Court if it found that the plaintiff 's case was true. The High Court, in our opinion, is not right in saying that no such case had at all been made out in the plaint. In our opinion, as we have earlier said, reading the plaint as a whole, such case can be spelt out. That being so to this limited extent, the matter could be examined by the Civil Court. We accordingly allow the appeal set aside the judgments of the courts below and send back the case to the Trial Court for disposing it of in accordance with law in the light of this judgment. There will be no order as to costs. Since the suit has become very old, the Trial Court is directed to dispose it of as expeditiously as possible. N.V.K. Appeal allowed.

The appellant filed a suit against his employer, the respondent, for a declaration that he had been removed from service illegally and without any reason and that he should be reinstated in his former job with due benefits and advantages. He also claimed compensation. The trial court held that the dispute raised by the appellant was in the nature of an industrial dispute and that the civil court had no jurisdiction to try the same. The First Appellate Court allowed the appeal and held that the dispute raised was of a civil nature and the case was cognizable by a civil court. In the respondent 's second appeal, the High Court agreed with the view of the trial court and held that the appellant had not claimed damages by pleading wrongful dismissal and breach of the contract of his service and that the facts pleaded in the plaint showed that the dispute was an industrial dispute cognizable only by an industrial court and not by a civil court. In the further appeal to this Court the point for consideration was whether on the facts pleaded by the appellant the dispute was an industrial dispute cognizable only by an industrial court and not by a civil court. Allowing the appeal, ^ HELD:(1) It is not quite correct to say that the suit as filed by the appellant is not maintainable at all in a civil court. The main reliefs asked for by the appellant which when granted will amount to specific performance of the contract of service and, therefore, they cannot be granted. But the appellant in the alternative has also claimed for awarding compensation to him. [127A C] (2) Reading the plaint as a whole, it can legitimately be culled out that the appellant had made out a case that he was wrongfully dismissed from service. This relief could be granted by the civil court if it found that the plaintiff 's case was true. The High Court was not right in saying that no such case had at all been made in the plaint. To this limited extent the matter could be examined by the civil court. [127D E] Dr. section B. Dutt vs University of Delhi, ; ; section R. Tewari vs Distt. Board Agra & Anr., ; ; Indian Airlines Corp. vs Sukhdeo Rai, , Premier Automobiles Ltd. vs Kamlekar Shantaram Wadke of Bombay & Ors., ; ; referred to.

ION: Civil Appeal No. 1028 of 1976. Appeal by Special Leave from the Judgment and Order dated 8 3 1976 of the Punjab and Haryana High Court in Civil Writ Petition No. 354/75. AND CIVIL APPEAL NOS. 1029 1032 OF 1976 Appeals by Special Leave from the Judgment and Order dated 8 3 1976 of the Punjab & Haryana High Court in C.W.P. Nos. 564 and 582/75 and C.W.P. Nos. 1988 and 2000/76 respectively. AND CIVIL APPEAL NO. 1033 OF 1976 Appeal by Special Leave from the Judgment and Order dated 31 5 1976 of the Punjab and Haryana High Court in C.W. Petition No. 2580/76. AND CIVIL APPEAL NO. 1034 OF 1976 Appeal by Special Leave from the Judgment and Order 10 6 1976 of the Punjab & Haryana High Court in Civil Writ Petition No. 2890/76. 955 AND CIVIL APPEAL NO. 1035 OF 1976 Appeal by Special Leave from the Judgment and Order dated 28 6 1976 of the Punjab & Haryana High Court in Civil Writ Jurisdiction No. 3216 of 1976. M. C. Bhandare, A. K. Sen, (in CA 1029/76), Mrs. Sunanda Bhandare, A. N. Karkhanis, Miss Malini Poduval and G. R. Sethi (in CA 1031/76). Soli J. Sorabjee, Addl. (In CA 1028/76), Hardev Singh for the Respondents. The Judgment of the Court was delivered by VENKATARAMIAH, J. In these appeals by special leave, we are called upon to pronounce on the validity of section 31 of the Punjab General Sales Tax Act, 1948 (hereinafter referred to as 'the Act '), the Notification dated the 13th January, 1968 issued thereunder by the Government of Punjab and the liability of the appellants to pay purchase tax under the Act in respect of the turnover relating to the purchases of paddy made by them during the relevant period. The appellants are dealers in paddy and engaged in the business of millers in the State of Punjab. They buy paddy from growers or katcha adatias, convert it into rice and sell rice. Most of the rice manufactured by them is purchased by the State Government under food procurement orders. A brief history of the relevant provisions of the Act is as follows: Under the Act as it was originally enacted, there was no provision levying tax on the purchase turnover of the goods dealt with by a dealer as defined in the Act. The Act was amended by Punjab Act No. 7 of 1958 which received the assent of the Governor on April 18, 1958 and the amending Act came into force at once. The amending Act brought about the following changes in the Act: In the long title of the Act, after the word "sale", the words "or purchase" were inserted. Clause (d) of section 2 of the Act which defined the expression 'dealer ' was amended so as to bring within the scope of that expression a person who purchased any goods in the course of trade or business. The turnover relating to purchases made by a dealer subsequent to the commencement of the amending Act of certain goods was made liable to payment of tax. The 956 word 'purchase ' was defined by clause (ff) of section 2 which was introduced by the amending Act as follows: "2. (ff) 'purchase ' with all its grammatical or cognate expressions, means the acquisition of goods other than sugarcane, foodgrains, and pulses for use in the manufacture of goods for sale for cash or deferred payment or other valuable consideration otherwise than under a mortgage, hypothecation, charge or pledge.". (The rest of the clause is not necessary for the purpose of these cases). Section 4 of the Act was amended by imposing tax on purchases also subject to sections 5 and 6 of the Act. It is, however, seen from clause (ff) of section 2 that the purchase of foodgrains was not covered by the definition and remained unaffected by the above amending Act. The Act was further amended by Punjab Act No. 13 of 1959 which deleted the words "other than sugarcane, foodgrains and pulses" in clause (ff) of section 2. Section 6 of the Act was repealed and substituted by a new section which read as follows: "6. Tax free goods. (1) No tax shall be payable on the sale of goods specified in the first column of Schedule C subject to the conditions and exceptions, if any, set out in the corresponding entry in the second column thereof and no dealer shall charge sales tax or purchase tax on the sale or purchase, as the case may be, of goods which are declared tax free from time to time under this section. (2) The State Government after giving by notification not less than three months ' notice of its intention so to do may by like notification add to or delete from Schedule B or Schedule C and thereupon Schedule B or Schedule C, as the case may be, shall be deemed to be amended accordinglly. " It is seen from the above provision that the turnover relating to the sale of goods mentioned in the first column of Schedule 'C ' to the Act subject to the conditions and exceptions, if any, set out in the corresponding entry in the second column thereof was exempted from payment of tax. By Punjab Act No. 24 of 1959, the above section 6 was substituted by a new section which read as follows: "6. Tax free goods. (1) No tax shall be payable on the sale of goods specified in the first column of Schedule B 957 subject to the conditions and exception, if any, set out in the corresponding entry in the second column thereof and no dealer shall charge sale tax on the sale of goods which are declared tax free from time to time under this section. (2) The State Government after giving by notification not less than three months ' notice of its intention so to do, may by like notification add to or delete from Schedule B and thereupon Schedule B shall be deemed to be amended accordingly. " By Punjab Act No. 18 of 1960, clause (ff) of section 2 of the Act which had undergone some alteration when Punjab Act No. 24 of 1959 came into force was substituted by a new clause which read: "2. (ff) 'purchase ', with all its grammatical or cognate expressions, means the acquisition of goods specified in Schedule C for cash or deferred payment or other valuable consideration otherwise than under a mortgage, hypothecation, charge or pledge. " The effect of the said amendment was that the turnover relating to the purchase of goods mentioned in Schedule 'C ' to the Act became liable to tax subject to the other provisions of the Act. Section 4 of the Act was also amended by the introduction of sub section (2 A) providing that notwithstanding anything contained in sub sections (1) and (2) of section 4 of the Act, no tax on the sale of any goods should be levied if a tax on their purchase was payable under the Act. Originally seven items of goods had been specified by the State Legislature in Schedule 'C ' to the Act. By the Punjab General Sales Tax (Amendment) Act, 1965 (Punjab Act No. 28 of 1965) section 31 was inserted in the Act authorising the State Government to amend Schedule 'C '. It read as follows: "31. Power to amend Schedule C The State Government, after giving by notification not less than three months ' notice of its intention so to do, may by notification add to, or delete from, Schedule C any goods, and thereupon Schedule C shall be deemed to be amended accordingly. " The words 'three months ' in the above section were substituted by 'twenty days ' by Punjab Act No. 7 of 1967. 958 In exercise of the power conferred by the above provision, the State Government issued the Notification on the 15th January, 1968 adding paddy and rice as items (8) and (9) in Schedule 'C '. The result was that the turnover relating to the purchase of paddy and rice became exigible to payment of purchase tax under the Act in the hands of the purchasers with effect from the 15th January, 1968. Aggrieved by the said notification, the appellants who became liable to payment of purchase tax on the turnover relating to the purchases of Paddy made by them filed petitions under Article 226 of the Constitution on the file of the High Court of Punjab and Haryana questioning the validity of section 31 of the Act, the Notification dated the 15th January, 1968 issued thereunder and their liability to payment of purchase tax. The principal contentions urged by the appellants before the High Court were (1) that section 31 of the Act which authorised the State Government to amend Schedule 'C ' to the Act by adding certain items making the turnover relating to their purchases liable to tax was void on the ground that it suffered from the vice of excessive delegation of legislative power and therefore the notification issued thereunder was also void and (2) that the appellants who were carrying on the business of manufacturers of rice could not be denied the benefit of section 5(2) (a) (ii) of the Act which authorised the deduction from the gross turnover the turnover relating to the sales of paddy effected in their favour notwithstanding the inclusion of paddy in Schedule 'C ' to the Act. The High Court rejected both the contentions of the appellants and dismissed the writ petitions. Hence these appeals under Article 136 of the Constitution. In this Court also, the very same contentions which were urged before the High Court were urged in support of the appeals with some slight variations. The first contention urged by Mr. M. C. Bhandare, learned counsel for the appellants was that section 31 of the Act which authorised the State Government to vary Schedule 'C ' to the Act by adding certain goods whose turnover was not liable to payment of sales tax before suffered from the vice of excessive delegation of legislative power and in the alternative he submitted that even if the said provision was otherwise valid, it could not be interpreted as including within its scope the power to issue a notification which would run counter to the express legislative policy of the Act contained in section 5(2) (a) (ii) thereof which had been enacted with the avowed purpose of giving assistance to manufacturing industries. 959 A review of the decisions of this Court to some of which we will presently refer shows that the delegation of power by the legislature to a local authority or to the Executive Government to vary or modify an existing law would not be unconstitutional so long as such delegation does not involve the abdication of essential legislative power by the legislature. Such delegations of legislative power have been upheld by this Court on several varied and diverse grounds such as the scheme and policy of the statute under which the power is delegated, the presence of guidelines in the statute regarding the exercise of delegated power, the lack of time for the Legislature to make provision with regard to all the details involved in the administration of the law, the incapacity of the Legislature to foresee all future events, the nature of the subject matter of legislation and the nature of the donee of power etc. Even in matters relating to taxation law, it has been consistently held that the Legislature can delegate the power to fix rates of tax provided there are necessary guidelines regarding such fixation on the ground that in a modern society, taxation is one of the methods by which economic and social goals of the State can be achieved and the power to tax, therefore, should be a flexible power and capable of being easily altered to meet the exigencies of circumstances. Such delegation has been held to be not amounting to delegation of essential legislative function. In Powell vs Appollo Candle Company Limited(1) the Judicial Committee of the Privy Council was called upon to decide whether section 133 of the Customs Regulation Act of 1879 of New South Wales which conferred the power on the Governor to impose tax on certain articles of import was an unconstitutional delegation of legislative powers. In holding that it was not unconstitutional, the Privy Council observed: "It is argued that the tax in question has been imposed by the Governor and not by the Legislature who alone had power to impose it. But the duties levied under the Order in Council are really levied by the authority of the Act under which the Order is issued. The Legislature has not parted with its perfect control over the Governor, and has the power, of course, at any moment, of withdrawing or altering the power which they have entrusted to him. In these circumstances, their Lordships are of opinion that the judgment of the Supreme Court was wrong in declar 960 ing Section 133 of the Customs Regulation Act of 1879 to be beyond the power of the Legislature." In J. W. Hampton Jr. & Company vs United States(1) the validity of the action of the President to make changes in the rates provided in the Tariff Act, 1922 under the power delegated by the Congress arose for consideration. That was challenged as a forbidden delegation of legislative power to executive authority. The challenge was negatived by the Supreme Court of the United States on the ground that the Congress had laid down by legislative act an intelligible principle to which the person authorised to fix the rate of customs duties on imported merchandise was to conform. The principle enunciated in the above two decisions has been substantially adopted and followed by this Court in two cases (1) Pandit Banarsi Das Bhanot vs The State of Madhya Pradesh & Ors. (2) and (2) Municipal Corporation of Delhi vs Birla Cotton, Spinning and Weaving Mills, Delhi & Anr.(3) to which we shall refer hereafter. In Rajnarain Singh vs The Chairman, Patna Administration Committee, Patna and Another(4) where an earnest attempt was made to analyse and explain the judgment of this Court in re. The Delhi Laws Act, 1912(5). Bose, J. after referring in detail to the observations made by the learned Judges in the latter case observed at page 301: "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. " In Pandit Banarsi Das Bhanot vs The State of Madhya Pradesh & Ors. (supra) where this Court was called upon to decide whether section 6(2) of the C.P. and Berar Sales Tax Act, 1947 which authorised the State Government after giving by notification not less than one month 's notice of its intention so to do by a notification 961 after the expiry of the period of notice mentioned in the first notification to amend Schedule II to that Act was constitutional, it was held that it was not unconstitutional for the Legislature to leave it to the executive to determine details relating to the working of the taxation laws, such as the selection of persons on whom the tax was to be laid, the rates at which it was to be charged in respect of different classes of goods and the like and that the power conferred on the State Government by section 6(2) of that Act to amend the Schedule relating to exemption was in consonance with the accepted legislative practice relating to the topic. In that connection at page 435, this Court observed: "Now, the authorities are clear that it is not unconstitutional for the legislature to leave it to the executive to determine details relating to the working of taxation laws, such as the selection of persons on whom the tax is to be laid, the rates at which it is to be charged in respect of different classes of goods, and the like." The next case to which reference may be made is Corporation of Calcutta & Anr. vs The Liberty Cinema(1) where the majority upheld the fixaion of a tax on cinema shows by the Corporation of Calcutta even though the Calcutta Municipal Act of 1951 prescribed no limits to which the tax could go. In that case, reliance was placed on the case of Pandit Banarsi Das Bhanot vs The State of Madhya Pradesh & Ors. (supra) and it was held that the fixation of rate of tax could be left to a non legislative body provided the Legislature gave necessary guidance for such fixation. This Court in that case found guidance in the various provisions of the statute including the fact that the body which had been authorised to levy the rate was a municipal body whose fiscal requirements were restricted by the nature and area of its jurisdiction. In Municipal Corporation of Delhi vs Birla Cotton, Spinning and Weaving Mills, Delhi & Anr. (supra) Hidayatullah, J. (as he then was) upholding the imposition of a tax by the Delhi Municipal Corporation in exercise of the power granted to it under the Delhi Municipal Corporation Act 66 of 1957 observed at page 287 as follows: "The doctrine that Parliament cannot delegate its powers, therefore, must be understood in a limited way. It only means that the legislature must not efface itself but 962 must give the legislative sanction to the imposition of the tax and must keep the control in its own hands. There is no specific provision in the Constitution which says that the Parliament cannot delegate to certain specified instrumentalities the power to effectuate its own will. The question always is whether the legislative will has been exercised or not. Once it is established that the legislature itself has willed that a particular thing be done and has merely left the execution of it to a chosen instrumentality (provided that it has not parted with its control) there can be no question of excessive delegation. If the delegate acts contrary to the wishes of the legislature the legislature can undo what the delegate has done. " In Devi Das Gopal Krishnan & Ors. vs State of Punjab & Ors.(1) the validity of section 5 of the Act (as originally enacted) which conferred on the Government power to levy tax at such rates as the Government might fix arose for consideration. This Court held that such conferment of power on the Government to levy tax at the rates determined by it without any statutory limitation or guidance was void. This Court, however, held that after section 5 was amended by Punjab Act No. 19 of 1952 by imposing the restriction that the rates determined by the State Government should not exceed two paise in a rupee was valid as the Legislature had delegated the power to the Government to determine the rates subject to the restriction mentioned above. In the course of the above decision, Subba Rao, C.J., dealing with the decision of this Court in Corporation of Calcutta vs Liberty Cinema (supra) observed: "If this decision is an authority for the position that the Legislature can delegate its power to a statutory authority to levy taxes and fix the rates in regard thereto, it is equally an authority for the position that the said statute to be valid must give a guidance to the said authority for fixing the said rates and that guidance cannot be judged by stereotyped rules but would depend upon the provisions of a particular Act. To that extent this judgment is binding on us. But we cannot go further and hold, as the learned counsel for the respondents asked us to do, that whenever a statute defines the purpose or purposes for which a statutory authority is constituted and empowers it to levy a tax a that statute necessarily contains a guidance to fix the rates: it depends upon the provisions of each statute. " 963 In Sita Ram Bishambher Dayal & Ors. vs State of U.P. & Ors.(1) the validity of section 3D(1) of the U.P. Sales Tax Act, 1948 which authorised the levy of a tax on the turnover of first purchases made by a dealer or through a dealer acting as a purchasing agent in respect of such goods or class of goods, and at such rates, not exceeding two paise per rupee in the case of foodgrains, including cereals and pulses, and five paise per rupee in the case of other goods and with effect from such date, as may, from time to time, be notified by the State Government in that behalf was questioned on the ground that the delegation of power to the State Government to determine the goods or class of goods whose purchase turnover would be liable to tax and the rates of purchase tax subject to the restriction imposed in that regard by that section suffered from the vice of excessive delegation. Repelling the above contention and upholding the said provision, Hegde, J. speaking for the Court observed thus: "It is true that the power to fix the rate of a tax is a legislative power but if the legislature lays down the legislative policy and provides the necessary guidelines, that power can be delegated to the executive. Though a tax is levied primarily for the purpose of gathering revenue, in selecting the objects to be taxed and in determining the rate of tax, various economic and social aspects, such as the availability of the goods, administrative convenience, the extent of evasion, the impact of tax levied on the various sections of the society etc. have to be considered. In a modern society taxation is an instrument of planning. It can be used to achieve the economic and social goals of the State. For that reason the power to tax must be a fexible power. It must be capable of being modulated to meet the exigencies of the situation. In a Cabinet form of Government, the executive is expected to refect the views of the legislatures. In fact in most matters it gives the lead to the legislature. However, much one might deplore the "New Despotism" of the executive, the very complexity of the modern society and the demand it makes on its Government have set in motion forces which have made it absolutely necessary for the legislatures to entrust more and more powers to the executive. Textbook doctrines evolved in the 19th Century have become out of date. Present position as regards delegation of legislative power 964 may not be ideal, but in the absence of any better alternative, there is no escape from it. The legislatures have neither the time, nor the required detailed information nor even the mobility to deal in detail with the innumerable problems arising time and again. In certain matters they can only lay down the policy and guidelines in as clear a manner as possible. " When the validity of section 3 D of U.P. Sales Tax Act, 1948 was again challenged before this Court in Hira Lal Rattan Lal etc. etc., vs State of U.P. & Anr. , etc.(1) on the very same ground, it was again upheld by this Court with the following observations: "The only remaining contention is that the delegation made to the executive under section 3 D is an excessive delegation. It is true that the legislature cannot delegate its legislative functions to any other body. But subject to that qualification, it is permissible for the legislature to delegate the power to select the persons on whom the tax is to be levied or the goods or the transactions on which the tax is to be levied. In the Act, under section 3 the legislature has sought to impose multi point tax on all sales and purchases. After having done that it has given power to the executive, a high authority and which is presumed to command the majority support in the legislature, to select for special treatment dealings in certain class of goods. In the very nature of things, it is impossible for the legislature to enumerate goods, dealings in which Sales tax or purchase tax should be imposed. It is also impossible for the legislature to select the goods which should be subjected to a single point sales or purchase tax. Before making such selections several aspects such as the impact of the levy on the society, economic consequences and the administrative convenience will have to be considered. These factors may change from time to time. Hence in the very nature of things, these details have got to be left to the executive. " We shall now proceed to examine the validity of section 31 of the Act in the light of the decisions referred to above. The expression 'dealer ' is defined in section 2(d) of the Act as "any person including a Department of Government who in the normal course of trade sells or purchases any goods, in the State of Punjab. " Section 2(ff) of the 965 Act defines the expression 'purchase ' as "acquisition of goods specified in Schedule 'C ' for cash or deferred payment. " The word 'sale ' is defined in section 2(h) of the Act as meaning "any transfer of property in goods other than goods specified in Schedule 'C ' for cash or deferred payment." Sub section (1) of section 4 of the Act which is the charging section provides that "subject to the provisions of sections 5 and 6, every dealer (except one dealing exclusively in goods declared tax free under section (6) whose gross turnover during the year immediately preceding the commencement of the Act exceeded the taxable quantum shall be liable to pay tax under the Act on all sales effected after the coming into force of the Act and purchases made after the commencement of East Punjab General Sales Tax (Amendment) Act, 1958." Section 5(1) of the Act authorises the State Government to determine the rates of tax payable on the taxable turnover of a dealer not exceeding the limit prescribed therein. Subsection (2) of section 5 of the Act lays down the principles governing the determination of "taxable turnover". During the relevant period, sub section (2) of section 5 of the Act read as follows : "5. (2) In this Act the expression "taxable turnover" means that part of a dealer 's gross turnover during any period which remains after deducting therefrom (a) his turnover during that period on (i) the sale of goods declared tax free under section 6; (ii) sales to a registered dealer of goods other than sales of goods liable to tax at the first stage under sub section (1 A); declared by him in a prescribed form as being intended for resale in the State of Punjab or sale in the course of inter State trade or commerce or sale in the course of export of goods out of the territory of India, or of goods specified in his certificate of registration or use by him in the manufacture in Punjab of any goods, other than goods declared tax free under section 6, for sale in Punjab and on sales to a registered dealer of containers or other materials for the packing of such goods: Provided that in case of such sales, a declaration duly filled up and signed by the registered dealer 966 to whom the goods are sold and containing prescribed particulars on a prescribed form obtained from the prescribed authority is furnished by the dealer who sells the goods: (ii) . . (iii). . (iv) sales to any undertaking supplying electrical energy to the public under a licence or sanction granted or deemed to have been granted under the , of goods for use by it in the generation or distribution of such energy; (v) sales or purchases of goods falling under section 29; (vi) the purchase of goods which are sold not later than six monts after the close of the year, to a registered dealer, or in the course of inter State trade or commerce, or in the course of export out of the territory of India; Provided that in the case of such a sale to a registered dealer, a declaration, in the prescribed form and duly filled up and signed by the registered dealer to whom the goods are soid, is furnished by the dealer claiming deduction. (vii)Such other sales or purchases as may be prescribed; (b) the amount of sales tax included in the gross turnover. " Section 6 of the Act during the relevant period read as substituted by Punjab Act No. 24 of 1959 with the modification made by Punjab Act No. 7 of 1967 which substituted the words "twenty days" in the place of "three months" in sub section (2) thereof. Schedule 'A ' to the Act specified certain goods which were considered as luxury goods for purposes of levy of tax at the rates prescribed by the State Government under the first proviso to section 5(1), Schedule 'B ' to the Act referred to the items of goods which were treated as tax free goods under section 6 and Schedule 'C ' during the relevant period referred to the goods the turnover of which was subject to purchase tax. The State Government was however, given power to amend all the three Schedules. 967 It is seen from the provisions of the Act referred to above that the Legislature while directing that the tax shall be levied on the turnover of sales and purchases of goods under section 4 left the rates of tax payable to be determined by the State Government under section 5(1) of the Act subject to the limits prescribed therein. The Legislature after specifying the goods which should be treated as luxury goods, tax free goods and goods whose purchase turnover is liable to tax in Schedule 'A ', Schedule 'B ' and Schcdule 'C ' respectively has delegated the power to the State Government to amend Schedule 'A ' under the first proviso to sub section (1) of section 5, Schedule 'B ' under sub section (2) of section 6 and Schedule 'C ' under section 31 of the Act. In each of these cases, the State Government can make the amendment only after giving previous publicity to its intention to do so thus giving an opportunity to interested parties to make representations, if any. In the case of a democratic Government, this itself acts as a check on arbitrary exercise of power. At this stage it is necessary to refer to sub section (2A) of section 4 of the Act and that provides that notwithstanding anything contained in sub sections (1) and (2) of section 4, no tax on the sale of any goods shall be levied if a tax on their purchase is payable under the Act. The Act also contains the machinery for assessment and collection of tax. It follows from the scheme of the Act that no tax is payable on the sale of goods specified in the first column of Schedule 'B ' subject to the conditions and exceptions, if any, set out in the corresponding entry in the second column, thereof and no dealer shall charge sales tax on the sale of goods which are declared tax free. In so far as goods included in Schedule 'C ' to the Act are concerned, tax can be levied only on their purchase turnover. In the case of all other goods, tax is levied on their sales turnover subject to section 5 and other provisions of the Act. When the State Government in exercise of its power under section 6(2) of the Act deletes any goods from Schedule 'B ', they cease to be tax free goods and their sales turnover would become liable to payment of tax. When the State Government in exercise of its power under section 31 of the Act includes any goods in Schedule 'C ', their sales turnover would become exempt from payment of tax but their purchase turnover would become liable for payment of tax. We are of the view that the delegation of power to the State Government to determine whether any class of goods should be included or excluded from Schedule 'C ' to the Act cannot be considered as unconstitutional in view of the decisions of this Court referred to above and in particular the decision in Pandit Banarsi Das Bhanot vs The State of Madhya Pradesh & Ors. (supra) where section 6(2) of the Central Provinces and Berar Sales Tax Act, 1947 corres 968 ponding to section 6(2) of the Act was upheld by a Constitution Bench of this Court. The Constitution Bench while rejecting the challenge of section 6(2) observed thus: "The contention of the appellant that the notification in question is ultra vires must, in our opinion, fail on another ground. The basic assumption on which the argument of the appellant proceeds is that the power to amend the Schedule conferred on the Government under section 6(2) is wholly independent of the grant of exemption under section 6(1) of the Act, and that in consequence, while an exemption under section 6(1) would stand, an amendment thereof by a notification under section 6(2) might be bad. But that, in our opinion, is not the correct interpretation of the section. The two sub sections together form integral parts of a single enactment, the object of which is to grant exemption from taxation in respect of such goods and to such extent as may from time to time be determined by the State Government. Section 6(1), therefore, cannot have an operation independent of section 6(2), and an exemption granted thereunder is conditional and subject to any modification that might be issued under section 6(2). In this view, the impugned notification is intra vires and not open to challenge. " We are of the view that the case in so far as section 31 of the Act which is also an integral part of a single enactment and which authorises the State Government to amend Schedule 'C ' to the Act cannot be different from the case which was dealt with by the Constitution Bench. If it is permissible for the Legislature to authorise the State Government to convert tax free goods into taxable ones, there is hardly any justification for holding that the State Government cannot be entrusted with the power to include goods in Schedule 'C ' making their purchase turnover taxable. It was, however, argued by Mr. M. C. Bhandare that in the instant case, the inclusion of paddy in Schedule 'C ' to the Act was against the policy underlying the Act and, therefore, even though section 31 of the Act might be constitutionally valid, the notification issued by the State Government directing inclusion of paddy in Schedule 'C ' should be held to be outside the scope of section 31 of the Act. In other words, he contended that having regard to the scheme of the Act, it was necessary for us to read section 31 of the Act as not delegating the power to the State Government to include paddy in Schedule 'C ' to the Act. The argument of the learned counsel was that the appellants were purchasing paddy either from agricul 969 turists who had grown it on their land or from katcha adatias for purposes of manufacture of rice in the circumstances mentioned in section 5(2) (a) (ii) of the Act. In either case no sales tax was being levied on the turnover relating to the sales in their favour by reason of item 39 of Schedule 'B ' to the Act which declared that agricultural or horticultural produce sold by a person or a member of his family grown by himself or grown on any land in which he has an interest whether as owner or usufructuary mortgage tenant or otherwise were tax free goods or of sub clause (ii) of clause (a) of sub section (2) of section 5 of the Act which required the turnover relating to sales to a registered dealer of goods specified in his certificate of registration for use by him in the manufacture in Punjab of any goods other than goods declared tax free under section 6 for sale in Punjab to be deducted from the gross turnover of any dealer in order to arrive at 'taxable turnover '. It was argued that the tax payable under the Act was an indirect tax and since no sales tax was leviable, the appellants could purchase paddy before the issue of the impugned notification without being saddled with the liability of payment of sales tax. The policy underlying section 5(2)(a)(ii) of the Act was that manufacturers of goods specified in the certificate of registration obtained by them should be able to acquire raw material for their industry without incurring the extra liability of sales tax. This exemption which the appellants were enjoying was taken away indirectly by the State Government by including paddy in Schedule 'C ' to the Act resulting in the imposition of purchase tax in respect of its turnover on them. Relying upon the decision of the High Court of Madras in Syed Mohamed & Co. vs The State of Madras(1) it was argued that sales tax was in effect tax on the transaction of sale of goods by one person to another and that it was unreasonable to assume that the Legislature contemplated different categories of transactions depending upon the point at which the tax was levied. In support of this contention, our attention was also drawn to the observation made at page 571 in Devi Das Gopal Krishnan & Ors. vs State of Punjab & Ors. (supra) and in State of Assam vs Ramesh Chandra Dey & Ors.(2). The learned counsel for the appellants contended that since the exemption from payment of sales tax accorded by the Legislature under item 39 of Schedule 'B ' and under section 5(2) (a) (ii) of the Act was in respect of the transaction of sale, it was not open to the Executive Government to take away the exemption by including paddy in Schedule 'C ' and since such inclusion was contrary to the express policy of the statute, section 31 of the Act must be so interpreted as not delegating the power to 970 include paddy purchased by the appellants in Schedule 'C '. We are, therefore asked to hold that even though section 31 was not unconstitutional, the notification was not enforceable against the appellants. The above argument is no doubt quite attractive but we do not find any substance in it since it overlooks the decision of the Constitution Bench of this Court in Pandit Banarasi Das Bhanot vs The State of Madhya Pradesh & Ors. (supra) where it has been held that it is open to the Legislature to delegate the power to withdraw the exemption which has been given by the Legislature in respect of certain transactions specified in Schedule II to the C.P. and Berar Sales Tax Act, 1947. Moreover it cannot be said that the principal object of the Act is to encourage manufacturing industry. The Act is a fiscal legislation and its object is to collect revenue for the purpose of meeting the expenditure of the Government. It is no doubt true that while levying tax under the Act, the Legislature may grant exemptions in certain cases and may decline to grant exemptions in other cases. The question whether such exemption should be given or not is only incidental or ancillary to the principal object viz. the object of levying tax for the purpose of collecting revenue. It cannot also be said that when certain goods are sold in favour of manufacturer, the seller is always entitled to deduct such sales turnover from the gross turnover. He can do so only when such goods are specified in the certificate of registration obtained by the purchaser and they are used by him in the manufacture in Punjab of any goods other than goods declared tax free under section 6 of the Act for sale in Punjab. Transaction in paddy cannot, therefore, be considered as having been generally exempted from payment of tax under the Act. It is also to be seen that section 5(2)(a)(ii) of the Act grants exemption from payment of sales tax on the turnover of goods sold in favour of a manufacturer under the circumstances mentioned therein only to the seller and not to the buyer even though indirectly the buyer may be benefited thereby. If the observation made by this Court in State of Tamil Nadu vs M. K. Kandaswami etc., etc.(1) that 'taxable goods ', 'taxable event ' and 'taxable person ' are three distinct concepts is borne in mind, there will be no room for any confusion. In the instant case, the taxable event is the purchase of paddy and not its sale which alone attracts section 5(2) (a) (ii) of the Act and taxble person, that is person liable to pay tax, is the purchaser and not the seller. The appellants cannot, therefore, complain that any exemption granted to them by the Act has been taken away. Even though the liability to pay purchase tax may be on appellants, it is bound to have repercussions on the price at which they buy paddy and 971 the price at which rice manufactured by them out of that paddy is sold by them. The tax payable under the Act admittedly being an indirect tax the tax burden would ordinarily fall on the consumer of rice and not on any of the intermediaries including the appellants. The impugned notification cannot, therefore, be treated as one issued against the policy of the statute. In view of the foregoing, we hold that section 31 of the Act and the Notification issued thereunder do not suffer from the vice of excessive delegation of legislative power. We may at this stage refer to one other subsidiary argument urged on behalf of the appellants. It is argued that because paddy and rice are not different kinds of goods but one and the same, inclusion of both paddy and rice in Schedule 'C ' to the Act would amount to imposition of double taxation under the Act. There is no merit in this contention also because the assumption that paddy and rice are one and the same is erroneous. In Ganesh Trading Co., Karnal vs State of Haryana & Anr. arising under the Act, this Court has held that although rice is produced out of paddy, it is not true to say that paddy continued to be paddy even after dehusking; that rice and paddy are two different things in ordinary parlance and therefore, when paddy is dehusked and rice produced, there is a change in the identity of the goods. The above decision follows the principle enunciated by this Court in State of Punjab vs Chandu Lal Kishori Lal in which it was held that cotton seeds when separated from cotton constituted distinct commercial goods different from cotton. The above contention has, therefore, to be rejected. In the result these appeals fail and they are dismissed. The parties shall, however, bear their own costs. N.K.A. Appeals dismissed.

Section 5(1) of the Punjab Sales Tax Act, 1948 authorises the State Government to determine the rates of tax payable on the taxable turnover of a dealer not exceeding the limit prescribed therein. Sub section (2) lays down the principles governing the determination of the taxable turnover. Schedule 'C ' of the Act refers to goods, the turnover of which is subject to purchase tax. Section 31 of the Act which gives specific power to the State Government to amend Schedule 'C ' provides that after giving by notification, not less than three months ' notice of its intention so to do the State Government may add to or delete from Schedule 'C ' any goods and thereupon Schedule 'C ' shall be deemed to be amended accordingly. By a notification dated January 15, 1968 the State Government added in Schedule 'C ', "paddy" and "rice" as items on which purchase tax could be levied. As a result of this notification turnover relating to the purchase of paddy and rice became exigible to purchase tax in the hands of the purchasers with effect from that date. The appellants who are dealers in paddy, buy paddy in the first instance and sell rice after converting paddy into rice. They filed writ petitions in the High Court questioning the validity of s.31 of the Act and the notification issued thereunder and their liability to payment of purchase tax. The High Court dismissed the writ petitions. In appeal to this Court it was contended that section 31 of the Act which authorised the State Government to vary Schedule 'C ' by adding certain goods whose turnover was not liable to payment of sales tax earlier, suffered from the vice of excessive delegation of legislative power. Dismissing the appeals, ^ HELD: 1(a) The delegation of power to the State Government to determine whether any class of goods should be included or excluded from Schedule 'C ' to the Act cannot be considered as unconstitutional. [967G] (b) The case in so far as section 31 of the Act which is an integral part of a single enactment and which authorises the State Government to amend Schedule 'C ' to the Act cannot be different from the case which was dealt 953 with by the Constitution Bench, in Pt. Banarsi Das Bhanot vs State of M.P.; , If it is permissible for the Legislature to authorise the State Government to convert tax free goods into taxable ones, there is hardly any justification for holding that the State Government cannot be entrusted with the power to include goods in Schedule 'C ' making their purchase turnover taxable. [968 D F] (c) It is well established that the delegation of power by the legislature to a local authority or to the executive Government to vary or modify an existing law would not be unconstitutional so long as such delegation does not involve the abdication of essential legislative power by the legislature. Such delegations of legislative powers have been upheld by this Court on several varied and diverse grounds such as the scheme and policy of the statute under which the power is delegated, the presence of guidelines in the statute regarding the exercise of delegated power, the lack of time for the legislature to make provision with regard to all the details involved in the administration of law, the incapacity of the legislature to foresee future events, the nature of the subject matter of the legislation and the nature of the donee of power etc. Even in matters relating to taxation laws, it has been consistently held that the legislature can delegate the power to fix rates of tax provided there are necessary guidelines regarding such fixation on the ground that in a modern society, taxation is one of the methods by which economic and social goals of State can be achieved and the power to tax should be flexible and capable of being easily altered to meet the exigencies of circumstances. Such delegation has been held to be not amounting to delegation of essential legislative function. [959A D] Pt. Banarsi Das Bhanot vs State of M.P. & Ors., ; ; Municipal Corp. of Delhi vs Birla Cotton, Spinning and Weaving Mills, Delhi & Anr., ; ; Corporation of Calcutta & Anr. vs The Liberty Cinema, ; ; Sita Ram Bishambar Dayal & Ors. vs State of U.P. State of U.P & Anr. etc., etc. ; ; referred to. 2(a) The argument that even though section 31 was not unconstitutional the notification was not enforceable against the appellants has no force. In Pt. Banarsi Das Bhanot vs State of M.P. it has been held that it is open to the Legislature to delegate the power to withdraw the exemption which has been given by the Legislature in respect of certain transactions specified in the Act under consideration in that case. It cannot be said that the principal object of the Act is to encourage manufacturing industry. The Act is a fiscal legislation and its object is to collect revenue for the purpose of meeting the expenditure of the Government. It is true that while levying tax under the Act, the Legislature may grant exemptions in certain cases and may decline to grant exemption in other. The question whether such exemption should be given or not is only incidental or ancillary to the principal object viz., the object of levying tax for the purpose of collecting revenue. It cannot be said that when certain goods are sold in favour of a manufacturer, the seller is always entitled to deduct such sales turnover from the gross turnover. He can do so only when such goods are specified in the certificate of registration obtained by the purchaser and they are used by him in the 954 manufacture in the State of any goods other than goods declared tax free under section 6 of the Act for sale in the State. Transactions in paddy cannot be considered as having been generally exempted from payment of tax under the Act. Section 5(2)(a)(ii) of the Act grants exemption from payment of sales tax on the turnover of goods sold in favour of a manufacturer under the circumstances mentioned therein only to the seller and not to the buyer even though indirectly the buyer may be benefited thereby. [970A F] (b) The terms "taxable goods", "taxable event" and "taxable person" are three distinct concepts. In the instant case the "taxable event" is the purchase of paddy and not its sale which alone attracts section 5(2)(ii) of the Act. "Taxable person" i.e. the person liable to pay tax is the purchaser and not the seller. The appellants cannot complain that any exemption granted to them by the Act has been taken away. Even though the liability to pay purchase tax may be on the appellants, it is bound to have repercssions on the price at which they buy paddy and the price at which rice manufactured by them out of that paddy is sold by them. The tax payable under the Act being an indirect tax, the tax burden would ordinarily fall on the consumer of rice and not on any of the intermediaries including the appellants. The impugned notification cannot therefore, be treated as one issued against the policy of the statute. [970G H, 971A B] State of Tamil Nadu vs M. K. Kandaswami, etc., etc. ; , ; referred to.

Appeal No. 435 to 437 of 1959. Appeals from the judgment and decree dated April 24, 1953 of the Patna High Court in First Appeals Nos. 119, 192 and 189 of 1948 respectively. section T. Desai, U. P. Singh and D. Goburdhan, for the appellants. G. section Pathak, B. Dutta & K. K. Singh, for the respondents Nos. 2, 3 (a), 3 (d), 4 (a) to 4 (c), 5, 6, 7 (a), 8 to 14, 15 (a) to 15 (c), 16, 18 to 20, 21 (a), 21 (b), 22, 23, 25 to 32, 33 (a), 33 (b), 34 to 38, 39(a) to 39(d), 40 to 42, 44, 45, 46(a) to 46(d), 47, 48, 49, 74 to 79 and legal representatives of respondent No. 1 (in C. As. 435 and 436 of 1959) and respondents Nos. 14 759 to 16, 18(a), 18(d), 19(a) to 19(c), 21, 23, 25, 26 and legal representatives of respondent No. 1 (in C.A. No. 437 of 1959). Sarjoo Prasad, Kanhaiyaji and A. G. Ratnaparkhi, for respon dent No. 80 (in C.As. 435 and 436/1959) and respondent No. 1 (in C.A. No. 437 of 1959). D. P. Singh, for respondent No. 81 (in C.As. 435 and 436 of 1959). The Judgment of the Court was delivered by Bachawat J. After stating the facts of the case and discussing the evidence his Lordship proceeded :] On the question of title also, the plaintiffs must fail. In the plaint, the basis of their claim of title was (a) occupation of 426 bighas 18 kathas and 9 dhurs of Dubha Taufir by their ancestor Naurang Thakur as occupancy tenant and the record of his rights in the survey papers of 1892 and (b) the oral arrangement with the Dumraon Raj. The first branch of this claim is obviously incorrect. The survey papers of 1892 do not record occupancy tenancy rights of Naurang Thakur in 426 bighas 18 kathas and 9 dhurs. In the High Court, counsel for the plaintiffs conceded that in the Khasra of 1892 1893 survey the plaintiffs ' branch was recorded as tenant for about 19 bighas only. The oral arrangement is not established, and the second branch of this claim also fails. The Subordinate Judge did not examine the basis of the plaintiffs ' claim of title. His finding in favour of the plaintiffs ' title was based chiefly on (1) oral evidence, (2) depositions of witnesses in previ ous litigations, (3) possession, (4) an admission of the Maharaja. The oral evidence on the point is not convincing. The claim is not supported by the documentary evidence. The survey papers of 1892, 1895, 1904, 1909 and 1937 do not support the plaintiffs ' claim of occupancy rights in the lands in suit. The depositions of witnesses in other litigations do not carry the matter further. The deposition of defendant No. 1 1, Ram Dass Rai, in Suit No. 217 of 1911 is of weak evidentiary value. Though admissible against him as an admission, it is not admissible against the other defendants. The other depositions relied upon do not satisfy the test of section 33 of the Indian Evidence Act, and are not admissible in evidence. We have already found that the plaintiffs and their ancestors were not in possession of the disputed land since 1909. The oral evidence as to their possession before 1909 is not convincing, and we are not inclined to accept it. The documentary evidence does not support the story of their possession before 1909. With 760 regard to the admission of the Maharaja in Suit No. 247/10 of 1913 relating to the plaintiffs ' title to 244 bighas, we find that in his written statement the Maharaja asserted his khas zeraiti rights and denied the alleged guzashta kastha rights of the plaintiffs ' ancestors. It seems that in Bihar 'guzashta kasht ' means a holding on a rent not liable to enhancement. Later, on June 10, 1913, a petition was filed on his behalf stating that the plaintiffs ' ancestors were tenants in occupation of the disputed land having guzashta kasht rights. The Maharaja was interested in the success of the suit, and it was necessary for him in his own interest to make this admission. The admission was made under somewhat suspicious circumstances at the end of the trial of the case when the arguments had begun. Though this petition was filed, the written statement of the Maharaja was never formally amended. In the circumstances, this admission has weak evidentiary value. In this suit, the plaintiffs do not claim tenancy right either by express grant or by adverse possession. Title cannot pass by mere admission. The plaintiffs now claim title under cl. (1) of section 4 of Regulation XI of 1825. The evidence on the record does not establish this claim. The claim of title based upon cl. (1) of section 4 of Regulation XI of 1825 was not clearly made in the pleading. It was clearly put forward for the first time in the High Court. It was contended that the decision in Suits Nos. 22 to 31 and 199 of 1937 conclusively established this claim. The High Court rightly pointed out that those suits did not relate to any portion of the subject matter in the present suit, and the decision in those suits cannot operate as res judicata. The plaintiffs now contend that the judgment is admissible to show that the plaintiffs ' ancestors asserted title to other Taufir lands as an accretion to frontier Dubha Mal plots under the Regulation and their claim was recognised. But the plaintiffs ' ancestors did not consistently assert such a title. In Attestation Dispute Cases Nos. 1 to 253 of village Dubha they claimed title to the lands in suit as an accretion to their 77 bighas, and this claim was negatived. The survey records of 1892, 1895, 1904 and 1909 disclose that the ancestors of the plaintiffs held some of the frontier plots of Dubha Mal. The High Court was, therefore, asked to draw the inference that their ancestors held those plots during 1845 to 1863 when the Taufir lands accreted. The question is whether such an inference should be drawn. Now, if a thing or a state of things is shown to exist, an inference of its continuity within a reasonably proximate time both forwards and backwards may sometimes be drawn. The presumption of future continuance is noticed in Illustration (d) to section 114 of the . In 761 appropriate cases, an inference of the continuity of a thing or state of things backwards may be drawn under this section, though on this point the section does not give a separate illustration. The rule that the presumption of continuance may operate retrospectively has been recognished both in India, see Anangamanjari Chowdhrani vs Tripura Soondari Chowdhrani (1) and England, see Bristow vs Cormican(2), Deo vs Young(1). The broad observation in Manmatha Nath Haldar vs Girish Chandra Roy(4) and Hemendra Nath Roy Chowdhury vs Jnanendra Prasanna Bhaduri(5) that there is no rule of evidence by which one can presume the continuity of things backwards cannot be supported. The presumption of continuity weakens with the passage of time. How far the presumption may be drawn both backwards and forwards depends upon the nature of the thing and the surrounding circumstances. In the present case, the High Court rightly refused to draw the inference from the state of things during 1892 to 1909 that the ancestors of the plaintiffs held frontier plots of Dubha Mal in 1863. The High Court pointed out that even during 1894 to 1905 the ownership of some of the plots had changed, and also that the frontier Mal plots and the corresponding Taufir plots were not always held by the same person. In 1845, part of the Mal lands was under water. The frontier Mal lands reformed between 1845 to 1863 were subject to annual inundation. It is well known that settlements of char lands are seasonal and temporary. There is a considerable gap of time between 1892 and 1845. It is not safe to assume that the state of things during 1894 to 1905 existed during 1845 to 1863. In exhibit L 1 (13), the Khatian of Mauza Dubha published on January 2, 1912, the tenancies of serveral plots held by the ancestors of the plaintiffs are described as Sharah Moaiyan (at fixed rate of rent). The plaintiffs contend that this record read in conjunction with section 50(2) of the Bengal Tenancy Act, 1885 shows that the ancestors of the plaintiffs must have held those plots from the time of the, Permanent Settlement. The contention is based on fallacious reasoning. Section 50(2) of the Bengal Tenancy Act, 1885 raises in a suit or proceeding under the Act a presumption that a raiyat has held at the same rate of rent since the Permanent Settlement, if it is shown that the rate of rent has not been changed during the last 20 years. Fixity of rent may arise not only from this presumption but also from express grant. An entry in the 1. (1887) L.R. 14 I.A. 101, 110. 2. , 669 670. ; , 4. , 770. 5. 5, 117. 762 record of rights showin that the tenancy was at a fixed rate of rent does not necessarily mean that the tenant was holding the land from the time of the Permanent Settlement. The point based on the entries in exhibit L 1(13) was not taken in the Courts below, and the circumstances under which they came to be made and the question whether they relate to the frontier plots of Dubha have not been investigated. We think that this new point ought not to be allowed to be raised at this stage. The suit as framed must fail, even if we presume that the ancestors of the plaintiffs ' branch held some of the frontier plots in Dubba Mal between 1845 and 1863, when the Taufir lands accreted. The ancestors of the defendants third party 's branch also held numerous frontier plots of Dubha Mal between 1892 and 1909, and making the same presumption in their favour, it would appear that they also held numerous frontier plots of Dubha Mal between 1.845 and 1863. The ancestors of the plaintiffs ' branch and defendants 3rd party 's branch separately held and enjoyed the several frontier plots of Dubha Mal, and on the plain tiffs ' own case, the ancestors of the plaintiffs ' branch would be entitled to the alluvial accretions in front of their plots and similarly, the ancestors of the defendants 3rd party 's branch would be entitled to the alluvial accretions in front of their plots. The alluvial accretions of each plot must be apportioned by drawing perpendicular lines from its boundary points to the new course of the Ganges, so that each plot acquires a new river frontage in proportion to its old river frontage. The plaintiffs could claim no more than the alluvial accretions to the plots, held by the ancestors of their branch. In the Courts below, no attempt was made by the plaintiffs to apportion the accretions amongst the several frontier plots. Without further investigation, the alluvial accretions in respect of each plot cannot be ascertained. This is not a fit case for remand at this late stage. The further case of the plaintiffs that the defendants3rd party lost their title to their portion of the Taufir lands is not established. It is neither alleged nor proved that the plaintiffs and the defendants 3rd party jointly owned and possessed the Taufir lands. In the absence of pleading and proof of joint title and possession, the plaintiffs ' claim for recovery of the entire Taufir lands must fail. Realising this difficulty, counsel for the plaintiffs made an entirely new case before us. He submitted that Dihal Thakur. the common ancestor of the plaintiffs and defendants 3rd party owned all the frontier plots of Dubha Mal between 1845 and 76 3 1863 and consequently acquired occupancy rights in all the Taufir lands accreted in front of his plots, those rights have now devolved jointly upon the plaintiffs and defendants 3rd party, and the plaintiffs and defendants 3rd party are jointly entitled to the entire Taufir lands. There is no trace of this case in the pleadings and the judgment of the trial Court. This case was not made even in the High Court. On the contrary, the plaintiffs ' case all along has been that the branches of the plaintiffs and defendants 3rd party separately possessed and enjoyed their respective plots. Moreover, we are not inclined to draw the presumption that Dihal Thakur owned all the frontier plots of Dubha Mal between 1845 and 1863. Even if we assume that the descendants of Dihal Thakur owned the frontier plots in 1892 or even in 1882, we are unable to infer that Dihal Thakur held them between 1845 and 1863. The case is made here for the first time, and was not the subject matter of an enquiry in the Courts below. There is neither pleading nor proof that Dihal Thakur held any of the frontier plots of Dubha Mal at any time, or that the branches of the plaintiffs and defendants 3rd party inherited their respective holding from Dihal Thakur. To establish their claim based upon cl. (1) of section 4 of Regu lation XI of 1825, the plaintiffs must also prove that the Taufir lands were gained by gradual accession from the recess of the river. Having regard to our conclusions on the other points, we do not wish to express any opinion on this question. Even if the Taufir lands were gained by gradual accession, this gain did not accrue for the benefit of the plaintiffs. The plaintiffs have failed to establish that they or their ancestors held any plot or plots to which the accretions were annexed. The plaintiffs have failed to prove their title based upon cl. (1) of section 4 of Regulation XI of 1825. They have also failed to establish their claim of title based upon oral arrangements. Their claim of title based upon occupation of the disputed lands is also not established. They have failed to prove that they were in occupation of the disputed lands. Moreover, mere occupation does not confer tenancy rights. The result is that Civil Appeals Nos. 435 and 436 of 1959 must fail. C. A. Nos. 435 to 437 dismissed.

The appellants claimed title to the lands in dispute on the basis of section 4(1) of the Bengal Alluvion and Deluvion Regulation XI of 1825. To establish their claim based upon the clause, the appellants had to prove that the lands were gained by gradual accession from the recess of the river and that the lands were accretions to plots in the possession of the appellants or their ancestors. Since the survey records from 1892 to 1909 showed that appellants ' ancestors held some of the frontier plots, the High Court was asked to draw the inference that they held those plots during 1845 to 1863 when the lands in dispute accrcted. The High Court refused to draw the inference. In appeal to this Court, HELD : If a thing or a state of things is shown to exist, an inference of its continuity within a reasonably proximate time both forwards and, in appropriate cases, backwards, may be drawn under section 114, Evidence Act. But it was not safe to assume in the present case that a state of things during 1892 to 1909 existed during 1845 to 1863 since the interval of time was too Inng. [760 H] Anangamanjari Chowdhrani vs Tripura Sundari Chowdhrani, (1887) L.R. 14 I.A. 101, 110, approved. Observation contra in Manmath Nath Haldar, vs Girish Chandra Roy, , 770 and Hemendra Nath Roy Chowdhury vs Jnendra Prasanna Bhaduri, , 117, disapproved.

Civil Appeal Nos. 450O and 4501 of 1984. Appeals by Special leave from the Judgment and order dated the 18th January and 18 January, 1984 of the Punjab and Haryana High Court in Civil Writ Nos. 33OO of 1981 aud 4757 of 1982. H.K. Puri, M.P. Jha and Sanjeev Walia for the Appellants. S.K Bagga for the Respondent. L.N. Sinha, A.K Panda and Ashwani Kumar for the Respon. dent The Judgment of the Court was delivered by CINNABAR REDDY J. The appellants, who are traders engaged in the purchase and sale of agricultural produce, appear to be a determined lot. For over a decade, they or those similarly placed have been litigating and impeding the levy and collection of Market fee by the Market Committees constituted under the Punjab Agricultural Produce Markets Act. Sometimes they have been successful, sometimes they have not. One of the occasions when they appeared to be successful was when this Court in Kewal Krishan Puri vs State 75 Of Punjab(l) declared that the enhancement of the fee from 2% to 3 % was illegal. The court while striking down the enhancement of the fee laid down no new principles but made certain general observations which, we regret to say, have been so misunderstood and misinterpreted as to lead to some confusion and public mischief. The misunderstanding and confusion have also naturally led to more litigation. Fortunately, in Srinivsa General Trader. vs Slate of Andhra Pradesh(2) this Court has removed much of the misunderstanding, cleared many of the cobwebs and retrieved the situation. Before we proceed to consider the question at issue in present case, it will be fair to recall the object and purpose of the Punjab Agricultural Produce Markets Act and similar enactments in force in other States Far back in 1953, Rajamannar, CJ and T.L. Venkatarama Aiyar, J, in Kutti Keya vs The State of Madras(3) considered the provisions of the Madras Commercial Crops Markets Act 1933, one of the fore runner of the Punjab Agricultural Produce Markets Act and other similar enactments elsewhere. The general nature of the legislation was explained by Venkatarama Aiyar, J, as follows: ". the Subject matter of the impugned Act is marketing and legislation on marketing is now a well recognised feature of all commercial countries The need for such a legislation arises whenever societies pass d on from the stage of self supporting economic unit, producing only articles for its own consumption to that of a commercial community producing articles for sale in outside areas for profit. While in the former stage, transactions would be generally settled directly between the seller and the purchaser, the price being paid and delivery of the commodity taken at the time of the deal, the conditions would be different when commercial crops are begun to be raised. The ultimate purchasers of these commodities would generally be persons outside the area of production, a merchant residing in another State and even in a foreign country. "To bring about a deal between the local producers and the outside purchasers, there emerged a class of (1) ; (2) AIR 1983 S.C, 1246. (3) AIR 1954 Mad. 76 middlemen. Even in well organised and economically advanced countries like England, it was found that the agrIculturist producer had not facilities for disposing of the goods to his best advantage (vide the statement of Dr. Addison, Minister for Agriculture, quoted at page 80 of the Indian Central Banking Enquiry Committee Report, Vol. r, Part II). It is these conditions that have led up to the enactment of marketing laws in all countries having a large volume of trade in commercial crops The object of this legislation is to protect the producers of commercial crops from being exploited by middlemen and profiteers and to enable them to secure a fair need for their produce. The need for such legislation is even greater in India as the producers are as a class illiterate and economically dependent and unstable. This question had engaged the attention of several committees which had been constituted to report on various economic matters. Indian Cotton was a commodity greatly in demand in England and other countries and in the Central Provinces and Berar open markets for cotton were established through legislation. In 1919, the Indian Cotton Committee observed in their report that the marketing system afforded great protection to the producers and that special legislation should be undertaken to establish such markets in every cotton growing area. The Royal Commission on Agriculture in India recorded a considerable body of evidence on the state trade in food crops and it showed the need for legislative action for safeguarding the interests of the producers (vide report dated 1928). In 1931 the Indian Central Banking Enquiry Committee considered in Chapter VII of its report the conditions with reference to marketing. It is therein pointed out that the village producer was seldom able to get a proper price because he was chronically indebted to the middlemen who advanced loans on the security of the crops to be grown and were thus in a position to dictate their own terms and that the bargains were seldom fair to the seller. "It was also observed that for want of facilities for ware housing the produce, the grower was not in a position to wait and sell the commodities for proper price (vide 77 pages 78 and 79). In 1933 the Act now under consideration A was passed with the object of providing for "the better regulation of buying and selling of commercial crops". It must be mentioned that at that time the only products which had become commercial crops having an international market were cotton, groundnuts and tobacco; and the definition of commercial crops as enacted originally corn prised only these three crops." . . . . . . . . . . . "Various suggestions were made for improving the market conditions (vide pp 92 and 63). In the report of the Planning Comission published in 1952, Chapter XVII, Vol l, deals with agricultural marketing and after referring to the working of the regulated markets in Bombay, Madras, Hyderabad and Madhya Pradesh, it throws out several suggestions for future improvements. It must be added that there has been legislation on lines similar to those of the Madras Act in several of the States in India. "It will be clear from the above survey of the market ing legislation that its object is to enable producers to get a fair price for their commodities and that it has been generally adopted in all commercial States Such laws have been held in America to be within the Police Power of the State as tending to promote general welfare (Vide 'Parker vs Brown [(1942) 87 Law ED 315 (D).] Under the Indian Constitution, they must be upheld under article 19 (6) as reasonable and enacted in the interests of the general public." The decision of the Madras High Court in Kutti Keva vs The State was affirmed by a Constitution Bench of The Supreme Court in Arunachala Nadar vs State of Madras.(l) Subba Rao, J. referring to the background of the Act, observed: "There is a historical background for this Act. Market ing legislation is now a well settled feature of all commercial countries. The object of such legislation is to protect the producers of commercial crops from being exploited by the middlemen and profiteers and to enable them to secure a fair return for their produce. In Madras State, as in other (l) AIR l959 SC 30O. 78 parts of the country, various Commissions and Committees have been appointed to investigate the problem, to suggest ways and means of providing a fair deal to the growers of crops particularly commercial crops, and find a market for selling their produce at proper rates. Several Commit tees, in their reports, considered this question and suggested that a satisfactory system of agricultural marketing should be introduced to achieve the object of helping the agriculturists to secure a proper return for the produce grown by them." The learned Judge then referred to the report of the Royal Commission on Agriculture in India, the report of the Expert Committee appointed by the Government of Madras, and proceeded to observe: "With a view to provide satisfactory conditions for the growers of commercial crops to sell their produce on equal terms and at reasonable prices, the Act was passed on 25th July, 1933. The preamble introduces the Act with the recital that it is expedient to provide for the better regulation of the buying and selling of commercial crops in the Presidency of Madras and for that purpose to establish market and make rules for their proper administration. The Act, therefore, was the result of a long exploratory investigation by exports in the field, conceived and enacted to regulate the buying and selling of commercial crops by providing suitable and regulated market by eliminating middlemen and bringing face to face the produces and the buyer so that they may meet on equal terms, thereby eradicating or at any rate reducing the scope for exploitation in dealings. Such a statute cannot be said to create unreasonable restrictions on the citizens and right to do business unless it is clearly established that the provisions are too drastic, unnecessarily harsh and over reach the scope of the object to achieve which it is enacted." . . . . . . . . . . . . . . . . . . . " . Shortly stated, the Act, Rules and the Bye laws framed thereunder have a long term target of providing a net work of markets where in facilities for correct weighment are ensured, storage accommodation is provided, and equal 79 powers of bargaining;, ensured, so that the growers may t, bring their commercial crops to the market and sell them at reasonable prices 1 11 such markets are. established, the said provisions, by imposing licensing restrictions, enable The buyers and sellers to meet in licensed premises, ensure correct weighment, make available to them reliable market information and provide for them a simple machinery for settlement of disputes. After the markets are built or opened by the marketing committees, within a reasonable radius from the market, as prescribed by the Rules, no licence is issued; thereafter all growers will have to resort to the market for vending their goods. The result of The implementation of the Act would be to eliminate, as far as possible, the middlemen and to give reasonable facilities for the growers of commercial crops to secure best prices for their commodities " In Immedisetti Ramkrishnaiah Sons vs State of Andhra Pradesh(l), the nature of the duties of a Market Committee was explained: "Another unfounded assumption of the learned counsel was that the activities of the Market Committee and the facilities provided by it were confined by the Act to the market area only. The establishment, maintenance and improvement of the market is one of the purposes for which the Market Committee Fund might be expended under Sec. I S of the Act. The other Services such as the pro vision and maintenance of standard weights and measures, the collection and dissemination of information regarding all matters relating to crop statistics and marketing in respect of noticed agricultural produce, livestock and pro ducts of livestock schemes for the extension or cultural improvement of notified agricultural produce including the grant of financial aid to scheme for such extension on improvement within such area undertaken by other bodies or individuals, propaganda for the improvement of agriculture, livestock and products of livestock and thrift, the promotion of grading services, measures for the preservation of the foodgrains, etc. are not services which are (1) AIR 1976 AP 193. 80 confined to the market area only. They area services which are required to be performed by the Market Committe and which may be rendered throughout the notified market area without being confined to the market. Further, the facilities provided in the market are available for the use of every grower of agricultural produce and owner of live stock within the notified market area. It is too much to expect the Market Committee to provide the same facilities as are available in the market area in every nook and corner of the notified market area. It is up to the growers of agricultural produce and owners of livestock to avail themselves of the facilities afforded in the market. None can complain against the levy of licence fees on the ground that some may not avail themselves of the facilities available in the market. " Immedisetti Ramakrishnayya Sons vs State of Andhra Pradesh (supra) was approved by this Court in Sreenivasa General Traders vs State of A.P.,(1) where it was observed: "It is obviously in the interests of the producers of agricultural produce that they can get the best competitive prices in an open market and that they have not to pay the middlemen. Sale or purchase of agricultural produce in h such a market under the supervision and control of the market committee is likely to be in ready cash and there fore advantageous to the producers and the use of standard weights must eliminate the possibility of his being victimized by malpractices. Supervision of the operations in the notified market area can be more conveniently done if business is carried on in a specified area or areas intended for that purpose. The Act is an integrated one and it regulates the buying and selling of notified agricultural produce, livestock and products of livestock from a centralized place. " . . . . . . . . . . . . . . . . . . . . . . . "The contention that there is no liability cast on the petitioners to pay market fee on transactions of sale and purchase of notified agricultural produce, livestock and (1) ATR.1983 S.C. 1246. 81 product of livestock proceeds on a wrongful assumption that they can still carry on such trade from their premises in the notified market area, but outside the market in that area. In view of the express prohibition contained in subsection (6) of Sec. 7, the petitioners cannot carry on such trade by not resorting to the market proper. " "There is a fallacy underlying the argument that since the services are rendered by market committees Within the market proper, there is no liability to pay a market fee on purchase or sale taking place in the notified market area but outside the market. The contention does not take note of the fact that establishment of a regulated market for the purchase or sale of notified agricultural produce, livestock or products of live stock is itself a service rendered to persons engaged in the business of purchase or sale of such commodities. The duty of a market committee constituted under sub section (1) of sec. 4 of the Act does not end with establishing such number of markets in the notified market area under the first part of sub section (3) but also extends to the providing of such facilities in the market as the Government may from time to time by general or special order specify under the second part of sub section (3). In exercise of their powers under sec. 33 of the Act, the State Government have framed the Andhra Pradesh (Agricultural Produce and Livestock) Markets Rules, 1969. Chapter V relates to 'Regulation of trading '. It would appear that Rules 48 to 53 are the machinery provisions for controlling the trade in notified agricultural produce, livestock and products of livestock in a notified area while Rules 54 to 73 impose restrictions on the carrying on of all such trade in such area. It is clear from the provisions of sec. 15 of the Act that the services to be rendered by the market committee and facilities to be provided are not confined to the market proper but extend throughout the notified area. " The general scheme of the Punjab Agricultural Produce. Markets Act and the Act, as amended and in force in Haryana, 82 are broadly on the same lines as the Madras and the Andhra Pradesh Acts and similar enactments in other States. Though we do not consider it necessary to refer to all the provisions of the Punjab and Haryana Acts, we think it may be appropriate to mention here those provisions of the Act which enumerate some of the duties and powers of the Market Committees constituted under the Acts and the purposes for which the Marketing Development Fund and the Market Committee Fund may be expended. We may mention that while there is to be a State Agricultural Marketing Board for the entire State for performing the functions and duties assigned to the Board by the Act, the State Government may declare specified, notified areas as market areas for each of which there shall be a market committee. The Board is vested with powers of superintendence and control over the committees. Section 13 prescribes the duties and powers of market committees and is in the following terms: "13 Duties and powers of Committee (1) It shall be the duty of a Committee (a) to enforce the provisions of this Act and the rules and bye laws made thereunder in the notified market area and, when so required by the Board , to establish a market therein providing such facilities for persons visiting it in connection with the purchase, sale, storage, weighment and processing of agricultural produce concerned as the Board may from time to time direct; (b) to control and regulate the admission to the market, to determine the conditions for the use of the market and to prosecute or confiscate the agricultural produce belonging to person trading without a valid licence; (c) to bring, prosecute or defend or aid in bringing, prosecuting or defending any suit, action, proceeding, application or arbitration, on behalf of the Committee or otherwise when directed by the Boards. (2) Every person licensed under sec. 10 or sec. 13 and every person exempted under sec. 6 from taking out licence, shall on demand by the Committee or any person 83 authorised by it in this behalf furnish such information and returns, as may be necessary for proper enforcement A of Act or the rules and bye laws made thereunder. (3) Subject to such rules as the State Government may make in this behalf, it shall be the duty of a Committee to issue licences to brokers, weighmen, measurers, surveyors, godown keepers and other functionaries for carrying on their occupation in the notified market area in respect of . agricultural produce and to renew, suspend or cancel such licences. (4) No broker, weighman, measurer, surveyor, godown keeper or other functionary shall, unless duly authorised by licence, carry on his occupation in a notified market area in respect of agricultural produce: Provided that nothing in sub sections (3) and (4) shall apply to a person carrying on the business of warehouse man who is licensed under the Punjab Warehouses Act, l957 (Punjab Act No.2 of 1958)". Section 25 provides for the creation of a Marketing Development Fund out of which the Board has to defray its expenditure. Sections 27 provides for the creation of Market Committee Fund out of which the Committee has to defray its expenditure. The purpose for which the Marketing Development Fund may be expended are specified in sec. 26 as follows: "26 The Marketing Development Fund shall be utilised out of following purposes: (i) Better marketing of agricultural produce; (ii) Marketing of Agricultural produce on co operative lines; (iii) collection and dissemination of market rates and news; (iv) grading and standardisation of agricultural produce: (v) general improvements in the markets or their respective notified; (vi) maintenance of the office of the Board and construction and repair or its office buildings, rest house and staff quarters; 84 (vii) giving aid to financially weak Committees in the shape of loans and grants, (viii) payment of salary, leave allowance, gratuity, corn passionate allowance, compensation for injuries or death resulting from accidents while on duty, medical aid, pension or provident fund to the persons employed by the Board and leave and pension contribution to Government servants on deputation; (ix) travelling and other allowances to the employees of the Board, its members and members of Advisory Committees; (x) propaganda, demonstration and publicity in favour of agricultural improvements; (xi) production and betterment of agricultural produce; (xii) meeting any legal expenses incurred by the Board; (xiii) imparting education in marketing or agriculture; (xiv) construction of godowns; (xv) loans and advances to the employees; (xvi) expenses incurred in auditing the accounts of the Board; (xvii) with the previous section of the State Government, any other purpose which is calculated to promote the general interests of the Board and the Committees (or the national or public interests); Provided that if the Board decides to give aid of more than five thousand rupees to a financially weak Committee under clause (vii), the prior approval of the State Government to such payment shall be obtained. The purposes for which the Market Committees Fund may be expended are specified in sec. 28 as follows: "28 Purposes for which the Market Committee Funds may be expended. Subject to the provisions of section 27 the Market Committee Funds shall be expended for the following purposes: (1) AIR 1983 SC 1246 85 (i) acquisition of sites for the market; A (ii) maintenance and improvement of the market; (iii) construction and repair of buildings which are necessary for the purposes of the market and for the health, convenience and safety of the persons using it; (iv) provision and maintenance of the standard weights and measures: (v) pay, leave, allowances, gratuities, compassionate allowances and contributions towards leave allowances, compensation for injuries and death resulting from accidents while on duty, medical aid, pension or provident fund of the persons employed by the Committee; (vi) payment of interest on loans that may be raised for purposes of the market and the provisions of a sinking fund in respect of such loans; (vii) collection and dissemination of information regarding all matters relating to crop statistics and marketing in respect of the agricultural produce concerned; (viii) providing comforts and facilities, such as the shelter, shade, parking accommodation and water for the per sons, draught cattle vehicles and pack animals link roads I coming or being brought to the market or on construction and repair of approach roads, culverts, bridges and other such purposes: (ix) expenses incurred in the maintenance of the offices and in auditing the accounts of the Committees, (x) propaganda in favour of agricultural improvements and thrift: (xi) production and betterment of agricultural produce; (xii) meeting any legal expenses incurred by the Committee, (xiii) imparting education in marketing or agriculture; (xiv) payments of travelling and other allowances to the members and employees of the committee, as prescribed; 86 (xv) loans and advances to the employees; (xvi) expenses of and incidental to elections, and (xvii) with the previous sanction of the Board, any other purpose which is calculated to promote the general interest of the Committee or the notified market area (supra) (or with the previous sanction of the State Government, any purpose calculated to promote the national or public interest)". It will be seen that sections 26 and 28 cover a vast range of topics and are so wide as to take in a multitude of direct and indirect ways of achieving the principal object of the Act, namely, the better regulation of the purchase, sale, storage and processing of agricultural produce and the establishment of markets for agricultural produce. Some of the purposes for which the funds maybe expended may on a first impression appear to be municipal or govemental functions, but a closer scrutiny will reveal that they are clearly associated with providing better facilities for marketing of agricultural produce. In fact, some of them may be municipal or governmental functions, but may yet be purpose for which the funds of the marketing board and marketing committees may be usefully, lawfully and perhaps necessarily expended. For example, it is of fundamental importance that there should be a network of roadways if effective aid is to be given to farmers to transport and market their produce. Section 23 of the Act enables the Committee, subject to such rules as may be made by the State Government in that behalf, to levy on ad volorem basis, fee on the agricultural produce bought or sold by a licensee in the notified market area at a rate not exceeding the rate mentioned in sec. 23 from time to time for every one hundred rupees. The fee which was originally 50 paise per 100 was raised to Re. l per 100 in 1969, thereafter to Rs. 1.50 in 1973 and to Rs. 2.25 in 1974. Later the fee was raised to Rs. 3 per 100. It was this enhancement of fee to Rs. 3 per 100 that was challenged by several dealers from Punjab and Haryana in Kewal Krishan vs State of Punjab (Supra). A Constitution Bench of this Court, after referring to the principles laid down in the leading cases of Shirur Malt,(1) Hingir Rampur Coal Co. Ltd. vs State of Orissa,(2) Corporation of Calcutta vs Liberties Cinema etc. thought that in all the (1) (2) 119621 2 SCR 537 87 circumstances of the case, an increase of the license fee beyond Rs 2 A per 100 was not justified. The court noticed that each of the market Committees had huge surpluses and had made large donations to educational institutions and expended funds for other purposes wholly unconnected with the purpose stipulated by the Act. It appeared that the increase from Rs. Z to Rs. 3 in the year 1978 was made largely to compensate the market committees for having contributed the huge sum of Rs. One crore to the Medical College, Faridkot. Having regard to the huge surpluses and unanthorised items of expenditures, the court came to the conclusion, on the facts of the case, that the increase of fee above Rs. 2 per 100 was not justified. In the course of the discussion, Untwalia, J. who spoke for the Court made certain observations which when turn out of context appear to give rise to some misunderstanding. For example, at page 1016 of AIR, he said: . 'But generally and broadly speaking, it must be shown with some amount of certainty, reasonableness or preponderance of probability that quite a substantial portion of the amount of the fee realised is spent for the special benefit of its payers". This sentence should not be read in isolation. It must be read in the context of the facts of the case. In fact, in the very sentence, preceding the one quoted, it was said: "It may be so intimately connected or interwoven with the services rendered to others that it may not be possible to do a complete dichotomy and analysis as to what amount of special service was rendered to the payers of the fee and what proportion went to others". That was why Sen J. in Sreenivasa General Traders vs State of Andhra Pradesh (Supra) took immense pains to explain the observations of Untwalia J. and place them in their proper setting. He observed, very rightly indeed, G "In the ultimate analysis, the Court held in Kewal Krishan Puri 's case, supra that so long as the concept of fee remains distinct and limited in contrast to tax, such expenditure of the amounts recovered by the levy of a market fee cannot be countenanced in law. A case is an authority H 88 only for what it actually decides and not for what may logically follow from it. Every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be founded there are not intended to be expositions of the whole law but governed or qualified by the particular facts of the case in which such expressions are to be found. It would appear that there are certain observations to be found in the judgment in Kewat Krishan Puri 's case, supra. which were really not necessary for purposes of the decision and go beyond the occasion and therefore they have no binding authority though they may have merely persuasive value. The observation made therein seeking to quantify the extent of correlation between the amount of fee collected and the cost of rendition of service, namely: "At least a good and substantial portion of the amount collected on account of fees, may be in the neighborhood of two thirds or three fourths must be shown with reason able certainty as being spent for rendering services in the market to the payer of fee". appears to be an obiter". obviously Untwalia, J. did not purport to lay down any new principles and could not have intended to depart from the series of earlier case of this Court. For instance, in H. H. Sudhundra Thirtha Swamiar vs Commissioner(l) the Court had said, ". nor is it a postulate of a fee that it must have direct relation to the actual services rendered by the authority to individual who obtains the benefit of the service. If with a view to provide a specific service, levy is imposed by law and expenses for maintaining the service are met out of the amounts collected there being a reasonable relation between the levy and the expenses incurred for rendering the service, the levy would be in the nature of a fee and not in the nature of a tax. but a levy will not be regarded as a tax merely because of the absence of uniformity in its incidence, or because of compulsion in the collection thereof, or because some of the contributories do not obtain the same degree of service as others may". (1) [1963] Supp 2 SCR 302. 89 In Hingir Rampur Coal Co. Ltd. vs State of orissa (Supra) the A Court had said,: "If specific services are rendered to a specific area or to a specific class of persons or trade or business in any local area, and as a condition precedent for the said services or in return for them cess is levied against the said area or the said class of persons or trade or business, the cess is distinguishable from a tax and is described as a fee". . . . . . . . . "It is true that when the Legislature levies a fee for rendering specific services to a specified area or to a specified class of persons or trade or business, in the last analysis such services may indirectly form part of services to the public in general. If the special service rendered is distinctly and primarily meant for the benefit of a specified class or area the fact that in benefiting the specified class or area the State as a while may ultimately and indirectly be benefited would not detract from the character of the levy as a fee. Where, however, the specific service is indistinguishable from public service, and in essence is directly a part of it, different considerations may arise. In such a case, it is necessary to enquire what is the primary object of the levy and the essential purpose which it is intended to achieve. Its primary object and the essential purpose must be distinguished from its ultimate or incidental results or consequences. That is the true test in determining the character of the levy, Again in H.H. Shri Swamiji vs Commissioner, Hindu Religious and Charitable Endowments Department (1) Chandracud C.J. said: "For the purpose of finding whether there is a correlationship between the services rendered to the fee payers and the fees charged to them, it is necessary to Know the cost incurred for orgainsing and rendering the services. But matters involving consideration of such a correlation ship are not required to be proved by a mathematical formula. What has to be seen is whether there is a fair correspondence between the fee charged and the cost of (1) ; 90 services rendered to the fee payers as a class. The further and better particulars asked for by the appellants under order 6, Rule S of the Civil Procedure Code, would have driven the Court, had the particulars been supplied, to a laborious and fruitless inquiry into minute details of the Commissioner 's departmental budget. A vivisection of the amounts spent by the Commissioner 's establishment at different places and for various purposes and the ad hoc allocation by the Court of different amounts to different heads would at best have been speculative. It would have been no more possible for the High Court if the information were before us than it would be possible for us if the information were before us, to find out what part of the expenses incurred by the Commissioners establishment at various places and what part of the salary of his staff at those places should be allocated to the functions discharged by the establishment in collection with the services rendered to the appellants. We do not therefore think that any substantial prejudice has been caused to the appellants by reasons of the non supply of the information sought by them. " On a consideration of these cases Sen J. concluded as follows in Sreenivasa General Traders vs State of Andhra Pradesh (Supra): "The traditional view that there must be actual quid pro quo for a fee has undergone a sea change in the subsequent decisions. The distinction between a tax and a fee lies primarily in the fact that a tax is levied as part of a common burden, while a fee is for payment of a specific benefit or privilege although the special advantage is secondary to the primary motive of regulation in public interest In determining whether a levy is a fee,the true test must be whether its primary and essential purpose is to render specific services to a specified area or class; it may be of no consequence that the State may ultimately and indirectly be benefited by it. The power of any legislature to levy a fee is conditioned by the fact that it must be "by and large" 91 a quid pro quo for the services rendered. However, correlationship between the levy and the services rendered A expected is one of general character and not of mathematical exactitude. All that is necessary is that there should be a "reasonable relationship" between the levy of the fee and the services rendered. " Referring to the catena of these cases it was observed by this Court in Municipal Corporation Delhi vs Mohd. Yasin (1): "What do we learn from these precedents ? We learn that there is no generic difference between a tax and a fee, though broadly a tax is a compulsory exaction as part of a common burden, without promise of any special advantages to classes of taxpayers whereas a fee is a payment for services rendered, benefit provided or privilege conferred. Compulsion is not the hallmark of the distinction between a tax and a fee. That the money collected does not go into a separate fund but goes into the consolidated fund does not also necessarily make a levy a tax. Though a fee must have relation to the services rendered, or the advantages conferred, such relation need not be direct, a mere causal relation may be enough. Further, neither the incidence of the fee nor the service rendered need be uniform. That others besides those paying the fees are also benefited does not detract from the character of the fee. In fact the special benefit or advantage to the payers of the fees may even be secondary as compared with primary motive of regulation in the public interest. Nor is the court to assume the role of a cost accountant. It is neither necessary nor expedient to weigh too, meticulously the cost of his service reinduced etc. not against the amount of fees collected so as to evenly balance the two. A broad correlationship is all that is necessary. Quid pro quo the strict sense is not the one and only true index of a fee; nor is it necessarily absent in tax. " Earlier on a question of interpretation it was pointed out: " A word on interpretation. Vicissitudes of time and necessitudes of history contribute to changes of philosophical attitudes, concepts, ideas and ideals and, with them, the meanings of words and phrases and the language itself. The philosophy and the language of the law are no excep (1) ; H 92 tions. Words and phrases take colour and character from the context and the times and speak differently in different contexts and times. And, it is worthwhile remembering that words and phrases have not only a meaning but also a content, a living content which breathes, and so, expands and contracts. This is particularly so where the words and phrases properly belong to other disciplines. 'Tax ' and 'fee ' are such words. 'they properly belong to the world of Public Finance but since the Constitution and the laws are also concerned with Public Finance, these words have often been adjudicated upon in an effort to discover content. " In Sreenivasa General Traders vs State of Andhra Pradesh (supra), Sen, J. had also pointed out that there was no generic difference between a tax and a fee, that both were compulsory exactions of money by public authorities and that a levy in the nature of a fee did not cease to be of that character merely because there was an element of compulsion or coerciveness present in it nor was it a postulate of a fee that it must have direct relation to the actual service rendered by the authority to each individual, who obtains the benefit of the service. He also drew attention to the increasing realization that the element of quid pro quo in the strict sense was not always sine quo non for fee. Nor was the element of quid pro quo necessarily absent in every tax. He further pointed out that an insistence upon a good and substantial portion of an amount collected on account of fee, say in the neighbourhood of two thirds or three forths, being shown with reasonable certainty as having been spent for rendering services in the market to the payer of fee, could not be a rule of universal application, and that it was a rule which had necessarily to be confined to the special facts of Kewal Krishan Puri 's case. Otherwise, it would affect the validity of marketing legislations undertaken throughout the country during the past half a century. We agree with the view of Sen, J. that the observations extracted by him from Kewol Krishan Puri 's case were not really necessary for that case and we also agree with the clarification of the observation made by Sen, J. There is one other significant sentence in Sreenivasa General Traders vs State of A.P. (Supra) with which we must 93 express our agreement. It was said, . with utmost respect, these observations of the learned judge are not to be read as Euclid 's A theorems, nor as provisions of the statute. These observations must be read in the context in which they appear. " We consider it proper to say, as we have already said in other cases, that judgments of courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. In London Graving Dock Co. Ltd. vs Horton (1) Lord Mac Doormat observed, "The matter cannot, of course, resettled merely by treating the ip sesame verba of Willes, J., as though they were part of an Act of Parliament and applying the rules of interpretation appropriate thereto. This is not to detract from the great weight to be given to the language actually used by that most distinguished judge. " D In Home office vs Dorset Yacht Co.(2) Lord Reid said, "Lord Atkin 's speech. is not to be treated as if it was a statutory definition. It will require qualification in new circumstances. " Megarry, J. in 1971(1) W.L.R. 1062 observed, "one must not, of course, construe even a reserved judgment of even Russell L. J. as if it were an Act of Parliament. And, in Herington vs British Railways Board. "(2) Lord Morris said: "There is always peril in treating the words of a speech or judgment as though they are words in a legislative P enactment, and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case. There are a few other observations in Rewal Krishan Puri 's case to which apply with the same force all that we have said above. It is needless to repeat the of quoted truism of Lord Halsbury that (1) at 761 (2) ; (3) [19721 2 W.L.R. 537 H 94 a case is only an authority for what it actually decides and not for what may seem to follow logically from it. We have said so much about Kewal Krishan Puri 's case because the learned counsel placed implicit reliance upon it though as we shall presently show, we do not see how a mere declaration that the levy and collection of fee in excess of Rs.2 per hundred automatically vest in the dealer the right to get at the excess amount when in fact he did not bear the burden of it and when the moral and equitable owner of it was the consumer public to whom the burden had been passed on. Soon after judgment was pronounced in Kewal Krishan 's case, the question arose as to what was to be done with the fee in excess of Rs.2 per 100 collected by various market committees. Were the Market Committees to be permitted to retain the excess amounts ? Were the excess amounts to be refunded to the traders from whom the amounts had been collected notwithstanding the fact that the traders themselves had already passed on the burden to the next purchasers and consumers ? In other words, were the traders to be allowed to get a refund from the market committees and unjustly enrich themselves ? Were they to be allowed to profiteer by ill gotten gains ? or were the next purchasers or consumers to be traced and the amounts refunded to them, which of course, would well nigh be an impossible task in practice? If it was not possible to trace the individual consumers who had borne the burden, was it not right that the public authority who levied and collected it should be allowed to hold and retain the amount as if it were in trust for their benefit to be used for the purposes for which the statute . desired the levy of the fee ? Some dealers, however, wanted the monies to be refuned to them and moved this Court. Instead, in the circumstances, the court in Shiv Shankar Dal Mil1s vs State of Haryana. ' '(l) gave the following directions: "I. Subject to the directions given below, all the sums collected by the various market committees who are respondents in these various writ petitions or appeals shall be liable to be paid into the High Court of Punjab and Haryana within one week of intimation by the Registrar of the amount so liable to be paid into the court. A statement of the amounts collected in excess (1) ; 95 (1%) shall be put into this Court by the dealers with copies A to the various market committees aforesaid and furnished to the writ petitioners and appellant with 1O days from today, and if there is any difference between the parties it shall be brought to the notice of this Court in the shape of miscellaneous petitions. On final orders, if any passed thereon by this Court, those amounts, so as determined, shall be treated as final. The Registrar of the High Court shall issue public notice and otherwise give due publicity to the fact that dealers who have not passed on the liabilities to others and others who have contributed to or paid the excess one percent covered by these writ petitions and appeals may make claims for such sums as are due to them from him Within one month or such other period as he may fix. The Registrar shall scrutinise such claims and ascertain the sums so proved. He will thereupon demand of all the market commit tees concerned payment into the Registry of such sums in regard to which proof of claims have been made. On such intimation, the market committees shall pay into the Registry the amounts so demanded by the Registrar within one week of such intimation. The amount shall be paid together with interest at 10 per cent per annum from today up to the date of deposit with the Registrar. It shall be open to the Registrar to make such periodical claims on appropriate proof by claimants on the line stated above. V. He will devise the mechanics of processing the claims as best as he may and, in the event of dispute, may refer to the High Court for its decision of such disputes, if he thinks it necessary. Otherwise, he may dispose of the objections finally. If any further directions regarding the mechanics of the claim of refund or otherwise are found necessary from this Court, the High Court will report about such matter to this Court and orders made thereon will bind the parties. N 96 VII. If parties eligible for repayment of amounts do not claim within one year from today the Registrar will not entertain any further claims. It will be open to such parties to pursue their remedies for recovery for any sums that may be due to therm. Each State Marketing Board will deposit within 1O days from today a sum of Rs. 5.000/ before the Registrar for the preliminary expenses of publicity and other incidentals for the implementation of the directions given above. Any unexpended amount, at the end of one year, will be repaid to the respective State Marketing Board. We further direct that the unclaimed amount, if any, shall be permitted to be used by the respective Marketing Committees for the purpose falling within the statute as interpreted by this Court in the C. A. No. 1083/77". Thereafter, more or less in tune with the directions given by the Court in ShivShankar Dal Mills case, the Punjab Agricultural Produce MarKets Act was amended by the introduction of sec. 23 A providing as follows: "In the Principle Act, after Section 23, the following section p shall be inserted namely: '23 A(1) Notwithstanding anything contained in any judgment decree or order of any Court, it shall be lawful for a Committee to retain the fee levied and collected by it from a licensee in excess of that levied under Section 23, if the burden of such fee was passed on by the licensee to the next purchaser of the Agricultural Produce in respect whereof such fee was levied and collected. (2) No suit or other proceedings shall be instituted, main trained or continued in any court for the refund of whole or any part of the fee retained by a Committee under sub section (1) and no court shall enforce any decree or order directing the refund of whole or any Part of such fee. (3) If any dispute arises as to the refund of any fee retained by a Committee by virtue of sub section (1) and 97 the question is whether the burden of SUCH fee was passed on by the licensee to the next purchaser of the concerned agricultural produce, it shall be presumed unless proved otherwise that such burden was so passed on by the licensee. If any amount of tee retainable by a Committee under sub section (1) has been refunded to any licensee, the same shall be recoverable by the Committee in the manner indicated in sub section (2) of Section 41. The provisions of this section shall not effect the operation of Section 6 of the Punjab Agricultural Produce Markets (Amendment and Validation) Act, 1976". The primary purpose of sec. 23 A is seen on the face of it; it prevents the refund of license fee by the market committee to dealers, who have already passed on the burden of such fee to the next purchaser of the agricultural produce and who went to unjustly enrich themselves by obtaining the refund from the market committee. section 23 A, in truth, recognises the Consumer public who have borne the ultimate burden as the persons who have really paid the amount and so entitled to refund of any excess fee collected and therefore directs the market committee representing their interests to retain the amount. It has to be in this form because it would, in practice, be a difficult and futile exercise to attempt to trace the individual purchasers and consumers who ultimately bore the burden. It is really a law returning to the public what it has taken from the public, by enabling the Committee to utilise the amount for the performance of services required of it under the Act. Instead of allowing middlemen to profiteer by illgotten gains, the legislature has devised a procedure to undo the wrong item that has been done by the excessive levy by allowing the Committees to retain the amount to be utilised here after for the benefit of the very persons for whose benefit the Marketing legislation was enacted. The constitutional validity of sec. 23A was questioned before the High Court of Punjab and Haryana, but was upheld in Walati Ram Mahabir Prasad vs State of Punjab(l). The correctness of this decision is questioned before us in these two civil appeals. The submission of the learned counsel was that sec. 23 A was (1). AIR 1984 P&H 120 98 a blatant attempt to validate a levy which had been declared invalid by this court and this, according to the learned counsel, was not permissible. We entirely disagree with the submission that sec. 23 A is an attempt at validating on illegal levy. Section 23 A does not permit any recovery of fee @Rs. 3 per 100 in respect of any sales of agricultural produce before or after the coming into force of that provision. There is no attempt at retrospective validation of excess collection nor any attempt at providing for future collection at the rate of Rs. 3 per 100. All that sec. 23 A does is to prevent unjust enrichment by those dealers who have already passed on the burden of the fee to the next purchaser and so reimbursed themselves by also claiming a refund from the Market Committees. We have already explained the true purpose of S 23 A. It gives to the public through the market committee what it has taken from the public and is due to it. It renders into Caesar what is Caesar 'section We do not see any justification for characterising a provision like Sec. 23 A as one aimed at validating an illegal levy. The decision of this Court in A. V. Nachane and ors. vs Union of lndia(1) on which the counsel placed reliance has no application whatsoever. Section 23 A in our view, is consistent with the spirit of Kewal Krishan and the letter of Shiva Shankar Dal Mills. Another submission of the learned counsel was that while the legislature was competent to enact a law for the levy of a fee and matters incidental and ancillary thereto it was incompetent to legislate providing for the retention by any authority of fee illegally levied. For this purpose, reliance was placed by the learned counsel on the decision of this Court in Abdul Quadar & Co. vs Sales tax officer(a). We are afraid that this decision also is of no avail to the appellants. In orient Paper Mills Limited vs State of Orissa(3), a dealer had been assessed to tax and had paid the tax. Later he applied for re fund of tax which was held to be not exigible by this Court in State of Bombay vs United Motors (India) Ltd( ') . When the appeals were pending in this Court, the orissa Legislature intervened in the matter and introduced sec. 14 A in the Principal Act providing that (1) [1982] I SCC 206. (2) ; (3) [19621 1 SCR 549 (4) [19531 SCR 1069. 99 refund could be claimed only by a person from whom the dealer has A actually realised the amount as tax. The vires of the provision was challenged in this Court, but it was upheld on the ground that it came within the incidental power arising out of Entry 54 of List II. The matter was considered to be a question of refund and it was held that it could not be doubted that refund of the tax collected was always a matter covered by incidental and ancillary powers relating to the levy and collection of tax. The Constitution Bench held, "By item 54 of List Il of Schedule 7 to the Constitution, the State Legislature was indisputably competent to legislate with respect to taxes on sale or purchase of papersand paper boards. The power to legislate with respect to a tax comprehends the power to impose the tax, to prescribe machinery for collecting the tax, to designate the offers by whom the liability may be enforced and to prescribe the authority, obligations and indemnity of those officers. The diverse heads of legislation in the Schedule to the Constitution demarcate the periphery of legislative competence and include all matters which are ancillary or subsidiary to the primary head. The Legislature of the orissa State was therefore competent to exercise power in respect of the subsidiary or ancillary matter of granting refund of tax improperly or illegally collected, and the competence of the legislature in this behalf is not canvassed by counsel for the assesses. If competence to legislate for granting refund of sales tax improperly collected be granted, is there any reason to exclude the power to declare that refund shall be claimable only by the person from whom the dealer has actually realised the amounts by way of sales tax or otherwise ? We see none. The question is one of legislative competence and there is no restriction either express or implied imposed upon the power of the Legislature in that behalf. " The present case is a case akin to orient Paper Mills case (supra). Section 23 A, as we have seen, disables a dealer from getting a refund of fee paid by him, the burden of which he has already passed on to the next purchaser. As we said all that sec. 23 A does is to prevent unjust enrichment by means 100 of a refund to which the person claiming it has no moral or equitable entitlement. Abdul Quader & Co. vs Sales Tax officer (supra) on which considerable reliance was placed by the learned counsel for the appellants was an entirely different case. The dealer in that case had collected sales tax from the purchasers in connection with the sales made by him on the basis that the incidence of the tax lay on the sellers and assured the purchaser that after paying the tax to the appellant, there would be no further liability on them. After realizing the tax, however, the appellant did not pay the amount realized to the Government, but kept it in a suspense account. When the Sales Tax Department discovered this and called upon the appellant to pay the amount realized, he refused to do so. On behalf of the Government, reliance was placed upon sec. 11 (2) of the Hyderabad General Sales Tax Act which laid down that any amount collected by way of tax otherwise than in accordance with the provisions of the Act shall be paid over to the Government and in default of such payment, the said amount shall be recovered from such person as if it were arrears of land revenue. The Court held that it was clear that the words "otherwise than in accordance with the provisions of this Act", included amounts which may have been collected by way of tax though not exigible as tax under the Act. The Court then held that the State Legislature was income tent to enact a provision like sec. 11(2) as it enabled the Government to recover an illegal levy and it could not possibly be said to be an incidental or ancillary power capable of exercise in aid of the main topic of legislation, which was, a tax on the sale or purchase of goods. The decision in orient Paper Mills case was distinguished on the ground that it dealt with a case of refund and not the collection of tax, not really due as a tax under the law. In their precise words, they said: "The matter (In orient Paper Mills case) dealt with a question of refund and it cannot be doubted that refund of the tax collected is always a matter covered by incidental and ancillary powers relating to the levy and collection of tax. We are not dealing with a case of refund in the present case. What sec. 11(2) provides is that some thing collected by way of tax, though it is not really due as a tax under the law enacted under Entry 54 of List II must be paid to the Government. This situation in our 101 Opinion is entirely different from the situation in orient , A Paper Mills case. " The decision in orient Paper Mills case was expressly affirmed by a Bench of Seven Judges of this Court in R.S. Joshi vs Ajit Mills(l) and observations to the contrary Ashoka Marketing Company case(2) were expressly dissented from. We are, therefore. satisfied that sec. 23 A of the Punjab Agricultural Produce Markets Act was within the competence of the Punjab Legislature and that it was not also otherwise invalid in any manner. The appeals are, therefore, dismissed with costs. M .L.A. Appeals dismissed.

After the decision of the Supreme Court in Kewal Krishan Puri vs State of Punjab ; holding that the increase of the market fee from Rs. 2 to Rs. 3 perhundred leviable on the agricultural produce brought or sold by a licensee in the notified market area under section 23 of the Punjab Agricultural Produce Markets Act was not justified, some dealers wanted refund of the market fee in excess of Rs. 2/ per hundred already collected by various market committees. But, the Supreme Court held in Shiv Shankar Dal Mills vs State of Haryana ; that dealers who had not passed on the liabilities to others and others who had contributed to or paid the excess one percent were entitled to make claim for such sums as were due to them from the Concerned market committees and directed the market committees to pay the same The Court further directed that the unclaimed amounts, if any, shall be permitted to be used by the respective market committee for the purposes falling within the statute as interpreted by this Court in C.A. 1083 of 1977. Thereafter more or less in tune with these directions given by the Court, the Punjab Agricultural Produce Markets Act was amended by the introduction of section 23 A It provided, inter alia, that not with standing anything contained in any judgment decree or order of any court, it shall be lawful for a committee to retain the fee levied and collected by it from a licensee in excess of that leviable under section 23 if the burden of such fee passed on by the licensee to the next purchaser of the agricultural produce in respect whereof such fee was levied and collected The appellants challenged before the High Court the constitutional validity of section 23 A and the same was upheld. The appellant contended (1) that Section 23 A was a blatant attempt to validate a levy which had been declared invalid by the Supreme Court and this was not permissible (2) that while the legislature was competent to enact a law for the levy of fee and matters incidental and ancillary thereto, it was incompetent to legislate providing for the retention by any authority of fee illegally levied. 73 Dismissing the appeals by the appellants ,. ^ HELD: (1) The general scheme of the Punjab Agriculture Produce Markets Act and the Act, as amended and in force in Haryana, are broadly on the same lines as the Madras and the Andhra Pradesh Acts and similar enactments in other States. Sections 13, 26 and 28 of the Act covers a vast range of topics and are so wide as take in a multitude of direct and indirect ways of achieving the principal object of the Act, namely, the better regulation of the purchase, sale, storage and processing of agricultural produce and the establishment of markets for agricultural produce. Some of the purposes for which the funds may be expended may on a first impression appear to be municipal or governmental functions, but a closer scrutiny will reveal that they are clearly associated with providing better facilities for marketing of agricultural produce. [81H; 86C D] (2) The primary purpose of section 23 A is to prevent the refund of licence fee by the market committee to dealers, who have already passed on the burden of such fee to the next purchaser of the agricultural produce and who want to unjustly enrich themselves by obtaining the refund from the market committee. section 23 A, in truth recognises the consumer.public who have borne the ultimate burden as the persons who have really paid the amount and so entitled to refund of any excess fee collected and there fore direct the market committee representing their interests to retain the amount. It has to be in this form because it would, in practice, be a difficult and futile exercise to attempt to trace the individual purchasers and consumers who ultimately bore the burden. It is really a law returning to the public what it has taken from the public, by enabling the Committee to utilise the amount for the performance of services required of it under the Act. Instead of allowing middlemen to profiteer by illgotton gains, the legislature has devised a procedure to undo the wrong that has been done by the excessive levy by allowing the Committees to retain the amount to be utilised hereafter for the benefit of the very persons for whose benefit the marketing legislation was enacted. [97D G] (3) There is no substance in the argument that sec. 23 A is an attempt at validating an illegal levy. Section 23 A does not permit any recovery of fee at the rate of Rs 3 per hundred in respect of any sales of agricultural produce before or after the coming into force of that provision. There is no attempt at retrospective validation of excess collection nor any attempt at providing for future collection at the rate of Rs. 3 per hundred. All that section 23 A does is to prevent unjust enrichment by those dealers who have already passed on the burden of the fee to the next purchaser and so reimbursed themselves by also claiming a refund from the market committees. It gives to the public through the market committee what it has taken from the Public and is due to it. There is no justification for characterising a provision like section. 23.A as one aimed at validating an illegal levy. It is consistent with the spirit of Kewal Krishan case and the Letter of Shiv Shankar Dal Mills case. [98B D] Walati Ram Mahabir Prasad vs State of Punjab, AIR 1983 P & 120 & R. section Joshi vs Ajit Mills ; approved. 74 Shiv Shankar Dal Mills vs State of Haryana ; followed. orient Paper Mills Limited vs State of Orissa ; , R.S. Joshi vs Ajit Mills ; relied upon. Kewal Krishan Puri vs State of Punjab ; , Srinivasa General Traders State of Andhra Pradesh AIR 1983 section C. 1246 Kutti Keya vs State of Madras AIR l954 Mad 621 Arunachala Nadar, State of Madras, AIR 1959 SC 30O, Immedisetti Ramkrishnaiah Sons vs State of Andhra Pradesh, AIR 1976 AP 193 Sreenivasa General Taaders vs State A. P. AIR 1983 SC 1246, Shirur Matt ; ; Hingir Rampur Coal Co. Ltd. vs State of Orissa, , Corporation of Calcutta vs Liberties Cinema ; , H. H. Sudhundra Thirtha Swamiar vs Commissioner, [1963] Supp. 2 SCR 302, H. H. Shri Swamiji vs Commisssioner, Hindu Religious and Charitable Fndowments Department [1980] I SCR 368, Municipal Corporation Delhi vs Mohd. Yasin ; , Craving Dock Co. Ltd. vs Horton, at 761, Home office vs Dorset Yacht Co., [1970] 2 All E. R. 294, Herington v British Railways Board [1972] 2 W. L R. 537, & State OF Bombay vs United Motor. (India) Ltd., ; referred to. A. V Nachane and Ors. vs Union of India, and Abdul Quadar & Co. vs Sales tax officer; , ; held inapplicable.

Appeal No. 212 of 1962. Appeal by special leave from the judgment and order dated February 3, 1961, of the Madhya Pradesh High Court in M. P. No. 139 of 1960. N. C. Chatterjee and D. N. Mukherjee, for appellants. B. Sen and 1. N. Shroff, for respondent No. 1. B. P. Maheshwari, for respondent No. 2. 1962. April 16. The Judgment of the Court was delivered by AYYANGAR, J. By a communication dated April 5, 1930, from the Secretary to the Government of the Central Provinces addressed to the Commissioner Jabalpur Division, certain Nazul land was made available to the Municipal Committee of Jabalpur. In this letter the Secretary Stated "I am directed by the Governor in Council with the previous sanction of the Government of India to communicate the following orders of the Government of the Central Provinces : Under Section 38(1)(f) of the Central Provinces Municipalities Act, 1922, Government is pleased to transfer to the Municipal Committee, Jubbiilpore, free of premium and ground rent nazul land measuring. . . of the Jabbulpore town. The land shall vest in the Municipal Committee subject to the following conditions : (1) The land shall be used only for the purpose of a garden and no part of it 137 shall be used for any other purpose without the previous sanction of the Local Government. (2) If condition 1 is broken the land shall be liable to be divested under section 38(2) and resumed by Government .and no compensation whatsoever shall be payable to the Municipal Committee upon such resumption. (3) If the land. is resumed by Government for any Government purpose the provisions of Section 38(3) will apply. " Sub sections (2)& (3) of section 38 referred to ran: "38.(2) The State Government may, by notification, direct that any property which has vested in the committee shall cease to be so vested, and thereupon the property speci fied in the notification shall cease to be so vested and the State Government may pass such orders as it thinks fit regarding the disposal and management of such property. (3) Where any immovable property is transferred, otherwise than by sales, by the State Government to a committee, for public purpose, it shall be deemed to be a condition of such transfer, unless specially provided to the contrary, that, should the property be at any time resumed by the Government, the compensation payable therefor shall notwith standing any thing to the contrary in the Land Acquisition Act, 1894 (1 of 1894), in no case exceed the amount, if any, paid to the Govern ment for the transfer, together with the cost or the present value, whichever shall be less, of any buildings created or other works executed on the land by the committee. " 138 The land thus obtained was being used by the Municipal Committee in accordance with the condition of the transfer as a public garden. The Central Provinces & Berar Municipalities Act, 1922 was repealed by the City of Jabalpur Corporation Act, 1948 (M. P. III of 1950). Under this later enactment the Municipal Committee was substituted by the Jabalpur Corporation, the appellant before us and all properties movable and immovable which were previously vested in the Municipal Committee were transferred to and vested in the Corporation (vide section 71 of the Jabalpur Corporation Act), and by reason of the vesting, the appellant was in enjoyment of the transferred property. A hostel or boarding house of a public institution the Hitkarni Mahavidyalaya had been located in a building constructed to the north of the Public Garden maintained by the Corporation. A public road ran to the south of the Public Garden and as there was not a proper and convenient access from the Boarding house to the public road, the authorities of the Mahavidyalaya approached the State Government to obtain for them a narrow strip of land about 20 ft. wide at the eastern extremity of the Public Garden for the purpose of laying a public road which would provide this access. The Government considered this request reasonable and forwarded this request of the Mahavidyalaya, with a covering letter of their own dated April 28, 1959, to the Corporation for being complied with. The request however was not acceded to and thereafter on February 11, 1960, the Government of Madhya Pradesh issued a notification under section 81 of the Jabalpur Corporation Act notifying that the strip of land needed for making a road measuring 3, 940 sq. "stood divested" from the Corporation. , .Section 81 runs in these terms 139 "81. The Provincial Government may resume any immovable property, transferred to the Corporation by itself or by any local authority, where such property is required for a public purpose, without payment of any compensation other than the amount paid by the Corporation for such transfer and the market value at the date of resumption of any buildings or works subsequently reacted or executed thereon by the Corporation with the intention that such buildings or works should be permanent : Provided that compensation need not be paid for buildings or works constructed or erected in contravention of the terms of the transfer." (The expression 'Provincial Government ' was amended so as to read 'State Government ' by the Adaptation of Laws Order). Complaining that this notification was illegal and beyond the jurisdiction of the State Government the Jabalpur Corporation moved the High Court of Madhya Pradesh for relief under Art . 826 of the Constitution praying for the issue of the writ of mandamus quashing the notification of the government as without jurisdiction and forbidding the enforcement of that order. This was opposed both by the State of Madhya Pradesh as well as the Hitkarini Sabha and the learned Judges dismissed this petition. An application for a certificate of fitness for appeal to this Court filed by the Corporation was also dismissed and therefore the present appeal has been filed by special leave obtained under article 136 of the Constitution. The submission of Mr. Chatterji learned Counsel for the appellant was naturally directed to showing that the reasoning adopted by the learned judges of the High Court was erroneous. The 140 reasoning was briefly as follows: The learned Judges assumed, accepting a submission made on behalf of the appellant Corporation during the arguments on the writ petition, that the authority which effected the transfer of the property to the Municipal Committee of Jabalpur by the order which we have set out as the opening of this judgment was not the Government of Central Provinces & Berar but the Central Government. Starting from this premise, they concluded that the notification could not be sustained under the terms of section 81. Section 81, it will be seen, empowers the State Government to resume immovable property transferred to the Corporation by itself when such property is required for a public purpose. If the property in question had been transferred by the Central Government, the argument ran that section 81 was inapplicable. It should be added that both in the basic assumption that it was the Central and not the Local Government the predecessor of the State Government that had effected the transfer, as well as in the further consequence that the exercise of the power under section 81 of the Corporation Act was ineffective, the learned Judges were aided by concessions accepting the correctness of this position which appear to have been made by the Deputy Advocate General who represented the State before them. , We shall have occasion to refer to this aspect later. Meanwhile to proceed with the reasoning of the learned Judges, section 81 being assumed not to be available to sustain the impugned notification, the learned Counsel for the State appears to have relied on the provisions of section 38 of the Act of 1922 as enabling the State Government to resume the land, and this notwithstanding that by the Jabalpur Corporation Act III of 1950 the entirety of the C. P. & Berar Municipalities Act of 1922 including section 38 bad been expressly repealed. The learned Judges considered that this was possible by 141 reason of a saving contained in section 3 (1) of the Jabalpur Corporation Act which reads "3. (1) All debts and obligations incurred, all contracts entered into with and all matters and things engaged to be done by or for, the Municipality of Jubbulpore, before this Act comes into force shall be deemed to have been incurred, entered into with or engaged to be done by, or for, the Corporation as constituted under this Act." Mr. Chatterji learned Counsel for the appellant Corporation submitted to us that the learned Judges of the High Court bad wrongly applied the saving in section 3 (1) of Act III of 1940 to sustain the resumption of land under the impugned notification. He consider, however, that in view of our conclusion that the impugned notification fell clearly within the power vested in State Government under section 81 of the Jabalpur Corporation Act, it is not necessary to pronounce upon the correctness of the submissions made to us on the construction of section I (1) of that Act, There could not be any dispute that if the authority that had transferred the property covered by the impugned notification, to the Municipal Committee of Jabalpur was the Government of Central Provinces & Berar, the right of the suceessor Government viz. ' the State Government of Madhya Pradesh to take over the land from the Corporation for the purpose of forming a public road would manifestly be within their power under a. 81. That the Corporation of Jabalpur was the successor in title to the Municipal Committee of Jabalpur and. ' that the property which was vested in the Municipal Committee of Jabalpur was transferred to and became vested in the appellant Corporation under section 71 of the Jabalpur Corporation Act, were never in dispute and indeed formed the 142 very basis of the appellant 's petition to the High Court. If any particular property had vested in the Municipal Committee subject to its being divested in particular contingencies, that the property in the hands of the Corporation would be held subject to the same obligations or disabilities could also not be in controversy. Nor could it be contested that the making of a public road is "a public purpose" for which land may be resumed by the State under section 81. What we desire to point out is that if the State of Madhya Pradesh was or must be deemed to have been the transferee of the property under the communication dated April 5, 1930, the validity of the notification under section 81 could not be challenged. As we have pointed out earlier, the learned Judges proceeded, however on the assumption that it was not the Government of C. P. & Berar but the Central Government that was the transferrer of the land in question. There ' was, however, no basis upon which the learned Judges could have rested this assumption. In the first place, in the writ petition by which the appellant Corporation challenged the validity of the notification it did not deny the fact that it was the Government of C. P. & Berar that had effected the transfer, and, in fact, the allegations in the petition proceeded on the basis that it was the State Government that had done so but the contention raised was that on a proper construction of is. 81 it applied only to transfers made after the Jubbulpore Corporation Act, 1948 came into force an untenable contention which has not been persisted in. The question as to who a transferor is obviously a question of fact or at best a mixed question of law and fact and when a party in a writ petition does not allege any such fact, it stands to reason that he ought not to be permitted to travel beyond the facts stated, 143 at the stage of the arguments, To confine a party to his pleadings, particularly to his allegations as regards facts is dictated not merely by the need for orderliness in these proceedings but for avoiding surprise to the other party and consequent injustice resulting therefrom. Save in exceptional cases, parties should be held strictly to their pleadings and if owing to discovery of new matter or grounds, there is need to add to or to modify the allegations either in the petition or in the counter affidavit, the Court should insist on formal amendments being effected, for this would enable each party to state its case with precision and definiteness and the other side would have a proper opportunity to know this case and meet it with appropriate defences. This salutary rule was not adhered to in this case, and the departure from the pleadings which the appellant was permitted to adopt during the course of its arguments before the High Court has led to injustice because thereby the Counsel for the State who was apparently not prepared, to meet an argument not raised in the petition, made submissions at the spur of the moment which were not justified by the true state of affairs. In our opinion, on the allegations made in the petition by the appellant Corporation it ought not to have been permitted to put forward a case that the State Government was not the transferor of the property and the learned Judges of the High Court should have proceeded on the basis of the pleadings in the case. Apart from this question of pleading, we consider that there is no merit in the contention even otherwise. We have already set out the terms by which the transfer of the land was communicated to the Municipal Committee. The preamble recites that is what being communicated is the order of the Government of the Central Provinces. The words 144 of conveyance are in the second paragraph and they read: "Under section 38(1)(f) of the Central Provinces Municipalities Act, 1922 Government is pleased to transfer to the Municipal Committee. . . ". The expression "Government" here obviously, in the context, means the Government of the Central Provinces. Paragraph 2 which specifies what should happen if the condition on which the land has been granted should be broken, states: "The land shall be liable to be. divested under section 38 (2) and resumed by Government ". "Government" here again obviously is the Government of the Central Provinces a construction reinforced if one looked at the sub section referred to. Further, in Condition 3 which speaks of what was to happen if the land was resumed by Government for any Government purpose the reference to "Government" again is to the "State Government". On the terms of the document therefore it was the Government of the Central Provinces that made the grant the predecessor of the State Government. We find therefore that there is no factual foundation for the submission which was apparently made before the High Court that the transfer in the present case was by the Central Government. No doubt, the communication refers to the fact that previous to making the grant the Government of C. P. & Berar had obtained the approval of the Central Government, but that was merely a matter of administrative arrangement between the Central and Local Governments which is totally irrelevant for determining the identity of the Government which made the grant. Besides, the corporation having accepted the grant from the State Government was obviously estopped from contending that 145 the land of which it continued in possession under that grant was not one by the State Government or that the State Government had not the authority to make the grant. If such contention is both not open to the Corporation and not tenable on the merits. , it would follow that the impugned notification was fully justified by the, provisions under section 81 of the Jabalpur Corporation Act. We therefore hold that the impugned notification was valid, though for reasons very different from those on which its validity was sustained by the learned Judges of the High Court. The appeal fails and is dismissed. In view however of the concession made by the respondent before the High Court which misled the learned Judges we consider it proper to direct that each party should bear its costs throughout. Appeal dismissed.

Acting under section 38 (1) (f) of the C. P. Municipalities Act 1922, the Provincial Government, with the sanction of the Government of India, transferred certain Nazul Lands to the Municipal Committee to be used for the purposes of a garden. The 1922 Act was repealed by the City of Jabalpur Corporat ion Act, 1948, which replaced the Municipal Committee by the Jabalpur Corporation. Under section 81 of the Corporation Act the State Government issued a notification notifying that a portion of this land needed for making a road stood divested from the Corporation. The Corporation filed a writ petition before the High Court challenging the notification. On a concession made by the counsel for the State that the transfer of the land had been made by the Central Government the High Court held that the notification could not be sustained under section 81 which was applicable only to transfers made by the State Government But the High Court sustained the notification under section 38 of the repealed 1922 Act, relying upon the saving in section 3 (1) of the Corporation Act. Held, that the transfer of the land in fact had been made by the State (Provincial) Government and the notification was fully justified by the provisions of section 81 of the Corporation Act. There was no basis on which the High Court could have based its assumption that the transfer was by the Central Government. The allegations in the writ petition proceeded on the basis that the transfer was by the State Government. On the pleadings the appellant ought not to have been permitted to put forward a case that the State Government was not the transferor of the property. To confine a party to his pleadings particularly in respect of facts, is dictated not merely by the need for orderliness but for avoiding surprise to the other party. Save in exceptional cases, parties should be held strictly to their pleadings, and if there is need to amend them, the Court should insist on formal amendments being affected. 136 in the present case, on the terms of the order transferring the land it was clear that the transfer was made by the Provincial Government.

: Criminal Appeal No. 190 of 1976. (Appeal by Special Leave from the Judgment and Order dated 15 7 1975 of the Madras High Court in Criminal Appeal No. 162/ 75. Vineet Kumar and M. Mudgal, for the appellant. A.V. Rangam and Miss A. Subhashni, for respondent No. 1 K. Jayaram and K. Ram Kurnar, for respondents Nos. 2 4. The Judgment of the Court was delivered by CHANDRACHUD, J. The appellant, Palaniappa Gounder, was convicted by the learned Principal Sessions Judge, Salem, under section 302 of the Penal Code and was sentenced to death on the charge that on August 23, 1974 he had committed the murder of one Sengoda Goundar. Two appellant 's son and daughter in law were convicted by the learned Judge for abetting the murder and were sentenced to life imprisonment. The three accused filed an appeal in the High Court of Madras which upheld the appellant 's conviction under section 392 but reduced the sentence from death to imprisonment of life. However, while reducing the substantive sentence the High Court imposed a fine of Rs. 20,000/ on the appellant and directed that out of the fine, if realised, a sum of Rs, 15,000/ should be paid to the son and daughters of the deceased under section 357(1) (c) of the Criminal Procedure Code, 2 of 1974. The other two accused were acquitted by the High Court. We are not concerned in this appeal with the legality of the appellant 's conviction or with the acquittal of his daughter and son in law. The special leave granted by this Court is limited to the question of the propriety of the fine imposed by the High Court. The reason and occasion for imposing the sentence of fine was that an application was filed before the High Court under section 482 of the Criminal Procedure Code by a son and two daughters of the decased praying that the appellant, his son and daughter in law be asked to pay to them, as heirs of the deceased, compensation in the stun of Rs. 40,000/ for the death of their father. Section 482 of the Code under which the heirs of the deceased filed the application for compensation corresponds to section 561 A of the Criminal Procedure Code of 1898. It saves the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under the Code or to prevent abuse of the process of any Court or otherwise to secure the ends of justice. A provision 134 which saves the inherent powers of a Court cannot over ride any express provision contained in the statute which saves that .power. This is put in another form by saying that if there is an express provision in a statute governing a par ticUlar subject matter there is no scope for invoking or exercising the inherent powers of the Court because the Court ought to apply the provisions of the statute which arc made advisedly to govern the particUlar subject matter. From this it will be clear that the application made by the heirs of the deceased for compensation could not have been made under section 482 since section 357 expressly confers power on the court to pass an order for payment of compensation in the circumstances mentioned therein. That did not, howev er, affect the power of the High Court to deal with the application because though the application was wrongly described as having been made under section 482 the High Court could deal with it as if it were made under section 357 of the Code. That in fact is what the High Court proceeded to do, for it passed the order of compensation not under section 482 but under section 357(1)(c) of the Code. Section 357 of the Code of Criminal Procedure, 2 of 1974, reads thus: "357. Order to pay compensation. (1) When a Court imposes a sentence of fine or a sentence (including a sentence of death) of which fine forms a part, the Court may, when passing judgment, order the whole or any part of the fine recovered to be applied : (a) in derraying the expenses properly incurred in the prosecution; (b) in the payment to any person of compen sation for any loss or injury caused by the offence, when compensation is, in the opinion of the Court, recoverable by such person in a Civil Court; (c) when any person is convicted of any offence for having caused the death of another person or of having abetted the commission of such an offence, in paying compensation to the persons who are, under the (13 of 1855), entitled to recover damages from the person sentenced for the loss resulting to them from such death; (d) when any person is convicted of any offence which illdudes theft, criminal misappropriation, criminal breach of trust, or cheating, or of having dishonestly received or retained, or of having voluntarily assist ed in disposing of, stolen property knowing or having reasons to believe the same to be stolen, in compensating any bona fide purchas er of such property for the loss of the same if such property is restored to the possession of the person entitled thereto. 135 (2) If the fine is imposed in a case which iS subject to appeal, no such payment shall be made before the period allowed for presenting the appeal has elapsed or of an appeal be presented, before the decision of the appeal. (3) When a Court imposes a sentence, of which fine does not form a Part, the Court may, when passing judgment, order the accused person to pay, by way of compensation, such amount as may be specified in the order to the person who has suffered any loss or injury by reason of the act for which the accused person has been so sentenced. (4) An order under this section may also be made by an Appellate Court or by the High Court or Court of Sessions when exercising its powers of revision. (5) At the time of awarding compensation in any subsequent civil suit relating to the same matter, the Court shall take into account any sum paid or recovered as compensation under this section. " Clauses (a), (b) and (d) of section 357(1) need not be con sidered firstly because the High Court has passed the order of compensation trader cl. (c) and secondly because those clauses have no application. No order having been passed by the High Court for derraying the expenses incurred in the prosecution cl. (a) does not come for consideration. Clause (b) has no application to cases in which the heirs of a person whose death has been caused apply for compensation because that clause deals with the payment of compensation to the very person to whom. any loss or injury has been caused as a result of the offence committed against him or his property and when compensation is recoverable by such person in a Civil Court. Clause (d) deals with a different Class of cases altogether and need not detain us. Clause (c) of section 357(1) under which the High Court has passed the order for compensation enables the Court to direct that the whole or any part of the fine recovered may be applied in paying compensation to the persons who are under the entitled to recover damages from the person sentenced for the loss resulting to them from the death of the person whose heirs, as described in the Act of 1855, they claim to be. Since under the Act of 1855, persons who may be compensated are the wife, hus band, parent (including grand parents) and child (including grand children and step children), the application filed in the High Court was maintainable at the instance of the son and daughters of the deceased. It cannot however be overlooked that the order for compensation can be passed under section 357(1)(c) only when "a Court imposes a sentence of fine or a sentence (including a sentence of death) of which fine forms a part". We are concerned in this appeal to examine primarily the legality and propriety of. the sentence of fine imposed by the High Court because upon that would depend the efficacy and indeed the very existence of the order for payment of com pensation to the heirs of the deceased. The compensa tion, as 10 240SC1/77 136 provided in the section, has to come out of the fine. Therefore, if on a proper application of the principles of sentencing, the fine imposed by the High Court is.found to be excessive and has therefore to be reduced, the order regarding the payment of compensation must suffer a corre sponding variation. There can be no doubt that for the offence of murder Courts have the power to impose a sentence of fine under section 302 of the Penal Code. That section provides that whoever commits murder shah be punished with death, or imprisonment for life, and "shall also be liable to fine". That is why section. 357(1) of the Code speaks of "a sentence (includ ing a sentence of death) of which fine forms a part. " That is only an instance of the practical application of section 302 under which not only a sentence of imprisonment for life but even a sentence of death can legitimately be combined with a sentence of fine. But legitimacy is not to be confused with propriety and the fact that the Court possesses a certain power does not mean that it must always exercise it. Though, therefore, the High Court had, the power to impose on the appellant a sentence of fine alongwith the sentence of life imprisonment the question still arises whether a sentence of fine of Rs. 20,000/ is justified in the circumstances of the case. Economic offences are generally visited with heavy fines because an offender who has enriched himself unconscionably or unjustifiably by violating economic laws can be assumed legitimately to possess the means to pay that fine. He must disgorge his iII gotten wealth. But quite different con siderations would, in the generality of cases, apply to matters of the present kind. Thought there is power to combine a sentence of death with a sentence of fine that power in sparingly exercised because the sentence of death is an extreme penalty to impose and adding to that grave penalty a sentence of fine is hardly calculated to serve any social purpose. In fact the common trend of sentencing is that even a sentence of life imprisonment is seldom combined with a heavy sentence of fine. We cannot, of course, go so far as to express approval of the unqualified view taken in some of the cases that a sentence of fine for an offence of murder is wholly "inapposite" (See, for example, State vs Pandurang Shinde(1), but before imposing the sentence of fine, particularly a heavy fine, alongwith the sentence of death or life imprisonment, one must pause to consider whether the sentence of fine is at all called for and if so, what is a proper or adequate fine to impose in the circum stances of the case. As observed by this Court in Adam Ii Umar Dalal vs The State of Bombay, (2) determination of the right measure of punishment is often a point of great diffi culty and no hard and fast rule can ' be laid down, it being a matter of discretion which is to be guided by a variety of considerations but the court must always bear in mind the necessity of maintaining a proportion between the offence and the penalty proposed for it. Speaking for the Court Mahajan J. observed in that case that: "in imposing a fine it is necessary to have as much regard to the pecuniary circumstances of the accused persons as to the (1) A.I.R. [1956] Bom. 711,714. (2) 137 character and magnitude of the offence, and where a substan tial term of imprisonment is inflicted, an excessive fine should not accompany it except in exceptional cases" (p. 177). Though that case related to an economic offence, this Court reduced the sentence of fine from Rs. 42,300/ to Rs 4,000/ on the ground that due regard was not paid by the lower Court to the principles governing the imposition of a sentence of fine. The High Court imposed in the instant case a fine of Rs. 20,000/on the ground that "the deceased was aged about 48 years and was actively supervising the cultivation of the family lands and would have lived for another 15 to 20 years with his abilities in tact, and the loss to the dependents, viz., the son and daughters would be about Rs. 20,000/ ". Except for the bald and bare statements contained in the petition for compensation filed by the heirs of the de ceased, there is no warrant for the assumption made by the High Court as regards the retention of "abilities in tact" or as regards the extent of "loss to the dependents". It appears to us that the High Court first considered what compensation ought to be awarded to the heirs of the deceased and then imposed by way of fine an amount which was higher than the compensation because the compensation has to come out of the amount of fine. Apart from the fact that even the compensation was not fixed on any reliable data, the High Court, with respect, put the cart before the horse in leaving the propriety of fine to depend upon the amount of compensation. The first concern of the Court, after recording an order of conviction, ought to be to determine the proper sentence to pass. The sentence must be propor tionate to the nature of the offence and the sentence, including the sentence of fine, must not be unduly exces sive. In fact, the primary object of imposing a fine is not to ensure that the offender will undergo the sentence in default of payment of fine but to see that the fine is realized, which can happen only when the fine is not unduly excessive having regard to all the circumstances of the case, including the means of the offender. Section 357(1) (c) of the new Code corresponds to s.545(1) (bb) of the Code of 1898 which was introduced by section 110 of Amending Act 26 of 1955. The statement of objects and reasons of that Act shows that the Joint Committee took the view that, in suitable cases, the person who causes death should compensate the heirs and dependents of the deceased for the loss resulting from the death. The Joint Committee was in full agreement with the view that in a case where death has resulted from homicide, the Court should award compensation to the heirs of the deceased because that would result "in settling the claim once for all by doing away with the need for a further claim in a civil Court, needless worry and expense to both sides of the party". The views of the Joint Committee incorporated in the State ment of Objects and Reasons to the Amending Act of 1955 arc undoubtedly entitled to consideration but those views only reflect that there should reside in the criminal Court the power in appropriate cases to pass an order of compensation in favour of the heirs of the 138 deceased. It cannot, however, be overlooked that since by section 35:7 (1) (c) of the new Code and its precursor, section 545(1)(bb) of the old Code, compensation can only come out of fine, it is always necessary to consider in the first instance whether the sentence of line is at all called for, particularly when the offender is sentenced to death or life imprisonment. If so, the fine must not be excessive, having regard to all the circumstances of the case like motivation of the offence, the pecuniary gain likely to have been made by the offender by committing the offence and his means to pay the fine. The High Court, instead of applying its mind to these factors, considered only what compensation the heirs of the deceased ought to receive. And that question it decided on inadequate data. in view Of the fact that the appellant was under the sentence of death since its imposition by the Sessions Court and its reduction to life imprisonment by the High Court and since a sentence of life imprisonment has been imposed on the appellant, that being the only other sentence permissible under the law, the fine of Rs. 20,000 imposed by the High Court seems to us unduly excessive. In the circumstances we reduce it to a sum of Rs. 3,000/ and direct that the fine or so much of it as is recovered shall be paid to the son and daughters of the deceased who had flied the petition in that behalf in the High Court. S.R. Appeal allowed in part.

The appellant was convicted by the Sessions Judge. Salem for an offence under section 302 I.P.C. and was sentenced to death. The High Court modified the sentence of death to one of life imprisonment. However, exercising its powers under section 367(4) of the Criminal Procedure Code, 1973, the High Court imposed a fine of Rs. 20,000/ under section 357(1)(c) of the Code. Special Leave was granted, by the court, limiting it into the question of propriety of the fine im posed by the High Court. Allowing the appeal in part and reducing the fine the Court, HELD: (i) A saving provision which saves the inherent powers of the court cannot over ride an express provision contained in the statute which saves that power. That did not however affect the power of the High Court to deal with the application merely because the application was wrongly described as having been made under a wrong section. In the instant case, the High Court correctly passed an order of compensation not under 5. 482 but under section 357(1)(c) of the Code and the application filed in the High Court was main tainable at the instance of the son and daughter of the deceased. [133 H, 135 F G] (ii) Under section 302 LP.C. not only a sentence of imprisonment for life but even a sentence of death can legitimately be combined with a sentence of fine. For the offence of murder, the court do have the power to impose the sentence of fine. [136 B C] (iii) Legitimacy is not to he confused with propriety and the fact that the court possesses a certain power does not mean that it must exercise it. Though there is power to combine a sentence of death with a sentence of fine that power is to be sparingly exercised because the sentence of death is an extreme penalty to impose and adding to that grave penalty a sentence of fine is hardly calculated to serve any social purpose. [136 C E] (iv) The first concern of the court, after recording an order of conviction, ought to he to determine the proper sentence to pass. The sentence must be proportionate to the nature of the offence and the sentence, including the sentence of fine, must not be unduly excessive. In fact, the primary object of imposing a fine is not to ensure that the offender will undergo the sentence in default of payment of fine but to see that the fine is realised which can happen only when the fine is not unduly excessive, having regard to all the circumstances of the case, including the means of the offender. [137 D F] (v) Since by section 357(1)(c) of the code of 1973 and its pre cursor section 545(1)(bb) of the code of 1898 compensation can only come out of fine, it is always necessary to consider in the first instance whether the sentence of fine is at all called for, particularly when the offender is sentenced to death or life imprisonment. If so, the fine must not be execessive, having regard to all the circumstances of the case like motivation of the offence, the pecuniary gain likely to have been made by the offender by committing the offence and his means to pay the fine. The High Court in the instant case instead of applying its mind to these fac tors, considered only what compensation the heirs ought to receive. There is no warrant for the assumption made by the High Court as regards the retention of "abilities in fact" or as regards the "extent of loss to the dependants. " [137 A C, 138 A C] 133 State vs Pandurang Shinde, A.I.R. [1956] Born 711, 714 referred to. Adamji Umar Dalai vs The State of Bombay, , applied. (vi) In view of the fact that the appellant was under the sentence of death since its imposition by the Sessions Court and its reduction to life imprisonment by the High Court since a sentence of life imprisonment has been imposed on the appellant that being the only other sentence permis sible under the law, the fine of Rs. 20,000 is unduly exces sive and a sum of Rs. would meet the ends of justice. [138 C D]

Civil Appeal No. 98 of 1962. Appeal from the judgment and decree dated March 7, 1957, of the Bombay High Court in First Appeals Nos. 897 of 1951 and 66 of 1952. section section Shukla for the appellant. G. B. Pai, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for respondents Nos. 1, 3 and 7. A.V. Viswanatha Sastri and Sardar Baliadur, for respondent No. 2. 522 1963. May 2. The judgment of the Court was delivered by WANCHOO J. This is an appeal on a certificate granted by the Bombay High Court and arises out of a suit filed by the appellant as a Hindu reversioner to recover possession of properties alienated by a Hindu widow. The property in suit was the self acquired property of one Ganpatrao jairam who died in 1894 leaving behind two widows, Annapurnabai and Sarswatibai. Ganpatrao had executed a will by which property in village Dahisar was given to Annapurnabai and property in village Nagaon was given to Sarswatibai. The will further provided that a dwelling house together with structures and open land situate at Thana would remain with his two wives who would enjoy the same. There were other dispositions in the will with which we are however not concerned now. Annapurnabai was also authorised to make an adoption on the advice of the executors appointed under the will; but the adopted son was to have no right or connection with the movable and immovable property devised to Annapurnabai during her life time and was to take the property devised to her only after her death. The adopted son was also to take the immovable property bequeathed to Saraswatibai after her death. It may be added that no son was adopted by Annapurnabai and this aspect of the matter therefore need not be considered further. Annapurnabai died on September 17, 1915, and she had executed a will before her death. After Annapurnabai 's death, Saraswatibai began to manage the property. It may be added that Sarswatibai had adopted a son, but this was saidto beagainst the provision in the will of herhusband which specifically directed that she could only adopt if Annapumabai died without making an adoption from amongst the family on the advice of the executors. There was therefore 523 litigation in connection with the adoption between Saraswatibai and Balkrishna Waman, one of the legatees under the will of Ganpatrao, which ended in favour of Balkrishna Waman. Saraswatibai died in 1943. The case of the appellant was that the will of Ganpatrao merely gave widow 's estate to Annapurnabai and Saraswatibai. Consequently Annapurnabai could not dispose of the property given to her by will and the bequests made by her were not binding on the appellant as the next reversioner. It was also alleged that the will made by Annapurnabai was vitiated by the exercise of undue influence brought to bear on her by Balkrishna Waman, who was the husband of her niece. Saraswatibai also made certain alienations and the appellant contended that the sale by Saraswatibai was due to the undue influence exercised on her by Balkrishna Waman, and in any case there was no legal necessity for transfer and therefore the transfer was not binding on the appellant. The main defendant in the suit was Ganesh, a son of Balkrishna Waman. In addition there were twelve other defendants who were alienees in possession of the property and were joined in the suit as the appellant prayed for recovery of possession from them also. The suit was resisted by the main defendant Ganesh for two main reasons. It was first contended that the appellant was an undischarged insolvent at the time succession opened in 1943 and therefore whatever property might come to him as a reversioner vested in the official receiver. Therefore, the appellant had no right to bring a suit to recover possession even after his absolute discharge because the property never vested in him. Secondly, it was contended that by his will Ganpatrao had granted an absolute estate to the two widows and therefore 524 Annapurnabai had full right to make a will with respect to the property given to her and Sarswatibai had the right to make alienations if she thought fit. Besides these two main defences, it was also contended that the appellant was not the nearest reversioner and the alienations made by Sarswatibai were for legal necessity. The same defence was raised by the other defendants. In addition the alienees from Sarswatibai contended that they were bona fide pur chasers for value without notice of the defect in their vendor 's title and therefore the alienations made in their favour could not be set aside. They further pleaded that they had made substantial improvements on the properties purchased by them. On these pleadings as many as eighteen issues were framed by the trial court. Two of these issues covered the two main defences which were raised, namely, (1) Is the plaintiff entitled to maintain the suit due to his insolvency as alleged by the defendants? (3) Had Annapurnabai no authority to will away the properties in her possession? The trial court held that the plaintiff was entitled to maintain the suit. The third issue obviously raised the question whether the bequest to Annapurnabai was that of widow 's estate or an absolute bequest, and the trial court held in that connection that the bequest to Annapurnabai was that of widow 's estate and therefore she had no right to will away the properties in her possession. The trial court also gave findings on the remaining issues and finally declared that the alienations made by Saraswatibai on March 29, 1930 and April 16, 1935 were not for legal necesssity and therefore were not binding on the appellant and the defendants of the suit were directed to deliver 525 possession of the suit properties to the appellant. Inquiry as to mesne profits was also directed and Rd finally the trial court ordered that notice be given to the receiver in the insolvency application No. 48 of 1939 to consider if he wanted the property to be made available for distribution amongst creditors in the aforementioned application. The defendants then went in appeal to the High Court and two separate appeals were filed one by original defendant No. 3 and the other by original defendant No. I and some others. The two appeals were heard together by the High Court and the two principal questions which arose, according to the High Court, were as to (i) the effect of the dispositions made by Ganpatrao under his will, and (ii) the right of the plaintiff to maintain the suit when he was, at the date when the succession opened, an undischarged insolvent, These two questions, it will be seen, correspond to the two issues raised by the trial court, which we have set out above. The High Court first considered the right of the plaintiff to maintain the suit and held that the plaintiff had no right to maintain the suit, as he was an undischarged insolvent at the time the succession opened and he could not maintain the suit even after his absolute discharge. The High Court further held that the disposition in favour of Annapurnabai of the property in Dahisar amounted to conferment of absolute estate on her and further that the disposition in favour of Saraswatibai of the property in Nagaon amounted to conferment of absolute estate on her. On these findings the High Court dismissed the suit. Thereupon the appellant applied for a. certificate which was granted; and that is how the matter has come up before us. 526 The first question that falls for consideration is whether the appellant can maintain the suit. It is necessary in that connection to see what the facts are with respect to the insolvency of the appellant. The appellant had filed an insolvency application in 1939 and was adjudged insolvent on March 11, 1940 and two years time was granted to him to apply for discharge. The appellant applied for discharge on July 6, 1942 and he was granted an absolute discharge in January, 1944. The succession to the estate of Ganpatrao had however opened on May 4, 1943 when the appellant was still an undischarged insolvent. Consequently, the case of the defendants respondents was that under section 28 (4) of the Provincial Insolvency Act, No. 5 of 1920, (hereinafter referred to as the Act), the property which devolved on the insolvent after the date of the order of adjudication and before his discharge forthwith vested in the court or receiver. It is further urged that the property having vested in the court or receiver it must remain so vested even after the absolute discharge of the appellant for the order of absolute discharge merely absolved the insolvent from liability from payment of debts other than those mentioned in section 44 of the Act. Therefore when the suit was brought in 1947 after the discharge the appellant had no title in the property as the title still vested in the court or receiver, and consequently the appellant could not maintain the suit for ejectment against those in possession of the property as he had no title on which he could base his right to sue for ejectment. The question therefore that arises for determination is whether an insolvent on whom property devolves when he is an undischarged insolvent can maintain a suit for the recovery of the property after his absolute discharge. The decision of that depends on what effect the order of absolute discharge has on the insolvent 's title to the property 527 which develoved on him when he was still an undischarged insolvent. It is to this narrow question, (namely, whether a suit brought by an insolvent after his absolute discharge with respect to property which devolved on him when he was an undischarged insolvent can be maintained by him), that we address ourselves hereafter. In view of this narrow question it is in our opinion unnecessary to consider those cases on some of which the High Court has relied which deal with the, right of the insolvent to maintain a suit while he is still an insolvent. What we say hereafter will only apply to a case where the suit is brought by an insolvent after his absolute discharge, though the right to property which is in suit devolved on him when he was an undischarged insolvent. It will be necessary in this connection to consider briefly the scheme of the Act, to decide exactly what the consequences are when an absolute discharge is granted to an insolvent. Section 6 of the Act defines what are acts of insolvency. Section 7 gives power to a debtor or a creditor to make an application for insolvency, if the debtor has committed an act of insolvency. Section 9 deals with applications made by creditors and section 10 by debtors. Section 19 provides for the procedure for hearing an insolvency petition. Sections 20 and 21 provide for interim proceedings against the debtor and appointment of an interim receiver. Section 25 provides for dismissal of the petition on grounds mentioned therein Section 27 gives power to the court to make an order of adjudication and the Court also has to fix a time therein within which the debtor shall apply for his discharge. Section 28 with which we are mainly concerned lays down the effect of an order of adjudication. Sub section (2) thereof provides that on the making of an order of adjudication, the whole of the property 528 of the insolvent shall vest in the court or in a receiver and shall become divisible among the creditors Under sub section (7) this vesting will relate back to and take effect from the date of the presentation of the petition on which the order of adjudication is made. Sub section (4) which is also material lays down that "all property which is acquired by or devolves on the insolvent after the date of an order of adjudication and before his discharge shall forthwith vest in the court or receiver, and the provisions of sub section (2) shall apply in respect thereof." This sub section undoubtedly vests in) the court or receiver any property which the insolvent acquires after the order of adjudication and before his discharge or which devolves on him in any manner, and such vesting takes place forthwith Section 33 provides for the making of a schedule of creditors after the order of adjudication and section 34 lays down what debts are provable under the Act. Section 56 provides for the appointment of a receiver and section 59 lays down the duties and powers of the receiver Scction 61 provides for priority of debts and section 62 for calculation of dividends. Section 64 lays down that when the receiver has realised all the property of the insolvent or so much thereof as can, in the opinion of the court, be realised without needlessly protracting the receivership, he shall declare a final dividend. But before doing so, the receiver has to give notice to persons whose claims as creditors have been notified but not proved, that if they do not prove their claims within the time limited by the notice, he will proceed to make a final dividend without regard to their claims. After the expiration of such time, the property of the insolvent shall be divided amongst the creditors entered in the schedule without regard to the claims of any other persons. Then comes section 67 which lays down that " 'the insol vent shall be entitled to any surplus remaining after payment in full of his creditors with interest as 529 provided by this Act, and of the expenses of the proceedings taken thereunder. " It is clear from this scheme of the Act that the entire property of the insolvent belonging to him on the date the petition for insolvency is made vests in the receiver under section 28 (2). Further under section 28 (4) if any property is acquired by the insolvent or devolves on him after the order of adjudication and before he is discharged, that property also vests in the court or receiver forthwith. The receiver has to administer the property so vested in him and he has the power to sell the property and do various other acts provided in section 59 for the purpose of the administration of the property. Generally speaking the receiver sells the property which vests in him and then distributes the money amongst the creditors who have proved their debts. But before the receiver declares the final dividend he has to give one more opportunity under section 64 to creditors who might not have proved their debts at the earlier stage, to come and prove their debts. This will generally happen when all the property of the insolvent has been disposed of by the receiver, though section 64 contemplates that the final dividend may be declared even if some property has not been disposed of when in the opinion of the court it will needlessly protract the receivership. Section 67 then finally provides that if any surplus is left in the hands of the receiver after payment in full to the creditors with interest and of the expenses of the proceedings under the Act, the surplus is to be paid to the insolvent. As we have said already, the final dividend is generally declared after all the property of the insolvent is disposed of but there may be cases when a final dividend may be declared without the disposition of all the property of the insolvent if in the opinion of the court that would result in needlessly protracting the receivership. But it is clear that under section 67 if there is 530 any surplus remaining in the hands of the receiver that surplus has to go to the insolvent. Though this is the general scheme of the Act with reference to administration of property which vests in the receiver after an order of adjudication, there are two exceptions which may be noticed. Section 35 provides that where, in the opinion of the court, a debtor ought not to have been adjudged insolvent, or where it is proved to the satisfaction of the court that the debts of the insolvent have been paid in full, the court shall, on the application of the debtor, or of any other person interested, by order in writing, annul the adjudication. Section 37 then provides that "where an adjudication is annulled, all sales and dispositions of property and payments duly made, and all acts therefore done, by the court or receiver, shall be valid ; but, subject as aforesaid, the property of the debtor who was adjudged insolvent shall vest in such person as the court may appoint, or, in default 'of such appoint ment, shall revert to the debtor to the extent of his right or interest therein on such conditions (if any) as the court may, by order in writing, declare. " Special stress has been laid on behalf of the respondents on the provision in section 37 which specifically lays down that the property of the debtor in case of annulment shall vest in such person as the court may appoint or in default of such appointment shall revert to the debtor, thus divesting the court or the receiver of the property which had vested in them under section 28 (2) or section 28 (4). The second exception is to be found in section 38 which allows compositions and schemes of arrangement. Section 39 then provides that if the court approves the composition or the scheme of arrangement, the terms shall be embodied in the order of the court and the order of adjudication shall be annulled and the provisions of section 37 shall apply to such annulment. 531 Lastly, we come to what happens where the estate of the insolvent has been administered in the usual way which we have set out already. Section 41 authorises the debtor to apply for an order of discharge. On such an application the court has to consider the objection, if any, made by any creditor and also the report of the receiver in case a receiver has been appointed and thereafter the court may (a) grant or refuse an absolute order of discharge ; or (b) suspend the operation of the order for a specified time ; or (c) grant an order of discharge subject.to any conditions with respect to any earnings or income which may afterwards become due to the insolvent, or with respect to his after acquired property. Section 42 then lays down in what circumstances the court, shall refuse to grant an absolute order of discharge ; and we may refer to only cl. (a) of section 42 (1) in that connection which gives power to the court to refuse to grant an absolute order of discharge if it finds that the insolvent 's assets are not of a value equal to eight annas in the rupee on the amount of his unsecured liabilities, unless the in solvent satisfies the court that the fact that the assets are not of a value equal to eight annas in the rupee on the amount of his unsecured liabilities has arisen from circumstances for which he cannot justly be held responsible. Section 43 provides that if the debtor does not apply for discharge within the period fixed by the court, or does not appear on the day fixed for hearing his application for discharge, the court may annul the order of adjudication or make such other order as it may think fit, and if the adjudication is so annulled, the provisions 532 of section 37 shall apply. Section 44 then provides for the effect of the order of discharge. Sub section (1) thereof mentions the debts from which the insolvent will not be released on an order of discharge. Subsection (2) then provides that "save as otherwise provided by sub section (I.), an order of discharge shall release the insolvent from all debts provable under this Act. " Stress is laid on behalf of the respondents on this provision and it is urged that though sub section (2) provides that the insolvent shall be released from all debts provable under the Act, it does not provide for revesting any property in the insolvent on an order of discharge. It is thus clear from the above analysis of the provisions of the Act that if there is no annulment of the adjudication and no sanction of a composition or scheme of arrangement resulting in an order of annulment, insolvency proceedings terminate generally after the administration of the properties is complete and a discharge is granted. The discharge may be absolute in which case the consequences mentioned in section 44 (2) apply. On the other hand discharge may be conditional in which case also the consequences of section 44 (2) apply subject to the conditions attached to the discharge in accordance with sub section 41 (2) (c). Further in considering whether an absolute order of discharge should be granted or not. the court has to consider whether the in solvent 's assets are of a value equal to eight annas in the rupee on the amount of his unsecured liabilities. Further before granting a discharge the court has to consider the report of the receiver if one is appointed. It is therefore reasonable to think that generally speaking an order of discharge will only be made after the court has considered the report of the receiver and has also considered that the assets of the insolvent ; are of a value equal to eight annas in the rupee on the amount of his unsecured liabilities. It is also not unreasonable 533 to think in view of all the provisions that no order of discharge will generally be made till all the assets of the insolvent are realised, (see section 64), though, as we have already pointed out, it is possible to declare a final dividend even though all the property of the insolvent has not been realised if in the opinion of the court such realisation would needlessly protract the receivership. In such a case however the court would generally pass an order protecting the interests of the creditors with respect to the property which has not been realised before the order of discharge. Finally there is section 67, which provides that if there is any surplus remaining after payment in full of his creditors with interest and of the expenses of the proceedings taken under the Act, it shall go to the insolvent. The key to the solution of the narrow question posed before us is in our opinion to be found in section 67. It is true that section 44 when it provides for the consequences of an order of discharge does not lay down that any property of the insolvent remaining undisposed of will revest in him and to that extent it is in contrast to section 37, which provides for the effect of an order of annulment and in effect lays down that all sales and dispositions of property made by the receiver shall be valid, but if any property remains undisposed of it shall vest in such person as the court may appoint or in default of any appointment shall revert to the debtor insolvent. The reason why section 44 has not provided specifically for the reversion of undisposed property to the insolvent obviously is that the scheme of the Act does not contemplate where there is no annulment that any property which vested in the receiver would remain undisposed of. It as section 74 shows the final dividend is generally declared when he receiver has realised all the property of the insolvent there would be no property left unadministered usually when an order of discharge comes to be passed. It is however urged on behalf of the respondents 534 that there is nothing in sections 41 and 42 to suggest that a discharge can only be granted after a final dividend is declared and therefore there may be cases where administration by the receiver may still go on after discharge has been ordered. This argument, in our opinion, is not quite correct, for cl. (a) to section 42 (1) definitely requires the court to consider whether the assets are of a value equal to eight annas in the rupee on the amount of his unsecured liabilities, and this the Court generally speaking can only find out after all the property has been realised and final dividend has been declared. But, as we have pointed out, it is possible to declare a final dividend and thereafter to get an order of discharge even though some property may not have been disposed of where in the opinion of the court the realisation of such property would needlessly protract the receivership. Therefore it may be possible in some cases that all the property of the insolvent may not be disposed of before an order of discharge is made. But in such a case the court will generally pass orders with respect to the property not disposed of when granting ' an order of discharge. It is true that the Act does not contemplate that an insolvent might get an order of discharge and yet retain part of his property free from the liability to pay debts provable under the Act, in case all the debts have not been paid off But it is here that we have to look to the effect of section 67 of the Act. That section lays down that the insolvent shall be entitled to any surplus remaining after payment in full of his creditors with interest as provided ' by the Act and of the expenses of the proceedings taken thereunder. Now, often this surplus would be in the form of money. But take a case where an insolvent has come into property by devolution after he became insolvent and before his discharge; and suppose that the property which was devolved on him is worth a few lacs while his debts are only a few thousands. In such a case the receiver would not proceed to sell all the property; he would only sell so much of the 535 property as would satisfy the debts in full and meet the expenses of the proceedings in insolvency; the rest of the property whether movable or immovable would not be converted into money. It seems to us that it would not be wrong in such a case to call such property whether movable or immovable which remains after payment in full to the creditors with interest and of the expenses of the proceedings in insolvency as "surplus". To this surplus the insolvent is entitled. In such a case therefore it would be proper to hold that if any property remains undisposed of in the shape of surplus that vests back in the insolvent, just as surplus in the shape of money would. It is true that cases may arise where what devolves on the insolvent after the order of adjudication and before his discharge may not be easily realisable or may be a matter of dispute which may lead to litigation lasting for many years. In such a case the receiver would be entitled to declare a final dividend if the court is of opinion that the property which has de ' volved on the insolvent is subject of protracted litigation and it cannot be realised without needlessly protracting the receivership. Such property would also in our opinion be surplus to which the insolvent would be entitled under section 67 subject to his complying in full with the provisions of that section i.e. paying his creditors in full with interest and meeting the expenses of the proceedings taken under the Act. A third class of cases may arise where the court may not come to know of the property which devolves on the insolvent and grants a discharge in ignorance of such devolution, may be because the insolvent did not bring it to the notice of the court. In such a case also in principle we see no difficulty in holding that the property which vested in the receiver under section 28 (4) and which remained undisposed of by him before the discharge of the insolvent would still be surplus to which the insolvent would be entitled, though he may not be permitted to make full use of 536 it until he complies with the conditions in section 67, namely, until payment in full is made to his creditors and the expenses of the proceedings in insolvency are met by him out of the property so remaining undisposed of. Though therefore there is no specific provision in terms in section 44 (2) with respect to property that may remain undisposed of by the receiver or by the court like the provision in section 37 on an order of annulment, it seems to us that section 67 by necessary implication provides the answer to a case like the present. All the property which remains undisposed of at the time of discharge must be treated as surplus to which the insolvent is entitled. The insolvent will thus get title to all such property and the vesting in the receiver whether under section 28 (2) or section 28(4) would come to an end on an order of discharge subject always to the insolvent complying in full with the conditions of section 67 in case they have not been complied with before his discharge, for he is entitled only to the surplus after the creditors have been paid in full and the expenses of all proceedings in insol vency have been met Any other view of the effect of discharge would result in this startling position that though the insolvent is freed from his debts under section 44 (2) and is a freeman for all purposes the property which was his and which vested in the receiver under section 28 (4) will never come back to him and will always remain vested either in the court or the receiver. We have no doubt that the Act did not contemplate such a situation. We have already indicated the reason why section 44 does not provide for revesting of property in the insolvent in contrast to the provision therefor in section 37. Generally speaking it is not expected that there would be any property left to revest in the insolvent after the administration in insolvency is over. We have therefore to look to section 67 which provides that the insolvent is entitled to any surplus remaining after payment in full of his creditors and after meeting the expenses of the proceedings taken under the Act; and it is that 537 section which gives title to the insolvent in the property which remains undisposed of for any reason before his discharge subject to the conditions of that section being fulfilled even after the discharge. just as the Act does not contemplate that an insolvent would get an order of discharge and yet retain part of his property without meeting the debts provable under the Act in full, it is to our mind equally clear that the Act does not contemplate that after an insolvent has been discharged his undisposed of property, if any, should for ever remain in the possession of the court or receiver, even though in a particular case the creditors may have been paid in full out of the property disposed of ' and all the expenses of the proceedings under the Act have been met. In such a case it seems to us that it is section 67 which must come to the aid of the insolvent and the property which remains undisposed of must be treated as surplus and he gets title to it. Where however the insolvent has been discharged without fully meeting the conditions of section 67, he would in our opinion be still entitled to the surplus, even if it be in the shape of undisposed property, subject to his fulfilling the conditions of section 67. It may be added that there is nothing in the Act which takes away the right of the insolvent to sue in courts after he has been granted a discharge, for he then becomes a free man. In such a situation we are of opinion that he would certainly be entitled to sue in court for recovery of his undisposed of property, if it is in the possession of a third party, after his discharge and such property cannot for ever remain vested in the court or receiver. All that justice requires is that in case the conditions of section 67 have not been fulfilled such property should be subject to those conditions, namely, that he should be liable to discharge his creditors in full. with interest and to meet the expenses of all proceedings taken under the Act. Subject to these conditions the insolvent in our opinion would be entitled to undisposed of property on discharge and would be 538 free to deal with it as any other person and, if necessary, to file a suit to recover it. It remains now to consider some of the cases which were cited at the bar. We have already pointed out that it is unnecessary to consider those cases which deal with the right of the insolvent to file a suit while he is still undischarged, though even on this point there seems to be difference of opinion in various High Courts as to the power of the insolvent; nor is it necessary to refer to the rule in Cohen vs Mitchel (1), which has found statutory expression in section 47 of the Bankruptcy Act, 1914, (4 & 5 Geo.5, ch. 59). Section 47 of the English Bank ruptcy Act deals with transactions by a bankrupt with any person dealing with him bona fide and for value, in respect of property, whether real or personal, acquired by the bankrupt after the adjudication, and provides that all such transactions shall be valid if completed before intervention by the trustee (i. e. the receiver). In England, therefore intervention by the trustee (i.e. the receiver) is required before completion of the transaction and if the trustee does not intervene the transactions arc generally speaking good. That position of law however does not apply in India because of section 28 (4), which specifically lays down that all the property which is acquired by or devolves on an insolvent after the date of an order of adjudication and before his discharge shall forthwith vest in the court or receivers Learned counsel for the parties have not been able to cite any case which deals exactly with a case like the one before us. We may however refer to certain observations of learned judges which may be helpful to show how the position has been understood by some High Courts with respect to surplus and also with respect to what happens to undisposed of property after a (1) , 539 discharge, though there is no discussion on the subject in the cases cited. In Sayad Daud Sayad Mohd. vs Mulna Mohd. Sayad (1), the Bombay High Court was dealing with a case where an insolvent had filed a suit to recover property four days after he had been adjudicated insolvent '. Later the official assignee wanted to join as a new plaintiff when he came to know of the suit; but by that time it appears that limitation had expired, and the question arose whether the suit would be said to have been filed afresh on the date the official assignee intervened. It was held that that was so, for the insolvent could not maintain a suit after he had been adjudicated insolvent and so far as the official assignee was concerned the suit must be held to have been filed on the date he asked for intervention and would therefore be barred by time. It will be seen that the case deals with a suit brought by an undischarged insolvent and not with a suit as in the present case brought by a discharged insolvent. But the learned judges observed that the vesting order for the time being was paramount, even though an insolvent might eventually be entitled to what might remain as surplus after satisfying his creditors, thus showing that what remains as surplus becomes the property of the insolvent. Yellavajjhula Surayya vs Tummalapalli Mangayya (2) is a case more directly in point. In that case the plaintiff was declared an insolvent in 1919. He was still an insolvent in 1929 when certain property devolved on him as reversioner. He was granted an absolute discharge in August 1931. No creditors had come to prove their debts or to take steps between 1919 and 1929; nor did the official receiver take any step prior to 1929 or between 1929 to 1931. After his absolute discharge, the plaintiff instituted a suit for recovering the property. , In that (1) (2) A.I.R. (1941) Mad. 345 540 suit, Varadachariar J. observed and, if we may say so with respect, rightly that the construction of cl. (4) of section 28 was not free from difficulty; but went on to add that there was nothing in the policy of the Insolvency Law to suggest that it was intended to benefit strangers, and in the circumstances the plain ' tiff could maintain the suit, though the learned judge added that nothing that was said in the judge ment would prejudice the right, if any, of the official receiver or of the creditors of the plaintiff to assert such rights and remedies as they might have in law in respect of the suit properties. It will be seen that this case was almost similar to the case before us and the court held that in such circumstances the discharged insolvent could maintain the suit, though the reasoning was only in one sentence, namely, that there was nothing in the policy of the Insolvency Law to suggest that it was intended to benefit strangers. In Rup Narain Singh vs Har Gopal Tewari an insolvent acquired some property after the order of adjudication. It was apparently not brought to the notice of the receiver and was mortgaged by the insolvent while he was still undischarged. Later after his discharge the mortgagee brought a suit to enforce the mortgage. The insolvent mortgagor had transferred part of the property to other persons who were also made parties. These persons raised the defence that as the mortgagor was an undischarged insolvent when he executed the mortgage, it was void. The High Court negatived this contention and relying on section 43 of the Transfer of property Act decreed the suit. In the course of the judgment the High Court however observed that after the order of discharge was passed, the property had been divested from the receiver and revested in the insol vent, though no reason was given for this view. In Dewan Chand vs Manak Chand (2) the facts were that a certain property devolved on an insolvent, (1) I.L.R. (1933) 55 All. (2) A.I.R. (1934) Lab. 809 541 who made a mortgage of it, apparently without bringing it to the notice of the receiver. After the insolvent was discharged, a suit was brought to enforce the mortgage and a question arose whether section 43 of the Transfer of property Act would apply. In that connection the High Court observed that after the insolvent was discharged the property in question must be considered to have revested in the mortgagor on his discharge in the absence of any order to the contrary by the court. We may now notice some cases on which reliance is placed to suggest that undisposed of property can never vest in the insolvent, even after he gets a discharge. In Arjun Das Kundu vs Marchhiya Telinee (1), it was held that "an absolute order of discharge of an insolvent does not release any property acquired by him before such order from the liability to meet his debts provable in insolvency. " That case, however, was only dealing with the effect of section 44 (2) of the Act and it was held that if there was any property which vested in the official receiver either under section 28 (2) or under section 28(4) and that property was not disposed of before the order of discharge, the creditors would still have a right to get their debts discharged by the sale of that property even though they might not have proved the debts at an earlier stage. This case does not in our opinion support the proposition contended for by the respon dents. It only lays down that the property which remains undisposed of would still be subject to the debts provable under the Act, and this is what in our opinion is the effect of section 67 where only the surplus revests in the insolvent. The next case is Kanshi Ram vs Hari Ram (2) there the facts were that a discharge was granted on the re port of the official receiver to the effect that the insolvent 's assets had been completely disposed of. Thereafter it was discovered that some property had (1) I.L.R. (2) A.I.R. (1937) Lah. 542 devolved on the insolvent before his discharge and was not within the knowledge of the receiver. The High Court held that such property was liable to meet the debts which had not been paid in full before the discharge. This case also in our opinion only lays down that any surplus in the hands of the insolvent after his discharge is liable to the debts provable under the Act if they have not been paid in full, and this is in accordance with the provisions of section 67, for the insolvent is only entitled to that property or money as surplus which remains after payment of his debts in full and after meeting all expenses of the proceedings under the Act. The last case to which reference may be made is Parsu vs Balaji (1). In that case also the insolvent had been discharged but his debts had not been paid in full. It was held in those circumstances that any undisposed of property would still be liable to meet the debts provable under the Act. This again in our opinion is in accord with section 67 where the insolvent is only entitled to that surplus which remains after his debts have been paid in full and all the expenses of the proceedings taken under the Act have been met. Therefore, on a careful consideration of the scheme of the Act and on a review of the authorities which have been cited at the bar, we are of opinion that an insolvent is entitled to get back any undisposed of property as surplus when an absolute order of discharge is made in his favour, subject always to the condition that if any of the debts provable under the Act have not been discharged before the order of discharge, the property would remain liable to dis charge those debts and also meet the expenses of all proceedings taken under the Act till they arc fully met. The view of the High Court that the suit is not maintainable is therefore not correct. The order of the trial court by which it held that the suit was maintainable and provided that notice should be (1) I.L.R. 543 given to the receiver in insolvency application No. 48 of 1939 to consider if be wanted the property to be made available for distribution amongst creditors, is correct. Now we come to the second point raised before the High Court, namely, the effect of the will of Ganpatrao. By the first clause of the will, Ganpatrao appointed three executors. The bequest in favour of Annapumabai was in these terms : "The entire immovable property situate at the village of Dahisar, Taluka Kalyan, consisting of lands and tenements etc. is given to my senior wife, Annapoorna. During her life time she shall enjoy, as owner, the income therefrom, in any manner she may like. No one shall have (any) right, title or interest therein. " The bequest in favour of Sarswatibai was in these terms : "The entire immovable property situate at the village of Nagaon, Taluka Kalyan, consisting of lands and tenements etc. is given to my junior wife, Sarswati. During her life time, she shall enjoy, as owner, only the income therefrom in any manner she may like." Then there was another clause which gave them some property jointly, which was in these terms : "The property consisting of a dwelling house and other structures and open space etc. situate at Thana shall remain with my two wives. Hence, they should live amicably and enjoy the same. " The High Court has held that the estate given to Annapurnabai in the lands at village Dahisar and 544 to Sarswatibai in the lands at village Nagaon and the estate given to them, in the house at Thana was an absolute estate subject to defeasance of the estate on their deaths in case a son was adopted by Annapurnabai. It is true that the two clauses with respect to the demise of properties in villages Dahisar and Nagaon to the two widows use the word "owner" ; but we have to read the clauses as a whole together with the surrounding circumstances then prevailing as also in contrast to the other clauses in the will to determine the intention of the testator. Now the clause with respect to village Dahisar is that the property in Dahisar was given to Annapurnabai. and then goes on to say that during her life time she would enjoy as owner the income there from in any manner she liked and no one else would have any right, title or interest therein Reading the clause as a whole it seems to us fairly clear that the intention of the testator was that the property given to Annapurnabai was for her life and she was entitled to enjoy the income therefrom in any manner she liked without any interference by any one. If the testator 's intention had been to give an absolute estate to Annapurnabai, there was no reason why he should have gone on to say in that clause, "during her life time she shall enjoy as owner the income therefrom, in any manner she may like", for that would have been unnecessary in the case of a person who was given an absolute estate. Therefore these words appearing in the second clause are clearly words of, limitation and show on the reading of the whole clause that the intention of the testator was to confer a life estate on Annapurnabai. In the case of the property in village Nagaon, the matter is clearer still, for the testator said that Sarswatibai shall enjoy as owner, only the income during her life time. These are clear words of limitation and show on reading the clause as a whole that the 545 intention of the testator was to confer only life estate on Sarswatibai. As to the clause relating to the dwelling house etc. in Thana, it is remarkable that that clause does not even use the word "given" ; it only says that the dwelling house etc. " 'shall remain with my two wives" i.e. that they will be in possession so long as they live. The further sentence that they should live amicably and enjoy the same, makes in our opinion no difference to the intention of the testator, which is clear from the fact that he wanted these properties to remain with his two wives, i.e. he was only giving them the possession of the property for enjoyment for their lives. In this connection it may be well to contrast the language of some other clauses in the will where the bequest was obviously of an absolute estate. Take the bequest relating to Sirdhon village in favour of Balkrishna Waman Kharkar. It is in these terms : "The entire immovable property situate , 'at Sirdhon village, taluka Panvel, consisting of lands and tenements etc. is given to Chiranjiv Balkrishan Waman Kharkar. He shall en 'JOY the same as owner. Neither my two wives nor others whosoever shall have any right, title or interest etc. whatever therein. " This is a clear bequest of an absolute estate. There is no mention of any income in this clause and also no mention of the life time of the legatee. Obviously, therefore, where the testator was intending to bequeath an absolute estate he used entirely different language from that used in the three clauses with respect to his wives. Contrast again the language relating to the bequest of movable property in favour of the two wives. That clause is in these terms : " Movable property such as ornaments and trinkets and clothes and raiments etc. which 546 may have been given to any party shall remain with the said party and my two wives shall be fully entitled thereto. They shall deal with the same in any manner they like. " The use of the words "fully entitled" clearly indicates the bequest of absolute estate so far as movable property is concerned ; but we find no similar words in the clauses relating to bequests of property in villages Dahisar, Nagaon and Thana. This conclusion as to the nature of the interest bequeathed to the two wives is strengthened by another provision in the will. Under that provision Annapurnabai was authorised to adopt a fit boy from amongst the family, on the advice of the executors. It was also provided that the adopted son shall have no right of any kind whatever to the movable and immovable properties so long as Annapumabai remained alive. But on her death he was to be entitled to these. properties. It was further provided that on the death of Sarswatibai the adopted son would become entitled to the immovable property bequeathed of her. Now if the estate bequeathed to Annapurnabai and Sarswatibai was anabsolute estate it is difficult to see how the testator could provide that on the death of Annapurnabai and saraswatibai the properties bequeathed to them would go to the adopted son. The holder of an absolute estate would be entitled to sell it if she so desired, and therefore there could be no provision in the will that on the deaths of Annapumabai and Sarswatibai, the property bequeathed to them would go to the adopted son. This provision therefore read with the provisions in the three clauses relating to the bequests of properties in Dahisar; Nagaon and Thana clearly shows that the bequest of those properties in favour of the two wives was only a life estate. We cannot therefore agree with the 547 High Court that the estate given to Annapumabai and Sarswatibai whether in Dahisar, Nagaon or Thana was an absolute estate. In our opinion it was life estate only. It may also be added that Ganpatrao died,, in 1894 when it was more usual to give life estate to widows and the terms in the various clauses on the will are in our opinion in consonance with the prevailing practice in those times. In the view that we have taken it follows that the judgment of the High Court must be set aside. However as the High Court has only considered these two questions, the case will have to be remanded so that the High Court may go into the other issues raised and decided by the trial court. Lastly we may refer to another contention on behalf of the respondents. It appears that Shamdas Narayandas and jaigopal Narayandas purchased property in village Dhokali Manpada in Taluka and sub division of Thana, described as lot No. 8 in the first schedule to the 'plaint. It appears that there was one sale deed in favour of these two defendants. Of these defendants, jaigopal_Narayandas died on April 19, 1960, after the decree of the High Court which was given on March 7, 1957, and also after the grant of the certificate by the High Court in May, 1958, and the order admitting the appeal by the High Court in April, 1959. The record was despatched to this Court in 1962. No application was however made to the High Court till August 13, 1962, for substitution of the heirs of jaigopal Narayandas. When the application was made in August 1962, for substitution, the High Court dismissed it on Jannary 9. 1963, on the ground of limitation. There was then a review application filed before the High Court, which was also dismissed on February 12, 1963. Thereafter the petition of appeal was filed in this Court on March 13, 1963. Then on April 3, 1963, an application was made to this 548 Court for substitution of the heirs of Jaigopal Nara a as. The respondents contend that as the heirs of jaigopal Narayandas were not brought on the recordwithin the time allowed by law, the entire appeal abates. We are of opinion that the interests of the various defendants who are in possession of various properties are independent and therefore the whole of the appeal cannot abate because the heirs of certain deceased defendants in possession of one property have not been brought on the record. So far as lot. No. 8 is concerned it was the common progerty of Shamdas Narayandas and jaigopal Narayan as, which they apparently acquired by one sale decd. We are not prepared to condone the delay in bringing the heirs of jaigopal Narayandas on the record and therefore dismiss the application dated April 3, 1963. The effect of this will be that the suit will abate in so far as the property in lot No. 8 is concerned. It is not shown that the interest of the two purchasers who are presumably members of an undivided family were separate and distinct and so there cannot be partial abatement only in regard to the share of the deceased purchaser; but that cannot affect the appeal in so far as the property in other lots is concerned. The High Court on remand will therefore go into the other issues with respect to properties in lots other than lot No. 8. We therefore allow the appeal and remand the case to the High Court for decision on other issues so far as lots (other than lot No. 8) in the first schedule to the plaint are concerned. So far as lot No. 8 is concerned, the appeal abates and is dismissed. In the circumstances we pass no order as to the costs of the appeal with respect to lot No. 8, so far as the costs of the appeal with respect to other lots are concerned, the respondents will pay the costs of the appellant including advocate 's fee of this court & the Court fees also. Appeal allowed. Case remanded.

The appellant, a Hindu reversioner, brought the suit out of which the appeal arose for recovery of certain properties alienated by two widows having widow 's estates under the will of their husband. The respondents resisted the suit mainly on the grounds that the appellant, who was an undischarged insolvent at the time the succession opened, could not maintain the suit even after his absolute discharge as the properties must be taken to have vested in the official receiver and that under the will of their husband the widows got not a widow 's estate but an absolute estate and had the right to alienate the properties which they did. The trial court found in favour of the appellant and directed delivery of possession of the properties to him. On appeal the High Court took the contrary view on both the points and dismissed the suit. The appellant came up to this Court on the certificate granted by the High Court. Held that the High Court was in error in holding that the appellant could not maintain the suit. There is nothing in the Provincial Insolvency Act that takes away the right of the insolvent to sue in courts after he is granted a discharge for he then becomes a free man. Though there is no specific provision in the Act with respect to the property that may remain undisposed of by the court or by the receiver, the provisions in section 67 by necessary implication read in the light of the general scheme of the Act provides an answer to this and all such property must be treated as surplus to which an insolvent is entitled, after an absolute order of discharge is made in his favour, subject always to the condition that if any debts provable under the Act have not been discharged before such order, 521 the property will remain liable for such discharge as also the expenses of all proceedings under the Act till they are fully met. Cohen vs Mitchel, (I 890) ; Sayad Daud Sayed Mahomed vs Mulna Mahomed Sayad, (1926) 28 Bom. L. R. 334; Yellavajjhula Suraya vs Tummalapali Mangayya, A.I.R. , Rup Narain Singh vs Har Gopal Tewari, 'I. L. R. (1933), 53 All. 503; Diwan Chand vs Manak Chand, A.I.R. (1934) Lah. 809; Arjun Das Kundu vs Marchhiya Tolinee, I.L.R. ; Kanshi Ram vs Hari Ram, A. I .R. and Parsu vs Balaji, I.L.R. (I , discussed. In order to determine the true intention of a testator, the clauses of the will should be read as a whole in the light of the surrounding circumstances as also in contrast to the other clauses and where the testator, as in the instant case, having used the word owner ' in the previous clause, follows up by using the words "during her lifetime enjoy as owner the income in any manner she likes" the latter words clearly limit the bequest and indicate that what is given is no more than a life estate. Where the interests of the various defendants in possession of various properties are independent, the appeal cannot abate as a whole by reason of the heirs of a deceased defendant in possession of a property not having been brought on the record within the prescribed time.

Appeal No. 161 of 1954. Appeal from the judgment and order dated, May 18, 1953, of the Calcutta High Court in Income tax Reference No. 72 of 1951. N. A. Palkhivala, P. D. Himatsingka, J. B. Dadachanji, section N. Andley Rameshwar Nath and P. L. Vohra, for the appellant. G. N. Joshi and R. H. Dhebar, for the respondent. May 23. The Judgment of the Court was delivered by KAPUR J. This appeal brought on a certificate of the High Court raises a point of far reaching consequence as to the interpretation of sections 8, 10 and 24(2) of the Indian Income tax Act (hereinafter termed the Act). The assessee (who is the appellant before us) claims that in the computation of its profits for the assessment year under review (1945 46), it is entitled to set off the carried over loss of the previous year against the profits of the year of assessment under section 24(2) of the Act. The assessee is a Bank carrying on banking business. For the assessment year its assessable income was computed by the Income Tax Officer at Rs. 14,95,826 "by splitting up" its income into 2 heads . . . . "interest on securities" and . . . . business income ". " Interest on securities" in the year of assessment was Rs. 23,62,815 and under the head " business income " there was a 81 loss of Rs. 8,86,972. After making the necessary adjust ments and deducting the business loss from " Interest on securities ", the net income was determined at Rs. 14,95,826. In the previous year there was a loss of Rs. 3,21,929 which was computed by setting off the business loss against "interest on securities ". Before the Income tax Officer the assessee made its claim on the basis that it was a part of " the business of the Bank to deal in securities. . . . . . and " that no distinction should be made between income from securities and income from business for the purpose of set off under section 24 ". It also claimed that it carried on only one business, namely banking as defined by section 277F of the Indian Companies Act in the ' course of which the " Bank has to receive money on deposits and invest such deposits in securities, loans and advances " and therefore holdings of securities by it could not be treated as its separate business. The Income tax Officer was of the opinion that, as there was a loss under the head " business " its claim could; not be sustained and hence it could not be set off under section 24(2) of the Act. On appeal to the Assistant Commissioner of Income tax it was again contended that the assessee was a dealer in securities and that the two heads of income, " Interest on securities " and " profits and gains " in banking business could not be treated separately and were part of the same business of the assessee and therefore it could claim a set off under section 24(2) of the Act. But this contention was repelled. The matter was then taken to the Income tax Appellate Tribunal where again the contention was repeated that the business of the assessee could not be split up into two heads under " interest on securities " and banking business". The Tribunal, however, held: " Reading sections 6, 8 and 10 it appears to us that the legislature wanted to keep the income from the two sources as separate. We are therefore of the opinion that the Income tax Officer was right in splitting up the income of the appellant into two heads and in refusing the set off of the business loss brought forward 11 82 from last year against income from Govt. securities earned this year. " It therefore did not allow the loss of the previous year to be set off against the computed profits of the assessment year. The assessee thereupon asked for a case to be stated to the High Court and inter alia raised two questions; (1) Whether interest on securities was a part of Bank 's income from business carried on by it. (2) Whether the assessee was entitled to set off the carried over loss of the previous year against income during the assessment year. The assessee contended that it was carrying on banking business in various towns in India, that " in the usual course of its business it invests moneys in Securities and receives interest thereon " and therefore it claimed that the loss of Rs. 3,21,929, carried forward from the previous year could be set off under section 24(2) of the Act. The Tribunal stated the case and sought the opinion of the High Court on the following three questions; (1) " Whether on the facts and in the circumstances of this case, the assessee was entitled to set off the business loss of Rs. 3,21,929 brought forward from the preceding year against this year 's income from interest on securities held by the assessee. (2) Whether on the facts and in the circumstances of this case the assessee was entitled under section 8 to deduct any part of the administrative expenses out of the income from interest on securities. (3) Whether in the circumstances of this case, the assessee was entitled under the first proviso to section 8 of the Income tax Act to deduct any interest on money borrowed and utilised for investment in tax free securities. " The High Court answered all the questions in the negative. The learned Chief Justice during the course of his judgment said: 83 " It appears to me, therefore, that because the several heads under section 6 in the Indian Act are mutually exclusive and because under any Income tax Law, an item coming under an exclusive head cannot in any circumstances be charged under another head and also because the interest on securities in the hands of a banker cannot be treated as business income on the principles explained by Mr. Justice Rowlatt, I must hold that the contention of the asesssee. . . . . . must be rejected. " We had the benefit of a full and able argument from counsel on both sides. Counsel for the appellant has raised three points: (1)That sections 8 and 10 of the Act should be so read that "interest on securities", in cases where the true nature and character of the securities in the hands of an assessee is one of trading assets, would be excluded from the scope of section 8 and would fall under the head "business" within section 10 of the Act and alternatively even if sections 8 and 10 are read as specific heads then section 10, being more appropriate, should be applied to the facts of the present case ; (2)If sections 8 and 10 are equally applicable the assessee has the option to be taxed under that head which imposes a lighter burden on him; and (3)Lastly he contended that even if the heads of income were to be taken as mutually exclusive so that the "interest on securities" falls under section 8 and "business" under section 10 of the Act, the assessee would be entitled to a set off under section 24 (2) because "interest on securities" and "profits and gains" from business result from different operations of the same business, the two being different forms of the same business of the assessee. We may now turn to the scheme of the Act. Section 2(15) defines "total income" to mean "total amount of income, profits and gains. . . .computed in the manner laid down in the Act. " Chapter I of the Act deals with "Charge of income tax". It consists of two sections 3 & 4. Section 3 provides that "income tax shall be charged for any year at any rate or rates in 84 accordance with and subject to the provisions of this Act. " Section 4 provides ' that "the total income of any previous year of any person includes all income, profits and gains from whatever sources derived". Chapter 3 deals with "Taxable income". Section 6 enumerates the heads of income chargeable to incometax. It says as under : section 6 "Save as otherwise provided by this Act, the following heads of income, profits and gains, shall be chargeable to income tax in the manner hereinafter appearing namely (i) Salaries. (ii) Interest on securities. (iii) Income from property. (iv) Profits and gains of business, profession or vocation. (v) Income from other sources. (vi) Capital gains. " The two relevant heads for the purpose of this appeal are (ii) & (iv), i.e., " interest on securities " and " profits and gains of business" which are dealt with under sections 8 and 10 of the Act respectively. Section 8 provides that " the tax shall be payable by an assessee under the head " interest on securities " in respect of interest receivable by him on any security of the Central Government. . . . and in the provisos to this section are given the allowable deductions. The amendment made in the proviso by the Act of 1955 is very relevant for the purpose of this appeal and we &hall advert to it at a later stage. Section 10 provides: " The tax shall be payable by an assessee under the head " profits and gains of business, profession or vocation" in respect of the profits or gains of any business, profession or vocation carried on by him ". The assessee contends that securities are a part of its trading assets and this position has throughout been accepted by the Department, and any income which accrues in respect of these assets in the form of interest 85 has the same characteristics as profits or gains of " business " and therefore must be treated as income falling under the head " business " under section 10 of the Act. In other words the income of the assessee from its banking business which includes dealing insecurities is,really income from the same source and whatever accrues in the form of interest whether from securities or from any other source of investment would fall under section 10 and not section 8 because all the interest accrues from the business carried on by the assessee and this business is only one business. The argument thus is that sections 8 & 10 have to be so construed as to harmonise with each other and the only way they can be harmonised is that income accruing in the form of "interest on securities" should be taken to be accruing from the business of the assessee because securities form part of its trading assets and thus fall within section 10 and not section 8, which must be restricted to capital investments only. It is further contended that if the object of the legislature was to give a separate and exclusive identity to the income from " interest on securities", it would have made the language of section 8 of the Act as specific as it has made in the case of income from dividends from shares, which income by the addition of sub section (I A) to section 12 has come to have a specific place under the head "other sources" and is no longer within the head "business" under section 10 of the Act and thus by statute its nature and character have undergone a change. Reference is in this connection made to Commissioner of Income tax vs Ahmuty & co. Ltd. (1) where it was held by the High Court of Bombay that dividend income received by a dealer in shares is chargeable under section 10 and not under section 12 of the Act. It is thus contended that in order to preserve the unity and oneness of the business of the assessee and to maintain the unity of its business income the applicability of section 8 should be circumscribed to "interest on securities" when they are not trading assets of the assessee. According to the scheme of the Act discussed above income tax has to be charged in respect of the "total (1) (1955] 86 income" of the previous year of every assessee and "total income" is defined under section 2(15) to comprise all income, profits and gains from whatever source derived subject to certain exemptions. Chapter 3 which is entitled "Taxable income" comprises sections 6 to 17 (both sections inclusive ). Section 6 enumerates the various heads of income, profits and gains which are chargeable to income tax. Each of these heads of income, profits and gains is dealt with under a separate section and these sections also give the details of allowances and exemptions in regard to each different head. The argument raised by counsel for the Revenue is that according to the decision of the Privy Council in Probhat Chandra Barua vs The King Emperor (1) section 6 is the charging section and that the words of sections 7 to 12 show that the various heads of income are mutually exclusive and items which specifically fall under these various heads have to be charged under only that head and would fall under one of these several but appropriately specific sections. It is true that the Privy Council in Probhat Chandra Barua vs The King Emperor (supra) did point out that section 6 was a charging section, but this was because sections 3 and 4 were then differently worded as pointed out by Kania, J., in B.M. Kamdar, In re (2 ) at p. 43 and by Chagla, J., in the, same case at p. 57. The Federal Court in Chatturam and others vs Commissioner of Income tax, Bihar(3) said: The liability to pay the tax is founded on sections 3 and 4 of the Income tax Act which are the charging sections". The judgment of the Privy Council in Wallace Brothers & Co. Ltd. vs Commissioner of Income tax (4) also shows section 3 to be the charging section. It is then argued that section 6 of the Act being mandatory all items of income, from whatever source they arise, would fall only under one of the heads enumerated under section 6 and therefore one of the sections 7 to 12 would specifically apply and section 8 which relates to " interest on securities" must be held to apply to income from that source. It is also contended by counsel for the (1) (1930) L.R. 57 I.A. 228, 238. (2) (3) , 308. (4) 87 Revenue that even if there is any overlapping between sections 8 and 10 "interest on securities" whether accruing from securities held as a capital asset or trading assets falls under section 8 alone and section 10 should be so read as to altogether exclude the income from " interest on securities". Counsel for the Revenue has referred us to the form of the Return, prescribed under section 22(1) of the Act at the relevant time of the assessment under review. The heads there shown are (1) Salary, (2) Interest on securities, (3) Property, (4) Business, profession or vocation, (5) other sources, and income from each source is to be shown in a separate column, in each one of which reference is made to a particular note relevant to that head of income. In the column under the head "interest on securities" reference is made to note 9 which is in the following words: "Interest on securities" means interest on promissory notes or bonds issued by the Government of India or any other State Government or the interest on debentures or other securities issued by or on behalf of a local authority or company. The gross amount before deduction of income tax should be entered. Entries under this head should be accompanied by persons paying the interest under section 18(9) of the Act. Deductions are allowable in respect of (a) Commission charged by a banker for collecting the interest. (b) Interest payable on money borrowed for the purpose of investment in the securities except certain interest payable to persons abroad from which tax has not been deducted (see section 8 of the Act for details). Full particulars (in a separate statement if necessary) should be given of any deduction claimed. " This is a statutory form and it gives what is meant by " interest on securities ", what documents are to accompany the Return in order to entitle an assessee to claim refund and what deductions are to be made. " The mandatory character of section 6 is indicated by the language employed in that section and the phraseology of all the sections following, i.e., 7 to 12, employing the words " the tax shall be payable under 88 the head. . . . in respect of " the different and distinct heads of income, profits and gains, salaries " Interest on securities ", and "property ", business etc. is indicative of the intention of the legislature making the various heads of income, profits and gains mutually exclusive. So every item of income, whatever its source, would fall under one particular head and for the purpose of computing the income for charging of income tax the particular section dealing with that head will have to be looked at. The various sources of income, profits and gains have been so classified that the items falling under those heads become chargeable under sections 7 to 12 according as they are income of which the source is "salaries ') " interest on securities property business, profession or vocation ", " other sources or " capital gains ". Looked at thus the contention of counsel for the Revenue that under the scheme of the Act and on a true construction of these relevant sections" interest on securities " by whomsoever and for whatever purpose held has to be taxed under section 8 and under no other section is well founded and must be sustained. It being a specific head of chargeability of tax, income from " interest on securities " whether held as a trading asset or capital asset would have to be taxed under section 8 and not under section 10 of the Act. The amendment made in the proviso to section 8 in the year 1955 allowing a deduction in respect of any remuneration paid to any person other than the banker for realising interest on behalf of the assessee, supports this interpretation. Thus this proviso now provides that reasonable amount can be deducted by an assessee for commission paid to a Bank or remuneration paid to anybody else for realising interest on its behalf which clearly indicates the intention of the legislature that interest on securities specifically falls under section 8 and under no other section. This amendment shows that even a Bank, if it buys securities as a part of its trading assets, is entitled to make a deduction for remuneration paid by it to any person for realising interest which postulates that "interest on securities" would fall under s, 8 of the Act, 89 This interpretation receives further support from the language of section 18 which deals with payment after deduction at source. Section 18(3) requires a person responsible for paying " interest on securities " to deduct income tax on the amount of the interest payable at the maximum rate and the person so responsible is required, after deduction of the income tax, to pay to the account of the Central Government within 7 days of the deduction, the sum so deducted and under section 18(5) the maximum rate is to be charged for the year in which the the amount is paid and not at the rate of the assessment year. A combined reading of sections 3,4,6, 8,10,18 and refund section, section 48, shows that income tax is to be charged at the rate or rates prescribed in the Finance Act on the total income of the assessee as defined in section 2(15) of the Act and computed in the manner given in as. 7 to 12 which are not charging sections but are provisions for the computation of " total income ". In the words of Viscount Dunedin in Salisbury House Estate vs Fry(1): " Now, the cardinal consideration in my judgment is that the income tax is only one tax, a tax on the income of the person whom it is sought to assess, and that the different schedules are modes in which the Statute directs this to be levied ". As has been pointed out in that judgment there are no separate taxes under the various schedules but only one tax. But in order to arrive at the total income on which tax is to be charged " you have to consider the nature, the constituent parts, of his (assessee 's) income to see which schedule you are to apply. " If these words may be used with reference to the language of the Indian Act, we have to look at the source of " income, profits and gains" and then see under what head it appropriately and specifically falls and if it falls under one particular head then computation is to be made under the section which covers that particular head of income. We cannot treat any one of the sections from sections 7 to 10 to be general or specific for the purpose of any one particular source of income. The (1) (1930)15 T.C.266,306. 90 language shows that they are all specific and deal with the various heads in which the item of income, profits and gains in the case of an assessee falls. Sir George Rankin in Commissioner of Income Tax vs Chunilal B. Mehta(l) said: " The effect of section 6 is to classify profits and gains, under different heads for the purpose of providing for each appropriate rules for computing the amount; its language is " shall be chargeable in the manner hereinafter appearing. " One of the heads is " business ", which as a head of income stands alongside salaries, interest on securities, professional earnings and other sources. True, the classification of income is according to the character of the source But the list of " heads in section 6 is a list of sources not in the sense of attributing the income to one property rather than another, one business rather than another, but only in the sense of attributing it to property as distinct from employment, or business as distinct from investment. . What is to be learnt from an examination of the language of sub section (1) of section 4 income, profits and gains, described or comprised in section 6 from whatever source derived is that section 6 is intended as describing different kinds of profits In that case the question for decision was whether a resident carrying on business in India and controlling transactions abroad in the course of such business was liable to income tax on such transactions, it was held that the profits arising under such transactions do not arise or accrue in India merely because of control by the assessee in India. The judgment of the Privy Council shows what section 6 of the Act means each head refers to income, profits and gains attributable to the source salary, interest on securities, property, business, profession etc. This supports the contention of each head being separate, exclusive and specific. Decided cases all support the contention of counsel for the Revenue that the various heads of income enumerated in section 6 of the Act and more particularly (1) , 529. 91 dealt with in sections 7 to 12 are exclusive heads and if an item of income falls under one of these heads then it has to be treated for the purpose of income tax under that head and no other. In Salisbury House Estate Ltd. vs Fry (1) the assessee was a limited company which was formed for the express purpose of acquiring Salisbury House and utilising it. In this building there were 800 rooms which were let to tenants. The company also maintained a staff of servants to render various kinds of services to the occupants of the rooms. The company was assessed to income tax under Sch. A upon gross valuation of the premises and as the actual rent received was higher, the Revenue wanted to assess income again under Sch. The company contended that so far as the proceeds of the property were concerned they had already been taxed under Sch. A and could not again be brought "in computo" under Sch. D. Viscount Dunedin at p. 306 observed: " Now, if the income of the assessee consists in part of real property you are, under the Statute, bound to apply Sch. Lord Atkin at p. 319 said: " the dominance of each Sch. A, B, C & E over its 'own subject matter is confirmed by reference to the Sections and Rules which respectively regulate them in the Act of 1842. They afford a complete code for each class of income, dealing with allowances and exemptions, with the mode of assessment, and with the officials whose duty it is to make the assessments. . . . . . . I find no ground for assessing the taxpayer under Sch. D for any property or gains which are the subject matter of the other specific Schedules. " At p. 320, he pointed out that Sch. D is a residuary Schedule and all Schedules are mutually exclusive. Referring to investments in securities he said: Income derived by a trading company from investments of its funds, whether temporary or permanent, in government securities must be taxed under (1) ; 92 Sch. C, and cannot for the purposes of assessment under Sch. D be brought into account. " This shows that even though Sch. D is residual all Schedules are mutually exclusive and if income falls under one Schedule, it must be assessed under that Schedule because the Schedules are a complete code for each class of income, dealing with, allowances and exemptions and with the mode of assessment. A significant passage in the judgment of Lord Atkin (at p. 321) is: " I find it difficult to say that companies which acquire and let houses for the purposes of their trade, such as breweries in respect of their tied tenants, and collieries and other large employers of labour in respect of their employees, do not let the premises as part of their operation of trading. Personally I prefer to say that even if they do trade in letting houses their income so far as it is derived from that part of their trading must be taxed under Sch. A and not Sch. D." Thus even though the assessee was a company carrying on business or trade, income from the head " property " was taxed under Sch. A and not Sch. This case supports the contention that different Schedules being distinctly applicable to each individual head of income would exclude the applicability of any other head. In Butler vs The Mortgage Company of Egypt Ltd. (1), a British company controlled in Egypt was carrying on business of lending money on mortgage of land in Egypt or on the security of debentures by mortgage of land. In case of default the bank could take action in the Egyptian Courts either to sell the property or to take possession with a view to future sale. The General Commissioners held that the acceptance of ,securities for money lent was only an incident of the company 's business and that income was not assessable under Case 4 of Sch. D. The company claimed that the assessment should be under Case 5 of Sch. D and not Case 4. It was held that the Crown had the right to tax under Case 4 but even if the assessee satisfies (1) , 809, 810. 93 that Case 5 is also applicable it was still for the Crown to decide and tax under Case 4 provided both cases applied equally. Rowlatt J. said: "A banker could never ask to be repaid the tax which had been deducted from the Government securities which he held, because he held them as a banker, the point being that when you have once got a security (we will say) the interest on which is taxed by the Act, you cannot get out of it because you say that you look a little further and see this is only embedded in a business." It means in terms of the Indian Statute that in the case of interest on securities if chargeable under a specific section, the assessee even though he is a banker cannot claim that they be treated as "business income." in Thompson vs The Trust and Loan Company of Canada (1), the respondent company carried on business as a loan and finance company. During the material years the company bought treasury bonds cum coupons and on the same day sold bonds of the same nominal value retaining the coupons and received on encashment a half year 's interest under deduction of income tax. The Crown contended that in computing the Company 's profits for assessment to income tax under Case I of Sch. D there, should be included, as receipts, the amounts realised by the sale of bonds ex coupons and the net proceeds of the coupons and, as disbursements, the amounts paid by the company for the bonds cum coupons. But it was held that the interest received by the company was income of the company taxed by deduction under Sch. C and that no part of the proceeds of the coupons should be included in the computation of the company 's liability under Sch. D. Rowlatt J. at p. 400 said: " The Crown cannot treat a transaction which has its own character for income tax purposes as if it were something of a different character. " and Lord Hanworth M.R. at p. 406 put the matter thus: (1) 94 Now in the present case it is plain that this subject matter of tax, government bonds and coupons payable out of the government funds, have got to be taxed under Sch. C; they cannot be taxed anywhere else. " In Volume I of Simon 's Income Tax (1948 Ed.) p. 54 the law is thus stated: " These Schedules are prima facie mutually exclusive and consequently if a particular kind of income is charged under one Schedule the Crown cannot elect to charge it under another. " This is in accord with the decisions discussed above. The Commercial Properties Ltd. vs Commissioner of Income tax, Bengal(1) was a case of a registered company whose sole object was to acquire lands,, build houses and let them to tenants, the sole business of the company being the management and collection of rents from the properties. The assessment was made under section 9 of the Act but the company claimed that they were carrying on a business assessable under section 10 and not under section 9. The Court held that the company was rightly assessed under section 9, its income being derived from its ownership of buildings. Rankin C. J. said at p. 26: " In my judgment the words of section 6 and section 9 and section 10 must be read so as to give some effect to the contrast that is there made between income, profits and gains from " property " and from " business " and I entirely refuse my assent to the proposition that because it happens that the owner of a property is a company which has been. incorporated for the purpose of owning such property, therefore the income derived from " property must be regarded as income derived from business ". In my judgment, income derived from " property is a more specific category applicable to the present case". The decision in this case shows that the ownership of the house property was not considered as "business" and that income derived from such source would more specifically and appropriately fall within the head "property". (1) 95 The applicability of section 8 directly arose and was discussed in H. C. Kothari v, Commissioner of Income tax, Madras(1). The assessees in that case had several sources of income, one of which was interest on securities. The business of the assessees showed a loss but the assessees claimed earned income relief in respect of interest on securities on the ground that securities, which they had purchased and sold as part of their business, formed their stock in trade and the interest therefrom should be treated as "business" profits. But section 8 of the Act was held applicable to the facts of that case. Satyanarayana Rao, J. said " of the Act which deals with interest on securities is a separate and distinct head, and if an income is chargeable under that head, it is not open either to the assessee or to the department to change the head and claim to tax it under a different head. It was also pointed out in this judgment following Commissioner of Income_tax vs Bosotto Bros. (2) that if income falls under more than one head the assessee has the option to choose the head which makes the burden on his shoulders lighter. The following two cases were relied upon by the assessee: (1) Mangalagiri Sri Umamaheshwara Gin and Rice Factory Ltd. vs Guntur Merchants Gin and Rice Factory Ltd. (3) where a limited company incorporated for the purpose of milling rice leased out the buildings, plant, machinery etc., to another company for a fixed annual rent. The lessees were to do the necessary repairs to keep the mill in good working condition and the lessors were to bear the loss of depreciation. The assessee company claimed the allowances for depreciation under section 10(2) (vi) of the Act. It was held that the company was carrying on the business of letting a rice mill and as such was entitled to a deduction for depreciation. The judgment of Krishnan, J., shows that it was clear from the facts of the case that the company was carrying on business (1) , 587. (3) (2) 96 of letting the mill for the purpose of being worked by lessees and it was under these circumstances that section 10 was held applicable. The other case is Sadhucharan Roy Chowdhry, In re (1) the facts of which were similar to the facts of Mangalagiri Sri Umamaheshwara Gin and Rice Factory Ltd. vs Guntur Merchants Gin and Rice Factory Ltd. (supra). It was held that letting of a Jute Press at rent was as much a business as the letting of a ship to freight or letting of motor car or any other kind of machines or machinery for hire, and therefore allowances for depreciation were allowed like in Mangalagiri 's case (supra). Neither of these cases throws any light on the question now before us. The appellant 's contention that looking at the real nature and character of the source of income arising from "interest on securities" in the case of the present assessee, the Bank, section 10 of the Act would apply and not section 8 can receive no support from the decision in Davies vs Braithwaite (2). That was a case where an actress earned her living by accepting and fulfilling professional engagements, her activities being acting in stage plays in England and America, performing for the films and on the wireless and performing for gramophone companies. These were held to fall under Sch. D and not E as whatever contracts she made were nothing but incidents in the conduct of her professional career. The use of the following words by Sir George Rankin in Commissioner of Income tax vs Chunilal B. Metha (3): But the list of "heads" in section 6 is a list of sources not in the sense of attributing the income to . . . one business rather than another but only in the sense of attributing it to business as distinct from investment. " is no surer foundation for saying that " interest on securities " is severable into income from securities held as a capital investment and income from those held as trading assets. The language of sections 6, 8 and 10 is destructive of any such contention. (1) (2) (3) [1938] 6I.T.R. 521, 529. 97 Thus on a true construction of the various sections of the Act the income of an assessee is one and the various sections 7 to 12 are modes in which the Statute directs that income tax is to be levied and these sections are mutually exclusive. The head of income of which the source is " interest on securities " has its ' characteristics for income tax purposes and falls under the specific head covered by section 8 of the Act, and where an item falls specifically under one head it has to be charged under that head and no other. This interpretation follows from the words used in sections 6, 8 and 10 which must be read so as to give effect to the contrast between " income, profits and gains " chargeable under the head " interest on securities " and income, profits and gains " chargeable under the head business ". Thus on this construction the various heads of " income, profits and gains " must be held to be mutually exclusive, each head being specific to cover the item arising from a particular source. It cannot, therefore, be said that qua the assessee in the present case and for the purpose of securities held by it, section 8 is more specific and section 10 general or vice versa, and therefore no question of the applicability of the principle " generalia specialibus non derogant " arises. This finds support from the decided cases which have been discussed above. Thus both on precedent and on a proper construction, the source of income " interest on securities " would fall under section 8 and not under section 10 as it is specifically made chargeable under the distinct head " interest on securities " falling under section 8 of the Act and cannot be brought under a different head even though the securities are held as a trading asset in the course of its business by a banker. In this view of the matter no question of exercise of option by the assessee or the Revenue arises. Consequently Lord Shaw 's observation in The Liverpool and Land Globe Insurance vs Bennett (1): " It appears to me that this selection is not only justified in law but is founded upon the soundest and most elementary principles of business," (1) , 376. 98 will be inapplicable to the facts of the present case, and so also the rule as to choosing the head which imposes on the assessee 's shoulders burden which is highter as given in Commissioner of Income tax vs Bosotto Bros., (supra) and reiterated in H. C. Kothari vs Commissioner of Income tax, Madras (supra). To the third point raised by counsel for the assessee that even if interest on securities falls under section 8 of the Act and not under section 10 the assessee is entitled to 'Yet a set off under section 24(2) of the Act, counsel for the Revenue has taken the objection that this plea is not available to the appellant because it was not placed before the Income Tax Appellate Tribunal for being referred to the High Court nor was it raised before the High Court. How the question was specifically raised before the Income Tax Officer and the Appellate Assist. ant Commissioner and also before the Income Tax Appellate Tribunal has already been mentioned. In its application to the Tribunal for stating the case to the High Court the assessee specifically raised in two suggested questions its right to set off the business loss of Rs. 3,21,929 brought forward from the previous year against the income of the assessee in the assessment year. It does not appear from the judgment of the High Court that the question was argued in the manner it has been debated in this court. The appellant seems to have rested his case on the applicability of section 10 to the profits under the head "interest on securities" because of the securities being trading assets but this contention was repelled and the same question has been raised before us but the assessee now supports his case on an alternative argument that even if the securities fall under section 8 still the profits from that source are from an item of the assessee 's business and therefore the loss of the previous year from the banking business of the assessee can be set off against the profits of the assessment year whatever be the source of that profit. The case is similar to the one in Commissioner of Income tax vs Messrs. Ogale Glass Works Ltd. (1). The question framed by the Tribunal is a general one and what is to be determined is whether (1) , 196, 198. 99 the loss of the previous year can be set off against the income of the assessment year within the provisions of section 24(2) of the Act. The question is wide enough to cover the point raised before us. In the circumstances of this case the third point, raised by counsel for the assessee, is open to be canvassed before us. Counsel for the Revenue contends that the words used in section 24(2) were " the same business " and therefore this set off would be allowable only against any profits or gains of the game business and no other business. He further contends that the scheme of section 24(1) and (2) shows that profits and gains must be arising under section 10 and not under any other section because the expression used is profits or gains which goes with " business " under section 10 and cannot have reference to income, profits and gains arising from interest on securities " which are under section 8 of the Act. Counsel for the assessee on the other hand submits that the use of the word " same " signifies the identity of the business in which the loss has occurred and has no reference to the head under which the profits are chargeable. In other words interest does not cease to be profits and gains of the same business merely because for the purpose of chargeability it falls under a different head, i.e., under section 8 and not under section 10. Section 24 of the Act deals with the set off of loss in computing the aggregate income. He also contends that the business which the assessee was carrying on was the business of dealing in money and credit and that banking and dealing in securities constitute one and the same business. He refers to section 277 F of the Indian Companies Act and relies on the Privy Council decision in Punjab Co operative Bank Ltd. vs The, Commissioner of Income tax, Punjab(1) in which it was pointed out that in the ordinary case 'of a bank the business consists in its essence of dealing with money and credit. The banker has always to keep enough cash or easily realisable securities to meet any probable demand by depositors, and if some of the securities are realised to meet (1) 100 withdrawals by depositors, this is clearly a normal step in carrying on the banking business. It is an act done in what is truly carrying on of the banking business. In view of the order we propose to make, we do not find it necessary to express any opinion on the respective contentions raised by counsel for the parties. In Punjab Co operative Bank 's case (supra) a finding had been given that the purchase and sale of securities was as much the assessee 's business as receiving deposits from clients and withdrawals by them. In the case before us no such finding has been given and in the absence of such finding no opinion can be given as to whether the holding of securities out of which interest was derived formed part of the same business within section 24(2) or not. The appeal would therefore, be allowed and the case remitted to the High Court for a fresh decision of the reference after getting from the Tribunal a fuller statement of facts about this part of the case, whether the securities in question were a part of the trading assets held by the assessee in the course of its business as a banker. The costs of this appeal will be costs in the reference before the High Court. Appeal allowed. Case remitted.

For the assessment year (1945 46) the assessable income of the appellant bank was computed by the Income tax Officer by splitting up its income into two heads " interest on securities " and " business income ", and deducting the business loss from interest on securities. In the previous year the assessment showed a loss which was computed by setting off the " business loss against " interest on securities The appellant claimed that in the computation of its profits for the assessment year in question it was entitled to set off the carried over loss of the previous year under section 24(2) Of the Indian Income tax Act, 1922. The Income tax Officer rejected the claim on the ground that the loss was under the head " business " and so could not be set off against income from securities under section 24(2) of the Act. Both the Income tax Appellate Tribunal and the High Court, on reference, held that in view of sections 6, 8 and 10 of the Act " interest on securities " could not be treated as business income and therefore the appellant could not claim a set off under section 24(2). On appeal to the Supreme Court it was contended for the appellant that (1) sections 8 and 10 should be so read that where the securities in the hands of an assessee are trading assets, section 8 would be excluded, being restricted to capital investments only, and the matter would fall under the head " business " within section 10, and (2) in any case, even if the income from securities fell under section 8, the appellant would be entitled to a set off under section 24(2) because it carried on only one business, namely banking, and the holding of securities by it was part of the said business. Held, that the scheme of the Indian Income tax Act, 1922, is that the various heads of income, profits and gains enumerated in section 6 are mutually exclusive, each head being specific to cover the item arising from a particular source and, consequently, " interest on securities " which is specifically made chargeable to tax under section 8 as a distinct head, falls under that section and cannot be brought under section 10, whether the securities are held as trading assets or capital asset," 80 Commissioner of Income Tax vs Chunnilal B. Mehta, Salisbury House Estate Ltd. vs Fry, (1930) 15 T. C. 266, Commercial Properties Ltd. vs Commissioner of Income Tax, Bengal, and H. C. Kothari vs Commissioner of Income Tax, Madras, , relied on. The question whether the holding of securities by the appellant formed part of the same business within section 24(2), could not be decided in the absence of a finding that the securities in question were a part of the trading assets held by the appellant in the course of its business as a banker, and the case was remitted to the High Court for a fresh decision on the reference after getting from the Tribunal a fuller statement of facts.

Appeal No. 552 of 1963. Appeal by special leave from the order dated April 28, 1960 of the Deputy Secretary to the Government of India, Ministry of Rehabilitation, New Delhi, purporting to exercise the powers of Revision under section 33 of the Displaced Persons (Compensation of Rehabilitation) Act, 1954 in Case No. 38(894)/59 Neg. A. With Writ Petition No. 108 of 1960. Petition under article 32 of the Constitution of India for the enforcement of Fundamental Rights. Achhru Ram and N. N. Keswani, for the appellants and the petitioners. N. section Bindra and B. R. G. K. Achar, for respondents Nos. 1 and 2 (in both the appeal and petition). M. C. Setalvad, K. Jairam and R. Ganapathy Iyer, for the respondents Nos. 3 to 7 (in both the appeal and petition). March 10, 1964. The Judgment of the Court was delivered by AYYANGAR, J. The appeal, by special leave, is directed to question the correctness of an order passed by the Deputy Secretary to the Government of India, Ministry of Rehabilitation under section 33 of the Displaced Persons (Com pensation and Rehabilitation) Act, 1954 (Central Act XLIV of 1954) which for convenience will be referred to hereafter as the Act. The facts necessary to appreciate the points urged be fore us are briefly these: The property in dispute is agricul tural land of an extent of about 60 acres situated at Nizam abad in the former State of Hyderabad and now in the State 105 of Andhra Pradesh. On September 7, 1950 the Deputy Cus todian of Nizamabad District allotted 44 acres of this land to five persons who are the respondents before us. All these five were displaced persons and were entitled to this allotment. By a further order dated July 21, 1951 the balance of the 16 acres and odd was also allotted to them. The allotment was by way of lease and one of its stipulations was that the terms of the lease would be revised only after five years. The only point that needs to be stated about the terms of this lease is, that there was no condition imposed upon the lessees that they should cultivate the lands personally. While the lease was continuing in force, the Government of India issued a press note on November 13, 1953 by which they announced that they had decided to allot evacuee agricultural land in Hyderabad State to displaced persons whose claims for agricultural lands had been verified under the Displaced Persons (Claims) Act, 1950. It further stated that the allotments would be towards the settlement of claims in respect of their agricultural lands. The allotment was to be on the same terms as under the quasi permanent allotment scheme in the Punjab and applications for allotment were invited from persons residing inter alia in Hyderabad State whose verified claims included a claim for agricultural lands. The press note prescribed the 31st of December as the last date for the receipt of these applications. The appellants made an application in pursuance of this notification and on May 4, 1954 the land now in dispute, though under a sub sisting lease in favour of the respondents, was allotted to them on quasi permanent tenure. It is not disputed that the appellants satisfied the qualifications for making applications under the press note and for being allotted evacuee property thereunder. The order of allotment, a copy of which was forwarded to the Collector of Nizamabad district, contained a request that the allottees may be put in possession of the land and the fact intimated to the office of the Regional Settlement Commissioner. The revenue authorities acting on this request or direction dispossessed the respondents from the lands leased to them and put the appellants in possession thereof. Thereafter, the respondents made a representation to the Regional Settlement Commissioner, Bombay pointing out that they were displaced persons who having been rehabilitated by the allotment by way of lease were now being uprooted. They also pointed out that they had incurred large expenses in improving the land and bringing it into proper cultivation. These applications were considered by the Regional Settlement Commissioner who by his order dated July 10, 1954 rejected their application. It is not necessary 106 to set out the reasons for making this order except to say that one of them was the failure on the part of the lessees to personally cultivate the lands. The respondents, then, moved the Regional Settlement Commissioner requesting him to review his order and they also sought relief from the Gov ernment of India seeking intervention in their favour. Subsequent to this date the Act was enacted and it came in to force on October 9, 1954. Section 12 of the Act em powered the Central Government to acquire evacuee property for rehabilitation of displaced persons and in pursuance thereof the properties now in dispute were acquired by Government by a notification dated January 18, 1955. During the pendency of the proceedings by which the respondents ,sought to obtain a reversal of the order dated July 10, 1954 and without reference to them, the Regional Settlement Commissioner issued sanads in favour of appellants 1 to 4 on January 12, 1956 acting under section 20 of the Act. The Deputy Chief Settlement Commissioner who dealt with the representations made by the respondents passed an order on August 22, 1958 after obtaining a report from the Regional Settlement Commissioner. He pointed out in his ,order that there was no indication from the papers on the file that the land was originally leased to the respondents on condition that they should cultivate the lands personally. He therefore set aside the order of the Regional Settlement Commissioner dated July 10, 1954 and remanded it for further enquiry directing the passing of fresh orders after a thorough enquiry. Thereafter a report was called for and obtained from the Collector who conducted this enquiry and in his report dated June 13, 1959 he recorded a finding that there had been personal cultivation of the lands by the respondents. He pointed out that of the 60 acres comprising the entire extent, 26 guntas were allotted on a quasi permanent basis to other displaced persons in 1954 and this extent was therefore out of the controversy. It ought to be mentioned that the order of the Deputy Chief Settlement Commissioner which was of the date August 22, 1958 was apparently by inadvertence passed without notice to the appellants. When this was brought to his notice after the remand he issued notice to them and after hearing them, referred the case to the Government of India for action under section 33 of the Act. The matter was considered by the Deputy Secretary in the Rehabilitation Ministry who heard all the parties and recorded the following findings: (1) that the order dated July 10, 1954 refusing to transfer the lands to the respondents was wrong, and (2) that there was no justification for terminating the lease and depriving the respondents of possession of the 107 property now in dispute and on these findings directed the sanads granted to the appellants to be revoked and the res pondents be put in possession of the property. It is the legality of this order that is challenged in this appeal. Three points were urged by Mr. Achhru Ram learned Counsel for the appellant: (1) that the Central Government had no power under section 33 of the Act to revise the order of the Regional Settlement Commissioner dated July 10, 1954, (2) that even assuming that that order was capable of revision, the land in dispute had been transferred to the appellants irrevocably by way of quasi permanent allotment and sanads issued and that thereafter the title under the sanads which had been granted in the name of the President of India could not be disturbed except in accordance with the terms of the sanads, (3) that the Deputy Secretary in the Government of India had no materials before him on the basis of which he could find that the order dated July 10, 1954 was erroneous and required to be revised. We shall deal with these points in the same order. Section 33 under which the order under appeal was made reads: "The Central Government may at any time call for the record of any proceeding under this Act and may pass such order in relation thereto as in its opinion the circumstances of the case require and as is not inconsistent with any of the provisions contained in this Act or the rules made thereunder. " In considering the argument addressed to us under this head there are two points to be borne in mind. If the order dated July 10, 1954 passed by the Regional Settlement Com missiooner was "a proceeding under this Act" then obviously there is no limitation on the power of the Central Govern ment to pass "such order as in the circumstances of the case was required". Of course, the Central Government cannot pass an order which is inconsistent with any of the provisions contained in the Act or the Rules made thereunder and subject to the objection made that after the transfer of property and the grant of a sanad under section 20 of the Act read with r. 91(8) in the form specified in Appendix XXIV to the Rules which is the second point raised by learned Counsel, it was not suggested that the order now impugned was inconsistent with any of the provisions of the Act or the Rules made thereunder. Whether the opinion which the Central Government entertained was correct or incorrect on the evidence would, of course, not fall for consideration by this Court in an appeal under article 136 but as regards the contention that 108 the order is illegal or invalid as distinct from its being incorrect, we shall deal with it in considering the last of the arguments submitted to us by learned Counsel. It was urged that the order of the Regional Settlement Commissioner which the Central Government revised under section 33 was not "a proceeding under the Act" having been passed before the Act came into force and was therefore outside its jurisdiction under section 33 of the Act. The answer to this is, however furnished by section 39 of the Act. That section deals with orders passed prior to the commencement of the Act and renders "all things done" or "action taken" in the exercise of powers conferred by or under this Act as if the Act were in force on the date when such thing was done or action taken. Section 39 enacts: "Anything done or any action taken (including any order made) by the Chief Settlement Commissioner, Settlement Commissioner, Additional Settlement Commissioners or Settlement Officers for the purposes of payment of compensation or rehabilitation grants or other grants to displaced persons shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken in the exercise of the powers conferred by or under this Act as if this Act were in force on the date on which such thing was done or action was taken. " It was then suggested that since the order dated July 10, 1954 had merely rejected an application filed by the respon dents for restoring them to possession of lands from which they complained they had been unjustly dispossessed, it was not "a thing done" or "action taken for the purpose of payment of compensation or rehabilitation grants to dis placed persons" so as to be deemed to be taken under the provisions of this Act. The same point was urged in a slightly different form by saying that even if the Central Government could interfere and set aside the order of the Regional Settlement Commissioner dated July 10, 1954 still they could not direct the cancellation of the sales and grants of sanads to the appellants and that as this was not a matter pending before them, the order in so far as it directed the cancellation of the sanads and the dispossession of the appellants from the disputed property was without jurisdiction. We do not see any substance in the points stated in either form. In the first place, even if learned Counsel is right in submitting that the Central Government should have stopped with setting aside the order dated July 10, 1954 the result would have been the same, because the prayer which was rejected by the Regional Settlement Commissioner when he 109 passed that order was that contained in an application by the respondents that they should be restored to the possession of the lands from which they had been dispossessed. If that prayer had to be granted on the reversal of the order dated July 10, 1954 it would inevitably have meant that the appellants should have been deprived of possession which is exactly what the order now impugned has directed. As the dispossession of the appellants was consequential on the setting aside of the order dated July 10, 1954 the appellants do not obtain any advantage by raising the contention that the Central Government should have confined itself to setting aside that order and doing nothing more. Besides, this submission proceeds from not appreciating the matters that were the subject of consideration before the Central Government and were considered by them at the time when the impugned order was passed. The facts were that there had been an allotment by way of lease as a rehabilitation grant to persons who were admittedly displaced persons in 1950 51. It was "this thing done" that had been upset in 1954 and which was restored by the order of July, 1954 being set aside by the order under section 33 of the Act. In substance and effect therefore the impugned order was dealing with and rectifying an error committed in relation to a "thing done or action taken" with respect to a rehabilitation grant to a displaced person. Not merely the order dated July 10, 1954 but the entire question as to whether the respondents as original allottees by way of lease were entitled to the relief of restoration was referred to the Central Government by reason of the order of the Regional Settlement Commissioner dated November 3, 1959. Both the parties were heard on all the points by the Central Government before the orders were passed and it would not therefore be right to consider that the matter in issue before the Central Government was technically merely the correctness of the order of the Regional Settlement Commissioner dated July 10, 1954, which read in vacuo might not be comprehended within section 39. The next point that was urged was that the appellant had been granted sanads on January 12, 1956 and that their sanads could. not be cancelled and the title acquired there displaced except in accordance with the terms of the sanads The term of the sanad which is relevant and which was referred to as the sole ground on which it could be set aside and the title of the appellants displaced reads: "It shall be lawful for the President to resume the whole or any part of the said property if the Central Government is, at any time, satisfied and records a decision in writing to that effect (the decision of the Central Government in this behalf 110 being final) that the transferee or his predecessor in interest had obtained or obtains any other compensation in any form whatsoever under the said Act by fraud or misrepresentation. " It is not disputed that this condition has not been ful filled but the question, however, is whether when the order of allotment on the basis of which the property was granted to the appellant and the sanad issued, is itself reversed or set aside can the sanad and the title obtained thereunder survive? On this point there are two decisions to which our attention was invited the first is a decision of the High Court of Rajasthan in Partumal vs Managing Officer, Jai pur(1), being a decision of a Full Bench of that Court. That case was concerned With the construction of section 24 of the Act which deals with the power of the Chief Settlement Commissioner to revise orders passed by a Settlement Officer, Assistant Settlement Officer, Assistant Settlement Commissioner, Additional Settlement Commissioner etc. The relevant part of the head note brings out the point of the decision. It reads: "Section 24 of the , no doubt confers very wide powers of revision on the Chief Settlement Commissioner, but it does not authorise cancellation of sal es after they are completed. No doubt, allotments can be set aside under section 24 of the Act, but after such allotments ripen into sales, they cannot be cancelled. The Chief Settlement Commissioner, but it does not authosioner exercising his power has no authority to cancel sale of property and an order of cancellation of sale of property is without jurisdiction and invalid. It would be too much to read in section 24 of the Act to hold that it extends to cancellation of sales by expressly providing for cancellation of allotments. The execution of a sale deed can not be regarded as only a formal expression of an order of allotment dependent on its subsis tence. " Subsequent to this decision a case arose before the High Court of Punjab: Balwant Kaur vs Chief Settlement Commiss ioner (Lands)(2 ) and a Full Bench of that Court by a majority dissented from this view and held that where an order making an allotment was set aside the title which was obtained on the basis of the continuance of that order also well with it We are clearly of the opinion that the judgment (1) I.L.R. (2) I.L.R. [1964] Punjab 36. 111 of the Punjab High Court is correct. The relevant provisions of the Act and the Rules have all been set out in the decision of the Punjab High Court and we do not consider it necessary to refer to them in any detail. It is sufficient to say that they do not contain any provision which militates against the position which is consistent with principle and logic. It is manifest that a sanad can be lawfully issued only on the basis of a valid order of allotment. If an order of allotment which is the basis upon which a grant is made is set aside it would follow, and the conclusion is inescapable that the grant cannot survive, because in order that that grant should be valid it should have been effected by a competent officer under a valid order. If the validity of that order is effectively put an end to it would be impossible to maintain unless there were any express provision in the Act or in the rules that the grant still stands. It was not suggested that there was any provision in the Act or in the rules which deprives the order, setting aside an order of allotment, of this effect. We do not therefore consider that there is any substance in the second point urged by learned Counsel. The last of the points urged was that the Deputy Secretary who passed the impugned order had no materials upon which he could find that the order dated July 10, 1954 was erroneous or justified being set aside. Learned Counsel is not right in this submission because if the respondents were entitled to remain in possession of the property originally leased to them by way of allotment and their leasehold interest had not been validly terminated a fact which on the materials the Deputy Secretary was competent to find the order that he passed restoring them to possession could not be said to lack material. We consider therefore that there is no merit in this submission. The result is that the appeal fails and is dismissed with costs. Writ Petition 108 of 1960: This petition under article 32 of the Constitution has been filed by the appellants in Civil Appeal 552 of 1963 and seeks the issue of a writ of certiorari to quash the same order of the Deputy Secretary to the Union Government as that whose legality is challenged in the appeal. Both the Writ Petition as well as the application for special leave came on for preliminary hearing on November 30, 1960 and while the leave prayed for was granted, rule nisi was also issued in the petition and the two matters have been heard together. In view of our decision in the appeal, the writ petition will stand dismissed, but there will be no order as to costs. Appeal and Writ petition dismissed.

The appellants and the five respondents were displaced persons. The Deputy Custodian of Nizamabad District allotted about 60 acres of land to the five respondents. The allotment was by way of lease. There was no condition imposed upon them that they should cultivate the lands personally. While the lease was continuing in force, the Government of India issued a Press Note on November 13, 1953 by which they announced that they had decided to allot evacuee agricultural land in Hyderabad State to displaced persons whose claims for agricultural land had been verified under the Displaced Persons (Claims) Act, 1950. The appellants made an application in pursuance of this notifi cation and on May 4, 1954 the land now in dispute, though under a subsisting lease in favour of the respondents, was allotted to them. In the mean time the , came into force on October 9, 1954. Under Section 20 of this Act, the Regional Settlement Com missioner issued Sanads in favour of appellants in respect of these lands. Both the appellants and the respondents claimed these disputed plots. The matter went up to the Deputy Chief Settlement Commissioner. He referred the case of both parties to the Government of India for action under section 33 of the Act. The matter was considered under section 33 of the Act by the Deputy Secretary in the Rehabilitation Ministry who upheld the contentions of these respondents. The result was that the allotment made in favour of the appellants was set aside. It is the legality of this order that is challenged in this appeal. Held (i) The order of the Central Government was covered by section 33 of the Act as one dealing with and rectifying an error committed in relation to a "thing done or action taken" with respect to a rehabilitation grant to a displaced person. Not merely the order of the Regional Settlement Commission rebut the entire question as to whether the respondents as original allottees by way of lease were entitled to the relief of restoration was referred to the Central Government by reason of the order of the Deputy Chief Settlement Commissioner. Both the parties were heard on all the points by the Central Government before the orders were passed and it would not therefore be right to consider that the matter in issue before the Central Government was namely the correctness of the order of the Regional Settlement Commissioner, which read in vacuo might not be comprehended within section 39 of the Act. (ii) It is manifest that a Sanad can be lawfully issued only on the basis of a valid order of allotment. If an order of allotment which is the basis upon which a grant is made 104 is set aside it would follow, and the conclusion is inescapable that the grant cannot survive, because in order that grant should be valid, it should have been effected by a competent officer under a valid order. If the validity of that order is effectively put an end to, it would be impossible to maintain unless there were any express provision in the Act or in the rules, that the grant still stands. On the facts of this case it was held that where an order making any allotment was set aside the title which was obtained on the basis of the continuance of that order also fell with it. Partumal vs Managing Officer, Jaipur, I.L.R. , distinguished. Balwant Kaur vs Chief Settlement Commissioner (Lands), I.L.R. [1964] Punjab 36, approved.

Appeal No. 1 of 1959. Appeal by special leave from the award dated September 16, 1957, of the Industrial Court, Bombay, in Misc. Application (IC) No. 20 of 1957. M. C. Setalvad, Attorney General for India, I. M. Nanavati, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellants. C. K. Daphtary, Solicitor General of India, B. R. L. Iyengar and K. L. Hathi, for the respondent. C. K. Daphtary, Solicitor General of India, H. J. Umrigar and R. H. Dhebar, for the Intervener. March 17. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. This appeal by special leave is directed against the award passed by the Industrial Court, Bombay, by which a scheme for gratuity has been framed in favour of the workmen represented by the respondent, Textile Labour Association, Ahmedabad, who are employed by the textile mills in Ahmedabad including the twenty appellant mills before us. In order to appreciate the points of law raised by the appellants in the present appeal we ought to state at the outset the material facts leading to the present dispute in which the impugned scheme for gratuity has been framed. On June 13, 1950, the respondent gave notice under section 42(2) of the Bombay Industrial Relations Act, 1946 (Bom. XI of 1947) (hereinafter called the Act), intimating to the Mill Owners ' Association at Ahmedabad (hereinafter called the Association) that it desired a change as specified in the annexure to the communication. The annexure showed that the respondent wanted a change in that a scheme for gratuity should be framed wherever services of an employee are terminated by the mills on grounds of old age, invalidity, 'incapacity or natural death. It was further claimed that the payment of gratuity in the said cases should be at the rate of one month 's wages (including dearness allowance) per every year of service. Some incidental demands were also specified in the annexure. The 332 demand thus made was not accepted by the Association, and so it was referred to the Industrial Court. Pending the reference the Employees ' Provident Funds Act, 1952 (19 of 1952), came into operation on March 4, 1952, and it was urged before the Industrial Court on behalf of the Association that since the statutory scheme of provident fund would soon become compulsory it would not be advisable to adjudicate upon the respondent 's claim for the specified items of gratuity at that stage. This argument was accepted by the Industrial Court; it held that when the scheme envi saged by the new Act is introduced it would be possible to see from what date it would be operative, and that, if after the introduction of the said scheme it be found that a sufficient margin is left, it would then be open to the respondent and the Association to make a fresh application for the institution of a gratuity fund either for all the employees or for the benefit of such of them as will have to retire within the next few years. It was on this ground that the demand made by the respondent was rejected on April 18, 1952. It appears that the prescribed scheme under the Provident Funds Act came into operation on October 1, 1952. In June 1955, a fresh notice of change was given by the respondent to all the mills in respect of the demand for gratuity and the said demand became the subject matter of certain references to the Industrial Court at Bombay under section 73A of the Act. At that time the association and the respondent had entered into an agreement to refer all their disputes to arbitration, and in accordance with the spirit of the said agreement the references pending before the Industrial Court in respect of gratuity were withdrawn and referred to the Board of Arbitrators. Before the Board it was, however, urged by the Association that, so long as the award passed by the Industrial Court on the earlier reference was subsisting and in operation, a claim for gratuity which was the subject matter of the said reference and award could not be properly or validly considered by the Board. This objection was upheld by the Board, and so it made no provision for gratuity. The decision of the Board of Arbitrators in the said proceedings was published on July 25, 1957. 333 After the said decision was made and before it was published the respondent made the present application for modification of the earlier award under section 116A of the Act on July 6, 1957. In this application the respondent alleged that there was sufficient justification for modifying the previous award and for introducing a scheme of gratuity as claimed by it. In this application a demand for gratuity was made on the following lines: (1) In the case of One month 's basic wages and death while in average Dearness Allow service or becom ance per completed year of ing physically or service. mentally unfit for further service : (2) On voluntary re After 10 continuous years of tirement or re service in the company signation of an same as in (1) employee : (3) On termination For less than 10 but more of service by the than 7 years at 3/4 rate of company: (1), For less than 7 years but 5 years or more than 5 years at the 1/2 rate of (1) For more than 10 years ' continuous service as in (1) above. It appears that in the application thus made a typing mistake had crept in which failed to type properly the third category of cases. The respondent applied on August 21, 1657, for amendment of the said typing mistake and the said amendment was naturally allowed. It is the demand made by this application that is the subject matter of the present proceedings under section 116A of the Act. In the present proceedings the Association did not file a written statement and in fact withdrew leaving it open to each mill to file a separate written statement of its own. It appears that there was a difference of opinion amongst the constituents of the Association. Accordingly written statements were filed on 43 334 behalf of the 65 constituent mills and the large majority of the said written statements raised some preliminary objections against the competence of the present proceedings and disputed the respondent 's claim for gratuity also on the merits. The industrial Court has overruled all the preliminary objections and on the merits it has framed a scheme for gratuity on industry cum region basis. The award framing the said scheme was pronounced on September 16, 1957. It is against this award that 21 out of the 65 mills have come to this Court by special leave. One of the appellant mills has subsequently withdrawn from the appeal with the result that out of 65 mills 45 mills do not feel aggrieved by the award but 20 mills do; and the contentions raised by them fall to be considered in the present appeal. Before dealing with the merits of the points raised by the appellants it would be relevant to refer very briefly to the relevant provisions of the Act. The Act has been passed by the Bombay Legislature because it thought that " it was expedient to provide for. the regulation of the relations of employers and employees in certain matters, to consolidate and amend the law relating to the settlement of industrial disputes and to provide for certain other purposes ". With this object the Act has made elaborate provisions for the regulation of industrial relationships and for the speedy disposal of industrial disputes. An " industrial dispute " under section 3, sub section (17), means "any dispute or difference between an employer and employer, or between employers and employees, or between employees and employees and which is connected with any industrial matter ". The expression " industrial matter has been inclusively defined in a very wide sense. Approved Union " in section 3(2) means " a union on the approved list " " primary union " under section 3(28) means "a union for the time being registered as a primary union under the Act registered union " under section 3(30) means " a union registered under the Act ", while " representative union "under section 3(33) means " a union for the time being registered as a representative union under the Act.". Section 3(39) defines " wages " as meaning " remuneration of all 335 kinds capable of being expressed in terms of money and payable to an employee in respect of his employment or work done in such employment, and includes, inter alia, any gratuity payable on discharge ". Section 42, sub section (2), provides that an employee desiring a change in respect of an industrial matter not specified in Schedule I or II shall give notice in the prescribed form to the employer through the representative of employees but shall forward a copy of the same to the Chief Conciliator, the Conciliator of the industry concerned for the local area, the Registrar, the Labour Officer, and such other person as may be prescribed. Section 66(1) provides, inter alia, that if an employer and a representative union or aNy other registered union which is the representative of the employees by a written agreement agree to submit any present or future industrial dispute or class of such disputes to the arbitration of any person, whether such arbitrator is named in such agreement or not, such agreement shall be called submission. We have already noticed that the Association and the respondent had entered into a submission in respect of several disputes which were referred to the Board of Arbitrators. Section 73A is important for our purpose; it deals with reference to arbitration by unions, and provides that " notwithstanding anything contained in this Act, a registered union which is a representative of employees, and which is also an approved union, may refer any industrial dispute for arbitration to the industrial court subject to the proviso prescribed under it. " It is under section 73A that the reference was made on the earlier occasion to adjudicate upon the respondent 's claim for a gratuity as specified in its notice of change. That takes us to sections 116 and 116A. Section 116 provides, inter alia, for the period during which an award would be binding Section 116(1) lays down in regard to an award that it shall cease to have effect on the date specified therein, and if no such date is specified, on the expiry of the period of two months from the date on which notice in writing to terminate such an award is given in the prescribed manner by any of the parties thereto to the other party, provided 336 that no such notice shall be given till the expiry of three months after the award comes into operation; in other words, the award cannot be terminated at least for three months after it has come into operation; thereafter it may be terminated as prescribed by section 116(1). With the rest of the provisions of section 116 we are not concerned in the present appeal. SeCtion 116A(1) prescribes, inter alia, that any party who under the provisions of section 116 is entitled to give notice of termination of an award may, instead of giving such notice, apply after the expiry of the period specified in sub section (2) to the industrial court making the award for its modification. It is unnecessary to set out the other provisions of section 116A. The award under appeal has been made by the industrial court on the application made by the respondent under section 11 6A. The first contention raised before us by the learned Attorney General on behalf of the appellant is that the application for modification made by the respondent under section 116A is incompetent, because what the respondent seeks is not any modification of the earlier award which is permissible under section 116A, but a reversal and a revision of the said award which is not permissible under the said section. The expression " modification of the award " may include alteration in the details of the award or any other subsidiary incidental matters. In this connection it must be borne in mind that there is a radical difference between the meaning of the word " change " as distinguished from the meaning of the word " modification ". Section 116(2) allows for a change or modification of the registered agreement, settlement or award in terms of the agreement, and that clearly brings out the difference between the two concepts of " change " and " modification ". In cases falling under section 116(2) the agreements or settlements can be wholly revoked and fresh ones substituted in their place by consent, or by consent they may be modified in subsidiary or incidental details. Where the Legislature wanted to provide for change it has expressly done so in section 116(2) by using both the words " changed " or " modified 337 Section 116A, however, is confined only to modification of the award and not its change. The same argument is placed in another form. It is contended that it was not the intention of the Legislature to permit the proceedings under section 116A for change of policy underlying the Award or its essential framework. Such a result can be achieved only by terminating the award under section 116(1) and raising an industrial dispute as provided by the Act. In support of this contention reliance has been placed on the observations made by Mukherjea, J., as he then was, in the case of Be: Delhi Laws Act, 1912(1) where the learned judge stated that " the word 'modification ' occurring in section 7 of the Delhi Laws Act did not mean or involve any change of policy but was confined to alteration of such a character which keeps the policy of the Act intact and introduces such changes as are appropriate to local conditions of which the executive government is made the judge ". In the same case Bose, J. observed that "the power to restrict and modify does not import the power to make essential changes ". On the other hand, the learned Solicitor General has contended that the context in which the word ` modification ' has been used in section 116A does not justify tne adoption of the limited meaning of the word " modify " for which the appellants contend. The policy of the Act and the reason why section 116A has been enacted show that the word " modification " has been used in a sense larger than its ordinary meaning. The Legislature realised that the procedure prescribed by section 116, sub section (1), for terminating the award which necessitates the other subsequent steps was apt to be dilatory and involved and so it has purported to provide for an effective alternative speedy remedy for the change of the award under section 116A. In support of this argument reliance has been placed on the meaning assigned to the word " modified " in " Words and Phrases " where it is stated that " though one of the primary meanings of the word ` modify ' is no doubt ` to limit ' or ` restrict 'it also means 'to vary ', and there is authority that it may even mean 'to extend ' or 'enlarge " ' (2). (1) , 1006. (2) " Words and Phrases" by Roland Burrows, Vol. 338 It is common ground that the modification permissible under section 116A does not mean that the provisions of the award must always be reduced; it may mean even increasing the provisions, and so it is urged by the respondent that the word "modification" should receive a wider denotation in the context of section 116A. This construction no doubt receives some support from the provision of section 116A that a party may apply for the modification of the award instead of giving notice for its termination; and the latter clause tends to show that the procedure prescribed by section 116A is an alter native to the procedure prescribed by section 116. The industrial court was apparently inclined to put a wider denotation on the word " modification " used in section 116A. We do not think it is necessary to decide this larger question of the construction of section 116A because, in our opinion, in the present case, even if the limited and narrow construction suggested by the appellant is put on the word " modification ", the respondent 's application cannot be said to be outside the purview of the said section. There is no doubt that the claim for gratuity made by the respondent in the earlier proceedings has been rejected by the industrial. court and that is an award; but, whether or not the present application seeks for a modification of the said award within the meaning of section 116A would depend on what the industrial court had decided on the earlier occasion. It is clear that the industrial court did not then consider the merits of the claim at all. It upheld the Association 's contention that the matter should not be decided then but may be considered later in view of the fact that the Employees ' Provident Funds Act had already been passed and the statutory scheme for provident funds was about to come into force. It was on this ground alone that the industrial court rejected the claim as it was then made but it took the precaution of expressly adding that after the introduction of the provident funds scheme it would be open to the res pondent or the Association to make a fresh application for the institution of a gratuity fund as it may deem expedient to claim. It would not be unreasonable, we think, to assume, that when liberty was thus reserved 339 to the parties to make a fresh application the industrial court had presumably section 116A in mind. In substance, the effect of the order then passed was that the application was regarded as premature and liberty was reserved to the parties to renew the application if the statutory scheme was thought to be insufficient or unsatisfactory by either of them. In such a case, if the respondent applies to the industrial court for modification of its award it is difficult to accept the argument that the respondent seeks to alter the framework of the award or to change any principle decided in the award. The true position is that by the present application the respondent is asking the court to consider the demand now that the scheme has come into force and is, according to the respondent, insufficient to meet the workmen 's grievance. What the industrial court then promised to consider after the scheme came into force is brought before it for its decision again. That being the true nature of the award and the true scope of the prayer made by the respondent in its present application it is difficult to hold that the application is incompetent under section 116A. The next argument which is pressed before us by the learned Attorney General is that the application for modification is incompetent in regard to matters not covered in the earlier proceeding. We have already referred to the items covered in the earlier proceedings as well as those which are the subject matter of the present application. It is true that the notice served by the respondent prior to the earlier reference specifically set out the claim for gratuity in four categories of cases of termination of services of the employees, whereas in the present proceedings some other categories are included. The objection raised against the competence of the present application purports to treat the earlier notice in a very technical way and confines the subsequent proceedings taken before the industrial court to the said four categories only. The argument is that the cases of termination of services which were not specified in the earlier notice cannot now be brought before the industrial court tinder the guise of the modification of the award. 340 If the modification of the award can be claimed under section 116A it must be claimed only in regard to the said four categories and no more. This argument has been rejected by the industrial court, and it has been held that in substance the earlier notice should be construed as constituting a claim for the scheme of gratuity in general. The validity of this conclusion has been seriously challenged by the appellant. There is no doubt that disputes in regard to industrial matters not covered by an award do not fall within the scope of section 116 of the Act; and so if the claim for gratuity in regard to categories not specified in the earlier notice is deemed to be outside the said notice and the relevant reference proceedings, could the respondent have made a claim in that behalf and ask for industrial adjudication without terminating the award? It is difficult to answer this question in the affirmative. It is well known that a scheme for gratuity is an integrated scheme and it covers all classes of termination of service in which gratuity benefit can be legitimately claimed. Therefore, when the industrial court refused to ' frame a gratuity scheme in regard to the four categories brought before it on the earlier occasion, in substance its refusal amounted to a rejection of any scheme for gratuity at all; otherwise it is very difficult to assume that having rejected the claim for gratuity in respect of the said four categories it would still have entertained a claim for gratuity on behalf of other categories not included therein. That is why we are inclined to think that though in form the rejection of the demand for gratuity on the earlier occasion was in regard to the four categories specified in the notice, in effect it was rejection in regard to the claim for a gratuity scheme itself. It cannot be disputed that if the earlier demand had been for a gratuity scheme pure and simple and no categories had been specified in connection therewith the present application for the modification of the award coupled with a claim for a gratuity scheme in respect of all the categories specified in the application would be within the purview of section 116 of the Act. That in substance is what has happened in this case 341 according to the finding of the industrial court on this point, and having regard to the unusual circumstances of this case we see no reason to interfere with it. Then it is urged that the industrial court has erred in law in framing a gratuity scheme even though the statutory scheme under the Employees ' Provident Funds Act has been in operation since 1952. The provident fund guaranteed by the statute under the statutory scheme is one kind of retirement benefit and since this retirement benefit is now available to the workmen it was not open to the industrial court to provide an additional gratuity scheme; that in sub stance is the contention. This contention has been frequently raised before the industrial courts and has been generally rejected. The Employees ' Provident Funds Act has no doubt been passed for the institution of provident funds for employees covered by it; and the statutory scheme for provident funds is intended to afford to the employees some sort of a retirement benefit; but it cannot be ignored that what the statute has prescribed in the scheme is the minimum to which, according to the Legislature, the employees are entitled; and so in all cases where the industrial courts are satisfied that a larger and higher benefit can be afforded to the employees no bar can be pleaded by virtue of the Provident Funds Act. it is true that after the Act came into force, the industrial courts would undoubtedly have to bear in mind the benefit of the statutory scheme to which the employees may be entitled; and it is only after bearing that factor in mind and making due allowance for it that any additional scheme for gratuity can and must be framed by them; but it is not open to an employer to contend that the Act excludes the jurisdiction of industrial courts to frame an additional scheme. In this connection it may be pertinent to point out that section 17 of the Employees ' Provident Funds Act empowers the appropriate government to exempt from the operation of all or any of the provisions of the statutory scheme to establishments as specified in section 17(1)(a) and (b). Under section 17(1)(b), for instance, any establishment may apply, for exemption if its employees are in enjoyment of benefits in the nature of 44 342 provident fund, pension or gratuity which, in the opinion of the appropriate government, are on the whole not less favourable to such employees than the benefits provided under the Act or any scheme in relation to employees in any other establishment of a similar characters This provision brings out two points very clearly. If the benefits provided by the employer are not less favourable than the statutory benefits he may apply for exemption and the appropriate government may grant him such exemption. If, on the other hand, the benefits conferred by him are less favourable than the statutory benefits he may not be entitled to any exemption, in which case both the benefits would be available to the employees. These provisions clearly indicate that the statutory benefits which in the opinion of the Legislature are the minimum to which the employees are entitled, cannot create a bar against the employees '. claim for additional benefits from their employers. In this connection we may incidentally refer to the decision of this Court in the case of Indian Hume Pipe Co. Ltd. vs The Workmen (1) where this Court has held that the statutory provision for the payment of retrenchment compensation under section 25F is no bar to a claim for gratuity. The argument urged that the statutory retrenchment partook the character of gratuity and thus constituted a bar for the additional claim for gratuity was rejected. We must accordingly hold that the Industrial Court was right in rejecting the appellants ' contention that the statutory provision for provident fund under the Employees ' Provident Funds Act is a bar to the present claim for a gratuity scheme. The learned Attorney General has then challenged the validity of the scheme on the ground that the Industrial Court was in error in dealing with the problem on industry wise rather than unit wise basis. He contends that the claim for gratuity is more allied to a claim for bonus and must, therefore, be dealt with on unit wise basis. It is not disputed that the benefit of gratuity is in the nature of retiral benefit and there can be no doubt that before framing a scheme for gratuity industrial adjudication has to take into (1) 343 account several relevant facts; the financial condition of the employer, his profit making capacity, the profits earned by him in the past, the extent of his reserves and the chances of his replenishing them as well as the claims for capital invested by him, these and other material considerations may have to be borne in mind in determining the terms of the gratuity scheme. This position has always been recognised by industrial courts (Vide: Arthur Butler & Co. (Muzaffarpur) Ltd. And Arthur Butler Workers ' Union (1). It appears also to be well recognised that though the grant of a claim for gratuity must depend upon the capacity of the employer to stand the burden on a long term basis it would not be permissible to place undue emphasis either on the temporary prosperity or the temporary adversity of the employer. In evolving a long term scheme a long term view has to be taken of the employer 's financial condition and it is on such a basis alone that the question as to whether a scheme should be framed or nit must be decided, and if a scheme has to be framed the extent of the benefit should be determined (Vide: Boots Pure Drug Co. (India) Ltd. And Their Workmen (2) For our present purpose it is really not necessary to embark upon the academic question as to whether gratuity is a part of deferred wage or not; we will assume that it is not. Even so it would not be reasonable to assimilate the character of the scheme for gratuity to that of a profit bonus and to seek to import the considerations of the Full Bench formula which governs the grant of bonus. A claim for profit bonus is based on the assumption that the employees contribute at least partially to the profits made by the employer and that they are entitled to ask for a share in the said profits in order to bridge the gulf between the wages actually received by them and a living wage to which they are ultimately entitled. A claim for gratuity is a claim for retiral benefit and it is strictly not a claim to receive a share of the profits at all; and so there would be no scope for importing the several considerations which are relevant in determining the claim for profit bonus. That is the view taken by the Labour Appellate Tribunal in Indian (1) (2) 344 Oxygen and Acetylene Co. Ltd. Employees ' Union And Indian Oxygen and, Acetylene Co. Ltd. (1) and the said decision has been cited with approval by this Court in Express Newspapers (Private) Ltd. vs The Union of India (2 ). Therefore, we are not prepared to accept the argument that the claim for gratuity is essentially similar to a claim for profit bonus, and like profit bonus it must always be considered on unit wise basis. Incidentally we may add that even a claim for profit bonus can and often is settled on industry wise basis. That still leaves the larger question to be considered whether the industrial court was in error in dealing with the claim for gratuity on industry wise basis. It is urged for the appellants that an industry wise basis is wholly inappropriate in dealing with gratuity and it should not have been adopted by the industrial court. It may be conceded that when an industry wise basis is adopted in dealing with a claim like gratuity often enough stronger units of the industry get a, benefit while the weaker units suffer a disadvantage. Take the case of a gratuity scheme. If such a scheme is based on industry wise basis employees working under the stronger units do not get that amount of benefit of gratuity which they would have got if the question had been considered unit wise, whereas employees working in weaker units get a better scheme than they would have got if the matter had been considered unit wise. Such a result is inevitable in an industrywise approach. This possible mischief can, however, be mitigated by taking a fair cross section of the industry or by working on a rule of averages after collecting the relevant facts of all the constituent units of the industry. Even so, if some of the units of the industry are very weak they are apt to suffer a disadvantage just as the very strong units in the industry are likely to get an undue advantage in the process; but the question which calls for our decision is: does this possible result mean that a scheme for gratuity should on principle not be framed on an industry wise basis but must always be framed on a unit wise basis? There are several factors which militate against the appellants ' suggestion that unit wise basis is the only (1) (2) at P. 156. 345 basis which should be adopted in such a case. Equality of competitive conditions is in a sense necessary from the point of view of the employers themselves; that in fact was the claim made by the Association which suggested that the gratuity scheme should be framed on industry wise basis spread over the whole of the country. Similarly equality of benefits such as gratuity is likely to secure contentment and satisfaction of the employees and lead to industrial peace and ' harmony. If similar gratuity schemes are framed for all the units of the industry migration of employees from one unit to another is inevitably checked, and industrial disputes arising from unequal treatment in that behalf are minimized. Thus, from the point of view of both employers and employees industry wise approach is on the whole desirable. It is well known that the Committee on Fair Wages which had examined this problem in all its aspects had come to the definite conclusion that " in determining the capacity of an industry to pay it would be wrong to take the capacity of a particular unit or the capacity of all the industries in the country. The relevant criterion should be the capacity of a particular industry in a specified region", and it recommended that as far as possible the same wages should be prescribed for all units of that industry in that region. This approach has been approved by this Court in the case of Express Newspapers (Private) Ltd. (1) (p. 19). What is true about the wages is equally true about the gratuity scheme. In the present economic development of our country we think industrial adjudication would hesitate to adopt an all India basis for the decision of an industrial dispute like that of gratuity; and so, on principle, it would be difficult to take exception to the approach adopted by the industrial court in dealing with the present dispute. In this connection it may be relevant to take notice of the fact that the wages of textile employees have been standardised on an industry wise basis. Similarly, dearness allowance has been fixed on the same basis, and unsubstituted holidays have been prescribed on a like basis. The Employees ' State Insurance (1) at P. 156. 346 Scheme (Act 34 of 1948) is industry wise and retrenchment compensation has been statutorily standardised on the same basis (Section 25F of Act XIV of 1947). What is more remarkable is the fact that the Association and the respondent had entered into an agreement regarding bonus for a period of five years and the gratuity scheme for the clerical and supervisory staff between the said parties is also based on the same industry wise approach by agreement between them. The Association and the respondent can justly claim with some pride that in the past most of their disputes had been amicably settled. It is only on the present occasion that owing to a difference of opinion amongst its constituent members that the Association withdrew from the proceedings and left it to the members to appear individually before the industrial court. Even so 45 out of the 65 mills have accepted the award. Under these circumstances the question which we have to decide is: Did the industrial court err in law in adopting an industry wise basis in deciding the present proceedings ? It would no doubt have been open to the industrial court to deal with the dispute unit wise just as it was open to the court to deal with it on an industry wise basis. As we have already indicated there are several factors in favour of adopting the latter approach though it may be conceded that by adopting the said course some hardship may conceivably be caused to the weakest units in the industry. Having carefully considered this question in all its aspects we are,_however, not prepared to hold that the scheme of gratuity under appeal should be set aside on the ground that the industrial court ought to have adopted a unit wise approach. In this connection it may not be out of place to observe that the cotton textile industry is the premier industry of our country and there is a concentration of a large number of mills in Ahmedabad. A good many of them have capitalised large portions of reserves and documents produced in the present proceedings show that the production has steadily increased and has found a responsive market. There is a gratuity scheme framed on an industry wise basis in operation in Bombay and a similar scheme appears to have been extended to 347 Nadiad and Khandesh. In fact an award for gratuity has been made on an industry wise basis even in respect of the textile industry at Coimbatore. Having regard to these facts we think the industrial court was right in observing that " there was no justification why an important textile centre like Ahmedabad should not have a gratuity scheme when the needs of the labour require it and the industry can afford it ". It is true that in dealing with industrial disputes on industry cum region basis, if the region covers the whole of the country industrial adjudication sometimes takes resort to the classification of the constituent units of the industry in question. Industrial adjudication in regard to the fixation of wage structure in respect of newspapers and banks in the country is an illustration in point. The need for such a classification is not as great when the region happens to be limited in area, though, even in respect of a limited area, in a proper case industrial adjudication may adopt the course of classification. In the present case the industrial court took the view that classification was not possible and would be inexpedient. No classification was made in dealing with the textile mills in Bombay, and the industrial court did not feel called upon to make a departure in respect of Ahmedabad. We do not think that this conclusion suffers from any infirmity. The scheme has been further attacked on the ground that before framing it the industrial court has not considered the extent of the liabilities already imposed on the industry. It has been strenuously argued before us that in assessing the extent of the liabilities the acutual liabilities accrued as the result of the scheme has not been taken into account and the serious strain imposed on the industry by the imposition of excise duty has also been overlooked; on the other hand, undue importance has been attached to bonus shares and no account has been taken of the industry 's obligation to contribute to the State Insurance Scheme. We are not impressed by these arguments. The argument about the actual liability accrued is really the oretical and cannot have much practical significance. If it is suggested that in 348 framing a scheme of gratuity the capacity to pay should be determined only if the employer can set apart a, fund to cover the whole of the liability theoretically accrued, then gratuity schemes can be very rarely framed. Such schemes are long term schemes and a fund to cover the total liability in that behalf must inevitably be built up in course of time year by year. In regard to the excise duty, the industrial court has rightly pointed out that the imposition of a higher duty was the conseqence of the excessive increase in prices of mill cloth and in fact it was levied " to mop off those extra profits ". When the prices fall down it is not unlikely that the excise duty may be reduced. In any case the obligation to pay excise duty or to contribute to the insurance scheme, though perhaps relevant, may not have a material bearing on the framing of the scheme of gratuity. Then, as to the bonus shares, it is not right to contend that the industrial court has attributed undue importance to them. All that it has observed is that the issue of bonus shares by a large majority of the mills in addition to good dividends during the war and post war period is an index to the prosperity enjoyed by the cotton textile industry in Ahmedabad. In our opinion, no criticism can be made against this statement. In this connection it may perhaps be pertinent to observe that the statutory ceiling placed on the agent 's commission may in due course assist the mills to some extent in meeting their liability under the scheme. The last argument urged against the validity of the scheme is based on the assumption that in working out the preliminary figures before framing the scheme the industrial court has committed an error. What the industrial court has done is to take the information collected by the Association on the earlier occasion, to compare it with the statement prepared by the respondent, and to make a rough estimate about the extent of the industry 's liability under the scheme. In considering these statements it is important to emphasise that the Association 's calculations have been made not on the basis of basic pay but on the basis of pay including dearness allowance, and that naturally has made considerable, additions to the 349 amounts involved. The scheme framed is by reference to the basic wages. This position is not disputed. The other material point which deserves to be mentioned is that the calculations made by the Association proceed on the assumption that most of the employees would seek to retire from employment as soon as they complete fifteen years service. Such an assumption seems to us to be not warranted at all. It is common ground that employee,% generally seek employment in textile industry between 18 and 20 years and the age of superannuation is 60. On an average each emp loyee would work 35 to 40 years and so it would be unrealistic to make calculation on the basis that each one of the employees retires as soon as he completes 15 years of service. In the absence of better employment in Ahmedabad it is quite likely that most of the employees would stick on to their jobs until the age of superannuation. The figures collated are in respect of the years 1953, 1954 and 1955. They are collated in seven different columns, and ultimately the percentages of persons who retired during the three respective years are worked out as at 3.13%, 4.13% and 3.84%. The industrial court has observed that the largest number of persons retired voluntarily on payment of gratuity because there was an agreement between the Association and the respondent whereby the respondent agreed to rationalisation which involved retrenchment of staff on condition that the surplus staff retrenched would be given gratuity. It also appears that the retired workmen included a number of employees who voluntarily resigned because they had not completed 1,5 years of service and were not entitled to gratuity. It is on a consideration of all the relevant facts that the industrial court came to the conclusion that the number of persons who would have been entitled to gratuity under a normal gratuity scheme would probably not have exceeded 2% of the labour force. If it is assumed, as we think it can be safely assumed, that on an average an employee works 35 to 40 years with his employer the said percentage deduced by the industrial court cannot be said to be erroneous. Even so the scheme framed by the industrial court has provided, inter alia, one month 's basic 45 350 wage for each completed year of service for the period before the coming into force of the Employees ' Provident Funds Act, 1952, and half a month 's basic wage for each completed year of service thereafter, subject to a maximum of fifteen months ' basic wages to be paid to the employee or his heirs or executors or nominees as the case may be. This provision which amounts to a departure from the Bombay scheme of gratuity brings out the fact that the provisions made by the Employees ' Provident Funds Act have been duly taken into account by the industrial court. We are, therefore, satisfied that the scheme framed by the industrial court does not suffer from any infirmities as alleged by the appellants. The result is the appeal fails and is dismissed with costs. Appeal dismissed.

This was an appeal by certain textile mills of Ahmedabad against a scheme for gratuity awarded by the Industrial Court. The Labour Association, the respondent, gave a notice of change under section 42(2) of the Bombay Industrial Relations Act, 1946 (Bom. XI of 1947), intimating the Mill Owners ' Association that they wanted a scheme for gratuity and mentioned four categories of termination of service in the annexure. This demand was refused and so referred to the Industrial Court under section 73A of the Act. Pending the reference the Employees ' Provident Funds Act, 1952 (19 of 1952), came into operation and the Industrial Court, on an objection by the Mill Owners ' Association, held that it was inadvisable to proceed with the reference and that a fresh application should be made, if necessary, after the scheme envisaged by the Act is introduced and rejected the respondent 's demand. Thereafter a fresh notice of change was given by the respondent and there were certain references to the Industrial Court in respect of the demand. The parties came to an agreement to refer all their disputes to arbitration, the references were withdrawn and the disputes were referred to the Board of Arbitrators. Before the Board the Mill Owners ' Association took the objection that so long as the award of the Industrial Court dismissing the earlier reference subsisted, the claim for gratuity could not be considered by it. That objection was upheld by the Board and it made no provision for gratuity. Thereupon the respondent applied for the modification of the award under section 116A of the Act, and the Industrial Court by its award, which is the subject matter of the present appeal, framed a scheme for gratuity on an industry cum region basis: Held, that the decision of the Industrial Court was correct and must be upheld. Regard being had to the true nature of its earlier award and the scope of the application for its modification, it could not be said that the respondent was seeking to alter the framework or change any of the principles of that award and the application under section 116A of the Act must be held to be competent. 330 A scheme for gratuity is by its nature an integrated scheme and covers all classes of termination of service where gratuity benefit can be legitimately claimed and the refusal of the Industrial Court in the earlier award amounted to a refusal to frame any scheme at all. The statutory provident fund created by the Employees ' Provident Funds Act, 1952, could be no bar to the respondent 's claim for a gratuity scheme although there can be no doubt that in awarding such a scheme Industrial Courts must make due allowance for it. Provisions of section 17 of the said Act clearly indicate that the statutory benefits under the Act are the minimum to which the employees are entitled and that they are no bar to additional benefits claimed by the employees. Indian Hume Pipe Co. Ltd. vs Their Workmen, [1960] 2 S.C.R. 32, referred to. It was not correct to say that the claim for gratuity was essentially similar to a claim for profit bonus and must always be considered on unitwise basis. The benefit of gratuity is in the nature of a retiral benefit and before framing such a scheme industrial adjudication has to, take into account such relevant factors as the financial condition of the employer, his profit making capacity, the profits earned by him in the past, the extent of his reserves and the chances of his replenishing them as well as the claims for capital invested by him, and in evolving a long term scheme a long view of the employer 's financial condition should be taken and on that basis alone the feasibility of a scheme and the extent of the benefit to be given should be determined. Arthur Butler & Co. (Muzaffarpur) Ltd. and Arthur Butler Workers Union, and Boots Pure Drug CO. (India) Ltd. vs Their Workmen, , referred to. Even assuming that gratuity is no part of deferred wage, it would not be reasonable to assimilate the scheme for gratuity to that of profit bonus or to apply the principles of the Full Bench formula applicable to the latter. A claim for gratuity is strictly not a claim to receive a share of the profits at all. Express Newspapers (Private) Ltd. vs The Union of India, and Indian Oxygen and Acetylene Co. Ltd. Employees ' Union vs Indian Oxygen and Acetylene Co. Ltd., , referred to. It was not correct to say that an industry wise basis is wholly inappropriate in dealing with gratuity or that the Industrial Court was in error in adopting that basis. Although some hardship to the weaker units in the industry may not be avoided, there were several factors in its favour both from the point of view of employers and employees. Since in the present state of economic development in the country the propriety of the adoption of an all India basis for a scheme of gratuity may be open to doubt no exception can on principle be taken to the industry cum region basis adopted in the instant case. 331 Express Newspapers (Private) Ltd. vs The Union of India, , applied.

Civil Appeal No. 1068 of 1987. From the Judgment and Order dated 16.5.86 of the Patna High Court in Civil Writ Jurisdiction Case No. 2523 of 1981. A.K. Sil and S.K. Sinha for the Appellants. D.N. Goburdhan for the Respondents. The following Order of the Court was delivered: O R D E R The 1st respondent Subodh Chandra is working as an operator grade III under the Hindustan Fertilizer Corporation Ltd. at Sindhri. The date of birth recorded in the register maintained by the Hindustan Fertilizer Corporation Ltd. was 1.6.1931 and in the usual course he has to retire from service on 1.6.1989 on completion of 58 years of age. He, however, filed a writ petition in the High Court of Patna claiming that his date of birth should be altered to 20th October, 1938. In support of his case he relied on a certificate issued by the Chief Medical Officer, Sindhri. The petition was contested by the Hindustan Fertilizer Corporation of India Ltd. After hearing the learned counsel for the parties, the learned Judge who heard the petition held that it was not possible to accept the case of the 1st respondent that he was born in the year 1938 and he further found that the date of birth as recorded in the register of the Corporation should not be interfered with. The learned Judge, however, passed the following order: "section Shamsul Hasan, J.: After the matter had been heard at great length and legal and factual pros and cons had been examined it appeared that the year of the birth of the petitioner being 1931 cannot be assailed nor interfered with. Consequently, Mr. Ojha felt that since the petitioner has his problem domestic or otherwise and he in 1971 was in fact given to understand that his year of birth would be 1938, some compassionate endowment may be made in his favour. I am entirely in agreement with Mr. Ojha. I, therefore, dispose of this application with an expression of my desire, which may be treated as a mandate, that the petitioner may be given three more years of service as a 864 special case after his due date of retirement, which could be done by reappointing him for that period. It is made clear that this may not be treated as a precedent for any other employee of the Institution or in any other case. " We are of opinion that the learned Single Judge having found that the date of birth of the 1st respondent as recorded in the register of the appellant Corporation should not be interfered with, committed a serious error in making an order directing the appellant Corporation 'as a special case ' to reappoint the 1st respondent for a period of three more years after his 'due date of retirement ', which is 1.6.1989. There was hardly any justification for passing such an order under Article 226 of the Constitution. The reason given by the High Court is wholly untenable. This appeal filed by the Corporation against the order passed by the learned Single Judge before this Court has, therefore, to be allowed. We set aside the judgment of the High Court and dismiss the writ petition filed by the 1st respondent. The appeal is disposed of accordingly. No order as to costs. N.P.V. Appeal allowed.

% The first respondent, an employee of the appellant Corporation, who was to retire from his service on 1.6.89 on completion of 58 years of age as per the date of birth recorded in the register maintained by the employer, the appellant Corporation, filed a writ petition in the High Court claiming that his date of birth should be altered to 20th October, 1938, relying on a certificate issued by the Chief Medical Officer. The petition was contested by the appellant Corporation. A Single Judge of the High Court held that it was not possible to accept the case of the first respondent that he was born in the year 1938, and that the date of birth as recorded in the register of the appellant Corporation should not be interfered with. However, taking into consideration the problems of the respondent, domestic or otherwise he made an order to the effect that the first respondent may be given three more years service after his due date of retirement by reappointing him for that period, as a special case. Allowing the appeal, ^ HELD: The Single Judge of the High Court having found that the date of birth of the first respondent as recorded in the register of the appellant Corporation should not be interfered with, committed a serious error in making an order directing the appellant Corporation, as a special case, to reappoint the first respondent for a period of three more years after his due date of retirement, on 1.6.89, on the ground that he had his problems, domestic or otherwise. There was hardly any justification for passing such an order under Article 226 of the Constitution. [864B C] 863

ition Nos. 3464 65, 5908 & 3231 of 1980. (Under Article 32 of the Constitution) section N. Kacker, K. N. Bhatt and Surendara Raju for the Petitioners in W. P. Nos 3464 65/80 and 5908/80. Soli J. Sorabjee, E. C. Agarwala, R. Satish and V. K. Pandita for the Petitioner in WP 3231,/80. L. N. Sinha, Att. and Altaf Ahmed for R. 1. in WPs 3464 65/80. Y. section Chitaley and Vineet Kumar for R. 14 in WP 3231/80 and for R. 2 in WPs 3464 65/80. R. P. Bhatt and N. R. Chaudhary for R. 4 in WP 3464/80. P. R. Mridul and Naunit Lal for R. 7 in WP 3231/80 and for R. 2 in WP 3464 65/80. Anil Dev Singh and Ashok Grover for R. 15 in WP 3231/80 and R. 3 in WPs 3464 65/80. section K. Bhattacharya and Suresh Sethi for R R. 6 and 12 in WP 3464 65/80. Satish Vij for R. 15 in WP 3464 3465/80. section Balakrishnan and section K. Bhattacharya for R. 16 in WP No. 3231/80. The Judgment of the Court was delivered by BAHARUL ISLAM, J. BY these writ petitions under Article 32 of the Constitution the petitioners have challenged the orders of the 843 first respondent (the State of Jammu and Kashmir) allotting quotas of resin to respondents. According to the petitioners these orders denying similar treatment to them are arbitrary and violative of Article 14 of the Constitution of India. The material facts in the four petitions are similar. The industries of which the petitioners are partners are admittedly small scale industries for the manufacture of resin and turpentine oil. The industries of the petitioners ' in Writ Petitions Nos. 3465 of 1980 and 3231 of 1980 were provisionally registered but revalidated for short periods. The industry of the petitioner in Writ Petition No. 3464 of 1980 was provisionally registered, revalidation was applied for but was not granted. The industry of the petitioner in Writ Petition No. 5908 of 1980 was formally registered. It appears that the petitioners were applying to the Government for allotment of resin as well as raw material for their industries but the Government referring to their policy decision of March 20, 1978 refused to make any allotment of Oleo resin to them. The petitioners in Writ Petition Nos. 3464 and 5908 of 1980 have alleged that they purchased raw material from the open market and somehow managed their industries to run for a certain period. Resin is admittedly a forest product extracted from "Chir trees". It has been alleged that only three States of India, namely, Himachal Pradesh, Uttar Pradesh and Jammu and Kashmir have Chir forests. The petitioners have alleged that the State of Himachal Pradesh and Uttar Pradesh stopped selling resin for the last several years in view of establishment of factories in public and joint sectors and that the State of Jammu and Kashmir was selling resin by public auction. Sometime after October 1978 the State of Jammu and Kashmir, it has been further alleged, virtually created monopoly in favour of three existing industrial units and committed to supply them about 17,000 M. T. of resin for long time to come. There is a Public sector unit in Jammu which consumes about 3,000 tons of resin per year. Several small scale industries, according to petitioners, were assured supply of resin even as late as 1979 notwithstanding the Government 's aforesaid industrial policy. In such a situation, being unable to procure raw materials for their industries, the petitioners approached the relevant authorities including the Deputy Minister of Industry and the Chief Minister of Jammu and Kashmir for allotment of raw materials but to no avail. (For the sake of convenience we shall hereinafter refer only to the respondents and Annexures in W. P. No. 3231 of 1980). The petitioners further allege that while they were refused allotment of supply of raw materials, respondent No. 1 made allotments to respondents No. 4 to 16 (hereinafter called "allottee respondents") although most of them 844 were not even formally registered at the time of making the impugned orders of allotment. The petitioners contend that in the circumstances they were adversely discriminated against while respondents Nos. 4 to 16 were favour ed and as such the impugned orders are liable to be struck down as , violative of Article 14 of the Constitution of India. The impugned orders have been annexed as Annexures N to Z 1. The letter of allotment (Annexure 'X ') in favour of M/s. Sud Pine Industries (respondent No. 27) is in the following terms: "Sub: Supply of resin to M/s. Sud Pine Industries Kunwani for their factory at Talab Jammu. Government Order No. 175 DIC/1980 dated 30 5 1980. In partial modification of Government order No. 2. DIC of 1979 dated 20 1 1979 sanction is accorded to the supply of crude (oleo) resin 700 tonnes per annum by the Forest Deptt. to M/s. Sud Pine Industries for their factory at Kunjwani Talab Jammu on the terms and conditions specified in the above said order. The supply of resin shall be subject to its being reviewed by the Government with due regards to its availability from year to year. By order of the Govt. of J & K. Sd/ (Sheikh Ghulam Rasool) Secretary to Government. " The orders as per annexures L to W in favour of respondents 17 to 26 are identical in material parts. It will be sufficient if the material portion of Annexure N is quoted. It runs thus. "Sanction is accorded to the supply of crude (oleo) resin by the Forest Department to M/s. Kashmir R & T Works, Srinagar, for their factory at Srinagar, subject to the terms and conditions of the agreement to be entered into between the Forest Department and the party and on the following specific conditions: 1. The Forest Department will supply Crude (oleo) resin @ 700 TPA to the firm from the date the Unit is formally registered subject to its being reviewed with due regard to its availability from year to year; 845 2. The resin will be supplied @ Rs. 320/ per quintal, unless otherwise reviewed on year to year basis. The cost of empty tin will be charged @ Rs. 5/ per tin in addition to the above rate; 4. By order of the Government at Jammu and Kashmir. Sd/ Sheikh Ghulam Rasool Secretary to Government." (emphasis added) 5. It is obvious that the industries of these respondents were not formally registered at the time of the impugned orders of allotment. The State of Jammu and Kashmir (Respondent No. 1) have filed a counter affidavit. They have not denied the material allegations of the petitioners but they say that the allocations have been made in order to implement the industrial policy of the State Government as enunciated in a "Report of the Development Review Committee, Jammu and Kashmir" a committee headed by Shri L. K. Jha, the Governor of the State. Respondent No. 1 has quoted from the report the 'Goals ' of the industrial policy which read: "The balanced economic development of the State will obviously, be one of the foremost concerns of the Government. They would like to emphasis maximum self sufficiency and self reliance consistently with the need to promote the requisite and desirable degree of inter dependence with other parts of the country. 'The objective will be to secure the most prudent and beneficial utilization of the natural resources and skills peculiar to this State; to achieve the maximum possible F rate of economic growth, consistently with the need to secure a degree of balanced regional development as well as balance between the rural areas and the urban, to maximise State per capita income, and to generate the maximum employment potential. Many areas of the State are as cut off, isolated and poor as they were at the dawn of independence. We have to improve the living standards in these specially backward areas for whom in terms of the quickest mode of transportation, Srinagar is more distant than the State is from Kerala. Many sections of the community similarly, like Scheduled Castes; Gujarat and Bakarwalas and other backward class need to be assisted in their speedy uplift. 846 Ladakh needs a visible acceleration of the tempo of its development so that our people in this far flung and difficult frontier area can realise the full fruits of development in the shortest possible time. " Respondent No. 1 has given the district wise break up of the applications received from different regions. It is as follows: Jammu 63 Udaypur 10 Rajouri 1 Poonch 1 Doda 1 Kathua 9 Anantnag 2 Srinagar 11 Outsiders 12 GRAND TOTAL 110 Applications They have also shown the allotments of resin districtwise. The industries of the respondents No. 4 to 16 are also small scale industries. The break up of the small scale industries as given in Annexure R.II (in W.P. No. 3464) shows that Jammu has the largest number of units namely, 10, Second comes Srinagar with 4, then come Udampur with 3, Kathua (in Jammu Division), Anantnag and Baramulla (in Kashmir Division), with one each. Rajouri in Jammu Division has none. It appears that the industries of the present applicants are also in the Jammu region and those of respondents No. 4 to 16 also appear to have been located in the Jammu region. In their affidavit at para 3 respondent No. 1 has stated that all the applications for allocation of resin were considered from time to time at various levels by the State Government and it was decided on May 30, 1980 as follows: (a) The allotment of resin to the existing unit should be rationalised; (b) Applications received from various districts be considered for allotment of resin. The State Government have submitted that they made no promise of supply of raw material in favour of any of the petitioners. The petitioners have submitted, in our opinion, correctly, that as there were already 10 units functioning in small scale sector in the Jammu region and inasmuch as the allottee respondents ' industries were also located in the Jammu region, allocations in their favour would be inconsistent with the Government 's industrial policy. 847 7. In the instant case, respondent No. 1 as well as the other parties has taken reliance on their industrial policy statement as stated above. We have already quoted the relevant portions of the State Industrial policy statement. The Government have stated that they have considered all the 110 applications including those of the petitioners coming from industrialists of different parts of the country. They have stated, and their statement is corroborated by the documents, that there is preponderance of industries in the Jammu region and industries of the petitioners as well as respondents No. 4 to 16 were also functioning in the same region. Respondent No. 1 has not explained as to how and on what basis, if any, the allotments were made by the impugned orders in favour of the new allottees whose industries were located in the Jammu region. Pawan Kumar Sharma, the petitioner in W.P. No. 3231 of 1980 states that his industry was provisionally registered under the Provisional Registration Certificate dated 29 1 1976. It was further extended for further short periods. He says that as there was assurance from the authorities that raw materials will be allotted to him after he completed the installation of requisite machinery. The J. K. Resin and Turpentine Industries of petitioner Om Prakash Sud, was provisionally registered in the year 1975. He was also approaching the Government from time to time to get allotment of the raw materials but got no favourable reaction from the Government. He states that he had already established his factory and got it insured for a sum of Rs. 6.80 lakhs. He obtained raw material from the open market and was running his industry. Petitioner, Ravindra Dutt of M/s. Dinesh Resin and Turpentines in W.P. No. 3465 of 1980 alleges that his industry was provisionally registered on 25 10 1975 which was extended upto April, 1979. Letter of 31st May, 1979 shows that his industry was later on formally registered as a small unit. This factory was producing resin and turpentine out of the resin which he purchased from open auction He was approaching the Government from time to time to get requisite quantity of raw materials but failed to get it. Petitioner, Shamlal Kapoor, Director of Jammu Resin Enterprises Private Limited, alleges that his industry was formally registered with the Government of J & K. He alleges that his industry was functioning for a long time and trying to get necessary quota of raw materials from respondent No. 1. He was approaching the Government to get requisite quota. Sud Pine Industries, was provisionally registered on 10 3 1978 and formally registered on 10 10 1978. It appears from Annexure N, in respect of respondent M/s Kashmir R & T Works 848 (respondent No. 17), Annexure O in respect of M/s. Sun Shine R & T Industries (respondent No. 18), Annexure P in respect of M/s. Woolan Paints and Chemicals Scopore (respondent No. 19) Annexure Q in respect of M/s. Pine Wood Products Company (respondent No. 20), Annexure R in respect of M/s. Haji Mast Ali Slaria (respondent No. 21), Annexure S in respect of M/s. Phyto Chemicals (respondent No. n 22), Annexure T in respect of M/s. New Himalayan Paints and Chemicals (respondent No. 23), Annexure U in respect of M/s. section K. Chemical (respondent No. 24), Annexure V in respect of M/s. Rajindra R & T (respondent No. 25) and Annexure W in respect of M/s. Bharat Paints and Chemicals (respondent No. 26) that the allotments were made in their favour "from the date the unit is formally registered" which shows that industries were not even registered at the time of the impugned orders of this allotment. Respondent M/s. Rajindra R & T Industries, Udhampur, appears to stand on a different footing. He appears to have fulfilled all the conditions required for allocation of resin in accordance with the policy of the State of J & K. The industry is an experienced one and the factory started production of resin and turpentine at Hoshiarpur since 1948. It is a firm registered under the Indian Partnership Act and has long experience in the business including resin and turpentine since 1948. The industry set up a factory in 1970 in the rural industrial estate near Udhampur which is a backward area. The industry was provisionally registered in 1970 and formal registration was granted on 29 2 1974. It applied for adequate quantities of raw materials and was allotted only 200 tons although it had been sanctioned 1500 per ton per annum since 1975. Respondent M/s. Sud Pine Industries, M/s. Kashmir R & T Works, Bakshi Resin & Turpentine and M/s. K. C. Soni Bakshi also appear to be on different footings. It appears from Annexures 'X ' and 'Y ' that the first two industries have already been formally registered. They are existing units having already started production. So far as respondent M/s Bakshi Resin and Turpentine is concerned, it had already set up factory and started production. It was provisionally registered as early as 1976 and the unit is located in a backward area. So far as respondent K. C. Soni Resin & Turpentine is concerned, it was formally registered on 19 4 79. This unit is located in a remote backward area of the State. "Equality before the Law" or "equal protection of the laws" within the meaning of Article 14 of the Constitution of India means absence of any arbitrary discrimination by the law or in their administration. No undue favour to one or hostile discrimination to another should be shown. A classification is reasonable when it is not an arbitrary selection but rests on differences pertinent to the subject 849 in respect of which the classification is made. The classification permissible must be based on some real and substantial distinction, a just and reasonable relation to the objects sought to be attained and cannot be made arbitrarily and without any substantial basis. . (See State of West Bengal vs Anwar Ali. The classification must not be arbitrary but be rational, that is to say, it must not only be based on some qualities or characteristics which are to be found in all the persons grouped together and not in others who are left out. Those qualities or characteristics must have a reasonable relation to the object of the law. In order to pass the test, two conditions must be fulfilled, namely, (1) that the classification must be founded on an intelligible differentia which distinguishes those that are grouped together from others, and (2) that differentia must have a rational relation to the object sought to be achieved by the Act. The differentia which is the basis of the classification and the object of the Act are distinct things and what is necessary is that there must be a nexus between them. We are not unaware that the rule of equality does not mean mathematical equality and that it permits of practical inequalities. But what is needed is that the selection of quota seekers as in the case in hand should have a rational relation to the object sought to be achieved in the industrial policy decision of the State. If the selection or differentiation is arbitrary and lacks a rational basis it offends Article 14. 9. In the instant case, although the State Government has taken reliance on the State Industrial Policy decision referred to above, they do not appear to have followed it in practice, except in the cases of the five respondents referred to above. In fact no reasonable basis has been adopted in making the allotments in favour of the new allottees and denying allotments to the petitioners. In the circumstances the petitions are partly allowed, the impugned orders of allotments except in favour of respondents, M/s Rajindra Resin and Turpentine Industries, M/s Sud Pine Industries, M/s Kashmir R & T Works, M/s Bakshi Resin & Turpentine and M/s K. C. Soni Resin & Turpentine are quashed. The petitions are partly allowed. The Rules are made absolute except as against these five respondents. The respondent. No. 1, the State of Jammu and Kashmir, is directed to make the other allotments of the raw materials to the applicants in the light of the observations made above. Respondent No. 1 shall pay costs of Rs. 100.00 to each of the petitioners. N.V.K. Petition partly allowed.

The petitioners in their writ petitions to this Court alleged that they were carrying on small scale industries for the manufacture of resin and turpentine oil and that they applied to the Government for allotment of resin for their industries but the Government referring to their policy decision of March 20, 1978 refused to make any allotment, and that they purchased raw material from the open market and managed to run their industries. They further alleged that while they were refused allotment of supply of raw materials, the State, respondent No. I made allotments to respondent nos. 4 to 16 n although most of them were not even formally registered at the time of making the impugned orders of allotment and that they were consequently adversely discriminated against, while respondent nos. 4 to 16 were favoured and as such the impugned orders of allotment were liable to be struck down " violative of Article 14 of the Constitution of India. The State, respondent No. 1 contested the writ petition, denied the material allegations of the petitioners and alleged that the allocations were made in conformity with the State Industrial Policy decision of securing the balanced economic and regional development of the State that there was a preponderance of industries in the Jammu Region, and that the industries of the petitioners as well as respondent nos. 4 to 16 were also functioning in that region. Allotments of resin were made districtwise, 110 applications were received and considered and allotment was made to respondents nos. 4 to 16. On the question whether the orders of the 1st respondent allotting quotas of resin to respondent nos. 4 to 16 were arbitrary and violative of Article 14 of The Constitution. ^ HELD : 1(i) Respondent No. 1 has not explained as to how and on what basis if any, the allotments were made by the impugned orders in favour of the new allottees respondent nos. 1 to 16 whose industries were located in the Jammu region. [847 C] (ii) Although the State Government has taken reliance on the State Industrial Policy decision, it does not appear to have followed it in practice, except in the cases of five respondents. No reasonable basis had been adopted in making the allotments in favour of the new allottees and denying the allotments to the petitioners. [84913 F] 842 2. The rule of equality does not mean mathematical equality. It permits of practical inequalities. What is needed is that the selection of quota seekers as in the instant case should have a rational relation lo the object sought lo be achieved in the industrial policy decision of the State. If the selection or differentiation is arbitrary and lacks a rational basis it offends Article 14. [849 D] 3. "Equality before the Law" or "equal protection of the laws` ' within the meaning of Article 14 of the Constitution of India means absence of any arbitrary discrimination by the law or in their administration. No undue favour to one or hostile discrimination to another should be shown. A classification is reasonable when it is not an arbitrary selection but rests on differences pertinent to the subject in respect of which the classification is made. The classification permissible must be based on some real and substantial distinction, a just and reasonable relation to the objects sought to be attained and cannot be made arbitrary and without any substantial basis. [848 H 849 A] State of West Bengal vs Anwar Ali, [19521 SCR 284 referred to.

ition (Civil) Nos.1003 1005 of 1984. (Under Article 32 of the Constitution of India ). PG NO 626 R.K. Garg, Pankaj Kalra and P.K. Jain for the Petitioners. V.C. Mahajan, Ms. A. Subhashini, C.V. Subba Rao, Grish Chander, S.K. Mehta, Dhruv Mehta, Aman Vachher, S.M. Sarin and Jagannath Goulay (N.f.) for the Respondents. The Judgments of the Court was delivered by VENKATARAMIAH, J. People belonging to the Scheduled Castes and the Scheduled Tribes and to other weaker sections of society in India are the zealously protected children of the Indian Constitution. Article 46 of the Constitution provides that the State shall promote with special care the educational and economic interest of the weaker sections of the people, and, in particular, of the Scheduled Castes and the Scheduled Tribes, and shall protect them from social injustice and all forms of exploitation. While clause (1) of Article 15 of the Constitution provides that the State shall not discriminate against any citizen on grounds only of religion, race, caste. sex, place of birth or any of them, clause (4) of that Article provides that nothing in the said Article or in clause (2) of Article 29 of the Constitution shall prevent the State from making any special provision for the advancement of any socially and educationally backward classes of citizens or for the Schedule Castes and the Scheduled Tribes. Simlarly, while clause (4) of Article 16 of the Constitution provides that there shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State and clause (2) of the said Article provides that no citizen shall, on grounds only of religion, race, caste, sex, descent, place of birth, residence or any of them, be ineligible for, or discriminated against in respect of any employment or office under the State, clause (4) of the said Article provides that nothing in that Article shall prevent the State from making any provision for the reservation of appointments or posts in favour of any backward class of citizens which, in the opinion of the State, is not adequately represented in the services under the State. Article 330 and Article 332 of the Constitution provide for reservation of seats for the Scheduled Castes and the Scheduled Tribes in the Lok Sabha and in the Legislative Assemblies of the States till such period as is provided in Article 334 of the Constitution. Article 335 of the Constitution, which is relevant for purposes of this case, provides that the claims of the members of the Scheduled Castes and the Scheduled Tribes shall be taken into consideration, consistently with the maintenance of efficiency of administration, in the making of appointments to services and posts in connection with the affairs of the Union or of a State. PG NO 627 The present case is, however, one in which a concession which had been extended to the employees belonging to the Scheduled Castes and the Scheduled Tribes by way of reservation of vacancies at the stage of promotion has been withdrawn in a rather concealed way. Petitioners 1 and 2 in this Writ Petition are the P & T Scheduled Caste/Tribe Employees ' Welfare Assocation (Regd.) Delhi and the Federation of all India Scheduled Castes & Scheduled Tribes Employees P & T Department, New Delhi and Petitioner 3 is an employee in the Posts & Telegraphs Department. By the letter bearing No. 27/2/71 Estt. (SCT) dated 27.11.1972 issued by the Department of Personnel, the Government communicated its policy regarding the reservations for the Scheduled Castes and the Scheduled Tribes in posts filled by promotion/promotions on the basis of seniority subject to fitness. The said policy was adopted by the Government in supersession of the orders contained in an earlier Government Order dated 11.7.1968. Under the said policy a reservation of 15 per cent of vacancies was made for the Scheduled Castes and 7 1/2 percent for the Scheduled Tribes wherever promotions were to be made on the basis of seniority subject to fitness, in appointments to all Class I, Class II, Class III and Class IV posts in grades or services in which the element of direct recruitment, if any, did not exceed 50 per cent. In order to implement the above reservation the Government directed the appointing authorities to maintain a separate 40 point roster to determine the number of reserved vacancies in a year in which points 1,8, 14, 22, 28 & 36 had to be reserved for the Scheduled Castes and points 4, 17 and 31 had to be reserved for the Scheduled Tribes. Detailed instructions were issued to the appointing authorities to make promotions in accordance with the directions contained therein so that members belonging to the Scheduled Castes and the Scheduled Tribes could have an advantage of getting promotion to a higher cadre much earlier than the employees who did not belong to the Scheduled Castes and the Scheduled Tribes. By the letter of the Department of Personnel & Administrative Reforms bearing O.M. No. 8/11/73 Estt. (SCT) dated 12.9. 1974 addressed to all the Ministries further instructions were issued with regard to the reservation of the Scheduled Castes and the Scheduled Tribes in posts filled by promotions/appointments to Selection Grade posts directing reservation of 15 per cent of vacancies for Scheduled Castes and 7 1/2 per cent for Scheduled Tribes. As regards the Posts & Telegraphs employees working under the P & T Board, the Ministry of Communications by it letter No. 31 19/74 PE I dated 15.6. 1974 gave certain further directions with regard to the filling up of posts by promotion conferring certain other advantages on persons belonging to the Scheduled Castes and the Scheduled Tribes. The policy PG NO 628 of reservation contained in the above three Government letters was continued till the year 1983 in the Post & Telegraphs Department. It would appear that in the year 1983 an agreement was arrived at between the Ministry of Communications and certain associations of employees working in the Posts & Telegraphs Department and as a consequence of the said agreement a fresh order relating to the policy of promotion to be adopted in the Posts & Telegraphs Department was issued in supersession of the scheme of reservation, which was being followed till then. The said New policy, the validity of which is challenged before us, is contained in the letter bearing No. 31 26/83 PE l dated 17. 1983 addressed to all heads of circles. Under this new policy it was decided that with effect from 30.11.1983 all officials belonging to basic grades in Group C and Group D to which there was direct recruitment either from outside and/or by means of limited competitive examination from lower cadres, and who had completed 16 years of service in that grade would be placed in the next higher grade. This policy, it is alleged, was introduced in order to remove the effects of stagnation of employees in a particular grade for nearly 20 to 23 years without being promoted to higher grade. It would appear that under the scheme which was prevailing prior to 30.11.1983 it was possible for members belonging to the Scheduled Castes and the Scheduled Tribes to secure promotion to the higher cadre within a period of 10 to 12 years while the other employees had to wait for nearly 20 to 23 years. Thus an advantage had been conferred on the employees belonging to the Scheduled Castes and the Scheduled Tribes since they could secure promotion Within a shorter period. Under the new policy irrespective of the fact whether an employee belonged to the general category or to the category of the Scheduled Castes and the Scheduled Tribes he would gory of the Scheduled Castes and the Scheduled Tribes he would be able to get promotion to the higher cadre on the completion of 16 years. Thereby the comparative advantage which the members belonging to the Scheduled Castes and the Scheduled Tribes were enjoying was taken away and all the employees, namely, the employees belonging to the Scheduled Castes, the Scheduled Tribes and to the other categories were placed at par. However, clause 6 of the said letter dated 17.12.1983 which contained the new policy reads thus: "6. For promotions under the time bound one promotion scheme the normal orders relating to reservation for SC/ST communities will not apply unless any specific order in this regard is subsequently issued. " PG NO 629 It is admitted that no specific order has been issued by the Government pursuant to clause 6 so far. But the earlier orders providing for reservation in favour of the Scheduled Castes and the Scheduled Tribes were made inapplicable. Aggrieved by the action taken by the Government in implementing the policy contained in letter dated 23. l983, which had the effect of depriving the members belonging to the Scheduled Castes and the Scheduled Tribes of the advantage which they were enjoying, the petitioners have filed this petition questioning the said action. The petition is resisted by the respondents. It is urged on behalf of the Government that the 'time bound one promotion scheme ' contained in the letter dated 23.12.83 was advantageous to all the employees since all of them would get automatically promoted to a higher cadre on completing 16 years of service in a cadre and that it had been issued with the consent of the Federations of Employees of the Posts & Telegraphs Department. It is not disputed that in many of the other departments of the Union Government the scheme of reservation of posts for the Scheduled Castes and the Scheduled Tribes is in vogue in cases of promotions from the lower grades to the higher grades when they are done on the basis of seniority subject to fitness and under the said policy the persons belonging to the Scheduled Castes and the Scheduled Tribes working in the other departments have been conferred an extra advantage which was not available to the Candidates belonging to other categories and that in the Posts & Telegraphs Department also the employees belonging to the Scheduled Castes and the Scheduled Tribes were enjoying a similar advantage before 30.11.1983 on which date the policy contained in the letter dated 23.12.1983 come into force. Even the letter dated 23.212.1983 while it sets at naught the normal orders relating to reservation for the Scheduled Casts and the Scheduled Tribes in the Posts Telegraphs Department in force in the other department provides for the issue of specific orders by the Government under which the members belonging to the Scheduled Castes & the Scheduled Tribes could gain some extra advantage. Admittedly no such order has been issued till today. The petitioners have prayed that a direction should be issued to the Government to issue specific order conferring on them such an extra advantage. We feel that the claim made by the petitioners is fully justified in view of the fact that similar advantage is being enjoyed by persons belonging to the Scheduled Castes and the Scheduled Tribes in other Departments and only they have been deprived of it. Such deprivation violates the equality clause of the Constitution. While it may be true that no writ can be issued ordinarily competing the Government to make reservation under Article 16(4) which PG NO 630 is only an enabling clause, the circumstances in which the members belonging to the Scheduled Castes and the Scheduled Tribes in the Posts and Telegraphs Department are deprived of indirectly the advantage of such reservation which they were enjoying earlier while others who are similarly situated in the other departments are allowed to enjoy it make the action of Government discriminatory and invite intervention by this Court. One of the methods by which the Government can confer some extra advantage on the employees belonging to the Scheduled Castes and the Scheduled Tribes in cases of this nature where promotion to higher cadre is a time bound one is to direct that the employees belonging to the Scheduled Castes and the Scheduled Tribes may be promoted to the higher cadre on completion of a shorter period of service than what is prescribed for others. In this particular case it is open to the Government to direct that while all others would be entitled to be promoted to the higher cadre on completion of 16 years of service, the members belonging to the Scheduled Castes and the Scheduled Tribes may be promoted to the higher cadre on completion of, say, 12 or 13 years of service. There may be other methods of achieving the same result. The claim for conferment of some extra advantage on the Scheduled Castes and the Scheduled Tribes employees working in the Posts & Telegraphs Department which may be commensurate with the extra advantage which members belonging to the Scheduled Castes and the Scheduled Tribes are enjoying in the other departments of the Government of the maintenance of efficiency in the service appear to be a reasonable one. In what way it should be done is a matter left to the discretion of the Government. This should be decided by the Government taking into consideration all aspects of the case. We therefore, issue a direction to the Government of India to issue an order under clause 6 of the letter dated some additional advantage on the employees belonging to the Scheduled Castes and the Scheduled Tribes in the Post & Telegraphs Department commensurate with similar advantages which are being enjoyed by the employees belonging to the Scheduled Castes and the Scheduled Tribes in the other departments of th Government of India. The Government shall issue such an order accordingly within four months from today. Any order that may be issued by the Government shall operate prospectively. All promotions that have been made so far pursuant to the policy contained in the letter dated 23.12.1983 and that may be made hereafter till the date on PG NO 631 which the direction to be issued by the Government under clause 6 comes into operation,shall however remain undisturbed. This petition is accordingly allowed. No costs. G.N. Petition allowed.

In supersession of its earlier order issued in I968, the Union Government communicated in I971 its policy regarding reservation for the Scheduled Castes and the Scheduled Tribes in post filled by promotion on the basis of seniority subject to fitness. Whenever such promotion were to be made in appointments to Class I, Class II, Class III and Class IV posts in grades or services in which the element of direct recruitment, if any, did not exceed 50 per cent, 15 per cent and 7/1 per cent of the vacancies were to be reserved for SCs and STs respectively. Detailed instructions were issued to the appointing authorities to make promotions accordingly so that the SCs and STs could have an advantage of getting promotion to a higher grade much earlier than the others. In 1974, further instructions were issued with regard to reservation of Scheduled Castes and Scheduled Tribes in posts filled by promotionts/appointments to Selection Grade Posts directing reservation of 15 per cent/7 1/2 percent of the vacancies for SCs/STs. PG NO 623 PG NO 624 In the Posts and Telegraphs Department, the aforesaid policy continued till 1983 when an agreement was arrived at between the Ministry of Communications and certain associations of Post and Telegraphs employees, and a fresh order relating to the policy of promotion to be adopted in the P & T Department was issued in supersession of the scheme of reservation followed till then. Under the policy, all official belonging to basic grades in Group C and Group D to which there was direct recruitment either from outside and/or by means of limited competitive examination from lower cadres and who had completed 16 years of service in that grade would be placed in the next higher grade. Whether an employee belonged to general category or to the category of SCs and STs, he would get his promotion on the completion of 16 years ' service. Under the previous scheme it was possible for the SC and ST employees to secure promotion within a period of 1() to 12 years, while the other employees had to wait for nearly 20 to 23 years. Thus, the comparative advantage enjoyed by employees belonging to SCs and STs was taken away. No specific order was issued by the Government regarding reservation for SCs and STs, though clause 6 of the new scheme provided for it. But the earlier orders providing for reservation for SCs and STs were made inapplicable. Aggrieved by the new policy, which deprived the SC and ST employees of the advantage which they were enjoying, the petitioners approached this Court by way of the present writ petition. Petitioners prayed for a direction to the Govt. of India for issuing an order under clause 6 of the new scheme conferring such additional advantage to them as are enjoyed by SC and ST employees in other departments. The Respondent contended that the new scheme was advantageous to all the employees since all of them would get automatic promotion after completing 16 years of service in a cadre and that it was done with the consent of the Federations of Employees of the P & T Department. Allowing the writ petition, HELD:1.The advantage of promotion within a shorted period is being enjoyed by persons 'belonging to the Departments and only the petitioners have been deprived of it. Such deprivation violates the equality clause of the PG NO 625 Constitution. While it may be true that no writ can be issued ordinarily compelling the Government to make reservation under Article 16(4) which is only an enabling clause, the circumstances in which the members belonging to the Scheduled Castes and Scheduled Tribes in the Posts and Telegraphs Department are deprived of indirectly, the advantage of such reservation which they were enjoying earlier, while others who are similarly situated in the other departments are allowed to enjoy it, make the action of Government discriminatory and invite intervention by this Court. [629G H; 630A B] 2. One of the methods by which the Government can confer some extra advantage on the employees belonging to the Scheduled Castes and the Scheduled Tribes in cases of this nature where promotion to higher cadre is a time bound one is to direct that the employees belonging to the Scheduled Castes and the Scheduled Tribes may be promoted to the higher cadre on completion of a shorter period of service than what is prescribed for others. In this particular case it is open to the Government to direct that while all others would be entitled to be promoted to the higher cadre on completion of 16 years of service, the members belonging to the Scheduled Castes and the Scheduled Tribes may nay be promoted to the higher cadre on completion ot, say 12 or 13 years of service. There may be other methods of achieving the same result. In what way it should be done is a matter left to the discretion of the Government. This should be decided by the Government taking into consideration al aspects of the case.[630B F] 3. The Government of India shall within four months issue an order under clause 6 of the letter dated 23.11.1983 conferring some additional advantage on the employees belonging to the Scheduled Castes and the Scheduled Tribes in the Posts & Telegraphs Department commensurate with similar advantages which are being enjoyed by the employees belonging to the Scheduled Castes and the Scheduled Tribes in the other departments. Any order that may be issued by the Government shall operate prospectively. All promotion that have been made so far pursuant to the policy contained in the letter dated 23.11.1983 and that may be made hereafter till the date on which the direction to the issued by the Government under claus 6 comes into operation, shall however, remain undisturbed. [630 F H;631A]

ivil Appeal No. 195 of 1963. Appeal from the judgment and decree dated March 24, 1959 the Allahabad High Court in First Appeal No. 76/47. C.B. Agarwala and J.P. Goyal, for the. appellant. S.T. Desai, M.V. Goswami and B.C. Misra, for the respondent No. 1. M.V. Goswami and B.C. Misra, for respondents Nos. 2, 7. and 8. R.S. Gupta, S.S. Khanduja and Ganpat Rai, for respondent No. 9. The Judgment of the Court was delivered by Hidayatullah, J. This appeal arises from a suit filed by respondents 1 and 2 for declaration of their rights to the Phulpur Estate, for possession of properties belonging to the Estate and for mesne profits. The Phulpur Estate is situated in Allahabad District. One Rai Bahadur Rai Pratap Chand who died on January 23, 1901, was the Zamindar of this Estate. After his death, his widow Rani Gomti Bibi succeeded to the Estate. Rani Gomti Bibi was considerably influenced by her brother Gaya Prasad and priests belonging to some temples. In the years following the death of her husband, Rani Gomti Bibi made many endowments involving vast properties and in July 1920, the Court of Wards assumed charge of the Estate which the Rani was mismanaging. On February 21, 1923, the Rani adopted one Bindeshwari Prasad and then applied to the Court of Wards under section 37 of the U.P. Court of Wards Act for permission to make the adoption. The Collector (Mr. Knox) made an enquiry and on April 3, 1923. made a report exhibit 79 stating that the evidence tendered before him was so conflicting and unreliable that he had come to the conclusion that the authority of Rai Pratap Chand to adoption by his widow was not proved. He, therefore, recommended that Rani Gomti Bibi be declined permission to make the adoption and the Board of Revenue accordingly refused permission. Rani Gomti Bibi, however, executed a deed of adoption on November 6, 1924 in favour of Bindeshwari Prasad. A suit was filed by Parmeshwar Dayal (who was the first plaintiff in the persent suit) in 1925 against Rani Gomti Bibi, Bindeshwari Prasad and the Court of Wards challenging the adoption made by the Rani. On August 21, .1926, the suit was decreed, and it was held that the adoption was contrary to section 37 of the U.P. Court of Wards Act, 1912 and was thus 29 invalid inasmuch as permission to take the adoption was not obtained from the Court of Wards. Rani Gomti Bibi then applied to the Court of Wards for permission to adopt Bindeshwari Prasad 's brother 's son Dwarka Nath who is the present appellant. Fresh enquiries about the authority of the husband were made by the then Collector Mr. Thompson. He examined witnesses from a list filed by Gaya Prasad in the earlier suit of 1925. After considering the evidence, the Collector recommended grant of permission under section 37 of the U.P. Court of Wards Act and permission was accordingly granted by the Board of Revenue. On November 28, i929, the Rani adopted Dwarka Nath at Phulpur. Immediately after this adoption the Court of Wards released the Estate and assumed charge of it again on behalf of Dwarka Nath who was a minor. On january 5, 1943, Rani Gomti Bibi died and the present suit was filed by Parmeshwar Dayal and one Amarnath Agarwal to whom Parmeshwar Dayal had assigned 6/16th share in the Estate. This suit was decreed by the Civil Judge of Allahabad who held inter alia that Parmeshwar Dayal was the nearest reversioner of Rai Partap Chand and was entitled to succeed him, and further that the adoption was invalid as there was no proof of authority given by Rai Pratap Chand to Rani Gomti Bibi to make the adoption. The suit for declaration and possession was decreed with mesne profits amounting to Rs. 88,000 against Dwarka Nath and the Collector and the Court of Wards who was also made a party to the suit. Three appeals were filed against the judgment and by a common judgment dated March 24, 1959, the High Court affirmed the decree except in respect of mesne profits. The High Court certified the case as fit for appeal to his Court and the present appeal results. At the hearing, Mr. C.B. Agarwala stated on behalf of the appellant that he did not challenge that Parmeshwar Dayal was the nearest reversioner of Rai Pratap Chand. We are also not now concerned with the endowments. Mr. Agarwala contended that the findings about authority by Rai Pratap Chand to the adoption were erroneous an required to be reconsidered. In seeking reconsideration of this finding. Mr. Agarwala relied both on facts and law. In so far as his claim is to have the evidence reconsidered, it may be stated at once that it is not the practice of this Court to examine the evidence at large specially when the High Court and the Court below have drawn identical conclusion from it. In this case, the evidence about the authority, such as it was, was considered both by the Trial Judge and the High Court and they could not persuade themselves to accept it. Following the settled practice of this Court we declined to look into the evidence for the third time, but we permitted Mr. Agarwala to raise arguments of law and we shall deal with those arguments now. 30 Mr. Agarwala relies upon ss 37 and 53 of the U.P. Court of Wards Act, 1912 and contends that inasmuch as the Court of Wards made an enquiry into the truth of the allegations that Rai Pratap Chand had given express authority to Rani Gomti Bibi to make an adoption after his death and found in favour of authority, the conclusion of the Court of Wards to grant permission and the reasons for the decision cannot be questioned by a civil suit. This argument, in our judgment, cannot be accepted. Section 37, of the U.P. Court of Wards Act, in so far as it is material. reads as follows: "37. Disabilities of wards A ward shall not be competent (a). . . . . (b) to adopt without the consent in writing of the Court of Wards; (c) . . . . Provided, first, that the Court of Wards shall not withhold its consent under clause (b) . . if the adoption . . . is not contrary to the personal or special law applicable to the ward . . . ". lm0 The section obviously places a hurdle in the way of adoptions by the wards which must be removed before the adoption can be valid. The section affects the competence of the Wards to make the adoption and as the consent is a pre requisite, any adoption made without such consent must be ineffective. The section, however, does not make the sanction of the Court of Wards to cure illegalities or breaches of the personal law. Nor does the sanction make up for incompetence arising under the personal law. It is obvious that if the adoption is void by reason of the personal law of the person adopting, the consent of the Court of Wards cannot cure it. Nor would ' the consent take the place of the essential ceremonies or the religious observances where necessary. Those matters would have to be determined according to the personal law in civil court of competent jurisdiction. Mr. Agarwala argues that section 53 is a bar to any suit questioning the adoption made after the consent of the Court of Wards to the adoption has been given. That section cannot be used in this manner. It reads: "53. (i) The exercise of any discretion conferred on the State Government or the Court of Wards bythis Act shall not be questioned in any Civil Court. (2) . . . . The section merely puts the exercise of discretion by officers acting under the Court of Wards Act beyond question. Thus if the Court of Wards gave or refused its consent to a proposed adoption a suit would not He either to cancel the consent or to compel it. This section, however, does not go to the length that after the consent of the Court of Wards the adoption itself cannot be question 31 ed at all. There are no words in the section to this effect nor can such a result be implied. If the Court of Wards gave its concurrence to a proposed adoption, the bar created by section 37 of the Act would be removed. but it would not make the adoption immune from attacks in a Civil Court on any ground on which adoptions are usually questioned there. Mr. Agarwala claims that the reasons for the consent of the Court of Wards are a part of the consent and are within section 53(1). This cannot be accepted. No doubt, the Court of Wards reached its own conclusion for purpose of section 37 that Raj Pratap Chand had accorded authority to Rani Gomti Bibi to adopt a son. but if the adoption was questioned in a civil court. the civil court would not be ousted of its jurisdiction to decide the question. All that the civil court would be compelled hold would be that the requirements of the Court of Wards Act ds to the consent of the Court of Wards were fulfilled. In our judgment, the legal argument that after the consent of the Court of Wards the Civil Court was incompetent to reconsider the question of the authority given by the husband cannot be accepted. In deciding the question of authority, the High Court rejected the oral evidence led before it and affirmed the conclusions of the trial Judge. The High Court considered this evidence both intrinsically and in the light of the attending circumstances and found it unacceptable. The trial Judge pointed out that as lawyers were present when Rai Pratap Chand 'is alleged to have given authority to his widow and as it was also suggested that that fact should be recorded, it was unbelievable, if the statements were true, that written authority would not have been prepared then and there. The High Court did not content itself with accepting the opinion of the trial Judge but discussed the evidence de novo and rejected it. The High Court pointed out that Rai Pratap Chand was only 30 years old at the time of his death and his wife was 25 years old and he could not have abandoned the hope of having an issue. Evidence shows that the writing was put off because it was not thought that Rai Pratap Chand was dying. The High Court also pointed out that Rani Gomti Bibi executed between November 24, 1901 and August 19, 1904 4 documents making different endowments. In none of these documents, she mentioned that she had been asked by her husband to make them. The High Court pertinently pointed out that the oral evidence showed that the declaration of the authority to his wife and the oral will to make the endowments, were made by Rai Pratap Chand at the same time and these facts would have figured as the reason for the endowments in these documents. Mr. Agarwala contends that even if the reasons for the endowments might be expected to be expressed. it is not logical to say that the deeds should have recited the irrelevant fact that authority was given to Rani Gomti Bibi to make the adoption. This is perhaps right, but the fact remains that the two directions of Rai Pratap Chand went hand in hand; and even if the fact of authority was not 32 recited in the documents, one would expect at least the oral will to make the endowments to be mentioned. This shows that the whole story about oral directions to Rani Gomti Bibi was untrue. Mr. Agarwala then seeks to use the statements made by Gaya Prasad and the witnesses before Mr. Thompson. In the High Court this claim was based upon sections 11, 32 and 157 of the Indian Evidence Act. The High Court rejected these statements and declined to attach any value to them. Section 11 was not relied upon before us; but the other two sections were referred to in an effort to have that evidence read. Section 157 of the Indian Evidence Act lays down: "157. Former statements of witness may be proved to corroborate later testimony as to same fact: In order to corroborate the testimony of a w:mess, any former statement made by such witness relating to the same fact at or about the time when the fact took place, or before any authority legally competent to investigate the fact, may be proved. " Two circumstances, which are alternative, are conditions precedent to the proof of earlier statements trader this section. The first is that the statements must have been made at or about the time when a fact took place. The fact here is the authority said to have been given by the husband in 1901. The statements were made on December 18, 1928, 27 years after the event. They cannot be said to have been made "at or about the time when the fact took place". Further, as rightly pointed 'out by i;he High Court, the Court of Wards was making an enquiry for the purpose of according its consent. It was not enquiring into the fact of the giving of authority as an 'authority legally competent '. That authority, as we have pointed out already, is the civil court for the civil court alone can finally decide such a question. It can do so even after the Court of Wards had reached a conclusion, and contrary to that conclusion. Section 157 therefore cannot make the statements provable. Mr. Agarwala next relies on section 32(7) of the Indian Evidence Act to introduce the earlier statements. That sub section reads: "32. Statements. written or verbal, of relevant facts made by a person who is dead, or who cannot be found, or who has become incapable of giving evidence, or whose attendance cannot be procured without an amount of delay or expense which under the circumstances of the case appears to the Court unreasonable, are them selves relevant facts in the following cases: * * * * (7) When the statement is contained in any deed, will or other document which relates to any such transaction as is mentioned in section 13, clause (a). * * * * 33 Clause (7) makes relevant statements made in deeds, wills and such other documents which relate to transactions by which a right or custom in question "was created, claimed, modified, recognised, asserted or denied" (to add the words of cl. (a)of section 13). The clause does not allow introduction of parole evidence, see Field on the Law of Evidence 8th Edn. p. 202. Such parole evidence may be relevant under cl. (5) of section 32, but that is not relied upon. We questioned Mr. Agarwala whether he wished to rely upon clause (5), but he did not wish to put his case under that clause and we need not therefore consider the application of that clause. We think Mr. Agarwala is right in taking this course, be cause cl. (5) requires that such a statement should have been made before the quest, ion in dispute was raised. The statements in question were definitely made after the question in dispute in the suit had already arisen, because one enquiry had already been made by Mi '. Knox and the statements now relied upon were made in the second enquiry before Mr. Thompson. Mr. Agarwala next wishes to use the statements made by Gaya Prasad on March 14, 1926 "exhibit 72"; but that clearly is not admissible, because when it was made in the suit, Gaya Prasad was being examined as a party before issues were framed. In fairness to Mr. Agarwala it may be mentioned that he did not press the point after noticing the above fact. Mr. Agarwala` contends lastly that as Dwarka Nath was adopted on November, 28, 1929 and the present suit was filed on May 21, 1945, after more than 15 years, and as during this time. Dwarka Nath had been considered by everyone to be legally and validly adopted the suit ought to have been dismissed. It may be pointed out that Parmeshwar Dayal never accepted the adoption of Dwarka Nath. He had filed an earlier suit and questioned the competence of Rani Gomti Bibi to make the adoption of Bindeshwari Prasad. In that suit he had denied that Rai Pratap Chand had given authority to his wife to make the adoption of a son after his death. He consistently denied the validity of the second adoption and in these circumstances, it cannot be said that he was concluded by any rule of law from questioning the adoption of Dwarka Nath after Rani Gomti Bibi 's death. On an examination of all the legal pleas against the judgment of the High Court we are satisfied that none of them avails the appellant. In so far as the question of fact are concerned, we have already stated that we do not propose to go into them as it did, not appear to us that there was any legal reason for reaching a different conclusion. We accordingly dismiss the appeal but order that the parties shall bear their own costs throughout. Appeal dismissed.

A widow whose estate was under the charge of the Court of Wards. made an adoption and applied under section 37 of the U.P. Court of Wards Act, 1912, for permission to make the adoption. The Collector refused the permission as the grant of authority to adopt, by the husband who died in 1901, was not proved. The 1st respondent 's father, the nearest reversioner, filed a suit challenging the adoption as contrary to section 37 of the Act and the suit was decreed. The widow. there.after, applied to the Court of Wards for permission to adopt the appellant. Fresh enquiries about grant of authority by the husband to adopt, were made, and permission was granted and the appellant was adopted in 1929. Immediately after the adoption of the appellant the Court of Wards, released the estate and assumed charge of it again on behalf of the appellant who was a minor. On the death of the widow in 1943, the 1st respondent 's father filed a suit, challenging the validity of the appellant 's adoption on the ground that the widow had no authority from her husband to adopt. The Trial Court decreed the suit and the High Court, on appeal. affirmed the decree. In appeal to this Court it was contended that the conclusion of the Court of Wards to grant permission and the reasons for the decision could not be questioned in a civil suit. HELD: The Civil Court was competent to reconsider the question, of the authority given by the husband, even after the consent of the Court of Wards. Section 37 of the U.P. Court of Wards Act affects the competence of the wards to make an adoption, and as the consent of the Court of Wards is a pre requisite, any adoption made without such consent must be ineffective. The section, however, does not make the sanction of the Court of Wards cure illegalities or breaches of personal law. Nor does the sanction make up for incompetence arising under the personal law. Those matters would have to be determ/ned according to the personal law in a Civil Court of competent jurisdiction. [30E G] Section 53 also is not a bar to such a suit. The section only provides that if the Court of Wards gave or refused its consent to a proposed adoption a suit would not lie to cancel the consent or to compel it. It does not go to the length of saying that after the consent of the Court of Wards, the adoption itself cannot be questioned at all. [30H] In deciding the question of authority, the statements made by witnesses at the second enquiry by the Court of Wards for giving its consent to adopt, could not be considered by the Civil Court they were not relevant or admissible either under section 32(7) or section ,of the Indian Evidence Act. [32 D F; 33 A C] 28 As the 1st respondent 's father never accepted the appellant 's adoption it could not be said that the suit, filed more than 15 years after the adoption during which time the appellant had been considered by everyone to be legally and validly adopted, ought to be dismissed. [33E G]

No. 17238 of 1988. IN Writ Petition Nos. 630 632 of 1984. (Under Article 32 of the Constitution of India). Shanti Bhushan and P.D. Sharma for the Petitioner. G.L. Sanghi, Mahabir Singh, Rana Ranjit Singh, Srinivas Choudhary, S.K. Mehta and G.K. Bansal for the Respondents. The Judgment of the Court was delivered by NATARAJAN, J. This Civil Miscellaneous Petition has been filed with a prayer for appropriate directions being issued to the State of Haryana as under: (a) Issue appropriate directions to the respondents No. 1 and 2 1082 to implement the judgment and order dated 17.12.86 and carry out the directions issued by way of writ of mandamus as prayed to this Hon 'ble Court in its full spirit giving effect to the promotion orders dated 30.12.87, from back dates (deemed dates) or the dates when their juniors were promoted. (b) Further issue suitable directions to the Respond ents No. 1 and 2 to allow other consequential benefits viz. fixation of pay from deemed dates, payment of arrears, pension and gratuity benefits to all officers figuring in list dated 27.10.85 irrespective of their retirement prior to the order of promotions dated 30.12.87 pronouncement. (c) Give effective relief to the petitioner Shri Mohinder Singh Kundu in full, irrespective of his retire ment. (d) Any other suitable orders or directions as this Hon 'ble Court may deem fit and proper in the facts and circumstances set out in the present petition. To understand the grievance of the petitioners, it is necessary to set out the back ground material and the pro nouncements made in T.R. Kapoor vs State of Haryana, ; and Ashok Gulati vs B.S. Jain, ; in favour of the petitioners. The petitioners who are Diploma holders initially joined the Class III Engineering Service of the Punjab State in the early fifties and were promoted to Class II service as officiating S.D.Os in the middle sixties and in the case of some of them the said temporary promotion was even earli er. By a Notification dated 27.10.1985 the petitioners and other similarly situated persons were regularly constituted as Class II service officers with effect from 25.12.1970. Further avenues of promotion to them were barred because the State Government construed the Service Rules to mean that without a degree in Engineering, a Class II officer cannot be promoted to Class I service. The said interpretation of the Service Rules was disapproved by this Court in A.S. Parmar vs State of Haryana, [1984] 2 SCR 476. By reason of that judgment, it followed that a degree in Engineering was not an essential pre requisite for a member of Class II service being promoted to the Class I service. 1083 After the judgment in A.S. Parmar 's case (supra) was rendered, the petitioners filed Writ Petitions under Article 32 of the Constitution seeking writs of mandamus to the State Government to consider the case of the petitioners and the like of them for promotion to the posts of Executive Engineers in Class I service. On 24.2.1984 an undertaking was given to the Court that the State would consider the claims of all the eligible persons including the petitioners for regular appointment to Class I service and that the exercise would be completed within four months time. Howev er, two days before the expiry of the said period of four months, the State Government brought an amendment to the Rules with retrospective effect from 10.7.64 so as to make a degree in Engineering an indispensable qualification for an officer in Class II service being promoted to Class I serv ice. Dismayed by the action of the State Government, the petitioners amended their writ petitions suitably and chal lenged the validity of the amendment to the Rules. After considering the matter in detail, this Court delivered judgment on 17.12.1986 striking down the impugned amendment to the rules as ultra vires the State Government and in a connected appeal C.A. No. 149 of 1981 Ashok Gulati (supra) this Court directed the State Government to consider the cases of all eligible members of Class II service for promo tion to the post of Executive Engineer in Class I service in accordance with law and to complete the process of .appoint ment within six months ' time. As the State Government failed to give effect to the said directions within the allotted time of six months, the petitioners filed a contempt petition C.M.P. No. 15430 of 1988 against the State. In reply to the contempt petition, the State Government stated that the delay in the implemen tation of the Court 's order was due to the stupendous nature of the work involved in the fixation of seniority of more than four hundred officers, their promotions, reversion, claims, and counter claims and their deemed promotions etc. After taking note of the said explanation, this Court di rected the State to expedite the matter and to complete the process of promotion of Class II officers to class I service within a period of two 'months and ordered the contempt petitions to be listed in the first week of January 1988. When the contempt petition came up before Court on 4.1.1988, it was represented on behalf of the State Government that the Court 's directions have been complied with and orders of promotion have been issued to the petitioners on 30.12.87 itself. Acting on 1084 the said representation, this Court passed the following order and discharged the notice in the contempt petition: "in view of this Court 's order dated 17th December, 1986 and the order dated 12th Octo ber, 1987, the officers concerned have been promoted by an order dated 30th December, 1987 and we presume that they will now be posted in consequence of that promotion. We hope and trust that the State of Haryana will pass posting orders expeditiously. The Civil Mis cellaneous Petition is disposed of according ly". It is thereafter the petitioners have come forward with this application for directions. The contention of the petitioners is that since their placement in Class II serv ice had been made effective with effect from 25.12.1970, though the order therefore was issued on 27.10.1985, they were entitled to be considered for promotion to Class I service as and when they attained eligibility after 25.12.1970 especially in view of the judgment in A.S. Par mar 's case (supra) which held that a degree in Engineering was not an essential pre requisite for members of Class II service being promoted to posts in Class I service. It is, therefore, stated by the petitioners that in all fairness they must be placed in their rightful position by being given promotion "from back dates or deemed dates or, in any case, the dates when persons junior to them were promoted." According to the petitioners their juniors were given promo tions in the years 1963, 1969, 1970, 1971, 1973, 1976 and 1978. The petitioners blame the State Government for their non promotion because of the delay in preparing the seniori ty list of Class II officers till 1985 and for closing the doors of promotion to them by wrong interpretation of the Rules and thereafter by making a wrongful amendment to the rules till judgments were rendered in T.R. Kapoor 's case (supra) and Ashok Gulati 's case (supra) on 17.12.1986. The petitioners would therefore contend that the promotions given to them belatedly on 30.12.1987 do not render full justice to them and the said order is also not fully in compliance with the directions given by this Court in the judgments rendered in the two cases on 17.12.86. Yet another grievance put forth is that the Government has not given relief to those Class II officers who have retired from service prior to 30.12.1987. The petitioners therefore seek further directions being issued to the State Government to give them and other similarly placed officers besides those who have already retired from service the benefit of promo tion with effect from back dates or deemed dates as per theft entitlement or atleast from the dates when persons junior to 1085 them were promoted together with all the consequential benefits arising therefrom. In reply to the petition for directions, three counter affidavits have been filed on behalf of the State of Har yana, one by Shri H.D. Bansal, Financial Commissioner and Secretary to Government, Irrigation & Power Department and the second by Shri H.K. Khosla, Engineer in Chief, Irriga tion Department. In both the counter affidavits it has been stated that the State has fully complied with, the direc tions of the Court by giving promotion to all the petition ers by order dated 30.12.87 and that the Court, in approval of the action of the Government as proper compliance to the directions given on 17.12.1986, dropped further proceedings in the contempt petition and as such there is no basis for the petitioners to seek further directions from the Court. The third counter affidavit dated 14.10.88 has been filed by Shri Raj Rup Fuliya, Deputy Secretary to Government of Haryana, Irrigation and Power Department. Therein the stand taken is that since the petitioners had acquiesced in the interpretation of the Service Rules by the Government till they filed the writ petitions, the petitioners are not entitled to claim promotional benefits with reference to their service in Class II posts from 1970. It is further stated that in the judgments rendered in T.R. Kapoor vs State of Haryana, (supra) and Ashok Gulati vs B.S. Jain, (supra), this Court had not directed that promotions should be given to the petitioners from back dates or deemed dates or from the dates their juniors were promoted to Class I Service. Likewise, it is stated that the Court had not directed the State to give the benefit of promotion to per sons who have already retired from service. The petitioners have controverted the averments in the counter affidavits by means of a rejoinder and have reiter ated their claim for promotion from anterior dates. In turn Shri Raj Rup Fuliya, Deputy Secretary to the Government has filed a supplemental counter 'affidavit to the rejoinder filed by the petitioners. In the light of the conflicting stands taken by the parties, it falls for consideration whether the petitioners are entitled to the benefit of promotion from anterior dates i.e. from deemed dates of promotion or from the dates their juniors were promoted as claimed by them or whether the promotions given to them on 30.12.87 by the Government amounts to grant of full relief to the petitioners as per this Court 's judgments dated 17.12.86. 1086 Taking up for consideration the contention of the peti tioners that by reason of their being constituted Class II Officers with effect from 25.12.70, they were entitled to promotion as and when they attained seniority, but the State Government had unjustly deprived them the benefit of promo tion due to wrong interpretation of the Rules, we are unable to accept the plea for more than one reason. In the first place, the petitioners had acquiesced in the interpretation of the Rules by the State Government all along and it was only after the decision in A.S. Parmar 's case, they chose to move this Court under article 32 of the Constitution to seek promotional benefits. Having remained complacent for a long number of years, the petitioners cannot now turn round and say that notwithstanding their inaction, they should be granted promotion from deemed dates on the basis of seniori ty. Secondly, in the long interval of time that had elapsed before the petitioners chose to file the writ petitions, several o*her Class II Officers holding engineering degrees have been promoted to Class I Service. The benefits which had accrued to those persons by reason of their promotions cannot now be disturbed or interfered with by giving the petitioners promotions from deemed dates of eligibility for promotion. In other words, a settled state of affairs among the Class I Promotees cannot be unsettled now. As already stated, during the pendency of the writ petitions, the State Government gave an undertaking on 24.2.1984 that they would consider the claims of the peti tioners for promotion to Class I service and pass orders in four months ' time. Subsequently, the State Government went back on its representation and brought about an amendment with retrospective effect to the Rules so as to make a degree in engineering an essential qualification for promo tion to Class I service. This amendment was struck down by this Court in T.R. Kapoor 's case and it was observed as follows: "Presumably, the State Government adopted this unfortunate course of action taking cue of the observations made by this Court in the con cluding part of the judgment in A.S. Parmar 's case saying that if the Government wish to appoint only persons having a degree in Engi neering to Class I service, it was free to do so by promulgating appropriate rules and that the power to frame such a rule was beyond question. But the Court never laid down that such a rule may be framed under article 309 of the Constitution with retrospective effect so as to render ineligible Class II officers like the petitioners who were Diploma holders 1087 for further promotion as Executive Engineers in Class I service. In view of the clear formulation of law interpreting r. 6(b) of the Class I Rules holding that a degree in Engi neering was not an essential qualification for promotion of Class II Officers to the cadre of Executive Engineers in Class I service, there was no occasion for the State Government to issue the impugned notification unless it was with the object of nullifying the decision of this Court in A.S. Parmar 's case". After thus disapproving the Government 's action, this Court gave directions to the State Government in the connected appeal Ashok Gulati vs B.S. Jain, (supra) to consider the claims of all the eligible Class II officers for promotion to Class I service without reference to their possessing a degree in Engineering. It is bearing in mind these factors the question whether the promotions granted to the petition ers with effect from 30.12.1987 amounts to sufficient com pliance of the directions of the Court dated 17.12.1986 has got to be examined. Inasmuch as the petitioners had not asked for mandamus being issued for promotion them to Class I posts from ante rior dates on deemed basis or with reference to the promo tions given to junior persons, and since even if such a prayer had been made, the relief would not have been given for the reasons set out above, this Court appropriately called upon the Government to consider the case of all eligible members of Class II service for promotion to the post of Executive Engineer in Class I service in accordance with law and to complete the process of appointment within six months time. The direction therefore enjoined the Gov ernment to give promotion to all Class II officers who were eligible for promotion to Class I service after Rule was issued in the writ petitions. Even before the direction was issued, the Government had conceded the position and that was why the Government had asked for four months time through its counsel to consider the case of all eligible Class II officers and give them promotion. The combined effect of the striking down of the amend ment to the Rules by the Government and the direction issued to the Government in Ashok Gulati 's case (supra) to consider for promotion the names of all the eligible Class II offi cers would entitle the petitioners to seek the benefit of promotion from 24.6.1984 when the time limit of four months sought for by the State Government to make the promotions came to expire. But for the unsustainable amendment made to 1088 the Rules, the Government could not have postponed the promotion of the petitioners and other Class II officers similar to them beyond the time limit of four months which expired 24.6.1984. It would therefore follow that the order of promotion made by the State Government on 30.12. 1987 will not amount to due compliance of the Court 's directions dated 17.12.1986. The Government cannot take advantage of its own error in making an illegal amendment to the Rules with retrospective effect and postpone the benefit of promo tion to Class II officers. The Government cannot also take umbrage for its action in giving promotion to the petitioners and other eligible Class II officers with effect from 30.12.1987 either because the directions given on 17.12.1986 did not set out the date from when promotions should be given or because the Court passed orders on 4.1.1989 dropping further proceedings in the contempt petition. As regards the directions issued on 17.12.1986 to the State Government to give promotions to the Class II officers in accordance with law, they must be construed with reference to the observations made in T.R. Kapoor 's case (supra) that the amendment to the Rule with retrospective effect by the Government "was with the object of nullifying the decision of this Court in A.S. Parmar 's case". Viewed thus, the Government 's action in giving promo tions to the petitioners and others belatedly on 30.12.1987 cannot be construed as due compliance of the Court 's direc tions. Once that conclusion is reached the question would then be as to from which date the Government should have given promotions to the petitioners and others in accordance with the directions of the Court. The latest point of time in which the Government could not and should have given promotions would be the date on which the four months ' time prayed for by the Government on 24.2.1984 to give promotions to the eligible Class II officers came to an end. The said period on 24.6.1984 and the Government cannot escape its obligation to give promotions to the officers in question with effect from that date. In so far as the order passed in the contempt applica tion on 4.1. 1988 is concerned, it is needless to say that this Court did not go into the question on that day as to whether the order of promotion passed on 30.12.1987 was in full compliance or only in partial compliance of the Court 's order dated 17.12.1986. In fact it is the grievance of the petitioners that the State Government did not communicate to them the orders passed on 30.12.1987 and therefore they had no opportunity to state before Court on 4.1.1988 that the Government had acted mala fide in granting them promotion only with effect from 30.12.1987 and that the said order had been passed only to escape 1089 the consequences of the contempt petition and not for ful filling the directions given by the Court on 17.12.1986 to promote all eligible persons in accordance with law. We, therefore, direct the State Government to give promotion to all eligible Class II officers with effect from 24.6.1984 and to give them all the consequential benefits arising therefrom. The benefits of promotion and consequen tial benefits should also be given to all those officers who were eligible for promotion on 24.6.1984 but who have re tired since then. The Government shall complete the exercise in two months ' time from today. To this extent the petition for directions will stand or dered. No costs.

This is an application filed by the Petitioners seeking directions of the Court for implementation of this Court 's order dated 17.12.86 in its true spirit, in particular, praying that the promotion orders dated 30.12.87 be given effect from the back dates (deemed dates) or the dates when their juniors were promoted. The circumstances that led to the filing of this application may be stated thus. The Petitioners were members of the regularly constitut ed class II Engg. service of the State with effect from 25.12.1970 and were working as Sub Divisional Officers. Further avenues of promotion to them were barred because the State Government construed the service Rules to mean that without a degree in Engineering, a class II officer could not be promoted to class I service. The said interpretation of the State Government was disapproved by this Court in the case of A.S. Parmar vs State of Haryana, [1984] 2 SCR 476 as a consequence whereof a degree in Engineering did not remain an essential pre requisite for a member of Class II service for being promoted to Class I service. After the Judgment in Parmar 's case, the Petitioners filed a Writ Petition in this Court seeking a direction to the State Government to consid er the case of the Petitioners and others similarly situated for promotion to the post of Executive Engineers in Class I service. On 24.2.84 an undertaking was given to the Court by the State, that the State would consider the claims of all the eligible persons including the petitioners for regular appointment to Class I service within four months. Instead of granting promotions, the State. Government amended the Rules with retrospective effect from 10.7.64 so as to make a degree in Engineering as an indispensable qualification for an officer in Class II service for being promoted as Class I officer. The Petitioners thereupon amended their Writ Peti tion and challenged the validity of 1080 the amendment and the Court by its Judgment dated 17.12.86 struck down the amendment to the Rules as ultra vires the State Government. In another case involving the same point viz., Ashok Gulati vs B.S. Jain, this Court directed the State Government to consider the cases of all eligible members of Class II service for promotion as Executive Engineers, within six months time. The State having failed to comply with the Court 's order aforesaid, a contempt petition was flied, which was disposed of by the Court 's order dated 30.12.87 by which time the State had reported to the COurt that the promotions to all concerned eligible officers had since been granted. The Petitioners have now filed this application contend ing that since their placement In Class II service had been made effective with effect from 25.12.70 though the order therefore was issued on 27.10.85, they Were entitled to be considered for promotion to Class I service as and when they attained eligibility after 25.12.70 especially in view of the Court 's Judgment in Parmar 's case whereby the degree in Engineering was no longer a necessary qualification. The Petitioners therefore urge that they be placed in their rightful position by giving promotion from back dates or deemed dates, or, in any case, the date when persons junior to them were given promotions. According to them promotions granted to them belatedly on 30.12.87 did not render true justice to them and that the said order did not fully comply with the Court 's order. Further a grievance is also made that no benefit has been given to those officers who retired from service during this period. On the other hand the State contended that it has duly complied with the Court 's order by giving promotions w.e.f. 30.12.87. The State supported its contention by saying that in approval of its action the Court on 17.12.86 dropped further proceedings in contempt petition which meant that there has been due compliance with the Court 's order. Disposing of the application with directions this Court, HELD: The combined effect of the striking down of the amendment to the Rules by the Government and the direction issued to the Government in Ashok Gulati 's case to consider for promotion the names of all the eligible Class II offi cers would entitle the petitioners to seek the benefit of promotion from 24.6.84 When the time limit of four months sought for by the State Government to make the promotions came to expire. But for the unsustainable amendment made to the Rules, the Government could not have postponed the promotions of the 1081 Petitioners and other Class II officers similar to them beyond the time limit of four months which expired on 24.6.84. It would therefore follow that the order of promo tion made by the State Government on 30.12.87 will not amount to due compliance of the Court 's directions dated 17.12.86. The Government cannot take advantage of its own error in making an illegal amendment to the Rules with retrospective effect and postpone the benefit of promotion to Class II officers. [1087G 1088B] The Government cannot also take umbrage for its action in giving promotion to the petitioners and other eligible Class II officers with effect from 30.12.87 either because the directions given on 17.12.86 did not set out the date from when promotions should be given or because the Court passed orders on 4.1.1989, dropping further proceedings in the contempt petition. [1088C] The State Government was directed to give promotions to all eligible Class II officers with effect from 24.6.84 and to give them all the consequential benefits arising there from. The court further directed that the benefit of promo tion and consequential benefits should also be given to all those officers who were eligible for promotion on 24.6.84 but who have retired since then. [1089B]

: Criminal Appeal Nos. 485 488 of 1979 etc. From the Judgment and Order dated 6.12. 1977 of the Andhra Pradesh High Court in Cr. Revision Cases Nos. 294, 295,296 and 293 of 1977 Kapil Sibal, Atul Wig, Raj Birbal, A.T.M. Sampath and G.M. Rao for the Appellant. 89 A.K. Goel, K. Ram Kumar, B Parthasarthi for the Respondents. The Judgment of the Court was delivered by OZA, J. These appeals have been filed after grant of leave against the acquittal of the respondent from offences under Sections 467 read with Section 109 and 471 of the Indian Penal Code. The prosecution case at the trial was that V. Suryakan tam is a resident of official colony VSP, and has a Bank account in the Bank of India since 1965. Her Account No. is 2006. She has also a cheque book to operate the Bank trans actions and she was also entitled to withdrawal facility for withdrawing money from her accounts. The respondent accused was working as an Accounts Clerk in the Bank of India in the very branch where V. Suryakantam P.W.i had her account. This V. Suryakantam, P.W. 1 was 'acquainted with the respondent accused and he used to assist her in the Bank transactions. It is alleged that whenever she wanted to withdraw money on a cheque her daughter V.S. Kanthi used to fill up the cheque and she used to sign on the cheque. On 23rd NOvember, 1970 the respondent accused misrepresented to P.W. 1 that her account book is required in the Bank for the purpose of posting up to date entries and on this represen tation obtained her pass book which he never returned. P.W. 1 demanded the pass book several times. He always represent ed that it was in the Bank and yet not completed. On 9.12. 1970 the respondent got filled up by some person withdrawal form No. 2055 on the account of P.W. 1 on the Bank of India for Rs.6,000 and represented this with drawal form in the Bank. He received the money i.e. Rs.6,000 and mis appropriated the same. On 11.3. 1971 P.W. 1 went to the Manager of the Bank. The respondent was absent and she told him about the fact of having given her passbook to the respondent long back and that he was not returning the pass book and dodging her. She also requested him to verify her accounts. The Manager asked her to come on the next day. On 12th March, 1971 when she went to the bank to her surprise she learnt that some withdrawal of money have been done and very little amount was left over. She immediately gave a complaint that this withdrawal of Rs.6,000 was not by her as well as two other withdrawals and on the same day the Manager and staff officer went to the house of 90 the accused and questioned him about those transactions. The respondent accused admitted his guilt before the Manager and requested the Manager to excuse him and gave a confessional statement in writing. During investigation hand writing specimen of P.W. 1 and admitted handwriting of the accused respondent were compared with the handwriting on the withdrawal forms by the expert. The opinion of the expert was that signature on the with drawal form was not by P.W. 1 and that the signatures on the reverse of the form which is taken in the Bank as an ac knowledgement for the receipt of money was that of the respondent accused. It was therefore opined that the respon dentaccused got forged the signatures of P.W. 1 on the withdrawal form, presented it as genuine at the Bank and withdrew Rs.6,000 and therefore he was prosecuted for of fences under Sections 467 read with Sec. 109, 47 1,408 and 420 of Indian Penal Code. As there were three items of such withdrawals three prosecutions were launched consequently three appeals and ultimately three appeals are filed here by the Bank of India and there is also an appeal filed by the State against the judgment of acquittal passed by Hon 'ble the High Court. On trial the respondent accused was convicted for an offence under Sec. 420 and sentenced to undergo imprisonment for 9 months and to pay a fine of Rs. 100. He was also convicted for an offence under Sec. 467 read with Sec. 109 and sentenced to imprisonment for 9 months and a fine of Rs. 100. He was also convicted under Sec. 47 1 IPC and sentenced to 9 months imprisonment. The trial court however acquitted him from the effence under Sec. 408. The appellate court acquitted the respondent accused from charge under Sec. 420 IPC but confirmed his conviction under Sec. 467 read with Sec. 109 and also under Section 471, the sentence under the two was maintained. The State did not prefer an appeal against the acquittal of the respondent under Sec. 408 IPC by the trial Court and his acquittal under Sec. 420 IPC by the appellate Court. The respondent accused aggrieved against conviction preferred a revision petition before Hon 'ble the High Court of Andhra Pradesh and Hon 'ble the High Court by its judgment dated 21st February 1977 came to the conclusion that the offence under sec. 467 read with Sec. 109 IPC is not made out. The learned Judge also came to the conclusion that consequently his conviction under Sec. 471 also could not be maintained. Consequently the respondent was acquitted from the charges levelled against him and it 91 is against this judgment of Hon 'ble the High Court that the present appeals have been filed after obtaining leave from this Court. The learned trial Court and the appellate Court came to the conclusion that the signatures on the withdrawal form were not that of P.W. 1 but it also came to the conclusion that they were also not forged by the respondent accused but both the Courts came to a concurrent finding of fact that these withdrawal forms on which there were forged signatures of P.W. 1 were presented in the Bank by the respondentac cused and he obtained money on the basis of these withdrawal forms and he put his signatures on the reverse of these withdrawal forms in acknowledgement of the receipt of money. These signatures on the back side of the withdrawal form acknowledging the receipt of money were also admitted by the respondent accused at the trial. Both the Courts below also came to a concurrent finding of Act that the money so obtained from the Bank from the account of P.W. 1 on the basis of these withdrawal forms was pocketed by the respondentaccused and was not returned or paid to P.W. 1 although that was the stand taken by the respondent accused and he also attempted to prove it by producing a defence witness for that purpose. On the basis of these findings both the Courts ultimately convicted the respondent accused for an offence under Sec. 467 read with Sec. 109 and Sec. 471 IPC. The learned Judge of the High Court while acquitting the respondent accused came to the conclusion that it was the duty of the prosecution to establish as to who had forged the signatures of P.W. 1 on the withdrawal form as admitted ly it has not been established that they were forged by the respondent accused and on this basis the learned Judge observed that as there is no evidence as to who forged the signatures P.W. 1 on the withdrawal form it could not be held that the accused respondent knew that the document was forged nor it could be said that he got the documents forged and on the basis of this conclusion the learned Judge came to the conclusion that none of the two offences i.e. Sec. 467 read with Sec. 109 or offence under Section 471 is established. The learned counsel appearing for the appellant (the Bank) contended that so far as receipt of the money on the basis of the withdrawal form from the Bank is concerned it is admitted by the respondent accused as he admits his signatures on the back of the withdrawal form which are signatures acknowledging the receipt of the money. 92 Both the Courts (trial Court and the appellate Court) negatived the defence that the money so collected from the bank by the respondent was given over to P.W. 1 and High Court also maintained that finding as it has not been nega tived. He therefore contended that the following facts are established and accepted to be established even by the High Court: (i) that the withdrawal form did not bear the signatures of P.W. 1; (ii) that on the basis of the withdrawal form the accused 'respondent withdrew money from the bank from the account of P.W. 1 and that (iii) he signed the acknowledgement of receipt of money and did not return the money to P.W. 1 but pocketed himself. These facts therefore clearly establish that the re spondent accused used the forged document and on the basis of that document obtained money to which he had no claim and thereby caused wrongful gain to himself and wrongful loss to P.W. 1. It is also clear from the evidence that P.W.1 used to take the assistance of the accusedrespondent whenever she wanted to have any transaction in the Bank and therefore it is expected of him to have known the signatures of P.W. 1 Apart from it there is nothing to establish as to from where the respondent accused got these withdrawal forms. Under these circumstances it could not be doubted that he used these withdrawal forms knowing them to be forged or at least believed them to be forged and therefore it could not be said that he could not be convicted for an offence under Sec. 471. As regards the offence under Section 467 read with Sec. 109, the learned High Court acquitted the respondent because it came to the conclusion that there is no evidence to establish as to who forged the signatures of P.W. 1 on the withdrawal form. It is no doubt true that so far as the evidence about the forgery of the signatures of P.W. 1 on the withdrawal form is concerned there is no evidence except the fact that the signatures are forged and the further fact that this withdrawal form was in the possession of respond ent accused who presented it in the Bank and obtained money therefrom and pocketed the same. From these facts an infer ence could safely be drawn that it was the respondent ac cused who got signatures of P.W. 1 forged on this document 93 as it was he who used it to obtain money from the Bank from the account of P.W. 1 and pocketed the same It is no doubt true that there is no evidence as to who forged the signa tures of the withdrawal form but the circumstances indicated above will lead to the only inference that it was the ac cused respondent who got the signatures of P.W. 1 forged on the withdrawal form. In this view of the matter therefore the acquittal of the respondent for an offence under Section 467 read with Sec. 109 also could not be justified. It is unfortunate that the State did not prefer an appeal against the acquittal of the respondent under Section 408 and also under Section 420, even before this Court it is first the Bank which came by way of special leave but later on the State has chosen to prefer an appeal. In the light of the discussions above, in our opinion, the appeal deserves to be allowed. It is therefore allowed and the acquittal of the respondent for offence under Sec tion 467 read with Section 109 and Section 471 of the Indian Penal Code is set aside. Instead he is convicted for these two offences. As there were three items, three separate prosecutions were launched and ultimately three appeals were before the High Court and in each one of them identical questions were involved. Consequently respondent is convict ed for the above mentioned two offences in each one of the three cases and sentenced to 9 months rigorous imprisonment for each of the offences. But it is further directed that all the sentences shall run concurrently. P.S.S. Appeal allowed.

The respondent Accused, who was working as an Accounts Clerk in the appellant Bank in the very branch where P.W. 1 had her account, was alleged to have presented forged cheques on her account and misappropriated the sum with drawn. He has prosecuted for offences under s.467 read with sections 109, 471, 408 and 420 of Indian Penal Code. The trial court and the appellate court found that the signatures on the withdrawal forms were not that of P.W. 1 and that they were also not forged by the accused. But they recorded a concurrent finding of fact that the withdrawal forms bearing forged signatures of P.W. 1 were presented in the Bank by the respondent accused and he obtained money and put his signatures on the reverse in acknowledgement of receipt of money, that the money so obtained was pocketed by the respondent accused and was not returned or paid to P.W. 1. He was acquitted by the trial court of the charge under s.408 and by the appellate court under s.420, and ultimately convicted of the offence under s.467 read with section 109 and s.471. The State did not prefer appeal against the acquittal under ss.408 and 420. On appeal by the accused respondent, the High Court took the view that there was no evidence as to who forged the signatures of P.W. 1 on the withdrawal form and that it could not be said that the accused respondent knew that the document was forged or that he got the document forged. It came to the conclusion that the offence under s.467 read with section 109 was not made out and that consequently his conviction under s.471 also could not be maintained. In these appeals it was contended on behalf of the appellant Bank that the respondent accused was liable be cause he has admitted that the signatures on the back of the withdrawal form were his signatures 88 acknowledging the receipt of money which he pocketed him self. Allowing the appeals, the Court, HELD: 1.1 The acquittal of the respondent accused by the High Court for an offence under s.467 read with section 109 of the Indian Penal Code was not justified. 1.2 Though there was no evidence about the forgery of the signatures of P.W. on the withdrawal forms still the fact remained that the signatures were forged, that the withdrawal form was in the possession of respondent accused and it was he who represented it in the Bank and obtained money. P.W. 1 used to take the assistance of the responden taccused whenever she wanted to have any transaction in the Bank and therefore it was expected of him to have known the signatures of P.W. 1. Apart from it there was nothing to establish as to from where the respondent accused got these withdrawal forms. These facts lead to the only inference that it was the accused respondent who got the signatures of P.W. 1 forged on the withdrawal form. It could not be doubted that the accused respondent used the withdrawal forms knowing them to be forged or at least believed them to be forged on the basis of which he obtained money to which he had no claim and thereby caused wrongful gain to himself and wrongful loss to P.W. 1. It could not, therefore, be said that the respondent accused could not be convicted for an offence under s.47 1. 3. As three separate prosecutions were launched the respondent is convicted of the offences under s.467 read with section 109 and s.47 1 of the Indian Penal Code in each one of the three cases and sentenced to 9 months rigorous im prisonment for each of the offences. The sentences to run concurrently.

Appeal No. 646 652 of 1960. 349 Appeals from the judgment and decree dated November 28, 1962 of the Madras High Court in 385, 259, 260, 385 of 1947 respectively. A.V. Viswanatha Sastri and R. Gopalakrishnan, for the appellant (in C.A. Nos. 648, 649 and 650 of 1960) and for the respondents (in C.A. Nos. 651 and 652 of 1960). T.V. R. Tatachari, for respondents Nos. 1. 2. 5 and 6 (in C.A. No. 648 of 1960) and appellants (in C.A. No. 652 of 1960). S.T. Desai, K. Jayaram and R. Ganapathy Iyer, for respondents No. 1, 3, 4, 5, 8 to 11, 15, 16, 18, 19 and 21 (in C.A. No. 649 of 1960) respondents Nos. 1, 2 and 8 (in C.A. No. 650 of 1960) and the appellants (in C.A. No. 651 of 1960). July 31, 1964. The Judgment of the Court was delivered by SUBBA RAO, J. These five appeals by certificate arise out of Original Suits Nos. 183, 184 and 185 of 1945 filed in the Court of the Subordinate Judge, Coimbator, Madras State. O.S. No. 183 of 1945 relates to properties claimed on behalf of Sri Chowleswaraswami temple. Periaswami Goundar and Samana Goundar, the plaintiffs in the said suit, are the trustees of the said temple. They filed the suit for the recovery of the plaint scheduled properties from the defendants who are the archakas and the alienees from them on the ground that the said properties were the properties of the deity and that the defendants had no right therein. They also claimed mesne profits for a period of 3 years prior to the suit. The defendants filed a written statement admitting the claim of the deity to the melvaram interest in the properties but claimed that the archakas owned the kudivaram therein and that some of the said properties were validly transferred to the alienees. O.S. No. 184 of 1945 was filed in the said Court by the trustees of Sri Pongali Amman temple situated in the village of Vengambur for the recovery of the properties 350 mentioned in the schedule attached to the plaint. The defendants, who are the archakas and alienees from them, inter alia, pleaded that only melvaram in the said properties was granted to the deity and that the archakas owned the kudivaram therein and that they had validly alienated their interest in the said properties in favour of the alienees. O.S. No. 185 of 1945 was filed in the same Court by the trustees of Sri Varadaraja Perumal temple situated in Vengambur village . The plaintiffs sought to recover the properties mentioned in the schedule annexed to the plaint from the archakas and the alienees from them on the same grounds and the defendants raised similar pleas. It is not necessary to mention other defences raised in the written statements filed in the three suits as nothing turns upon them in these appeals. The main issue in O.S. No. 183 of 1945, O.S. No. 184 of 1945 and O.S. No. 185 of 1945 was whether the inam grants made to the three temples consisted of both varams or melvaram alone. The learned Subordinate Judge tried the said suits along with two other suits and delivered a common judgment therein. On the said issue he held in all the three suits that the grants to the three deities comprised both the varams. He further held that the alienations made by the archakas prior to May 16, 1931, were binding on the trustees of the respective temples and that the alienations made subsequent to that date were liable to be set aside. In the result the learned Subordinate Judge gave a decree in each of the suits for possession of the plaint schedule properties except those covered by the alienations effected before May 16, 1931. He also decreed mesne profits to the plaintiffs for a period of 3 years prior to the suits and also subsequent profits from the date of the suits to the date of delivery of possession at the rate fixed by him. The defendants in the said suits preferred appeals to the High Court of Madras, being Appeals Nos. 259, 260 and 385 of 1947. The said appeals were heard by a Division Bench of the said High Court, consisting of Satyanarayana Rao and Rajagopalan, JJ. The High Court agreed with the 351 trial court on the finding relating to the nature of the grants to the temples, that is to say it held that the grants to the temples comprised both the varams, namely, melvaram and kudivaram. The learned Judges, for the first time, though there was no pleading, no issue and no contention in the trial Court, held that the archakas were entitled to have a portion of the said properties allotted to them towards their remuneration for the services to the temples and gave a decree directing the division of the said properties into two halves and putting the archakas in possession of one half. They did not disturb the finding of the learned Subordinate Judge in regard to the alienations, that is they maintained the alienations made before May 16, 1931. Against the decree of the High Court in A.S. No. 259 of 1947 and A.S. No. 385 of 1947 both the archakas and the trustees preferred appeals to this Court questioning the correctness of the decree of the High Court in so far as it went against them. Against the decree in A.S. No. 260 of 1947 no appeal was filed by the archakas, but the trustees preferred an appeal questioning that part of the decree directing a part of the properties to be put in possession of the archakas. Mr. Desai and Mr. Tatachari, appearing for the archakas in the different appeals, contended that the Courts below, having regard to the consistent and continuous conduct of enjoyment as absolute owners of the properties by the archakas spread over a long period of time, should have invoked the doctrine of lost grant particularly when there was no clear and convincing evidence of the terms of the grant. Alternatively, they argued that the Courts should have held, on a fair construction of the recitals found in the inam statements and the inam register, that only melvaram was granted to the deity. Mr. Viswanatha Sastri, learned counsel for the trustees, contested this position. He would say that there is no scope for invoking the doctrine of lost grant as the recitals in the inam register and the inam statement, which are of great evidentiary value, conclusively establish that both the 352 varams were granted to the deity and that all the documents, or most of them, disclosing the conduct of the archakas would support the conclusion that both the varams were so granted to the deity. At the outset it would be convenient to notice briefly the scope of the doctrine of lost grant, as the learned counsel for the appellants have strongly relied upon it. The doctrine of lost grant with its limitations has been succinctly explained by the Judicial Committee in Sankara narayana Pillayan vs H.R.E. Board, Madras(1). The temple in that case had 4 kattalais. Though the temple had a general trustee, each of the kattalais was in the charge of a special trustee or trustees. In regard to one of the kattalais after meeting all the expenses there remained a surplus which the trustees claimed for their own benefit and in fact they were utilizing the surplus for the benefit of their families. It was contended by the appellants that they were the owners of the suit properties, which were subject only to a charge in favour of the kattalai for the performance of the worship according to the prescribed scale. The Judicial Committee, after noticing the earlier decisions, observed: "The presumption, it was stated, of an origin in some lawful title which the Courts have so often readily made in order to support pos sessory rights long and quietly enjoyed, arises where no actual proof of title is forthcoming, and the rule has to be resorted to because of the failure of actual evidence. In the present case, where there is ample and convincing proof of the nature of the grant, the object of the endowment and the capacity of the persons claiming the user and enjoyment, the rule can hardly have any application. " In the result the Judicial Committee held that the proper ties were granted only to the deity and that the trustees had no claim to any surplus income. The said principle has been accepted by this Court in Buddu Satyanarayana V. Konduru Venkatapayya(2). There a question similar to (1) I.L.R. ,605 606. (2) ; , 1003. 353 that now raised was considered. The archakas claimed, relying upon the doctrine of lost grant, that under the original inam grant only the melvaram interest was given to the deity. Rejecting that contention, Das, J., speaking for the Court, observed: "There is no doubt, on the authorities, that a presumption of an origin in some lawful title may in certain circumstances be made to support possessory rights long and quietly enjoyed where no actual proof of title is forthcoming but it is equally well established that that presumption cannot 'be made where there is sufficient evidence and convincing proof of the nature of the grant an the persons to whom it was made. " The basis of this doctrine is clearly brought out by two judgments of the Judicial Committee. Lord Buck master, delivering the judgment in Maginiram Sitaram vs Kasturbhai Manibhai(1), observed : "At the lapse of 100 years, when every party to the original transaction has passed away, and it becomes completely impossible to ascertain what were the circumstances which caused the original grant to be made, it is only following the policy which the Courts always adopt, of securing as far as possible quiet possession to people who are in apparent lawful holding of an estate, to assume that the grant was lawfully and not unlawfully made." Viscount Sumner in Mohamed Muzafar Ali Musavi vs Jabeda Khatun(2) said much to the same effect thus "The presumption of an origin in some lawful title, which the Courts have so often readily made in order to support possessory rights, long and quietly enjoyed, where no actual proof of title is forthcoming, is one which is not a mere (1) [1921] L.R.49 I.A. 54. 51 Sup. Court. 23 (2) [1930] L.R. 57 I.A. 125. 354 branch of the law of evidence. It is resorted to because of the failure of actual evidence. " It is, therefore, clear that the said principle can only be invoked where there is no acceptable evidence of the terms of the grant. In these appeals the trustees filed copies of the relevant extracts of the inam register and the statements filed by the ancestors of the archakas during the inam enquiry in support of the contention that both the varams were granted to the deity. The evidentiary value of the recitals in the inam register has been emphasized by the Judicial Committee in more than one decision. In Arunachalam Chetti vs Venkata Chalapathi Guruswamigal(1), the Judicial Committee expressed its view on the evidentiary value of the recitals in inam register thus: "It is true that the making of this register was for the ultimate purpose of determining whether or not the lands were tax free. But it must not be forgotten that the preparation of this register was a great act of state and its preparation and contents were the subject of much consideration under elaborately detailed reports and minutes. It is to be remembered that the Inam Commissioners, through their officials, made enquiry on the spot, heard evidence and examined documents, and, with regard to each individual property, the Government was put in possession not only of the conclusion come to as to whether the land was tax free, but of a statement of the history and tenure of the property itself. While their Lordships do not doubt that such a report would not displace actual and authentic evidence in individual cases, yet the Board when such is not available, cannot fail to attach the utmost importance, as part of the history of the property, to the information set forth in the inam register. " (1) Mad. 355 In the latest decision of the Judicial Committee reported in Sankaranayana Pillayan 's case(1), it reiterated the same position when it said: "The question arose in a recent case before this Board with reference to a Madras inam [see Secretary of State for India vs Vidhya Thirta Swamigal(2)], where it was held that the title deeds and the entries in the inam register are evidence of the true intent and effect of the transaction and of the character of the right which was being recognized and continued. The entries in the inam register and the description of the inamdar therein were accepted as indications of the nature and quantum of the right and the interest created in the land. "This view of the Judicial Committee has been accepted and applied by the Madras High Court in many decisions when it was called upon to decide on the conflicting claims of a trustee and a archaka to the properties dealt with in the inam registers. The documents relating to Sri Pongali Amman temple are Exs. P 2 and P 3. exhibit P 2 is the statement filed by an ancestor of the present archakas before the Inam Commissioner. It is of the year is an extract of ,the inam register. As observed by the Judicial Committee, the entries made in the said register are the result of an elaborate enquiry based upon oral evidence, on the spot enquiry and scrutiny of available accounts and records. The inam statement is only one of the pieces of evidence which the Inam Commissioner might have taken into consideration in compiling the inam register. The recitals in the statement must, therefore, give Place to the recitals in the inam register, though an attempt shall be made to harmonize them, if possible. Before considering the recitals in exhibit P 3 it is necessary to bear in mind the common case i.e., that it is the case of both the archakas and the trustees that exhibit P 3 deals only with the property that was given to the deity. But the dispute is as regards the extent of the (1) I.L.R. (2) 1.L.R , 908 (P.C.). 356 interest in the property that was given to the deity. WaS it only the Melvaram in the said property that was granted to the deity or was it that both the varams therein were granted to the deity. Now let us give a close look to the recitals under the various columns in exhibit P 3. The first major head is "class, extent and value of inam". The said major head is divided into 7 sub heads. in col. 2 under the sub head "General class to which the inam belongs", the entry is "religious". In col. 3 under the head "the survey number and the name of the field or fields comprised in the grant dry, wet or garden", the particulars of the lands are given. This entry shows that except a small extent which is a garden the rest is dry land. These details are more consistent with the grant being of both the varams than being of mere melvaram. If it is of melvaram alone, the quality of the field is quite irrelevant. Sub heads 4, 5 and 6 show that the extent is about 18 acres and 99 cents and the assessment is Rs. 24 14. 5. These recitals leave the impression that the lane, was a dry land bearing a small assessment of Rs. 24 14 5 and the, income therefrom could not have been appreciable in those days. The second main head is "description, tenure and documents in support of the inam". The entries under the various columns under this head establish that the dry lands bearing an assessment of Rs. 24 14 5 described in cols. 3. 4, 5 and 6 were granted as Devadayam to the deity Pongali Amman permanently by Madurayar Paligar of Midura. The of the grant is not known; but even in the accounts of 1209 F. the name of the deity was entered the grantee . The third major head is "name and relationship of the original grantee and of subsequent and present heirs length of possession". In Col. 13 and 15 the, name of the deity alone is given. In Col. 16 under the heading "name and age" and in Col. 17 under the heading "place of residence" only the name of the deity is given. Below the name of the deity the name of the Pujari "Pujari Muttandi, age 45" is given. In Cols. 18 and 1 9 under the heading "relation to orginal grantee or subsequent registered holders" and "surviving heirs of the present incumbent" no entry is made. Obviously no entries are made under these sub heads, as the deity cannot have relations. The mention of Pujari Muttandi in the 357 context of other entries indicates that he was in charge of the temple. If his name was mentioned because he had some interest in the land the other suitable entries in regard to his relations would have been made under the relevant sub heads. Indeed it is not the case of the archakas that they have some interest in the melvaram. If the document was concerned only with the melvaram interest, strictly there was no place for the archaka in the document, for he had no interest therein. His name was mentioned only as he was the person who was in de facto management of the properties of the deity. In Col. 21 under the heading "Deputy Collector 's opinion and recommendation", the entry is "To be confirmed permanently to the Pagoda so long as it is well kept up, subject to the existing jodi of Rs. 3 1 7". Under Col. 22 the inam is confirmed to the Pagoda. A reasonable interpretation of the recitals in this document leads to the only conclusion that the Inam Commissioner was dealing with the entire interest in the land, the particulars whereof were given therein. There is no evidence that at the time the grant was made the archakas or any others were kudivaramdars. But it is said that exhibit P 2, the inam statement, filed by the then archakas would establish that what was ranted was only the melvaram. There, in Col. 2 under the head "Name of the inamdar entered in dowle and names of the present enjoyer" the following entry is found: Pongaliamman poosari Kuppaiyandi Muthuveeran as per paimash entry. For fields Nos. 595 and 597 no poosari 's name is mentioned. Present (enjoyer) Pongaliamman poosari Muthandi. " It is said that pujari is shown as the enjoyer and, therefore, the deity has no interest in the enjoyment of the land. The deity was obviously represented by the pujari who was the de facto trustee. He was in possession of the property in his capacity as the de facto trustee. In those circumstances if the pujari of the temple is described as an enjoyer, it can only mean that he was in possession of the land on behalf of the temple. Whatever ambiguity there might be in the said recital it is dispelled by the entry in Col. 12 under the head "Particulars of present enjoyment", namely 358 "By directly cultivating this land selling the produce derived therefrom and applying the sale proceed to the service of the deity. and my agnates have been performing pooja and enjoying the said land according to the conditions of the grant". This entry is couched in clear and unambiguous terms. It describes the nature of the enjoyment of the land by the archaka; it clearly says that he was cultivating the land, selling the produce and from the sale proceeds he was doing the services to the deity in accordance with the terms of the grant. If the deity was entitled only to the melvaram, this recital is inconsistent with it. The recital indicates that the entire land was the subject matter of the grant in favour of the deity and that the produce from that land was utilized for the services to the deity. Strong reliance is placed upon the entry in col. 13 under the head "Income derived from the manibam; whether sarvadambla or jodigai, if jodigai, how much". The entry is, "Income Rs. 24 14 5; Jodigai Rs. 3 1 7." Basing upon the said entries the argument is that exhibit P 3 shows that the assessment on the land was Rs. 24 14 5 and exhibit P 2 indicates that the same amount was the income derived from the inam and, therefore, what was granted in inam could have been only the assessment i.e., Rs. 24 14 5. This argument is farfetched and based on a slender foundation. One of the main objects of the inam enquiry was to ascertain whether the alienated lands were free of tax or not. The archaka who was in possession of the land on behalf of the deity had to give information as regards the tax payable in respect of the land in his possession. In that context the expression "income derived from the manibam" can only mean the assessment fixed on the land. After stating that full assessment was only Rs. 24 14 5 the archaka stated that he was not paying the entire amount, but was paying only the jodigai of Rs. 3 1 7. So understood the said recitals fit into the scheme of other recitals in the said statement and those found in exhibit P 3. A similar argument was advanced before this Court in Buddu Satyanarayan 's case(1) and was rejected. Das, J., observed at p. 1006 thus: (1) ; 359 "Apart from these points of distinction the decision relied on by the learned Attorney General appears to us to be of doubtful authority. As will appear from the passages quoted above, the decision rested mainly, if not entirely, on the fact that the amount of assessment and the amount of income were the same and the conclusion was drawn that the Inam grant comprised only of the revenue assessment, i.e., of melvaram rights. We are unable to follow the reasoning. " We, therefore, hold that, from the recitals in the said two documents, what was granted to the deity was of both the varams. Learned counsel for the archakas relied upon the long possession and enjoyment of the suit lands by the archakas and their ancestors in support of their contention that the melvaram alone could have been granted to the deity. Long enjoyment is also consistent with an arrangement that might have been entered into between the grantor and the then functioning archaka or archakas having regard to the conditions prevailing then. The lands granted were com paratively of small extent and they were dry lands. In those days the income from the said lands must have been very insignificant. There was no trustee for the temple. In those circumstances it is, more likely that the grantor would have put the land in the possession of the archaka so that he might, from and out of the produce from the land, maintain the temple, perform the puja and meet the expenditure connected with the puja and also pay himself the remuneration for his services to the temple. That was a convenient arrangement which was adopted in many of the small temples in that part of the country. This practice was recorded with clarity by the Madras High Court in Narayanamurthi vs Achaya Sastrulu(1). In dealing with a similar argument the learned Judge observed: The evidence of user and enjoyment, however long uninterrupted and unquestioned, would be evidence of the grant only iN the absence of (1) A.I.R [1925] Mad.411,412 413 360 any reliable or cogent evidence with regard to the terms of the grant itself or in the case of any ambiguity in the grant. It seems to be clear that almost very recently the suit lands yielded only just what was sufficient for nitya naivedyam or the daily worship. No doubt in such a state of things not only the persons who established the temples and made the endowments but succeeding generations of worshippers would have allowed the archakas to cultivate the lands and take the income performing the puja as it was obviously the most convenient mode of arranging for the worship of the deities and the payment of remuneration of the archaka service." "But when the income accruing from the lands came to be considerable and the archakas, by reason of old habits and following their fore fathers, claimed the lands and surplus profits therefrom to be their own, it was only natural that the worshippers should take steps to secure the surplus income for the institutions. " These observations are very apposite and they clearly describe the circumstances under which the archakas of the temples were allowed to be in possession of the temple lands. If that was the situation under which the archakas came into possession of the lands, they were certainly in the position of de facto trustees and they could not by mortgaging or otherwise alienating the properties claim any rights in derogation of the title of the deity. Indeed the documents on which the learned counsel relied contain clear and unambiguous admission on the part of the archakas that the land itself was the property of the deity. P 12, P 13, P 14 and P 15 are copies of mortgages executed by the archakas. Under these documents the land in their possession was mortgaged and it was described as paditharam Manyam. They also disclosed hat the paditharam paddy directed to be paid to the temple was more than the kist payable thereon to the Government. In the prior proceedings i.e., applications preferred by the 361 archakas for declaring the temples as excepted ones, there was no claim that the melvaram alone was granted to the deity. In other proceedings the archakas claimed that the lands were service inams, but they did not come forward with the present plea that melvaram only was granted to the deity. Further, pattas for the suit lands were transferred without any objection of the archakas in the name of the deities in 1939 and the archakas also paid contribution to the Madras Hindu Religious Endowments Board on tile basis that both the varams belonged to the deity. The conduct of the archakas, therefore, is consistent with the recitals in the inam register, namely, that what was granted to the deity was the land i.e., both the varams, and that they had been put in possession and enjoyment of the said land in their capacity as archakas and de facto trustees. Learned counsel for the appellants relied upon an order made by A.R.C. Westlake, Collector of Coimbatore, on April 14, 1941, wherein he held that only melvaram was granted to the deity. That order came to be made under the following circumstances. The trustees appointed by the Coimbatore District Temple Committee filed an application before the Revenue Division Officer under section 44 B11(a) of the Madras Hindu Religious Endowments (Amendment) Act, 1934, for a declaration that the alienations of portions of inam land attached to the temple were null and void and for resumption and regrant of the same to the deity. One of the issues in the application was whether the inam comprised melvaram or both melvaram and Kudivaram. The Revenue Division Officer held that the inam comprised both the varams. On appeal, the Collector came to the contrary conclusion. But a perusal of the order shows that his conclusion was based upon pure surmises. The Collector did not refer to any document or evidence for his conclusion. The trustees filed a suit in the Court of the Subordinate Judge, Coimbatore, for a declaration that the inam grant in favour of the plaint temple comprised both the varams The learned Subordinate Judge held that section 44 B of the Act had no application as the grant was to the deity and was not a service inam. The result of this litigation was that there was no final decision on the 362 question whether the grant was of both the varams or only of the melvaram. These proceedings cannot, therefore, be of any evidentiary value in this case. On a consideration of the entire evidence we agree with the conclusion arrived at by the High Court that the grant to the deity comprised both the varams in the suit lands. Now coming to the appeals relating to chowleswara swami temple, the factual and legal position is exactly the same as in the case of Pongaliamman temple exhibit P 2 is the statement made before the Inam Commissioner by the then archaka and exhibit P 3 is the extract from the Inam register. Under the relevant entries in the inam register, survey numbers, extent, quality and the assessment of the subject matter of the grant are given. The land is described as Devadayam and is stated to have been granted for the support of the pagoda of Chowleswaraswami. The nature of the grant is described as permanent. The date of the grant is not known. The grantor 's name is given as Maduraiyar Paligar of Madura. The name of the original grantee is given as Chowleswaraswami. The grant of the land described earlier is confirmed permanently to the pagoda as long as it is well kept subject to the existing jodi of Rs. 24 8 2. The only mention of archaka is in col. 17 under the head "Particulars regarding present owner" and the entry thereunder is "Chowleswaraswami, stanika Muttaiyan". The other columns where the relationship of the present owner with the previous owners is expected to be recorded are left blank for the obvious reason that the said columns are irrelevant in the case of a deity. The archaka 's name in addition to the deity is mentioned as he was in possession of the land in his capacity as de facto trustee. The deity must necessarily have to be represented by somebody and that he can only be the stanika who was managing the temple and its properties. The relevant entries in the inam register do not countenance any contention that the melvaram interest only in the land was granted and that was confirmed to the deity. If the melvaram was granted or confirmed, the recitals would have been different. The corresponding inam statement is exhibit P 2. The entries are practically similar to those found in exhibit P 2 relating to 363 Pongaliamman temple with some slight variations. Col. 2 makes a clear distinction between ownership of the land and enjoyment. The owner is shown as Chowleswaraswami and the "present" enjoyer is shown as Chowleswaraswami 'section stanika. The nature of the enjoyment is described in col. 2 thus: "The said lands are leased out for varam cultivation and I cultivate the same myself some times and the income (masul) therefrom is enjoyed by me and co sharers (Pangali) and used for Swami Viniyogam. " It is manifest from this recital that the land was the subjectmatter of the grant and the income therefrom was derived either by direct cultivation or by leasing out the same, and the said income was enjoyed by the archaka and used for viniyogam. The point to be noted is that the predecessorin interest to the present archaka admitted that the produce from the land was utilized for the services of the deity. The said admission is inconsistent with the allegation that the grant was only of melvaram. The entries in col. 13 are similar to those contained in the corresponding exhibit P 2 relating to Pongaliamman temple, and, for reasons already given, they do not support the contention that the assessment of Rs. 74 1 5 was only granted to the deity. A combined reading of these two documents leads to the only conclusion that both the varams were granted to the deity. Just as in the case of Pongaliamman temple so in the case of Chowleswaraswami temple, the subsequent conduct of the archakas belie their assertion that only melvaram interest in the land was granted to the deity. D 1 of 1867, D 2 of 1868, D 3 of 1870 and D 4 of 1883 are some of the mortgages executed by the archakas ,of Chowleswaraswami temple. D 5, D 6 and D 7 are sales. In all these documents the property is described as Chowleswaraswami manyam. If really the kudivaram belonged to the archakas, they would not have described the land they were alienating as Chowleswaraswami manyam. The description of the property as that of the deity is consistent with the title of kudivaram also being in the deity. Further, as in the other case, the pattas were 364 transferred in the name of the deity in 1939, the contri butions were paid to the Hindu Religious Endowments, Board on the basis that the entire interest in the lands belonged to the deity and that in other proceedings the archakas 's case was not that the grant to the deity was only of the melvaram but the lands were service inam lands. Though the archakas dealt with the properties by mortgaging or otherwise alienating them they never denied the title of the deity. For the foregoing reasons we hold that even in the case of Chowleswaraswami temple the original grant made to the deity comprised both the varams. In regard to Sri Varadaraja Perumal temple, no appeal was filed by the archakas and they allowed the judgment of the High Court in regard to the title to become final. Nothing, therefore, need be said on the question of title of the land in respect of this temple. Coming to the cross appeals filed by the trustees against that part of the decree of the High Court apportioning the property of the deity between the deity and the archakas, the question raised is whether the High Court, having held that the title to the suit property vested in the deity, had jurisdiction to compel the trustees of the temples to put the archakas in possession of specified extent of property towards their remuneration. The High Court observed thus: "On these findings, it is no doubt true that the decree in favour of the plaintiffs for possession of the properties on behalf of the deity has to be upheld subject to the consideration set forth below. " Then it proceeded to consider whether any allocation of land should be made between the archakas and the trustees. After noticing the relevant decisions on the subject, it observed thus: .lm15 "These decisions are practically uniform except for the decisions. . (in) A. section No. 2 3 7 of 1950(1) and. . (in) Venkatadri vs Seshacharlu(2) and have upheld the allocation (1) Brahnyya vs Rajeswarawami temple A.I.R. 1953 Mad. (2) I.L.R. 365 of lands between the archakas and the trustees, the proportion however varying with the extent of the lands and the amount of the income. None of the Judges were of the opinion that the arrangement should be a permanent and an unalterable one and it must naturally be subject to revision or alteration according to the circumstances of the case at the instance not only of the trustees but also at the instance of the archakas, if it was found that the allocation was working to the detriment of either the archakas or of the temple. " It concluded: "We think, therefore, in these cases, the best arrangement would be to allocate half the lands in each of the suits for the remuneration of the archakas, to be divided equally, having regard to the wet and dry extents, and leave the remaining half to the trustees, who have to meet the cost of the daily worship and accumulate the surplus in their hands as it belongs to the deity." On principle, in our view, the conclusion arrived at by the learned Judges of the High Court is unsupportable. The suits were based on title and the relief asked for was the eviction of the archakas from the suit property as they, according to the plaintiffs had no title to remain in possession. The archakas raised the plea that the title of the ,deity was confined only to melvaram in the plaint schedule lands and that they had title to the kudivaram. Both the courts confirmed the title of the deity to both the interests and negatived the title of the defendant. In the circumstances the Court has no option but to deliver pos session to the plaintiffs who had established their title to the suit properties. In a suit for framing a scheme for a temple a court may in an appropriate case put the archaka in possession of a portion of the temple lands towards his remuneration for services to the temple; but these are not suits for framing a scheme. That apart, there is absolutely no material either in the pleadings or in the evidence to 366 make any such apportionment, for the allotment of a parti cular share to the archaka would depend upon the total income from the lands, the value of the articles required for the worship, the amount of reasonable remuneration intended to be provided and other similar circumstances. An allotment cannot possibly be made on the basis of allocations made in the circumstances and facts peculiar to other cases. Indeed, this Court has already expressed a clear opinion on this aspect of the case in Buddu Surya narayana 's case(1). Therein, Das, J., said at p. 1008 thus: In a proceeding for the framing of a scheme relating to a temple it may be permissible to take into account the claims, moral if not legal, of the Archakas and to make some pro vision for protecting their rights, but those considerations appear to us to be entirely out of place in a suit for ejectment on proof of title. " With respect we entirely agree with the said observations. It follows that the High Court went wrong in making an allocation of the lands between the trustees and the archakas in a suit for ejectment. Learned counsel for the archakas made an impassioned appeal that we should give a direction to the authorities concerned to make an apportionment of the properties on the lines suggested by the High Court, having regard to the long enjoyment of the temple lands by the archakas. Long enjoyment of the temple lands by the archakas is not a peculiar feature of this case. The authorities concerned have made suitable arrangements for remuneration in the ,case of other temples and we have no doubt that they would make a reasonable provision for the archakas in the present case also for their remuneration in accordance with law. In the result, Civil Appeals Nos. 648 and 650 of 1960 filed by the trustees are allowed but, in the circumstances, without costs. Civil Appeal No. 649 of 1960 filed by the trustees is also allowed without costs except as against the (1) ; 367 14th respondent. The said appeal against the 14th respondent is withdrawn on the ground that his interest as a mortgagee is not now subsisting and the said appeal against the 14th respondent is dismissed as withdrawn but, in the circumstances, without costs. Civil Appeals Nos. 651 and 652 of 1960 filed by the archakas are dismissed with costs. One hearing tee. Ordered accordingly.

The appellants filed suits for the recovery of certain properties from the possession of the respondents. The plaintiffs were the trustees of the temples and the defendants were the archakas and the alienees of the suit properties. These suits were based on title and the relief asked for was the eviction of the archakas from the suit property as they, according to the plaintiffs, (appellants) had no title to remain in possession The plaintiff claimed that the suit properties were the properties of the deity and that the defendants had no right therein. The archakas raised the plea that the title of the deity was confined only to melvaram in the plaint schedule lands and that they had title to the Kudivarani. Both the Trial Court and the High Court confirmed the title of the deity to both the interests (Varams) and negatived the title of the defendant Archakas. The High Court also held that the archakas were entitled to have a portion of the said properties allotted to them towards their remuneration for the services to the temples and gave a decree directing the division of the said properties into two halves and putting the archakas in possession of one half. Against this decree of the High Court both the archakas and the trustees (appellants) preferred cross appeals to this Court. 348 The main point for consideration was whether the High Court, having held that the title to the suit property vested in the deity, had jurisdiction to compel the trustees of the temple to put the archakas in possession of specified extent of property towards their remuneration. Held:(i) The principle of a Lost Grant can only be invoked where there is no acceptable evidence of the terms of the grant. In the present case there is no scope for invoking the doctrine of Lost Grant as the terms of the grant are clear from the recitals in the lnam register and the inam statement, which conclusively establish that both the Varams were granted to the deity. Sankaranarayana Pillayan vs H.R.E. Board, Madras I.L.R. , Buddu Satyanarayana vs Konduru Venkatapayya: ; , Maginiram Sitaram vs Kasturbai Manibhai, (1921) L.R. 49 I.A. 54 and Mohamed Muzafar Ali Musavi V. Jabeda Khatun, (1930) L.R. 57 A. 125, relied on. (ii)The High Court erred in making an allocation of the lands between the trustees and the archakas in a suit for ejectment because there was absolutely no material either in the pleadings or in the evidence to make any such apportionment. 'Me High Court had De option but to deliver possession to the plaintiffs who had established their title to the suit properties. In a suit for framing a scheme for temple a court may in an appropriate case put the archaka in possession of a portion of the temple lands towards his remuneration for services of the temple; but such considerations are out of place in a suit for ejectment. Brahmayya vs Rajaswaraswami Temple, A.I.R. 1953 ',fad. 580 as Venkatadri V. Seshacharlu, I.L.R. referred to. (iii)On the facts of this case it was held that the conduct of the archakas, was consistent with the recitals in the inam register, namely, that what was granted to the deity was the land i.e. both the Varams and that they had been put in enjoyment the said land in their capacity as archakas and de facto trustees. They could not by mortgaging or otherwise alienating the property claim any right in derogation of the title of the deity. They also cannot claim any right because their names are mentioned in addition to deity in the Inam register. Their names in addition to the deity are mentioned as they were in possession of the land in their capacity as de facto trustees. Arunachalam Chetti vs Venkata Chalapathi Guruswamligal, Mad. 253 and Secretary of State for India vs Vidhya Thirta Swamiga, I.L.R. , referred to. Narayanamurthi V. Achaya Sastrulu, A.I.R. 1925 Mad. 411 relied on.

Civil Appeal No. 3040 of 1986 From the Judgment and order dated 24.6.1985 of the Madras High Court in S.R.No. 106081 of 1984. Soli J. Sorabjee, Joel Peres and D.N. Mishra for the Appellants. Abdul Khader, T.V. Ratnam and A.V. Rangam for the Res pondent. The Judgment of the Court was delivered by VENKATARAMIAH, J. The short question which arises for 758 consideration in this appeal is whether under the Tamil Nadu Court Fees and Suits Valuation Act, 1955 (hereinafter referred to as 'the Act ') the court fee payable on a memorandum of appeal filed under section 11 of the (Act 30 of 1952) (hereinafter referred to as 'the Requisitioning Act ') should be computed in accordance with section 51 of the Act or a fixed court fee is payable under the residuary provision that is Article 3 (iii) (A) (1) (a) of Schedule II to the Act. The appellants claim to be the co owners of the land and building bearing Door No. 745 E.V.R. Periyar High Road (Poonamallee High Road), Kilpauk, Madras. The land along with the building standing thereon was originally requisitioned under the provisions of the Requisitioning Act for the purpose of accommodating the NCC Headquarters through the Collector of Madras. The above property was taken possession of on 9.2.1963. In order to fix the compensation for the period of five years beginning from 9.6. 1963 to 20.2.1967, an Arbitrator was appointed. The Arbitrator by his award dated 5.1.1970 fixed the compensation at Rs.6000 per month and the compensation was being paid accordingly. At this stage it is necessary to refer to the history of the Requisitioning Act. The power to requisition and to acquire immovable property for a public purpose was first provided in the Defence of India Act, 1939 which expired on the 30th September, 1946. It was, however, found necessary to retain some of the properties for a longer period in the occupation of the Government. Therefore, it was provided in the Requisitioned Land (Continuance of Powers) Act, 1947 that any property which had been requisitioned under the Defence of India Act, 1939 would continue to remain under requisition. Subsequently, the that is the Requisitioning Act with which we are concerned in this case was passed in the year 1952 to confer powers on the Government in this regard. The Act was initially to operate for a period of six years but its duration was extended from time to time. The Requisitioning and Acquisition of Immovable Property (Amendment) Act, 1970 made the Requisitioning Act a permanent measure but restricted the period for which a requisitioned property could be retained under requisition to three years from the commencement of the above said Amendment Act in the case of properties requisitioned before such commencement and in the case of any other property requisitioned after such commencement to three years from the date on which possession of such 759 property was surrendered or delivered to or taken by the competent authority under section 4 of the Requisitioning Act. Thus properties requisitioned before the commencement of the said Amendment Act could be retained under requisition up to the 10th March 1973. A large number of properties requisitioned under the Requisitioning Act could not be released by the said date and the maximum period for which properties could be kept under continued requisition was extended for a further period of two years by the Requisitioning and Acquisition immovable Property (Amendment) Act, 1973. A number of properties requisitioned under the Requisitioning Act were still in possession of the Ministry of Defence and also some other Ministries. Although the Government was expeditiously implementing the policy of acquiring or de requisitioning the requisitioned properties, a large number of them were expected to be needed by the Government even after the 10th March, 1975 for public purposes. On many of the properties valuable constructions of a permanent nature connected with the national defence or the conduct of military operations or other important public purposes had been put up. Due to financial stringency, it was not possible either to acquire the properties or take up large scale construction programmes in the immediate future to enable the Government to release the requisitioned properties. It was, therefore, found necessary to keep the properties under the continued requisition for a longer period. Parliament, therefore, passed the Requisitioning and Acquisition of Immovable Property (Amendment) Act, 1975 (Act 11 of 1975) by which it amended the Requisitioning Act so as to extend by five years the existing maximum period for which properties could be retained under requisition and to provide for quinquennial revision of the recurring part of compensation . The property in question by virtue of the several amendments made to the Requisitioning Act continued to remain under requisition and the compensation payable in respect of it was required to be revised as provided by the Requisitioning Act as amended by Act II of 1975 for a period of five years from 7.3.1975 to 6.3.1980. As there was no agreement between the parties on the question of compensation payable for the said period the said question was referred to the Principal Judge, City Civil Court, Madras who had been appointed as the arbitrator under section 8 of the Requisitioning Act to determine the compensation payable in respect of the property in question for the said period. The learned Arbitrator by his award dated August 31, 1984 fixed the compensation payable for the property at Rs.21,000 per 760 month as against the claim of Rs.77,270 per month made by the appellants. Aggrieved by the decision of the Arbitrator the appellants filed an appeal before the High Court of Madras under section 11 of the Requisitioning Act. On an objection raised by the Registry of the High Court regarding the amount of the court fee paid on the memorandum of appeal the matter was placed before a Division Bench of the High Court of Madras for its decision. After hearing the learned counsel for the appellants the High Court following its earlier decision in Y. Venkanna Choudhary vs Government of India, by Military Estates officer, Madras & Anr., AIR 1976 Madras 41 held that the appellants were liable to pay court fee on the memorandum of appeal under section 51 of the Act ad valorem on the amount of compensation which was in dispute in the appeal. The appellants have filed this appeal by special leave against the said order of the High Court. Section 51 of the Act which arises for consideration in this case reads thus: "51. The fee payable under this Act on a memorandum of appeal against an order relating to compensation under any Act for the time being in force for the acquisition of property for public purposes shall be computed on the difference between the amount awarded and the amount claimed by the appellant. " The corresponding provision in the Court Fees Act, 1870 (Central Act VII of 1870) which was in force prior to the Act coming into force in Tamil Nadu is section 8 of that Act. It reads thus: "8. Fee on memorandum of appeal against order relating to compensation. The amount of fee payable under this Act on a memorandum of appeal against an order relating to compensation under any Act for the time being in force for the acquisition of land for public purposes shall be computed according to the difference between the amount awarded and the amount claimed by the appellant." Two principal contentions are urged by the appellants in support of this appeal. The first contention is that since there is no transfer of title to the property which is requisitioned from its owner to the Go 761 vernment, the said transaction is not an acquisition and hence those provisions of the Requisitioning Act under which the property is requisitioned do not constitute a law providing for acquisition of property. On the above basis it is urged that section 51 of the Act would not be applicable because it relates only to appeals filed against an order relating to compensation under any Act for the time being in force for the acquisition of land. The expression 'acquisition ' is not defined in the Act. We will have to ascertain from the scheme of the Requisitioning Act whether an acquisition of property takes place when it is requisitioned under the relevant provisions of the Requisitioning Act. Sections 3 to 6 of the Requisitioning Act deal with the powers of the Government in respect of requisitioning of property and section 7 of that Act confers power on the Government to acquire a property which has been requisitioned. Whenever a property is requisitioned by the competent authority it is entitled to call upon the owner or any other person who may be in possession of the property to surrender possession thereof to the Government. Section S of the Requisitioning Act provides that all properties requisitioned under section 3 shall be used for such purposes as may be mentioned in the notice of requisition. Such requisitioned property may be released from requisitioning under section 6. The title to the property continues to rest with the owner, the Government being entitled to only the possession of such property. In the State of West Bengal vs Subodh Gopal Bose and Ors. , ; , Patanjali Sastri CJ., has explained the meaning of the word 'acquisition ' at page 610 thus: "The word "acquisition" is not a term of art, and it ordinarily means coming into possession of, obtaining, gaining or getting as one 's own. It is in this general sense that the word has been used in articles 9, 11 and 19(1) (f) and not as implying any transfer or vesting of title . . . . . To say that acquisition implies the transfer and vesting of title in the Government is to overlook the real nature of the power of the State as a sovereign acting through its legislative and executive organs to appropriate the property of a subject without his consent. When the State chooses to exercise such power, it creates title in itself rather than acquire it from the owner the nature and extent of the title thus created depending on the purpose and 762 duration of the use to which the property appropriated is intended to be put as disclosed in the law authorising its acquisition. No formula of vesting is necessary." In Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning & Weaving Co. Ltd. and Ors. , ; Mahajan, J. has observed at page 704 thus: "In my judgment, the true concept of the expression "acquisition" in our Constitution as well as in the Government of India Act is the one enunciated by Rich J. and the majority of the court in Dalziel 's case. With great respect I am unable to accept the narrow view that "acquisition" necessarily means acquisition of title in whole or part of the property. It has been rightly said that a close and literal construction of constitutional provisions made for the security of person and property deprives them of half their efficacy and ends in a gradual depreciation of the right as if the right consisted more in sound than in substance. In other words, such provisions can not be construed merely by taking a dictionary in hand. The word "acquisition" has quite a wide concept meaning the procuring of property or the taking of it permanently or temporarily. It does not necessarily imply the acquisition of legal title by the State in the property taken possession of. " In both the above decisions the learned Judges drew support for their views from the decision of the High Court of Australia in The Minister of State for the Army vs Dalziel; , In that case the High Court of Australia had to consider the scope of the legislative power with respect to acquisition of property conferred on the Commonwealth by section 51 (xxxi) of the Commonwealth of Australia Constitution Act of 1900 including the power to take possession for indefinite period. In the said case the placitum of the Australian Constitution which came up for consideration read like this: "The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make law. " Rich, J. who was one of the Judges constituting the majority in that Bench observed. 763 "The language used is perfectly general. It says the acquisition of property. It is not restricted to acquisition by particular methods or of particular types of interests, or to particular types of property. It extends to any acquisition of any interest in any property . . . But there is nothing in the placitum to suggest that the legislature was intended to be at liberty to free itself from the restrictive provisions of the placitum by taking care to seize something short of the whole bundle owned by the person whom it was expropriating . . . . . . . . It would, in my opinion, be wholly inconsistent with the language of the placitum to hold that, whilst preventing the legislature from authorising the acquisition of citizen 's full title except upon just terms, it leaves it open to the legislature to seize possession and enjoy the full fruits of possession, indefinitely, on any terms it chooses, or upon no terms at all . I am not impressed by the argument sought to be based upon the fact that in the expropriation legislation of fully sovereign legislatures a distinction is sometimes drawn between the permanent appropriation of property and the temporary assumption of the possession of adjacent property for use whilst works are being erected on the property which has been permanently appropriated. It was pointed out that in such legislation the two types of appropriation are differently dealt with, and that different language has been used to describe them by learned judges who have had occasion to refer to them. This is no doubt so. . . . . But, with all respect. I fail to see how the practice of such legislatures or the language used by judges in referring to their legislation, throws any light upon the construction or operation of placitum xxxi, occurring, as it does, in a Constitution which confers powers which are both limited and conditional. " The majority in that decision ultimately took the view that the taking under regulation 54 of the National Security (General) Regulations by the Commonwealth for an indefinite period of the exclusive possession of property constituted an acquisition of property within the meaning of section 51(xxxi) of the Australian Constitution. "Possession in the Common Law". by Pollock and Wright (1888) 764 says: 'So feeble and precarious was property without possession or rather without possessory remedies, in the eyes of medieval lawyers, that possession largely usurped not only the substance but the name of the property . . Possession confers more than personal right to be protected against wrongdoers: it confers qualified right to possess, a right in the nature of property which is valid against everyone who cannot show a prior or better title. . . . Possession is a root of title. ' Not only is a right to possession a right of property, but where the object of proprietary rights is a tangible thing, it is the most characteristic and essential of those rights. Possession, it is said, is nine points in law. An owner without possession has only a mere shell while the person in possession enjoys the property in many ways. In this situation, it is difficult to say that there cannot be deprivation of property without deprivation of title also. Deprivation of possession for an indefinite period is acquisition of property during that period though the title may continue to rest with the owner. That is why the requisitioning law also had to satisfy Article 19(1) (f) and Article 31 of the Constitution when they were in the Constitution. It is no doubt true that in India before the Constitution there were two modes of depriving a person of immovable property in exercise of the right of eminent domain of the State, namely, requisitioning of property and acquisition of property and even after the Constitution came into force the same pattern of laws is continued to be maintained but this Court has treated both requisitioning of property and acquisition of property as meaning the acquisition of property in the larger sense and there is no reason to depart from the views expressed by the two Constitution Benches of this Court referred to above. We do not, therefore, find any substance in the argument that the requisitioning of property under the Requisitioning Act does not amount to acquisition and the provisions contained in the said Act providing for the requisitioning of property do not constitute a law relating to acquisition of property referred to in section 51 of the Act. The first contention, therefore, fails. The second contention urged on behalf of the appellants is that the award made by the Arbitrator under section 8 of the Requisitioning Act not being an order as defined in the Code of Civil Procedure, 1908 the appellants cannot be called upon to pay the court fee in accordance with section 51 of the Act since section 51 of the Act refers to court fee payable on a memorandum of appeal against an 'order '. Elaborating the above contention the learned counsel for the appe 765 llants submitted that the expression 'order ' in section 51 of the Act can only mean an order as defined in section 2(14) of the Code of Civil Procedure in view of section 3(iv) of the Act which provides that expressions used and not defined in the Act or in the Tamil Nadu General Clauses Act, 1891 (Tamil Nadu Act I of 1891), but defined in the Code of Civil Procedure, 1908 (Central Act V of 1908), shall have the meanings respectively assigned to them in the said Code, and the expression 'order ' is defined in section 2(14) of the Code as the formal expression of any decision of a Civil Court which is not a decree. It is argued that since the Arbitrator appointed under section 8 of the Requisitioning Act is not a Civil Court, the award passed by him cannot be termed as an 'order ' bringing it within the mischief of section 51 of the Act. Reliance is placed by the appellants in support of the above contention on the decision of the High Court of Bombay in Hirji Virji Jangbari vs Government of Bombay A.l. R. 1945 Bombay 348 which was a decision rendered on the basis of section 8 of the Court Fees Act, 1870 which was in force in Bombay at that time and which was more or less couched in the same language as section 51 of the Act. We have already quoted above section 8 of the Court Fees Act, 1870. The Act corresponding to the Requisitioning Act, which was under consideration by the High Court of Bombay in that decision was the Defence of India Act, 1939. In that case under rule 75A of the Defence of India Rules, 1939 framed under the Defence of India Act, 1939 a plot of land belonging to the claimant therein was acquired by the Government for and on behalf of the Defence authorities and as no agreement could be arrived between the claimant and the Government with regard to the amount of compensation payable, the Government of Bombay appointed the Chief Judge of the Court of Small Causes as an arbitrator under section 19(1) (b) of Defence of India Act, 1939 corresponding to section 8 of the Requisitioning Act, to determine the amount of compensation payable to the claimant. The artibtrator fixed the amount payable to him at Rs.45,855. The claimant being dissatisfied with that amount filed an appeal in which he claimed a further sum of Rs.47,896/8 in addition to the amount awarded to him by the arbitrator. The question that arose in that case was whether the appellant was liable to pay court fee on the memorandum of appeal ad valorem, as required by section 8 of the Court Fees Act, 1870 or whether he was liable to pay a fixed fee under Schedule II Article 11 of the Court Fees Act, 1870. The learned Judge who decided the said case held that the order of the arbitrator in that case being not a decree nor an order having the force of a decree and there being no provision in section 19 of the Defence of India Act and the Rules made thereunder by which the awards made under that Act were deemed to be the 766 decrees, the award could not be treated as an order within the meaning of section 8 of the Court Fees Act. The learned Judge, therefore, came to the conclusion that a fixed court fee was payable under the residuary Article 11 of Schedule II to the Court Fees Act, 1870. It was brought to our notice that this decision had been followed in Crown vs Chandrabhan Lal and Ors., A.I.R. 1957 Nagpur 8. We find that earlier to the above decision a contrary view had been taken by the Calcutta High Court In re Ananda Lal Chakrabutty & Ors., A.I.R. 1932 Calcutta 346. In that case Rankin CJ. who decided it observed thus: "Section 8, while not itself imposing any fee upon any one, provides a rule for computation of the fee payable under the Act in a certain class of cases. What it says is that, in the class of cases, which it deals with, the amount of fee pay able under the Act on a memorandum of appeal, it is to be computed according to the difference between the two sums. Now, that section standing in the text of the Act proceeds clearly upon the assumption that otherwise in the Act there is a charge which is an ad valorem charge and is not a fixed charge; . . The provisions of section 8, involving as they do that fee in the class of cases dealt with is an ad valorem fee, are themselves sufficient to exclude any question of Article 11 of Schedule II being made applicable to such cases. It is not necessary to consider whether the Tribunal 's award, which is an order and not a decree, is an order having the force of a decree. Whatever the effect of that phrase may be, section 8 shows one perfectly clear that an appeal regarding compensation in a Land Acquisition case is not under Article 11 of Schedule II, because it is not a fixed fee at all . . " In Satya Charan Sur vs State of West Bengal, A.I.R. 1959 Calcutta 609 the High Court of Calcutta while following the decision in Ananda Lal Chakrabutty 's case (supra) expressly dissented from the view expressed in Hirji Virji Jangbari 's case (supra), After the Bombay Court Fees Act, 1959 came into force a similar question arose for consideration in C.B.G. Trust vs Union of India, [1970] Bombay Law Reporter, 4()7, regarding the proper court fee payable on an appeal filed against an award made under the Requisitioning Act. In the Bombay Court Fees Act, 1959 section 7(1) provided that the amount of fee payable 767 under that Act on a memorandum of appeal against an order relating to compensation under any Act for the time being in force for the acquisition of land for public purposes should be computed according to the difference between the amount awarded and the amount claimed by the appellant. The language of that section was similar to the language of section 51 of the Act and of section 8 of the Court Fees Act, 1870. A Division Bench of the High Court of Bombay, which heard the said case held that the Court fee payable on the memorandum of appeal preferred against award made under section 8 of the Requisitioning Act was as prescribed by Article 3 of Schedule 1 read with section 7(1) of the Bombay Court Fees Act, 1959. They disapproved the decision of the Bombay High Court in Hirji Virji Jangbari 's case (supra) and followed the decision of the Calcutta High Court in Ananda Lal Chakrabutty 's case (supra). An identical question came before this Court for consideration in Sahadu Gangaram Bhagade vs Spl. Deputy Collector, Ahmedanagar & Anr., ; In that case this Court approved the view expressed by the Calcutta High Court in Ananda Lal Chakrabutty 's case (supra) and in C. B. G. Trust case (supra) and held that the contention that the award made by the Arbitrator had no effect and, therefore, it could not be considered as an order, was not acceptable. The Court proceeded to hold that though the award was not an order as defined in the Civil Procedure Code, 1908 having not been made by the Civil Court but since the expression 'order ' had not been defined in that Act, the award of the Arbitrator was undoubtedly a formal expression of a E decision made by a competent authority which was binding on the parties to the proceedings in which it was made. The learned counsel for the appellants tried to distinguish this decision from the present case on the ground that while the expression 'order ' had not been defined in the Bombay Court Fees Act, 1959 which arose for consideration in the said decision, in the present case it had been defined as stated earlier by stating in section 3(iv) of the Act that the expression used and not defined in the Act, but defined in the Code of Civil Procedure should have the meaning respectively assigned to them in the said Code, and in view of the above distinction the decision in Sahadu Gangaram Bhagade 's case (supra) would not govern the present case. We do not find much substance in the above contention. On carefully going through the decision of this Court in Sahadu Gangaram Bhagade 's case (supra) we find that the decision did not really turn upon the presence or the absence of the definition of the word 'order ' in the Bombay Court Fees Act, 1959 although there is a reference to this aspect of the matter in the course of the decision. The relevant 768 part of the decision in Sahadu Gangaram Bhagade 's case (supra) at page 150 reads like thus: "Section 11 provides for an appeal to the High Court against the award made by the arbitrator. In the Act there is no provision similar to sub section (2) of section 26 of the Land Acquisition Act, 1894 where under every award made by the Land Acquisition officer is to be deemed to be a decree of court. Therefore, the question whether the award made under section 8 of the Act is executable or not is a matter that requires further considera tion. For the present, we shall proceed on the basis that it, is not executable. But section 9 of the Act requires the competent authority to pay the compensation awarded to the person or persons entitled thereto. Therefore, we are unable to accept the contention of the learned counsel for the appellant that the award made by the arbitrator is something which has not effect and therefore it cannot be considered as an order. It is true that it is not an 'order ' as defined in the Civil Procedure Code, the same having not been made by a civil court. But the expression 'order ' is not defined in the Act. The award of the arbitrator is undoubtedly a formal expression of a decision made by a competent authority. Further it is a decision binding on the parties to the proceedings in which it is made. Therefore the question whether the order in question is executable or not appears to us to be irrelevant for the purpose of determining the point in issue. " (emphasis added) The portion of the judgment of this Court which has been under lined clearly brings out the effect of an award. This Court has held that the award of the arbitrator is undoubtedly a formal expression of a decision made by a competent authority. We are also of the view that much reliance cannot be placed on the definition clause found in section 3(iv) of the Act since the definitions given in that section have to be read subject to the context in which the expressions defined therein appear in the Act. Section 3 of the Act states that in the Act 'unless the context otherwise requires ' the words and expressions defined in that section shall carry the meaning given to them in various clauses in that section. It is relevant to note that in section 51 of the Act which arises for consideration before us the word 'order ' does not appear in isola 769 tion. The section states that the fee payable under the Act on a memorandum of appeal against an order relating to compensation in any Act for the time being in force for the acquisition of property for public purposes shall be computed on the difference between the amount awarded and the amount claimed by the appellants. The 'order ' referred to in section 51 of the Act need not therefore be an 'order ' of a civil court as defined in section 2(14) of the Code of Civil Procedure but should be an 'order ' relating to compensation under any Act for the time being in force for the acquisition of property for public purposes. There is no doubt that the award passed by the Arbitrator under the Requisitioning Act is a formal expression of a decision made by a competent authority which is binding on the parties and it relates to compensation payable under an Act for the time being in force for the acquisition of property for the public purposes. Hence we are of the view that even though the expression 'order ' simpliciter has to be understood in the sense in which that expression is defined in section 2(14) of the Code of Civil Procedure, the wold 'order found in section 51 of the Act has to be read differently having regard to the word which qualify that expression in that section, namely, relating to compensation under any Act for the time being in force for the acquisition of properties '. The said order need not be an order of a civil court only. It can be of any statutory authority. But it must determine compensation for a property acquired under a law of acquisition of property for public purpose. The award made under section 8 of the Requisitioning Act satisfies these tests. We do not, therefore, find any substance in this contention too. Since according to us the appeal before the High Court filed under section 11 of the Requisitioning Act falls squarely under section 51 of the Act, court fee has to be paid on ad valorem basis as provided in Article 1 of Schedule 1 to the Act. It follows that the residuary Article i.e. Article 3(iii)(A)(1)(a) of Schedule 11 to the Act is not attracted. The High Court was right in following its earlier decision in Y. Venkanna Choudhary 's case (supra) and directing the appellants to pay court fee an ad valorem basis under section 5 1 of the Act. We may add that the decision in Srunguri Lakshmi Narayana Rao & Ors. vs Revenue Divisional officer, Kakinada & Ors., A.I.R. 1968 Andhra Pradesh, 348 M. Ramachandran & Ors. vs State of Madras represented by the Collector, Coimbatore, 87 Law Weekly Madras 791 Satya Charan Sur 's case (supra), Balakrishnan Nambiyar & Ors., vs Kanakathidathil Madhavan & Ors., and Ghouse Saheb vs Sharifa Bi & Ors., A.I.R. 1977 Karnataka 181 have taken the came view as we have taken. 770 The decisions in Hirji Virji Jangbari 's case (supra), Kanwar Jagat Bahadur Singh vs The Punjab State, A.I.R. 1957 Punjab 32. Crown 's case (supra) and Mangal Sen vs Union of India, A.I.R. 1970 Delhi 44 are not approved by us. We, therefore, dismiss the appeal. There shall, however, be no order as to costs. The appellants are granted three months ' time to pay the deficit court fee on the memorandum of appeal. M.L.A. Appeal dismissed.

The property of the appellants continued to remain under requisition by virtue of the several amendments made to the and the compensation payable in respect of it was required to be revised for a period of 5 years from 7.3.75 to 6.3.1980. As there was no agreement between the parties on the question of compensation payable for the said period, the said question was referred to an arbitrator under section 8 of the Requisitioning Act to determine the compensation payable. The arbitrator by his award fixed the compensation payable for the property at Rs.21,000 per month as against the claim of Rs.77,270 per month made by the appellants. Aggrieved by the decision of the arbitrator the appellants filed an appeal before the High Court of Madras under s.11 of the Requisitioning Act. The Registry of the High Court raised an objection regarding the amount of court fee paid on the memorandum of appeal. The matter was placed before the Division Bench of the High Court and it held that the appellants were liable to pay court fee on the memorandum of appeal under section 51 of the Tamil Nadu Court Fees and Suits Valuation Act 1955 (for short, the Act) ad valorem on the amount of compensation which was in dispute in the appeal. In appeal to this Court, the appellants contended that the amount 755 of court fee payable on a memorandum of appeal filed under section 11 of the Requisitioning Act should not be computed in accordance with section 51 of the Act as a fixed court fee was payable under the residuary provision, that is, article 3 (iii) (A) (1) (a) of Schedule II of the Act. In support of this contention the appellants raised two points; (i) that since there is no transfer of title to the property which is requisitioned from its owner to the Government, the said transaction is not an acquisition and hence those provisions of the Requisitioning Act under which the property is requisitioned do not constitute a law providing for acquisition of property and therefore, section 51 of the Act would not be applicable because it relates only to appeals filed against an order relating to compensation under any Act for the time being in force for the acquisition of land; and (ii) that the award made by the arbitrator under section 8 of the Requisitioning Act not being an 'order ' as defined in the Code of Civil Procedure 1908, the appellants cannot be called upon to pay court fee in accordance with section 51 of the Act since section 51 refers to court fee payable on a memorandum of appeal against an 'order '. Dismissing the appeal, ^ HELD: 1. The appeal before the High Court filed under section 11 of the Requisitioning Act falls squarely under section 51 of the Act. Therefore, the court fee has to be paid on ad valorem basis as provided in article 1 of Schedule I to the Act. It follows that the residuary Article, that is, article 3(iii) (A) (1) (a) of Schedule II to the Act is not attracted. [769E F] 2(i) Section 3 of the Act states that in the Act 'unless the context otherwise requires ' the words and expressions defined in that section shall carry the meaning given to them in various clauses in that section. It is relevant to note that in section 51 of the Act which arises for consideration the word 'order ' does not appear in isolation. The section states that the fee payable under the Act on a memorandum of appeal against an order relating to compensation in any Act for the time being in force for the acquisition of property for public purposes shall be computed on the difference between the amount awarded and the amount claimed by the appellants. The 'order ' referred to in section Sl of the Act need not be an 'order ' of a civil court as defined in section 2(14) of the Code of Civil Procedure but should be an 'order ' relating to compensation under any Act for the time being in force for the acquisition of property for public purposes. [768G H; 769A C] 2(ii) There is no doubt that the award passed by the Arbitrator 756 under the Requisitioning Act is a formal expression of a decision made by a competent authority which is binding on the parties and it relates to compensation payable under an Act for the time being in force for the acquisition of property for the public purposes. Therefore, even though the expression 'order ' simpliciter has to be understood in the sense in which that expression is defined in section 2 (14) of the Code of Civil Procedure, the word 'order ' found in section 51 of the Act bas to be read differently having regard to the words which qualify that expression in that section, namely, 'relating to compensation under any Act for the time being in force for the acquisition of properties '. The said order need not be an order of a civil court only. It can be of any statutory authority. But it must determine compensation for a property acquired under a law of acquisition of property for public purpose. In the instant case, the award made under section 8 of the Requisitioning Act satisfies these tests. [769C E] Sahadu Gangaram Bhagade vs Spl. Deputy Collector, Ahmedanagar & Anr., ; , relied upon. Y. Venkanna Choudhary vs Government of India, by Military Estates officer, Madras & Anr., AIR 1976 Madras 41, Laxshminarayana Rao & Ors. vs Revenue Divisional officer, Kakinada & Ors., A.I.R. 1968 Andhra Pradesh 348, M. Ramachandran & Ors. vs State of Madras represented by the Collector, Coimbatore, 87 Law Weekly Madras 791, Balakrishnan Nambiyar & Ors. vs Kanakathidathil Madhavan & Ors., & Ghouse Saheb vs Sharifa Bi & Ors., A.l. R. 1977 Karnataka 181, approved. Hirji Virji Jangbari vs Government of Bombay, A.I.R. 1945, Bombay 348, Kanwar Jagat Bahadur Singh vs The Punjab State, Crown 's case, A.l. R. 1957 Punjab 32 Crown vs Chandrabhanlal and Ors., AIR. 1957 Nagpur 8 and Mangal Sen vs Union of Indian A.l.R., 1970 Delhi 44, disapproved. 3(i) The expression 'acquisition ' is not defined in the Act. Sections 3 to 6 of the Requisitioning Act deal with the powers of the Government in respect of requisitioning of property and section 7 of that Act confers power on the Government to acquire a property which has been requisitioned. Whenever a property is requisitioned by the competent authority it is entitled to call upon the owner or any other person who may be in possession of the property to surrender possession thereof to the Government. Section 5 of the Requisitioning Act provides that all properties requisitioned under section 3 shall be used 757 for such purposes as may be mentioned in the notice of requisition. Such requisitioned property may be released from requisitioning under section 6. The title to property requisitioned under the Requisition Act continues to rest with the owner, the Government being entitled to only the possession of such property. [761 B E] 3(ii) Not only is a right to possession a right of property, but where the subject of proprietary rights is a tangible thing, it is the most characteristic and essential of those rights. Possession, it is said, is nine points in law. An owner without possession has only a mere shell while the person in possession enjoys the property in many ways. In this situation, it is difficult to say that there cannot be deprivation of property without deprivation of title also. Deprivation of possession for an indefinite period is acquisition of property during that period though the title may continue to rest with the owner. That is why the requisitioning law also had to satisfy article 19(1) (f) and article 31 of the Constitution when they were in the Constitution. [764B D] 3(iii) The Supreme Court has treated both requisitioning of property and acquisition of property as meaning the acquisition of property in the large sense and there is no reason to depart from the views expressed by the two Constitution Benches of this Court in the State of West Bengal vs Subodh Gopal Bose and Ors,. ; and Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning & Weaving Co. Ltd. and Ors. , ; The Minister of State for the Army vs Dalziel, ; , referred to.

Civil Appeal No. 1363 of 1974. Appeal by special leave from the judgment and order dated the 20th May, 1971 of the Patna High Court at Patna in C.W.J.C. No. 306 L. N. Sinha and Girish Chandra, for the appellants section N. Mishra, B. P. Singh and A K Srivastava, for the respondents. 9 L522SCI/76 366 The Judgment of the Court was delivered by RAY, C.J. This appeal by special leave turns on the question whether the Coal Mines Provident Fund Commissioner is to hear an employer before making an order requiring the employer to pay damages under section 10F of the Coal Mines Provident Fund and Bonus Scheme Act, 1948 (hereinafter referred to as the Act). The employer being the respondent to this appeal was directed by a letter dated 3/4 January, 1969 to pay provident fund contributions amounting to Rs. 5821.21 for the months of July to September, 1968 and damages at the rate of 25 per cent on the above dues amounting to Rs. 1455.5O. The employer was required to pay damages under the provisions of section 10F of the Act. The employer filed an objection explaining the circumstances under which there was delay in the payment of provident fund contributions. The employer prayed that damages might not be imposed at the rate of 25 per cent for the delay in payment. The employer paid the provident fund contributions. The employer was informed that damages charged on the delayed payments of provident fund contribution could not be waived. The employer thereafter filed an application in the High Court for an order that the demand notice be quashed. The High Court acceded to the application of the employer. The High Court gave two reasons. First, that the computation of amount of damages should arise upon consideration of facts and circumstances and a mechanical computation of damages is not contemplated. Second, the authorities should have given opportunity to the employer to . represent the case. The High Court did not accept the contention of the employer that section 10F of the Act suffered from the vice of excessive delegation. The provision contained in section 10F of the Act are as fol lows: "Where an employer makes default in the payment of any contribution or bonus or any charges payable by him under any scheme framed under this act, or where any person who is required to transfer provident fund accumulations in accordance with the provisions of section 3D makes default in the transfer of such accumulations, the Central Government may recover from such employer or person, as the case may be, such damages, not exceeding twenty five per cent of the amount of arrears, as it may think fit to impose. " The Central Government under sub section (1) of section 10 C of the Act is authorised to delegate any power exercisable by it under the Act, or any Scheme framed thereunder, to the Coal Mines Provident Fund Commissioner or any other officer. The Central Government in exercise of the power conferred under section 10C(1) of the Act by notification dated 1st October, 367 1966 directed that powers exercisable by it under sections 10A and A 10F of the Act and specified in column (1) of the Table attached to the notification shall, subject to the conditions specified in the corresponding entry in column (2) of the Table attached, be exercisable by the Coal Mines Provident Fund Commissioner appointed under section 3C(l) of the Act. There is a Schedule attached to the notification where sliding scale of damages has been fixed by the Central Government under section 10F of the Act. The Schedule attached to the notification is as follows: "Sliding rate of recovery of damages under section 10F of the Coal Mines Provident Fund and Bonus Scheme Act, 1949. " C S.No. of Period of defaultault , duting one over over over over over the year. month one two three four five or less month months months months months up to up to up to up to two three fourfive months months months months 2 3 4 5 6 7 Ist default 2% of S% of 18% of 15% of 20% of 25% of arrears alTears alTears arrears arTears arrears 2nddefault S% " IO% " 15% " 20% " 25% " 2S% " 3rd default IO% " IS% " 20% " 2S% " 2S% " 2S% " 4thdefault IS% " 20% " 2S% " 2S% " 2S% " 2S% 5th default 20% " 2S% " 2S% " 2S% " 2S% " 2S% " 6th or subsequent 2S% " 2S% " 2S% " 2S% " 2S% " 2S% " default li Under section 78 of the Act the Coal Mines Provident Fund Commissioner or any other officer authorised in that behalf by the Central Government may, by order, determine the amount due from any employer under any provision of this Act or any scheme framed thereunder and for this purpose may conduct such enquiry as he may deem necessary. Section 78(3) also contemplates giving of reason able opportunity to represent the case. The High Court held that the provisions of section 78 are attracted in the case of an order relating to determination of damages for delay in payment of contribution under the Act. The Solicitor General contended that section 78 of the Act does not apply for two reasons. First, section 78 of the Act would be applicable only where liability is to be determined. Neither liability to pay nor default in payment is disputed in the present case. Second, under section 10F of the Act the amount of damages is quantified and a 368 personal hearing is not necessary because the employer has said everything in his representation and an order for payment of damages is not one of punishment. The provisions contained in section 78 of the Act indicate first that the Coal Mines Provident Fund Commissioner may determine the amount due from the employer, and, second, for this purpose he may conduct such enquiry as he may deem necessary. Therefore, an enquiry is contemplated. Section 78(3) speaks of reasonable opportunity being given to an employer to represent his case. The provisions in section 10F of the Act also indicate that determination of damages is not a mechanical process. The words of importance in section 10F of the Act are "such damages not exceeding 25 per cent of the amount of arrears as it may think fit to impose". Here the two important features are these. First, the words of importance are "damages not exceeding 25 per cent". These words show that the determination of damages is not an inflexible application of a rigid formula. Second, the words "as it may think fit to impose" in section 10F of the Act show that the authorities are required to apply their mind to the facts and circumstances of the case. This Court in The India Sugars and Refineries Ltd. vs Amravathi Service Co op. Society Ltd. & Anr. etc.(l) said that "situations in which a duty will arise to act judicially according to the natural justice cannot be exhaustively enumerated. A duty to act judicially will arise in the exercise of a power to deprive a person of legitimate interest or expectation that addition price would be paid. The facts which point to an exercise of powers judicially are the nature of the interest to be affected, the circumstances in which the power falls to be exercised and the nature of the sanctions, if any involved". When a body or authority has to determine a matter involving rights judicially the principle of natural justice is implied if the decision of that body or authority affects individual rights or interests. Again, in such cases having regard to the particular situation it would be unfair for the body or authority not to have allowed a reasonable opportunity to be heard. (See State of Punjab vs K. R. Erry & Sobhag Rai Mehta.(2) The High Court was correct in holding that an opportunity should have been given to the employer to be heard before the damages were determined. The appeal is, therefore, dismissed with costs. section R.Appeal dismissed.

Section IOF of the Coal Mines Provident Fund and Bonus Scheme Act 1948 is a penal section under which for default in the payment of any Provident Fund contribution, the Central Government may recover from such employer or person as the case may be, such damages, not exceeding 25% of the amount of arrears, as it may think fit to impose. ln respect of tho period from July to September, 1968, the respondent employer was asked to pay a sum of Rs. 1455.50 as damages being 25% of the arrears of Provident Fund contributions by the appellant to which he filed an objection explaining the delay. The employer ' request for waiving the damages was negatived. The writ application of the employer against that order was allowed by the High Court on two grounds, viz. (i) that the computation of damages should arise upon consideration of the facts and circumstances, and (ii) the authorities should have given an opportunity to the employer to represent the case. Dismissing the appeal by special leave, the Court. ^ HELD: ( I ) The provisions contained in a 78 of the Act indicate first that the Coal Mines Provident Fund Commissioner may determine the amount due from the employer, and second, for this purpose he may conduct such enquiry as he may deem necessary. Therefore, an enquiry is contemplated. Section 78 (3 ) speaks of reasonable opportunity being given to an employer to represent his case. The provision in section 10F of the Act also indicates that determination of damage is not a mechanical process. The words of importance in section 10F of the Act are "such damages not exceeding 25 per cent of tho amount of arrears as it may think fit to impose". Here the two important features are these: First the words of importance are "damages not exceeding 25% show that the determination of damages is not an inflexible application of the rigid formula. Second, the words "as it may think fit to impose" in section 10F show that the authorities are required to apply their mind to the facts and circumstances of the case. [368A C] (2) When a body or authority has to determine a matter involving rights judicially, the principle of natural justice is implied if the decision of that body or authority affects individual rights or interest. [368E E] Indian Sugars & Manufacturers Ltd vs Amravati Services Co operative Society Ltd. Anr. r[1976] 2 S.C.R. 740 and State of Punjab vs K R. Erry k Sobhag Rai Mefta ; , applied.

Appeal Nos. 351 359/72. Appeals from the Judgment and Order dated 7 5 1971 of the Orissa High Court in O.J.C. Nos. 1185 to 1190, 1223 and 1224 of 1970 and 41/71 and CiviI AppeaI Nos. 1855 1863, 2091/72 and 1802/74. Appeals by Certificate/Appeals by Special Leave from the Judgments and Orders dated 7 5 1971, 3 2 1971 and 28 3 1974 of the 814 Orissa High Court in O.J.C. Nos. 1185 1190, 1223, 1224 and 1226/ 70, 850/70, 589/72 and Civil Appeals Nos. 1892 1893 of 1971, 1302, 2071 and 12351236 of 1972. Appeals from the Judgment and Orders dated 15 5 1970, 16 41971, and 6 9 1971 of the Orissa High Court in O.J.C. Nos. 329 and 357/70, 786/.70, 242/67, 859 and 863/70. Vinoo Bhagat for the Appellants in CAs. 351 359/72 and RR. in CAs. 1859 1862/72. Gobind Das and G.S. Chatterjee for the Appellants in rest of the Appeals, except 1802/74 and RR. in CAs. 351 359/72. R.K. Garg and S.C. Agarwal for Appellants in CA 1802/74 and B.P. Maheshwari and Suresh Sethi for Respondents in CAs. 12351236/72. B. Parthasarthy for RR in CA. 1802/74. The Judgment of the Court was delivered by J. These appeals by certificate or special leave are directed against judgments of the Orissa High Court dated May 15, 1970, February 3, 1971, April 16, 1971, May 7, 1971, September 6, 1971 and March 28, 1974. They arise out of several writ petitions. The facts which gave rise to the petitions changed from time to time largely because of amendments in the law, and that was the reason for the filing of separate writ petitions resulting in the impugned judgments of the High Court, but we have heard them together at the instance of the learned counsel for the parties and will dispose them of by a common judgment. The nature of the controversy in these cases is such that it will be enough to state the basic facts for the purpose of appreciating the arguments of counsel for the parties. The Collector of Mayurbhanj issued a notice on February 3, 1970 by which he invited tenders for the grant of li cences for establishing 70 outstill shops for 1970 71. Ajodhya Prasad Shah gave the highest bid for a group of seven shops, in one lot, for Rs. 34,000/ per month. His bid was accepted and his name was entered in the prescribed register, and the entry was signed by the successful bidder and the Collector. Ajodhya Prasad accordingly deposited Rs. 68,000/ on account of two months ' "fees", in ad vance, as required by rule 103 of the Board 's Excise Rules, 1965. Raghunandan Saha, who was the unsuccessful bidder, felt aggrieved and filed an appeal, but it was dismissed by the Excise Commissioner on March 16, 1970. The Board of Revenue also refused to interfere. Ajodhya Prasad claimed that in the mean time he made arrangements for establishing his shops and incurred an expenditure of about Rs. 1,50,000/ . He therefore approached the authorities concerned for the issue of the licenses for running the shops from April 1, 1970. He approached , the Superintend ent of Excise for depositing Rs. 34,000/ for the month of April, but the Superintendent did not pass the deposit challan. Ajodhya Prasad thereupon filed a writ petition (O.I.C. No. 329 of 1970) in the High Court with the allega tion that the Collector 815 was not acting according to the law as the State Government had issued instructions to him not to. issue the licenses. Ajodhya Prasad prayed in his petition for the issue of directions for ' the issue of licenses and quashing the State Government 's instructions to the contrary. Raghunandan Saha also filed a petition (O.J.C. No. 357 of 1970) on April 13, 1970. The Collector issued a notice for reauction on May 1, 1970 and Ajodhya Prasad amended his petition for quashing the notice also. The State Government and the other respondents traversed the claim in Ajodhya Prasad 's writ petition and pleaded, inter alia, that the bids at the auction were not satisfac tory and, in the interest of the State revenue, the State Government had passed the orders for not accepting Ajodhya Prasad 's bids. The High Court examined the questions whether Ajodhya Prasad was entitled to the issue of the licenses for the seven shops and whether the State Govern ment had the authority to direct the withholding and reauc tioning of the licenses, and held, inter alia, that the State Government had no power to interfere with the auction held by the Collector after it had "become final in appeal and revision", and could not direct a reauction. The High Court examined the nature of the realisation at the auction and held that it was a tax which was not contemplated by section 38 of the Bihar and Orissa Excise Act, 1915, herein after referred to as the Act, and that rule 103(1) of the Board 's Excise Rules in regard to the fees for the licenses was not authorised by the Act and was in excess of the rule making power of the Board. The High Court also held that the "auction price for a license is not excise duty within the meaning of Entry 51 of List II of the Seventh Schedule to the Constitution" and it was not open to. the Collector "to follow the process of auctioning for deter mining the license fee" which was really a tax in the garb of a fee. It held that the aforesaid rule 103 was incompe tent and ultra vires the Act. On the question of grant of the "exclusive privilege" under section 22 of the Act, the High Court held that what was purported to be given under the sale notice was not the grant of .an exclusive privi lege. In taking that view the High Court stated that notice had not been issued under section 22 (1) of the Act and the Collector had no authority to issue such a notice In that view of the matter, the High Court did not express any final opinion as to whether the licence was to be granted for an exclusive privilege to manufacture and sell 'liquor. The High Court accordingly quashed the direction of the State Government dated April 15, 1970 for reauctioning the license and declared that rule 103(1) of the Board 's Excise Rules was ultra vires the Act. Appeals Nos. 1892 and 1893 of 1971 are directed against that judgment of the High Court dated May 15, 1970, on certificates. The State Government issued the Bihar and Orissa Excise (Orissa Amendment) Ordinance of 1970 and the State Govern ment issued a fresh order dated August 19, 1970 under the provisions of the amended section 29(2) of the Act for fresh settlement of the shops, and wrote to the Collector of Mayurbhanj to call for tenders in accordance with that order. The Collector called for tenders within a week. 816 Ajodhya Prasad thereupon filed another writ petition (O.J.C. 'No. 850 of 1970) for quashing the Collector 's tender notices and for a direction to the authorities con cerned to grant a license to him on the basis of the earlier auction. The Bihar and Orissa Excise (Orissa Amendment) Act, 1970 was passed on October 5, 1970 and the ordinance was re pealed. That was followed by the Orissa Excise (Exclusive Privilege) Rules, 1970, which were made under section 89 of the Act. The respondents in Ajodhya Prasad 's writ petition No. 850 of 1970 pleaded that the amendments to the Act were valid and that the State Government had the right to grant an exclusive privilege for the purposes mentioned in section 22 of the Act. The money so realised was consideration for the exclusive privilege under section 22 and was neither an excise duty nor a tax nor a fee. It was also pleaded that the tender was in accordance with the rules as the authority to accept the tender was the State Government. The High Court examined Ajodhya Prasad 's writ petition (No. 850 of 1970 in its Judgment dated February 3, 1971. It held that the order of the State Government dated August 19, 1970 for inviting tenders was invalid as the authorities for fixing the procedure under the amended section 29(2)(b) had not been specified, the Government had "appropriated for itself absolute and naked and arbitrary power ' to accept any tender or reject any tender for any reason whatsoever or without any rhyme or reason" and the order left it to the uncontrolled discretion of the authority concerned to determine the adequacy of the amount offered in the tender. As regards the claim for the issue of a license under sec tion 6, the High Court held that as the petitioner was the highest bidder on February 20, 1970 and his name was entered in the bid register and the entry was signed, the petition er was entitled to the grant of the exclusive privilege under section 22 by virtue of section 6(a) of the Amending Ordinance irrespective of the validity of rule 103 (1) of the Board 's Excise Rules. The High Court accordingly held that section 6(a) of the Amending Ordinance was valid and the grant of seven ' shops to the petitioner, for the manu facture and retail sale of country liquor was therefore validated "as the grant of an exclusive privilege under section 22 of the Act" and he was entitled to license under sub section (2) of that section. The Order of the State Government dated August 19, 1970 and the Collector 's tender notice were quashed and the Collector was directed to issue the license for the seven shops to him. Siba Prasad Saha who filed the writ petition (No. 786 of 1970) in August 1970, after the first judgment of the High Court dated May 15, 1970 for refund of the license fee and for non payment of any fee in the future, as he was a licen see for several liquor shops, amended it in the light of the subsequent developments. The High Court took the view in its judgment dated April 16, 1971 that sections 2 to 5 of the Amending Ordinance, or the Amending Act (17 of 1970) were not made retrospective. It took note of this Court 's 817 decision in Krishna Kumar Narula etc. vs The State of Jammu and Kashmir and others(1) that a citizen had the fundamental right to carry on business in liquor and all that the State could do. was to impose reasonable restric tion thereon. It also held that in so far as section 29(2) of the Act provided that the sum payable under sub section (1) thereof shall be determined "otherwise" than by calling tenders or by auction, it was unconstitutional That portion ,of sub section (2)(a) was therefore struck off. The High Court held further that what was realised by the State was not a fee or tax, as the primary purpose of the Act was to. restrict the manufacture and sale of country liquor. It accordingly held as follows, "We are, therefore, satisfied that the provi sion in Section 22 of the Act for grant to any person of the exclusive privilege of manufac ture and sale of country liquor for a sum, the method of determination of which is provided in Section 29, are provisions which are calcu lated to restrict and control trade in liquor although incidentally revenue is earned for the State thereby and that Entry in List II of the Seventh Schedule confers power on the State Legislature to enact such a regulatory measure and consequently the State Legislature has legislative competence to enact Sections 22 and 29. " The High Court accordingly held that section 22 and section 29 without the expression "or otherwise" in clause (a) of sub section 2 were valid and constitutional. The High Court then examined the effect of section 6 of the Amend ing Act of 1970, and held that as retrospec tive effect was not given to sections 2 to 5 of that Act, the validity of the money rea lised by the State had to be judged with reference to the unamended provisions, and held as follows, "It, therefore, follows that by reason of the fact that Sections 2 to 5 of the Amending Act were not made retrospective in operation, the effect of Section 6 is that thereby the Legis lature had directed the State to disregard the decision given by this Court in Ajodhya Pra sad 's case (I.L.R. 1971 Curt. 51 ) that the amount realised by the auction is illegal. This virtually amounts to judicial exercise of power by the legislature a power which the Legislature does not possess. We, therefore hold that Sections 2 to 5 of the Amending Act having not been made retrospective, Section 6 is ultra vires the powers of the Legislature. " The High Court however held that although the ' license fee collected by the State was illegal, the petitioner had already enjoyed the benefit under the license and had volun tarily participated in the auction, and was not entitled to an order for its refund. A similar view was taken in the judgment dated April 16,1971 in O.J.C. No. 242 of 1967 and the judgment dated May 7, 1971 in (1) ; 818 O.J.C. NOS. 1185 1190, 1223, 1224 and 1226 of 1970. Those judgments have given rise to civil appeals Nos. 2071, 1855 1863 and 351 359 Of 1972 (cross appeals). O.J. Cs. Nos. 859 and 863 of 1970 were diposed of by separate judgments dated September 6, 1971 which followed the earlier judgment dated April 16, 1971 in Siba Prasad Saha 's case and that has given rise to appeals Nos. 1235 and 1236 of 1972. The Bihar and Orissa Excise (Orissa Second Amendment) Act, 1971 (10 of 1971) was passed to set right the defects in the law. Stated briefly that Act made the amendments to sections 2, 7, 29, 37 ' and 90 retrospective and validated the earlier acts. A writ petition (O. J.C. No. 589 of 1972) was filed to challenge the vires of section 22 and 29 of the Act. The main judgment in the matter was delivered in O.J.C. No. 1036 of 1971, on January 3, 1974. In that judgment the High Court examined the challenge to the vires of sections 22 and 29 of the Act and the claim for refund of the money already paid with reference to the amendments to the Act. It fol lowed the earlier decision in Siba Prasad Saha 's case of April 16, 1971 (I. L.R.1971 Cuttack 777) and dismissed the writ petitions and that/ms led to the filing of civil ap peals Nos. 1235 and 1236 of 1972. The last judgment was delivered on March 28, 1974 in O.J.C. No. 589 of 1972, in Siba Prasad saha 's case. The petitioner there was the grantee of the exclusive privilege for sale of country liquor: during the year 1972 73 for some shops in Mayurbhanj district. The ' petitioner challenged the vires of sections 22 and 29(2) as amended, and prayed for the consequential reliefs. The High Court held that the case was completely covered by its decision dated January 3, 1974 in O.J.C. No. 1036 of 1971 and dismissed the peti tion. It will tires appear that these appeals are inter con nected and that is why we have thought it desirable to examine them in a common, judgment. As has been stated, Civil Appeals Nos. 1892 and 1893 of 1971 arise out of ' O.J. Cs. 392 and 357 of 1970 which have been decided by the judgment of the High Court dated May 15, 1970. It has been argued by Mr. Govind Das on behalf of the appellants that the High Court erred in hold ing that the sale notice issued by the Collector was not for the grant of an exclusive .privilege under subsection (1) of section 22 of the Act because the Collector had no authority to issue a notice under that sub section, as the power of the ' State Government in that respect had been delegated to the Board of Revenue. Sub section (1) of section 22 of the Act provides that the State Government may grant to any person, On such condi tions and for such periods as it may think fit, the exclu sive privilege, inter alia, of manufacturing or selling retail any country liquor. The proviso to the sub section requires that public notice shall be given of the intention 819 to grant any exclusive privilege of that nature and that a. decision would be taken after considering the objections made in that respect. Once a decision is taken under ,sub section (1) to grant the exclusive privilege within any specified area, sub section (2) provides that no grantee of such a privilege shall exercise the same "unless or until he has received a license in that behalf from the Collector or the Excise Commissioner. " It has been stated at the Bar by Mr. Govind Das, and has not been controverted that, as. had been averted in ' the memorandum of appeal, the requirement of sub section (1) of section 22 had already been complied with by the State Government, and that the Collector was not concerned and did not in fact issue any public notice for purposes of sub section (1) of section 22. A reading of the Collector 's notice, which admittedly was in Form G.L. 10, shows that it related to the auction of the right to open a shop at the site named in the notice and the payment of the license fee therefor. The High Court therefore went wrong in holding that the issue of the notice in Form G.L. 10 negatived the contention that what was proposed to be given was the exclusive privilege to manufacture and sell country liquor. By virtue of section 7(1), the administra tion of the Excise Department and the collection of excise revenue within the district vested in the Collector, and we are unable to think, that his notice in Form G.L. 10 was sufficient to show that the exclusive privilege for retail sale of country liquor, under the outstill system, was not proposed to be given to the successful bidders at the auc tion. The true nature of the proceeds of the auction held by the Collector in such a case has been examined by this Court in Nashirwar etc. vs The Slate of Madhya Pradesh, C) Har Shankar and others vs The Dy. Excise and Taxation Com missioner and others(2) and Thakur Prasad Sao and others vs The Member, Board of Revenue and others etc. (? '). In Na shirwar 's case (supra) this Court examined the constitution al validity of the provisions in the Central Provinces Excise Act for granting leases in respect of liquor by public auction, and of the Abkari Act of the Kerala State placing restrictions on the manufacture and sale etc. of liquor. After considering all the decided cases includ ing Narula 's case (supra) in which it was held that a citizen had a fundamental right to. do business and deal in liquor, this Court referred to its decision in State of Orissa and others vs Harinarayan Jaiswal and others(4) in which Narula 's case was explained, and held as follows, "For these reasons we hold that the State has the exclusive right or privilege of manufacturing and selling liquor. The State grants such right or privilege in the shape of a licence or a lease. The State has the power to hold a (1) ; (2) ; (3) ; (4) [1972].3 S.C.R. 784. 820 public auction for grant of such right or privilege and accept payment of a sum in consideration of grant of lease. " While taking this view this Court held that the State Legislature was authorised to make a provision for public auction by reason of the power contained in Entry 8 List II of the Seventh Schedule to the Constitution and that there was "no fundamental right of citi zens to carry on trade or to do business in liquor. " The matter again came up for consideration in Har Shankar 's case (supra) with reference to the provisions of sections 27 and 34 of the Punjab Excise Act, 1914, where the appellants gave bids at public auctions. It was held that the amount payable by them, as licensees, was neither a fee in the technical sense nor a tax, but was in ' the nature of "price of a privilege" and that auctions were only a mode or medium for ascertaining the best price obtainable therefor. Thakur Prasad 's (supra)was a case directly under the provisions of the Act. It also related to the outstill system. It was held that "the State has the exclusive right and privilege of manufacturing and selling liquor" and that it has the "power to hold a public auction for the grant of such a right or privilege and to accept payment of a sum therefor. " It was accordingly held that the right granted to the appellants by public auction and the li censes issued to them was "clearly an exclusive privilege within the meaning of section 22(1) of the Act" and that it has expressly been provided in section 29 that it would be permissible for the State Government to accept payment of a sum in "conSideration" of the exclusive privilege under section 22. There can be no doubt therefore that the High Court erred in taking a contrary view. The High Court has tried to support its view by refer ring to the condition stated in Form G.L. 10 for the opening of additional shops during the currency of the license, and has stated that an exclusive privilege under section 22 "cannot comprehend exercise o[ such power once it is granted for a specified period. " This was clearly an erroneous view because it is not disputed before us that no such condition was inserted in the license at all. What the licensee therefore received under the license was an exclu sive privilege of manufacturing and selling liquor under the outstill system within the meaning of section 22 of the Act. The High Court has held that after the acceptance of the bid all that remained was to issue a license and that the Collector committed an illegality in ordering a reauction under the directions of the State Government. Such a view presupposes that a binding, obligation had come into existence in favour of the bidder by accepting a deposit from him even though this was done on the express condition that it was tentative and was not an acceptance of his bid. We do not think that what the High Court held to be an "acceptance of the bid" at the "auction", even after the announcement of an express condition 821 attached to it that the knocking down of the bid would not really be an acceptance of it by the Government, could be an acceptance of the bid at all. In the peculiar facts and circumstances of the auction, the bids were, apparently, nothing more than offers in response to invitation to make tenders, and such auctions were the mode of ascertaining the highest offers. The basic conditions for the emergence of rights through offers or conditions made and accepted, and acted upon, by paying any specified or agreed price as consideration, were thus wanting in this case. In fact the express and advertised terms of the auction made it clear that the money tendered was to be deemed to be deposited tentatively, pending the acceptance of the bid. So what we have before us are neither offers nor acceptance by the Government. There were only offers by the bidders to pur chase the rights, subject expressly to their acceptance or rejection by the State Government. The essentials of any agreement and the mutuality of obligations were thus absent altogether. Moreover it was not an ordinary auction where binding agreement could be deemed to be concluded at the fall of the hammer, creating mutually enforceable obligations. Those were only so called auctions, adopted as means for ascer taining the highest offers for the exclusive privileges which the Government alone could grant for carrying on a trade or business. considered noxious, under the law and which, because of its special character, could be regulated in any way, or even prohibited altogether, by the Govern ment. This special character of the trade or business would appear from the power of the State Government to grant the exclusive privilege to. carry on trade in the manufacture and sale of liquor. It will be recalled that section 22(1) provides that the State Government "may grant to any person, on such conditions and for such periods as it may think fit, the exclusive privilege" in question: Sub section (2) of section 22 enacts that a grantee of such a privilege shah not exercise it "unless or until he has received a license in that behalf from the Collector or the Excise Commission er. " The powers of the Government to reject a bid were thus reserved both under the provisions of law and by the express declarations made before the auction. At any rate we do not find any basis for the creation of a right merely by making a bid. The extent of the powers of the government in such matters has been indicated by this Court in State of Orissa and others vs Harinarayan Jaiswal and others (supra). So long as these powers are not used in an unreasonable or mala fide manner, their exercise cannot be questioned. In the cases before us, it could not be said that either the Gov ernment or any of its officers abused the power by acting either unreasonably or in a mala fide manner, and we find no justification for the argument that it was not permissi ble for the State Government to issue.the directions for reauction even when it found that the bids at the auction were unsatisfactory. The High Court has taken the view that rule 103(1) of the Board 's Excise Rules regarding the manner of fixation and realisation 822 of the consideration for the grant of a license for the exclusive privilege of retail vend of country spirit was "incompetent and ultra vires the act. " The High Court took that view under the mistaken impression that the State was not entitled to collect a tax "under the garb of a fee" and the "auction price for a license is not duty within the meaning of Entry 51 of List 11 of the Seventh Schedule to the Constitution. " But, as has been shown, what was sought to be raised was consideration and not "fee". The use of the expression "fees" in the rule is therefore inaccurate, but that cannot detract from the real nature of the recov ery. Mr. S.C. Agarwal has challenged the validity of rule 103 on another ground, and we shall deal with it when we come to the judgment of the High Court dated April 16, 1971. The next judgment of the High Court is that dated February 3, 1971, in O.J.C. No. 850 of 1970, which has given rise to civil appeal No. 209/of 1972 by the State of Orissa. We have already stated the findings of the High Court in regard to it. It has been argued by Mr. Govind Das that even if the State Government failed to specify the authority which was to determine the mode of determining the sum payable under sub section (1) of section 29, that could not be said to matter because it was the Collector, who was incharge of the administration of the Excise Department and Collection of the excise revenue under section 7 of the Act, who took the action to issue the auction notice for the grant of the license. for the retail sale of country liquor. Moreover, the State Government did not object to his authority to do so. and, on the other hand, directed him to make a reauction merely on the ground of the insufficiency of the bids. The Collector called for fresh. tenders. It was not in dispute before the High Court that the State Government issued a special order under section 29 by which it nominated itself to be the authority to determine the sufficiency of the sum payable under section 29(1) of the Act. There is nothing in sub section (2)(b) to show that that was not permissible. The other question in this respect is whether the fol lowing direction in the State Government 's order dated August 19, 1970 was valid, "It shall be at the discretion of the State Government to accept or reject any tender without assigning any reason therefor to order for calling of fresh tender or other wise as the case may be. " It will be recalled that the High Court has taken the view that the order dated August 19, 1970 and the tender notice issued in pursuance thereof were bad in law and were liable to be quashed. The High Court has taken the view that section 29(2)(a) did not authorise the exercise of "such absolute and naked power in determining the sum of money" as was sought to be done by the order dated August 19, 1970. It appears to us however that the power to accept or reject a tender without assigning any reason cannot be said to be 823 arbitrary as section 29(2) (which has been amended with retrospective effect) itself provides. that (i) it shall be exercised in the interest of the Excise revenue", (ii) by the specified authority, and (iii) under such control as may be specified. As has been stated, the State Govern ment retained the power of accepting or rejecting the tender, or for calling of a fresh tender, to itself, and such an order cannot be said to be an "absolute" or "naked" power of the nature apprehended by the High Court. Refer ence in this connection may be made to the decision in Jaiswal 's case (supra) mentioned above. Moreover it is not disputed before us that the power to accept or not to accept the highest or any bid was expressly reserved under the impugned sale notification. Sub section (2) of section 79 of the Act was also amended by the Bihar and Orissa Excise (Second Orissa Amendment) Act 1971 (Act 10 of 1971) with full retrospective effect. Section 17 of the Act validated both the licenses granted and amounts paid or payable therefor, and its validity has not been challenged before us. It will be remembered that Siba Prasad Saha had filed O.J.C. No. 786 of 1970 after the first judgment of the High Court dated May 15,1970, for refund of the license fee and for non payment of the fee in future. The State of Orissa feels aggrieved against the decision of the High Court in that case dated April 16,1971 that a citizen has a fundamen tal right to deal in liquor. In taking that view the High Court relied on this Court 's decision in Narula 's case (supra). The decision in Narula 's case was considered and explained by this Court in Nashirwar 's care (supra) and it has been held as follows, "It is not correct to read in the deci sion in Narula 's case that there is a funda mental right to do business in liquor. The decision is that dealing in liquor is busi ness and a citizen has a right to do business in that commodity and the State can impose reasonable restrictions on the right in public interest. If the State can prohibit bussiness in liquor as is held in State of Bombay and Another vs F.N. Balsara (1951 S.C.R.682) this establishes that the State has exclusive right of privilege of manufac ture, possession, sales of intoxicating liquor and therefore the Slate grants such a right of privilege to persons in the shape of license or lease." In reaching this conclusion this Court took note of the decision in Bharucha 's case(1) that there was no inherent right in a citizen to sell intoxicating liquors by retail, and that it is not a privilege of a citizen of the State, and observed that as Bharucha 's case was a Constitution Bench decision like Narula 's case, the latter could not be said to have overruled the former. As has been stated, the matter again came up for consideration in Har Shankar 's case (supra) with specific reference to Narula 's case, and it was reiterated that "there is no fundamental right to do trade or business in intoxicants" and that "in all their mani festations, these rights are vested in the State and indeed without such vesting there can be no effective regulation of 824 various forms of activities in relation to intoxicants. " The contrary view of the High Court in impugned judgment is incorrect and must be set aside. The other grievance of the appellant State is that the High Court struck down the expression "or otherwise" from clause (a) of subsection (2) of 29 of the Act as unconstitu tional. We have given our reasons for the contrary view, and the High Court therefore went wrong in striking down the expression "or otherwise". The High Court has also held that as sections 2 to 5 of the Amending Act of 1970 were not made retrospective in operation, the effect of section 6 amounted to a direction by the Legislature to the State to disregard the decision in Ajodhya Prasad 's case that the amount realised by auction was illegal and that section 6 was therefore ultra vires the powers of the Legislature. It will be sufficient to say in this connection that the Bihar and Orissa Excise (Second Orissa Amendment) Act, 1971 (Act 10 of 1971) has made good the deficiency, if any, by stating that the amending provi sions shall be deemed always to have been so added or inserted or substituted. In this respect also, the impugned judgment of the High Court must be rectified. Mr. S.C. Agarwal has argued that the amount realised by the State for grant of the exclusive privilege under sec tions 22 and 29 was nothing but a tax and no such tax was permissible under Entries 45 to 63 of List II of the Seventh Schedule to the Constitution and that it was not excise duty within the meaning of Entry 51 or a fee under Entry 66. It has also been argued that Entry 8 embodying the Police powers of the State could not be invoked to sustain such an imposition. Mr. Bhagat has also argued that the collection was in the nature of a tax and section 29 was therefore ultra vires the Constitution. Mr. Bhagat has also urged that the State was not the owner of the exclusive privilege to manufacture or sell liquor and that the Act did not empower it to part with that right on payment. We have given our reasons already for taking a contrary view, with refer ence to. the decisions in Nashirwar 's case and Har Shankar 's case. The State has the exclusive right or privilege to manufacture, store and sell liquor and to grant that right to its license holders on payment of consideration, with such conditions and restrictions for its regulation as may be necessary in the public interest. The argument to the contrary is futile and is rejected. It has been argued by Mr. Agarwal that although the Amending Act of 1970 (Act 17 of 1970) was enacted for the purpose of getting over the High Court 's declaration in O.J.C.No. 357 of 1970 that rule 103 of the Board 's Excise Rules, 1965, in so far as it directs that fees for license for the retail vend of excisable articles shall be fixed by auction, was ultra vires the Act, rule 103 continued to remain invalid even after the promulgation of that Act because. such a rule could not be made under section 90(7) of ' the Act. Counsel has argued that as the rule was in valid, it was not permissible to hold the impugned public auction because that was not permissible under any other provision of the Act. This argument is also futile because section 5 of the Bihar and Orissa Excise (Second Orissa Amendment) 10 of 1971) has substituted a new sub section (2) for the old sub section as follows, providing for auction, and it has been stated that it shall be "deemed always to have been substituted". "(2) The sum payable under sub section (1) shall be determined as follows, (a) by auction or by calling tenders or other wise as the State Government may, in the interest of excise revenue by general or special order direct." Then follow other clauses with which we are not concerned. Moreover section 17 of that Act has validated all grants made by way of licenses for manufacture and retail sale of country liquor in respect of any place on or after the 7th day of August, 1965, on which date the Board 's Excise Rules (including rule 103) admittedly came into force. In this view of the matter, it is not necessary for us to examine the other arguments of Mr. Agarwal Which have been adopted by Mr. Bhagat regarding the invalidity of rule 103. It is not necessary to deal separately with the judgment of the High Court dated April 16, 1971 in O.J.C. No. 242 of 1967, which has given rise to civil appeal No. 2071 of 1972, or with its decision dated May 7, 1971 in O.J.Cs. No. 1185 1190, 1223, .1224 and 1226 of 1970 (which has given rise to civil appeals Nos. 1855 1863 of 1972 and cross appeals Nos. 351 359 of 1972) because they are based on the afore said decision dated April 16, 1971 in O.J.C. No. 786 of 1970. So also, it is not necessary to deal separately with the decision dated September 6,1971 in O.J.C.No. 859 of 1970 and 863 of 1970 which have given rise to civil appeals Nos. 1235 and 1236 of 1972, for the same reason. This takes us to the judgment of the High Court dated March 28, 1974 in O.J.C.No.589 of 1972 which has given rise to civil appeal No. 1802 of 1974. That decision is based on the decision dated January 3,1974 in O.J.C.No. 1036 of 1971. The petitioner in that case was a licensee for the retail sale of country liquor in Mayurbhanj district. He chal lenged the vires of sections 22 and 29 of the Act and claimed that the monthly consideration for the license was not due from him and that he was entitled to a refund of the money already paid by him. The High Court followed that decision and dismissed the writ petition. In doing so it relied on its decision dated April 16, 1971 in Siba Prasad Saha vs State of Orissa and other (I.L.R. 1971 Cut tack 777) and the decision of this Court in Jaiswal 's case (supra) and dismissed the petition. We have already dealt with the points which arise for consideration in this case while examining the earlier cases and we see nothing wrong with the impugned judgment of the High Court by which the writ petition has been dismissed. In the result, we order as follows, Civil Appeals Nos. 1892 and 1893 of 1971 are allowed, the impugned judgment of the High Court dated May 15,1970 is set aside and writ petitions Nos. O.J.C. 329 and 357 of 1970 are dismissed. 826 Civil Appeal No. 2091 is allowed, the impugned judgment of the High Court dated February 3, 1971 is set aside and the writ petition No. 850 of 1970 is dismissed. Civil Appeal No. 1302 of 1972 is allowed, the 'impugned judgment of the High Court dated April 16, 1971 is set aside and the writ petition No. 786 of 1970 is dismissed. Civil Appeal No. 2071 of 1972 is allowed, the impugned judgment of the High Court dated April 16, 1971 is set aside and the writ petition No. O.J.C. 242 of 1967 is dismissed. Civil Appeals Nos. 1855 1863 of 1972 are allowed, the impugned judgments of the High Court dated May 7, 1971 are set aside and O.J. Cs. 1185 1190, 1223, 1224 and 1226 of 1970 are dismissed. Cross appeals Nos. 351 359 of 1972 are dismissed. Civil Appeals Nos. 1235 and 1236 of 1972 are allowed, the impugned judgments of the High Court dated September 6, 1971 are set aside and O.J. Cs. Nos. 859 and 863 of 1970 are dismissed. Civil Appeal No. 1802 of 1974 fails and is dismissed. In the circumstances of these cases there will be no order as to he costs.

Section 22(1) of the Bihar & Orissa Excise Act, 1915, provides that the States may grant to any person on such conditions and for such periods as it may think fit, the exclusive privilege of manufacturing or selling in retail count try liquor. The proviso provides that a public notice shall be given of the intention to grant such exclu sive privilege and that a decision would be taken after considering objections. Sub section (2) provides that no grantee of such a privilege shall exercise it unless or until he has received a licence in that behalf from the Collector or the Excise Commissioner. In the present case the Collector issued a notice in form GL 10 relating to the auction of the right to open a liquor shop at the site named in the notice and the payment of the licence fee therefor. The respondent was a success ful bidder at the auction. He deposited the money under r. 103 of the Excise Rules but the Government did not grant him the licences. In a writ petition filed by the respond ent the State Government alleged that the bids at the auc tion were not satisfactory and that in the interest of revenue the State Government did not accept the bids. The High Court held (i) that the State Government had no power to interfere with the auction held by the Collector after it had become final and could not direct reauction and (ii) that the realisation at the auction was not a fee but a tax not contemplated by the Act and that the auction price for a licence was not excise duty within the meaning of Entry 51 of List II and hence r. 103(1) of the Rules providing for fixation of licence fee by auction was in excess of the rule making power of the Board. The High Court also held that what was purported to be given under the sale notice of the Collector was not the grant of exclusive privilege under section 22. By the Bihar & Orissa Excise (Orissa Amendment Ordi nance) 1970 which later became the Act, section 29(2) was amend ed. The State Government issued an order for fresh settle ment of the shops and the Collector accordingly called for tenders. In the respondent 's writ petition the High Court held that the State Government 's order was invalid as the author ities for fixing the procedure. under section 29(2) as amended had not been specified and the order left it to the uncon trolled discretion of the authority concerned to accept or reject any tender and to determine the adequacy of the amount offered in the tender. The State Government 's order and the Collector 's tender notice were quashed and the Collector was directed to issue licence to the respondent. The High Court accordingly held that the respondent was entitled to the grant of the exclusive privilege under section 22 because he was the highest bidder in the auction. The High Court also held in a petition filed by another respondent, that in so far as section 29(2) provided that the sum payable under sub section (1) thereof shall be determined "other wise" than by calling tenders or by auction it was uncon stitutional; that portion of section 29(2). should, therefore, be struck down: that section 6 of the Amending Act, 1970 was ultra vires as there was exercise of judicial power by the legis lature and, therefore, the licence fee collected by the State was illegal; but that as the respondent had already enjoyed the benefit of the licence and voluntarily partici pated in the auction he wag not entitled to its refund. 3 1338S.C.I./76 812 Therefore the Second Amendment Act, 1971 was passed. The vires of the amended sections 21 and 29 was challenged in writ petitions but the High Court dismissed them. In appeals to this Court, HELD: (1) The provisions of the Act and the express declarations make clear that the State Government had the power to reject a bid. In any event no right is created in the bidder by making a bid. The administration of the Excise Department and the collection of revenue within the district vest in the Collector. It is not correct to say that the notice issued by the Collector in form GL 10 was sufficient to show that the exclusive privilege for retail sale of country liquor was not proposed to be given to the successful bidders at the auction. The High Court erred in holding that a condition regarding the opening of additional shops was inserted in the Form. ; 820E] (b) It has been held by this Court that the State has the exclusive right or privilege of manufacturing and sell ing liquor. The State grants such right or privilege in the shape of a licence or a lease. The State has the power to hold, a public auction for grant of such right or privilege and accept payment of a sum in consideration of grant of lease, that the amount payable by the bidders as licensees was neither a fee in the technical sense nor a tax, but was in the. nature of price of a privilege and that auctions were only a mode or medium for ascertaining the best price obtainable thereof. Therefore, the right granted to the bidders by public auction and the licences issued to them was clearly an exclusive privilege within the meaning of section 22(1 ) of the Bihar Act and it was expressly provided in section 29 that it would be permissible for the State not to accept payment of a sum in consideration of the grant of the exclusive privilege. [819 H; 820A D] Nashirwar etc. vs The State of Madhya Pradesh ; ; Hat Shankar & ors. vs The Dy. Excise and Taxa tion Commissioner & ors. ; ; Thakur Prasad Sac & ors. vs The Member, Board of Revenue & ors. ; State of Orissa & ors. vs Harinarayan Jaiswal & ors. ; applied. (c) The view of High Court that after the acceptance of the bid the Collector should have issued the licence and that he committed an illegality in ordering reauction pre supposes that a binding obligation had come into existence in favour of the bidder by accepting a deposit from him even though this was done on the express condition that it was tentative and was not an acceptance of his bid. In the peculiar facts and circumstances of the auction, the bids were nothing more than offers in response to an invitation to make tenders and such auctions were the mode. of ascer taining the highest offers. The basic conditions for the emergence of rights through offers or conditions made and accepted and acted upon by paying any specified or agreed price as consideration were wanting in this case. The express and advertised terms of. the auction made it clear that the money tendered was to be deemed to be deposited tentatively, pending the acceptance of the bid. The bids were neither offers nor acceptance ' by the Government. They were only offers by the bidders.to purchase the rights. The essentials of an agreement and mutuality of obligations were absent altogether. Since auction is only a mode of ascer taining the highest offer, the State Government can deter mine the sum payable by any other method and hence. the High Court was wrong in striking down the expression "other wise" from section 29(2)(a). [820 H; 821 A C] (d) These auctions are not ordinary auctions where a binding agreement could be deemed to be concluded at the fall of the.hammer, creating mutually enforceable obliga tions but. are a means for ascertaining the highest offers for the exclusive privileges which the Government alone could grant for carrying on a trade or business considered noxious under the law, and which, because of its special character, could be regulated m any way or even prohibited altogether by the Government. This special character of the trade or business would appear from the power of the State Government to grant the exclusive privilege to carry on trade m the manufacture and sale of liquor. [821 F G] (e) There is no justification for the argument of the. respondents that it was not permissible for the State Gov ernment to issue directions for reauction even when it found that the bids at the auction were unsatisfactory. So long as the powers of the Government to reject a bid are not used in an unreasonable or mala fide manner, their exercise cannot be questioned [821 G] 2(a) The High Court 's view that r. 103(1) was ultra. vires was taken under the mistaken impression that the State was collecting a tax under the garb of a fee and that the auction price for a licence could not be treated as duty within the meaning of Entry 51, List II of the Seventh Schedule. But what was sought to be raised was considera tion and not fee. The use of the expression " 'fees" in the rule is inaccurate but that:cannot detract from the real nature of the recovery. [822 A B] (b) The argument of the respondent that r. 103 continued to remain invalid even after the promulgation of the Amend ment Act is not correct because section 5 of the Second Amendment Act has substituted a new sub section (2)for the old subsection providing for auction and this sub section stated that it shall be deemed always to have been substituted". Section 17 has validated all grants made by way of licences for manufacture and retail sale of country liquor and the amounts paid or payable therefor. [824 G H; 825 C] (c) The power to accept or reject a tender without assigning any reason cannot be said to be arbitrary as section 29(2) (which has been amended with retrospective effect) itself provides that (i) it shall be exercised in the inter est of the Excise revenue, (ii) by the specified authority and (iii) under such control as may be specified. In the instant case the 'State Government retained the power of accepting or rejecting the tender or for calling of a fresh tender, to itself, and such an order cannot be said to be an absolute or naked power of the nature apprehended by the High Court. Moreover, the power to accept or reject the highest o,r any bid was expressly reserved under the im pugned sale notification. [823 A C] (3) Even though no authority was specified for taking action under section 29(1) it was the Collector who is in charge of the Excise Administration that took action in the present case and his action was approved by the State Gov ernment. Moreover, the State Government issued a modified order under section 29 nominating itself as the authority to determine the sufficiency of the. sum payable. [822 D] (4) It has been held by this Court that there is no fundamental right to do trade or business in intoxicants and that in all their manifestations these rights are vested in the State and without such vesting there can be no effective regulation of various forms of activities in relation to intoxicants. There is no inherent right in a citizen to sell intoxicating liquors by retail. [823 H] Krishan Kumar Narula etc. vs The State of J & K & ors ; ; Nashirwar etc. vs The State of M.P. ; ; Har Shankar & ors. vs The Dy. Excise & Taxation Commissioner & ors. ; ; Coovetlee Bharucha vs The Excise Commissioner ; fol lowed. (5) Since the Bihar & Orissa Excise (Second Orissa Amendment) Act, 1971 has made good the deficiency, if any, by stating that the amending provisions in sections 2 to 5 of the Amending Act, 1970 shall be deemed always to have been so added or inserted or substituted, the High Court was wrong in holding that there was any exercise of judicial power by 'the Legislature. [824 C D]

Appeal No. 247 of 1953. Appeal by special leave from the judgment and decree dated August 22, 1952 of the Bombay High Court in Appeal No. 66 of 1952 arising out of the decree dated March 7, 1952 of Bombay High Court in its Ordinary Original Civil Jurisdiction in Suit No. 1177 of 1951. M. C. Setalvad, Attorney General for India, Purshottam Tricumdas, T. Godiwala, J. B. Dadachanji, Rameshwar Nath and section N. Andley, for the appellant. C. K. Daphtary, Solicitor General of India and Sardar Bahadur, for the respondent. October 19. The Judgment of the Court was delivered by SINHA J. This is an appeal by special leave against the judgment and decree of the High Court of Judicature at Bombay dated August 22,1952, reversing those of a single Judge of that Court on the Original Side, dated March 7,1952, by which he had granted a decree for dissolution of marriage between the appellant and the respondent. 840 The facts and circumstances of this case may be stated as follows: The appellant, who was the plaintiff, and the respondent were married at Patan on April 20, 1942, according to Hindu rites of the Jain Community. The families of both the parties belong to Patan, which is a town in Gujarat, about a night 's rail journey from Bombay. They lived in Bombay in a two room flat which was in occupation of the appellant 's family consisting of his parents and his two sisters, who occupied the larger room called the hall, and the plaintiff and the defendant who occupied the smaller room called the kitchen. The appellant 's mother who is a patient of asthma lived mostly at Patan. There is an issue of the marriage, a son named Kirit, born on September 10, 1945. The defendant 's parents lived mostly at Jaigaon in the East Khandesh district in Bombay. The parties appear to have lived happily in Bombay until a third party named Mahendra, a friend of the family came upon the scene and began to live with the family in their Bombay flat some time in 1946, after his discharge from the army. On January 8, 1947, the appellant left for England on business. It was the plaintiff 's case that during his absence from Bombay the defendant became intimate with the said Mahendra and when she went to Patan after the plaintiff 's departure for England she carried on "amorous correspondence" with Mahendra who continued to stay with the plaintiff 's family in Bombay. One of the letters written by the defendant to Mahendra while staying at the plaintiff 's flat in Bombay, is exhibit E as officially translated in English, the original being in Gujerati except a few words written in faulty English. This letter is dated April,1947, written from the plaintiff 's house at Patan, where the defendant bad been staying with her mother in law. This letter had been annexed to the plaint with the official translation. It was denied by the defendant in her written statement. But at the trial her counsel admitted it to have been written by her to Mahendra. As this letter started all the trouble between the parties to this litigation, it will have to be set out in extenso hereinafter. Continuing 841 the plaintiff 's narrative of the events as alleged in the plaint and in his evidence, the plaintiff returned to Bombay from abroadon May 2O, 1947. To receive him back from his foreign journey the whole family ' including the defendant was there in Bombay. According to the plaintiff, he found that on the first night after his return his bed had been made in the hall occupied by his father and that night he slept away from his wife. As this incident is said to have some significance in the narrative of events leading up to the separation between the husband and the wife and about the reason for which the parties differ, it will have to be examined in detail later. Next morning, that is to say, on May 21, 1947, the plaintiff 's father handed over the letter aforesaid to the plaintiff, who recognised it as being in the familiar handwriting of his wife. He decided to tackle his wife with reference to the letter. He handed it to a photographer to have photo copies made of the same. That very day in the evening he asked his wife as to why she had addressed the letter to Mahendra. She at first denied having written any letter and asked to see the letter upon which the plaintiff informed her that it was with the photographer with a view to photo copies being made. After receiving the letter and the photo copies from the photographer on May 23, the plaintiff showed the defendant the photo copy of the letter in controversy between them at that stage and then the defendant is alleged to have admitted having written the letter to Mahendra and to have further told the plaintiff that Mahendra was a better man than him and that Mahendra loved her and she loved him. The next important event in the narrative is what happened on May 24, 1947. On the morning of that day, while the plaintiff was getting ready to go to his business office his wife is alleged to have told him that she had packed her luggage and was ready to go to Jalgaon on the ostensible ground that there was a marriage in her father 's family. The plaintiff told her that if she had made up her mind to go, he would send the car to take her to the station and offered to pay her Rs. 100 for her expenses. But she 884 refused the offer. She left Bombay apparently in the plaintiff 's absence for Jalgaon by the afternoon train. when the plaintiff came back home from his office, he "discovered that she had taken away everything with her and had left nothing behind". It may be added here that the plaintiff 's mother had left for Patan with his son some days previously. Plaintiff 's case further is that the defendant never came back to Bombay to live with him, nor did she write any letters from Jalgaon, where she stayed most of the time. It appears further that the plaintiff took a very hasty, 'if not also a foolish, step of having a letter addressed to the defendant by his solicitor on July 15, 1947, charging her with intimacy between herself and Mahendra and asking her to send back the little boy. ,The parties violently differ on the intent and effect of this letter which will have to be set out in extenso at the appropriate place. No answer to this letter was received by the plaintiff. In November, 1947, the plaintiff 's mother came from Patan to Bombay and informed the plaintiff that the defendant might be expected in Bombay a few days later. Thereupon the plaintiff sent a telegram to his father in law at Patan. The telegram is worded as follows: "Must not send Prabha. Letter posted. Wishing happy new year". The telegram stated that a letter bad been posted. The defendant denied that any such letter bad been received by her or by her father. Hence the original, if any, is not on the record. But the plaintiff produced what he alleged to be a carbon copy of that letter which purports to have been written on November 13, 1947, the date on which the telegram was despatched. An English translation of that letter is exhibit C and is to the following effect: Bombay 13 11 47 To Rajmanya Rajeshri Seth Popatlal & others. There is no letter from you recently. You must have received the telegram sent by me today. Further, this is to inform you that I have received information from my Mami (mother) that 843 Prabha is going to come to Bombay in 3 or 4 days. I am surprised to hear this news; Ever since she has gone to Jalgaon, there has been not a single letter from her to this day. Not only that, but, although you know everything, neither you nor any one on your behalf has come to see me in this connection. What has made Prabha thus inclined to come all of a sudden! After her behaviour while going to Jalgaon for: the marriage, (and after), her letter to Mahendra and her words. 'He is better than you Has feeling for ' me and I love him ' and all this, I was afraid that she would not set up a house with me. Hence when my mother gave me the news of her return, I was surprised. I have not the slightest objection to the return of Prabha, but if she gives such shameless replies to me and shows such improper behaviour, I shall not be able to tolerate the same. If she now really realises her mistake and if she is really repenting and wants sincerely to come, please make her write a reply to this letter. On getting a letter from her, I shall personally come to Patan to fetch her. Kirit is young. For his sake also, it is necessary to persuade Prabha. Further, I have to state that I have so far kept peace. I have made efforts to call back Prabha. Please understand this to her my final effort. If even now Prabha does not give up her obstinacy, I am not responsible and (then) do not blame me. Well, that is all for the present. Kirit must be bale and hearty. My new year 's greetings to you all. Please do assign to me such work as I can manage. Written by Bipinchandra" The plaintiff stated that be received no answer either to the telegram or to the letter. Two days later, on, November 15, the plaintiff 's father addressed a letter to the defendant 's father, which is exhibit D. This letter makes reference. to the defendant 's mother having, talked to the plaintiffs mother about sending the defendant I to Bombay and to the fact that the plaintiff bad sent a telegram on November 13, and ends with the expression of opinion by the plaintiff 's father 844 that it was "absolutely necessary" that the plaintiff 's consent should be obtained before sending the defendant to Bombay. This letter also remained unanswered. According to the plaintiff, nothing happened until May, 1948, when he went to Patan and there met the defendant and told her "that if she repented for her relations with Mahendra in the interests of the child as well as our own interests she could come back and live with me". To that the defendant is said to have replied that in November, 1947, as a result of pressure from her father and the community, she had been thinking of coming to live with the plaintiff) but that she had then decided not to do so. The defendant has given quite a different version of this interview. The second interview between the plaintiff and the defendant again took place at Patan some time later in 1948 when the plaintiff went there to see her on coming to know that she had been suffering from typhoid,. At that time also she evinced no desire to come back to the plaintiff. The third and the last interview between the plaintiff and the defendant took place at Jalgaon in April May, 1949. At that interview also the defendant turned down the plaintiff 's request that at least in the interests of the child she should come back to him. According to the plaintiff, since May 24, 1947, when the defendant left his home in Bombay of her own accord, she bad not come back to her marital home. The suit was commenced by the plaintiff by filing the plaint dated July 4, 1951, substantially on the ground that the defendant bad been in desertion ever since May 24, 1947, without reasonable cause and without his consent and against his will for a period of over four years. He therefore prayed for a decree for a dissolution of his marriage with the defendant and for the custody of the minor child. The suit was contested by the defendant by a written statement filed on February 4, 1952, substantially on the ground that it was the plaintiff who by his treatment of her after his return from England had made her life unbearable and compelled her to leave her marital home against her wishes on or about May 845 24, 1.947. She denied any intimacy between herself and Mahendra or that she was confronted by the plaintiff with a photostat copy of the letter. , exhibit E, or that she had confessed any such intimacy to the plaintiff. She admitted having received the Attorney 's letter, exhibit A, and also that she did not reply to that letter. She adduced her father 's advice as the reason for not sending any answer to that letter. She added that her paternal uncle Bhogilal (since deceased) and his son Babubhai saw the plaintiff in Bombay at the instance of the defendant and her father and that the plaintiff turned down their request for taking her back. She also made reference to the negotiations between the defendant 's mother and the plaintiff 's mother to take the defendant back to Bombay and that the defendant could not go to Bombay as a result of the telegram of November 13, 1947, and the plaintiff 's father 's letter of November 15, 1947, aforesaid. She also stated that the defendant and her son, Kirit, both lived with,the plaintiff 's family at Patan for over four months and off and on on several occasions. The defendant 's definite case is that she had always been ready and willing to go back to the plaintiff and that it was the plaintiff who all along had been wailfully refusing to keep her and to cohabit with her. On those allegations she resisted the plaintiff 's claim for a decree for a dissolution of the marriage. On those pleadings a single issue was joined between the parties, namely, "Whether the defendant deserted the plaintiff for a continuous period of over four years prior to the filing of the suit". At the trial held by Tendolkar, J. of the Bombay High Court on the Original Side, the plaintiff examined only himself in support of his case. The defendant examined herself, her father, Popatlal, and her cousin, Bhogilal, in support of her case that she had been all along ready and willing to go back to her marital home and that in spite of repeated efforts on her part through her relations the plaintiff had been persistently refusing to take her back. 110 846 The learned trial Judge answered the only issue in the case in the affirmative and granted a decree for divorce in favour of the plaintiff, but made DO order as to the costs of the suit. He held that the letter, exhibit E "reads like a love letter written by a girl to her paramour. The reference to both of them having been anxious about something and there being now no need to be anxious any more can only be to a possible fear that she might miss her monthly periods and her having got her monthly period thereafter, because, if it were not so and the reference was to anything innocent, there was nothing that she should have repented later on in her mind as she says she did, nor should there have been occasion for saying 'after all love is such an affair '. " With reference to that letter he further held that it was capable of the interpretation that she had misbehaved with Mahendra and that she was conscious of her guilt. With reference to the incident of May 24, the learned Judge observed that having regard to the demeanour of the plaintiff and of the defendant in the witness box, he was inclined to prefer the husband 's testimony to that of the wife in all matters in which there was a conflict. He held therefore that there was desertion with the necessary animus deserendi and that the defendant had failed to prove that she entertained a bonafide intention to come back to the marital home, that is to say, there was no animus revertendi. With reference to the contention that the solicitor 's letter of July 15,1947, had terminated the desertion, if any, he held that it was not well founded inasmuch as the defendant had at no time a genuine desire to return to her husband. He made no reference to the prayer in the plaint that the custody of the child should be given to the father, perhaps because that prayer was not pressed. The defendant preferred an appeal under the Letters Patent which was heard by a. Division Bench consisting of Chagla C.J. and Bhagwati J. The Appellate Bench, allowed the appeal, set aside the decision of the trial Judge and dismissed the suit with costs. It held that the defendant was not guilty of 847 desertion, that the letter of July 15, 1947, clearly established that it was the 'plaintiff who had deserted the defendant. Alternatively, the Appellate Court held that even assuming that the defendant was in desertion as a result of what had happened on May 24, and subsequently, the letter aforesaid bad the effect of putting an end to that desertion. In its judgment the letter, exhibit E, did not justify the plaintiff having any reasonable suspicions about his wife 's guilt and that the oral evidence of the defendant and her relations proved the wife 's anxiety to return back to her husband and of the obduracy of the husband in refusing to take the wife back. The plaintiff made an application to the High Court for leave to appeal to this Court. The leave asked for was refused by another Division Bench consisting of the Chief Justice and Dixit J. Thereafter the plaintiff moved this Court and obtained special leave to appeal from the judgment of the Appellate Bench of the High Court. In this appeal the learned Attorney General appearing on behalf of the appellant and the learned Solicitor General appearing on behalf of the respondent have placed all relevant considerations of fact and law before us, and we are beholden to them for the great assistance they rendered to us in deciding this difficult case. The difficulty is enhanced by the fact that the two courts below have taken diametrically opposite views of the facts of the case which depend mostly upon oral testimony of the plaintiff husband and the defendant wife and not corroborated in many respects on either side. It is a case of the husband 's testimony alone on his side and the wife 's testimony aided by that of her father and her cousin. As already indicated, the learned trial Judge was strongly in favour of preferring the husband 's testimony to that of the wife whenever there was any conflict. But he made no reference to the testimony of the defendant 's father and cousin which, if believed, would give an entirely different colour to the case. Before we deal with the points in controversy, it is convenient here to make certain general of observations 848 on the history of the law on the subject and the well established general principles on which such cases are determined. The suit giving rise to this appeal is based on section 3(1) (d) of the Bombay Hindu Divorce Act ', XXII of 1947, (which hereinafter will be referred to as "The Act") which came into force on May 12, 1947, the date the Governor 's assent was published in the Bombay Government Gazette. This Act, so far as the Bombay Province, as it then was, was concerned, was the first step in revolutionizing the law of matrimonial relationship, and, as the Preamble shows, was meant "to provide for a right of divorce among all communities of Hindus in certain circumstances". Before the enactment, dissolution of a Hindu marriage particularly amongst what were called the regenerate classes was unknown to general Hindu law and was wholly inconsistent with the basic conception of a Hindu marriage as a sacrament, that is to say, a holy alliance for the performance of religious duties. According to the Shastras, marriage amongst the Hindus was the last of the ten sacraments enjoined by the Hindu religion for purification. Hence according to strict Hindu law as given by the Samhitas and as developed by the commentators, a Hindu marriage could not be dissolved on any ground whatsoever, even on account of degradation in the hierarchy of castes or apostacy. But custom ', particularly amongst the tribal and what used to be called the lower castes recognised divorce on rather easy terms. Such customs of divorce on easy terms have been in some instances held by the courts to be against public policy. The Act in section 3 sets out the grounds of divorce. It is noticeable that the Act does not recognise adultery simpliciter as one of the grounds of divorce, though cl. (f) renders the fact that a husband "has any other woman as a concubine" and that a wife "is a concubine of any other man or leads the life of a prostitute" a ground of divorce. In the present case we are immediately concerned with the provisions of section 3(1)(d), which are in these terms: 3. (1) A husband or wife may sue for divorce on 849 any of the following grounds, namely: . . . . . . . . (d) that the defendant has deserted the plaintiff for a continuous period of four years". "Desertion" has been defined in section 2(b) in these terms: 'Desert ' means to desert without reasonable cause and without the consent or against the will of the spouse". It will be seen that the definition is tautological and not very helpful and leads us to the Common Law of England where in spite of repeated legislation on the subject of matrimonial law, no attempt has been made to define "desertion". Hence a large body of case law has developed round the legal significance of "desertion". "Marriage" under the Act means "a marriage between Hindus whether contracted before or after the coming into operation of this Act". "Husband" means a Hindu husband and "wife" means a Hindu wife. In England until 1858 the only remedy for desertion was a suit for restitution of conjugal rights. But by the Matrimonial Causes Act of 1857, desertion without cause for two years and upwards was made a ground for a suit for judicial separation. It was not till 1937 that by the Matrimonial Causes Act, 1937, desertion without cause for a period of three years immediately preceding the institution of proceedings was made a ground for divorce. The law has now been consolidated in the Matrimonial Causes Act, 1950 (14 Geo. VI, c. 25 ). It would thus appear that desertion as affording a cause of action for a suit for dissolution of marriage is a recent growth even in England. What is desertion? "Rayden on Divorce" which is a standard Work on the subject at p. 128 (6th Edn.) has summarised the case law on the subject in these terms: "Desertion is the separation of one spouse from the other, with an intention on the part of the deserting spouse of bringing cohabitation permanently to on end without reasonable cause and without the 850 consent of the other spouse; but the physical act of departure by one spouse does not necessarily make that spouse the deserting party". The legal position has been admirably summarised in paras. 453 and 454 at pp. 241 to 243 of Halsbury 's Laws of England (3rd Edn.) Vol. 12, in the following words: "In its essence desertion means the intentional permanent forsaking and abandonment of one spouse by the other without that other 's consent, and without reasonable cause. It is a total repudiation of the obligations of marriage. In view of the large variety of circumstances and of modes of life involved, the Court has discouraged attempts at defining desertion, there being no general principle applicable to all cases. Desertion is not the withdrawal from a place but from a state of things, for what the law seeks to enforce is the recognition and discharge of the common obligations of the married state; the state of things may usually be termed, for short, 'the home '. There can be desertion without previous cohabitation by the parties, or without the marriage having been consummated. The person who actually withdraws from cohabitation is not necessarily the deserting party. , The fact that a husband makes an allowance to a wife whom he has abandoned is no answer to a charge of desertion. The offence of desertion is a course of conduct which exists independently of its duration, but as a ground for divorce it must exist for a period of at least three years immediately preceding the presentation of the petition or, where the offence appears as a cross charge, of the answer. Desertion as a ground of divorce differs from the statutory grounds of adultery and cruelty in that the offence founding the cause of action of desertion is not complete, but is inchoate, until the suit is constituted. Desertion is a continuing offence". Thus the quality of permanence is one of the essential elements which differentiates desertion from 851 wilful separation. If a spouse abandon the other spouse in a state of temporary passion, for example, anger or disgust, without intending permanently to cease cohabitation, it will not amount to desertion. ' For the offence of desertion, so far as the deserting spouse is concerned, two essential conditions must be there., namely, (1) the factum of separation, and (2) the intention to bring cohabitation permanently to an end (animus deserendi ). Similarly two elements are essential so far as the deserted spouse is con cerned: (1) the absence of consent, and (2) absence of conduct giving reasonable cause to the spouse leaving the matrimonial home to form the necessary intention aforesaid. The petitioner for divorce bears the burden of proving those elements in the two spouses respectively. Here a difference between the English law and the law as enacted by the Bombay Legislature may be pointed out. Whereas under the English law those essential conditions must continue throughout the course of the three years immediately preceding the institution of the suit for divorce; under the Act, the period is four years without specifying that it should immediately precede the commencement of proceedings for divorce. Whether the omission of the last clause has any practical result need not detain us, as it does not call for decision in the present case. Desertion is a matter of inference to be drawn from the facts and circumstances of each case. The inference may be drawn from certain facts which may not in another case be capable of leading to the same inference; that is to say, the facts have to be viewed as to the purpose which is revealed by those acts or by conduct and expression of intention, both anterior and subsequent to the actual acts of separation. If, in fact, there has been a separation, the essential question always is whether that act could be attributable to an animus deserendi. The offence of desertion commences when the fact of separation and the animus deserendi co exist. But it is not necessary that they should commence at the same time. The de facto separation may have commenced without the necessary animus or it may be that the separation 852 and the animus deserendi coincide in point of time; for example, when the separating spouse abandons the marital home with the intention, express or implied, of bringing cohabitation permanently to a close. The law in England has prescribed a three year period and the Bombay Act prescribes a period of four years as a continuous period during which the two elements must subsist. Hence, if a deserting spouse takes advantage of the locus poenitentiae thus provided by law and decides to come back to the deserted spouse by a bonafide offer of resuming the matrimonial some with all the implications of marital life, before the statutory period is out or even after the lapse of that period, unless proceedings for divorce have been commenced,, desertion comes to an end and if the deserted spouse unreasonably refuses the offer, the latter may be in desertion and not the former. Hence it is necessary that during all the period that there has been a desertion the deserted spouse must affirm the marriage and be ready and willing to resume married life on such conditions as may be reasonable. It is also well settled that in proceedings for divorce ' the plaintiff must prove the offence of desertion, like any other matrimonial offence, beyond all reasonable doubt. Hence, though corroboration is not required as an absolute rule of law, the courts insist upon corroborative evidence, unless its absence is accounted for to the satisfaction of the court. In this connection the following observations of Lord Goddard, C.J. in the case of Lawson vs Lawson(1) may be referred to: "These cases are not cases in which corroboration is required as a matter of law. It is required as a matter of precaution. . . With these preliminary observations we now proceed to examine the evidence led on behalf of the parties to find out whether desertion has been proved in this case and, if so, whether there was a bona fide offer by the wife to return to her matrimonial home with a view to discharging marital duties and, if so, whether (1) , 342. 853 there was an unreasonable refusal on the part of the husband to take her back. In this connection the plaintiff in the witness box deposed to the incident of the night of May 20, 1947. He stated that at night he found that his bed had been made in the hall in which his father used to sleep, and on being questioned by him, the defendant told him that it was so done with a view to giving him the opportunity after a long absence in England to talk to his father. The plaintiff expressed his wish to the defendant that they should sleep in the same room as they used to before his departure for England, to which the wife replied that as the bed had already been made, "it would look indecent if they were removed". The plaintiff therefore slept in the hall that night. This incident was relied upon by the plaintiff with a view to showing that the wife had already made up her mind to stop cohabitation. This incident has not been admitted by the defendant in her cross examination. On the other hand she would make it out that it was at the instance of the plaintiff that the bed had been made in the hall occu pied by his father and that it was the plaintiff and not she who was responsible for their sleeping apart that night. As the learned trial Judge has preferred the plaintiff 's testimony to that of the defendant on all matters on which there was simply oath against oath, we would not go behind that finding. This incident by itself is capable of an innocent explanation and therefore has to be viewed along with the other incidents deposed to by the plaintiff in order to prove his case of desertion by the defendant. There was no reason why the husband should have thought of sleeping apart from the wife because there was no suggestion in the record that the husband was aware till then of the alleged relationship between the defendant and Mahendra. But the wife may have been apprehensive that the plaintiff had known of her relations with Mahendra. That apprehension may have induced her to keep out of the plaintiff 's way. The most important event which led to the ulti 854 mate rupture between the parties took place on May 21, 1947, when in the morning the plaintiff 's father placed Mahendra 's letter aforesaid in the plaintiff 's hands. The letter which has rightly been pointed out in the courts below as the root case of the trouble is in its relevant parts in these terms: "Mahendrababu, Your letter has been received. I have read the same and have noted the contents. In the same way, I hope, you will take the trouble of writing me a letter now and then. I am writing, this letter with fear in my mind, because if this reaches anybody 's hands, that cannot be said to be decent. What the mind feels has got to be constrained in the mind only. On the pretext of lulling (my) son to sleep, I have been sitting here in this attic, writing this letter to you. All others are chitchatting below. I am thinking now and then that I shall write this and shall write that. Just now my brain cannot go in any way. I do not feel like writing on the main point. The matters on which we were to remain anxious and you particularly were anxious, well we need not now be. I very much repented later on in my mind. But after all love is such an affair. (Love begets love). . . . . . . . "While yet busy doing services to my mother in law, the clock strikes twelve. At this time, I think of you and you only, and your portrait shoots up before my eyes. I am reminded of you every time. You write of coming, but just now there is nothing like a necessity, why unnecessarily waste money? And again nobody gets salvation at my bands and really nobody will. You know the natures of all. Many a time I get tired and keep on being uneasy in my mind, and in the end I weep and pray God and say, 0 Lord, kindly take me away soon: I am not obsessed by any kind of anxiety and so relieve me from this mundane existence. I do not know how many times I must be thinking of you every day. . . " This letter is not signed by the defendant and in place of the signature the word "namaste" finds 855 place. The contents of the letter were put to the defendant in cross examination. At that time it was no more a contested document, the defendant 's counsel having admitted it during the cross examination" of the plaintiff. She stated that she had feelings for Mahendra as a brother and not as a lover ' When the mysterious parts of the letter beginning with the words "The matters on which" and ending with the words "such an affair" were put to her, she could not give any explanation as to what she meant. She denied the suggestion made on behalf of the plaintiff in these words: "It is not true that the reference here is to our having had sexual intercourse and being afraid that I might remain pregnant". The sentence "I very much repented later on in my mind" was also put to her specifically and her answer was "I do not know what I repented for. I wrote some thing foolishly". Pressed further about the meaning of the next sentence after that, her answer was "I cannot now understand how I came to write such a letter. I admit that this reads like a letter written by a girl to her lover. Besides the fact that my brain was not working properly I bad no explanation to give as to how I wrote such a letter". She also admitted that she took good care to see that the. other members of the family, meaning the mother in law and the sisters in law, did not see her writing that letter and that she wanted that the letter should remain a secret to them. Being further pressed to explain the sentence "We need not be anxious now", her answer was " I did not intend to convey that I had got my monthly period about which we were anxious. I cannot say what the normal natural meaning of this letter would be". She bad admitted having received at least one letter from Mahendra. Though it would appear from the trend of her cross examination that she received more letters than one, she stated that she did not preserve any of his letters. She has further admitted in cross examination "I have not signed this letter. It must have remained to be signed by mistake. I admit that under the 856 letter where the signature should be I have put the word 'Namaste ' only. It is not true that I did not sign this letter because I was afraid, that if it got into the hands of any one, it might compromise me and Mahendra. Mahendra would have known from my handwriting that this was my letter. I had previously written one letter to him. That letter also I had not signed. I had only said 'Namaste" '. The tenor of the letter and the defendant 's explanation or want of explanation in the witness box of those portions of the letter which very much need explanation would leave no manner of doubt in any person who read that letter that there was something between her and Mahendra which she was interested to keep a secret from everybody. Even when given the opportunity to explain, if she could, those portions of the letter, she was not able to put any innocent meaning to her words except saying in a bland way that it was a letter from a sister to a brother. The trial court rightly discredited her testimony relating to her answers with respect to the contents of the letter. The letter shows a correspondence between her and Mahendra which was clearly unworthy of a faithful wife and her pose of innocence by characterising it as between a sister and a brother is manifestly disingenuous. Her explanation, if any, is wholly unacceptable. The plaintiff naturally got suspicious of his wife and naturally taxed her with reference to the contents of the letter. That she had a guilty mind in respect of the letter is shown by the fact that she at first denied having written any such letter to Mahendra, a denial in which she persisted even in her answer to the plaint. The plaintiff 's evidence that he showed her a photostatic copy of that letter on May 23, 1947, and that she then admitted having written that letter and that she bad tender feelings for Mahendra can easily be believed. The learned trial Judge was therefore justified in coming to the conclusion that the letter betrayed on the part of the writer "a consciousness of guilt". But it is questionable how far the learned Judge was justified in observing further that ' the contents of the 857 letter "are only capable of the interpretation that she had misbehaved with Mahendra during the absence of the plaintiff". If he meant by the word "misbehaved" that the defendant had sexual intercourse with Mahendra, he may be said to have jumped to the conclusion which did not necessarily follow as the only conclusion from them. The very fact that a married girl was writing amorous letters to a man other than her husband was reprehensible and easily capable of furnishing good grounds to the husband for suspecting the wife 's fidelity. So far there can be no difficulty in assuming that the husband was fully justified in losing temper with his wife and in insisting upon her repentance and assurance of good conduct in future. But we are not prepared to say that the contents of the letter are capable of only that interpretation and no other. On the other hand, the learned Judges of the Appeal Court were inclined to view this letter as an evidence merely of what is sometimes characterised as "platonic love" between two persons who by reasons of bond of matrimony are compelled to restrain themselves and not to go further than merely showing love and devotion for each other. We are not prepared to take such a lenient, almost indulgent, view of the wife 's conduct as betrayed in the letter in question. We cannot but sympathise with the husband in taking a very serious view of the lapse on the wife 's part. The learned Judges of the Appeal Court have castigated the counsel for the plaintiff for putting those questions to the defendant in cross examination. They observe in their judgment (speaking through the Chief Justice) that there was no justification for the counsel for the plaintiff to put to the defendant those questions in cross examination suggesting that she had intercourse with Mahendra as a result of which they were apprehending future trouble in the shape of pregnancy and illegitimate child birth. It is true that it was not in terms the plaintiff 's case that there had been an adulterous intercourse between the defendant and Mahendra. That need not have been so, because the Act does not recognise adultery as one of the grounds 858 for divorce. But we do not agree with the appellate Court that those questions to the defendant in cross examination were not justified. The plaintiff proposed to prove that the discovery of the incriminating letter containing those mysterious sentences was the occasion for the defendant to make up her mind to desert,the plaintiff. We do not therefore agree with the observations of the appellate Court in all that they have said in respect of the letter in question. There can be no doubt that the letter in question made the plaintiff strongly suspicious of his wife 's conduct (to put it rather mildly), and naturally he taxed his wife to know from her as to what she bad to say about her relations with Mahendra. She is said to have confessed to him that Mahendra was a better man than the plaintiff and that he loved her and she loved him. When matters had come to such a head, the natural reaction of the parties would be that the husband would get not only depressed, as the plaintiff admitted in the witness box, but would in the first blush think of getting rid of such an unloving, if not a faithless, wife. The natural reaction of the defendant would be not to face the husband in that frame of mind. She would naturally wish to be out of the sight of her husband at least for some time, to gain time for trying, if she was so minded, to reestablish herself in her husband 's estimation and affection, if not love. The event of the afternoon of May 24, 1947, must therefore be viewed in that light. There was going to be performed the marriage of the defendant 's cousin at her father 's place of business in Jalgaon, though it was about five to six weeks from then. The plaintiff would make it out in his evidence that she left rather in a recalcitrant mood in the afternoon during his absence in office with all her belongings and that she had refused his offer of being sent in his car to station and Rs. 100 for ' expenses. This conduct on the part of the wife can easily be explained as that of a person who had found that her love letter had been discovered by the husband. She would naturally try to flee away from the husband for the time being at least because she had not the 859 moral courage to face him. The question is whether her leaving her marital home on the afternoon of May 24, 1947, is only consistent with her having deserted, her husband, in the sense that she had deliberately ' decided permanently to forsake all relationship with her husband with the intention of not returning to consortium, without the consent of the husband and against his wishes. That is the plaintiff 's case. May that conduct be not consistent with the defendant 's case that she had not any such intention, i.e., being in desertion? The following observations of Pollock, M. R. in Thomas vs Thomas(1) may usefully be quoted in this connection: "Desertion is not a single act complete in itself and revocable by a single act of repentance. The act of departure from the other spouse draws its significance from the purpose with which it is done, as revealed by conduct or other expressions of intention: see Charter vs Charter(2). A mere temporary parting is equivocal, unless and until its purpose and object is made plain. I agree with the observations of Day J. in Wilkinson vs Wilkinson(3) that desertion is not a specific act, but a course of conduct. As Corell Barnes J. said in Sickert vs Sickert(4): 'The party who intends bringing the cohabitation to an end, and whose conduct in reality causes its termination, commits the act of desertion '. That conduct is not necessarily wiped out by a letter of invitation to the wife to return". The defendant 's further case that she bad been turned out of the house by the husband under duress cannot be accepted because it is not corroborated either by circumstances or by direct testimony. Neither her father nor her cousin say a word about her speaking to them on her arrival at Jalgaon that she had been turned out of her husband 's home. If her case that she bad been forcibly turned out of her marital home by the husband had been made out, certainly the husband would have been guilty of "constructive desertion", because the test is riot who (1) (3) (2) (4) , 282, 860 left the matrimonial home first. (See Lang vs Lang(1)). If one spouse by his words and conduct compel the other spouse to leave the marital home. the former would be guilty of desertion, though it is the latter who has physically separated from the other and has been made to leave the marital home. It should be noted that the wife did not cross petition for divorce or for any other relief. Hence it is no more necessary for us to go into that question. It is enough to point out that we are not prepared to rely upon the uncorroborated testimony 'of the defendant Chat she had been compelled to leave her marital home by the threats of the plaintiff. The happenings of May 24, 1947, as pointed out above, are consistent with the plaintiff 's case of desertion by the wife. But they are also consistent not with the defendant 's case as actually Pleaded in her written statement, but with the fact; and circumstances disclosed in the evidence, namely, that the defendant having been discovered in her clandestine amorous correspondence with her supposed paramour Mahendra, she could not face her husband or her husband 's people living in the same flat in Bombay and therefore shamefacedly withdrew herself and went to her parent 's place of business in Jalgaon on the pretext of the marriage of her cousin which was yet far off. That she was not expected at Jalgaon on that day in connection with the marriage is proved by her own admission in the witness box that "when I went to Jalgaon everyone was surprised". As pointed out above, the burden is on the plaintiff to prove desertion without cause for the statutory period of four years, that is. to say, that the deserting spouse must be in desertion throughout the whole period. In this connection the following observations of Lord Macmillan in his speech in the House of Lords in the case of Pratt vs Pratt(2 ) are apposite: "In my opinion what is required of a petitioner for divorce on the ground of desertion is proof that throughout the whole course of the three years the respondent has without cause been in desertion. The (1) 417. (2) , 420. 861, deserting spouse must be shown to have persisted in the intention to desert throughout the whole period. In fulfilling its duty of determining whether on the evidence a case of desertion without cause has been proved the court ought not, in my opinion, to leave out of account the attitude of mind of the petitioner. If on the facts it appears that a petitioning husband has made it plain to his deserting wife that he will not receive her back, or if he has repelled all the advances which she may have made towards a resumption of married life, he cannot complain that she has persisted without cause in her desertion". It is true that the defendant did not plead that she had left her husband 's home in Bombay in the circumstances indicated above. She, on the other hand, pleaded constructive desertion by the husband. That case, as already observed, she has failed to substantiate by reliable evidence. But the fact that the defendant has so failed does not necessarily lead to the conclusion that the plaintiff has succeeded in proving his case. The plaintiff must satisfy the court that the defendant had been in desertion for the continuous period of four years as required by the Act. If we come to the conclusion that the happenings of May 24, 1947, are consistent with both the conflicting theories, it is plain that the plaintiff has not succeeded in bringing the offence of desertion home to the defendant beyond all reasonable doubt. We must therefore examine what other evidence there is in support of the plaintiff 's case and in corroboration of his evidence in court. The next event of importance in this narrative is the plaintiff 's solicitor 's letter of July 15, 1947, addressed to the defendant, care of her father at Jalgaon. The defendant 's cousin 's marriage was performed towards the end of June and she could have come back to her husband 's place, soon thereafter ' Her evidence is that after the marriage had been performed she was making preparations to go back to Bombay but her father detained her and asked her to await a letter from the plaintiff. The defendant instead of getting an invitation from the plaintiff to 862 come back to the marital home received the solicitor 's letter aforesaid, which, to say the least, was not calculated to bring the parties nearer. The letter is in these terms: "Madam, Under instructions from our client Bipin Chandra J. Shah we have to address you as under: That you were married to our client in or about April 1942 at Patan. Since the marriage you and our client lived together mostly in Bombay and son by name Kirit was born on or about the 10th day of September 1944. Our client. states that he left for Europe in January last and returned by the end of May last. After our client 's return, our client learnt that during our client 's absence from India you developed intimacy with one Mahendra and you failed to give any satisfactory reply when questioned about the same and left for your parents under the pretext of attending to the marriage ceremony of your cousin. You have also taken the minor with you and since then you are residing with your father to evade any satisfactory explanation. Our client states that under the events that have happened, our client has become entitled to obtain a divorce and our client does not desire to keep you any longer under his care and protection. Our client desires the minor to be kept by him and we are instructed to request you to send back the minor to our client or if necessary our client will send his agent to bring the minor to him. Our client further states that in any event it will be in the interest of the minor that he should stay with our client. Our client has made this inquiry about the minor to avoid any unpleasantness when our client 's agent comes to receive the minor". The letter is remarkable in some respects,apart from antedating the birth of the son Kirit by a year. The letter does not in terms allege that the defendant was in desertion, apart from mentioning the fact that she had left against the plaintiff 's wishes or that she had done so with the intention of permanently abandon 863 ing her marital duties. On the other hand, it alleges that "You are residing with your father to avoid any satisfactory explanation". The most important part of the letter is to the effect that the plaintiff had "become entitled to obtain a divorce" and that he "does not desire to keep you any longer under his care and protection". Thus if the solicitor 's letter is any indication of the working of the mind of the plaintiff, it makes it clear that at that time the plaintiff did not believe that the defendant had been in desertion and that the plaintiff had positively come to the determination that he was no longer prepared to affirm the marriage relationship. As already indicated, one of the essential conditions for success in a suit for divorce grounded upon desertion is that the deserted spouse should have been willing to fulfill his or her part of the marital duties. The statement of the law in para 457 at p. 244 of Halsbury 's Laws of England (3rd Edn. Vol 12) may be usefully quoted: "The burden is on the petitioner to show that desertion without cause subsisted, throughout the statutory period. The deserting spouse must be shown to have persisted in the intention to desert throughout the whole of the three year period. It has been said that a petitioner should be able honestly to say that he or she was all along willing to fulfill the duties of the marriage, and that the desertion was against his or her will, and continued throughout the statutory period without his or her consent; but in practice it is accepted that once desertion has been started by the fault of the deserting spouse, it is no longer necessary for the deserted spouse to show that during the three years preceding the petition be or she actually wanted the other spouse to come back, for the intention to desert is presumed to continue. That presumption may, however, be rebutted". Applying those observations to the facts of the present case, can the plaintiff honestly say that be was all along willing to fulfill the duties of the marriage and that the defendant 's desertion, if any, continued throughout the statutory period without his consent. The letter, exhibit A) is an emphatic No. In the first 864 place, even the plaintiff in that letter did not allege any desertion and, secondly, he was not prepared to receive her back to the matrimonial home. Realising his difficulty when cross examined as to the contents of that letter, he wished the court to believe that at the time the letter was written in his presence he was "in a confused state of mind" and did not remember exactly whether he noticed the sentence that he did not desire to keep his wife any longer. Pressed fur ther in cross examination, he was very emphatic in his answer and stated: "It is not true that by the date of this letter I had made up my mind not to take her back. It was my hope that the letter might induce her parents to find out what had happened, and they would persuade her to come back. I am still in the confused state of mind that despite my repeated attempts my wife puts me off". In our opinion, the contents of the letter could not thus be explained away by the plaintiff in the witness box. On the other hand, it shows that about seven weeks after the wife 's departure for her father 's place the plaintiff had at least for the time being convinced himself that the defendant was no more a suitable person to live with. That, as found by us, be was justified in this attitude by the reprehensible conduct of his wife during his absence is beside the point. This letter has an importance of its own only in so far as it does not corroborate the plaintiff 's version that the defendant was in desertion and that the plaintiff was all along anxious to induce her to come back to him. This letter is more consistent with the supposition that the husband was very angry with her on account of her conduct as betrayed by the letter, exhibit E and that the wife left her husband 's place in shame not having the courage to face him after that discovery. But that will not render her in the eye of the law a deserter, as observed by Pollock, M. R. in Bowron vs Bowron(1) partly quoting from Lord Gorell as follows: "In most cases of desertion the guilty party (1) , 192. 865 actually leaves the other, but it is not always or necessarily the guilty party who leaves the matrimonial home. In my opinion, the party who intends bringing the cohabitation to an end, and whose conduct in reality causes its termination, commits the act of desertion: See also Graves vs Graves(1); Pulford vs Pulford(2); Jackson vs Jackson(2); where Sir Henry Duke P. explains the same doctrine. You must look at the conduct of the spouses and ascertain their real intention". It is true that once it is found that one of the spouses has been in desertion, the presumption is that the desertion has continued and that it is not necessary for the deserted spouse actually to take steps to bring the deserting spouse back to the matrimonial home. So far we do not.find any convincing evidence in proof of the alleged desertion by the wife and naturally therefore the presumption of continued desertion cannot arise. But it is not necessary that at the time the wife left her husband 's home, she should have at the same time the animus deserendi. Let us therefore examine the question whether the defendant in this case, even if she had no such intention at the time she left Bombay, subsequently decided to put an end to the matrimonial tie. This is in consonance with the latest pronouncement of the Judicial Committee of the Privy Council in the case of Lang vs Lang(1) in an appeal from the decision of the High Court of Australia, to the following effect: "Both in England and in Australia, to establish desertion two things must be proved: first, certain outward and visible conduct the 'factum ' of desertion; secondly, the 'animus deserendi ' the intention underlying this conduct to bring the matrimonial union to an end. In ordinary desertion the factum is simple: it is the act of the absconding party in leaving the matrimonial home. The contest in such a case will be almost entirely as to the 'animus '. Was the intention (1) 3 Sw. & Tr. (3) (2) (4) [1955] A.G. 402, 417. 866 of the party leaving the home to break it up for good, or something short of, or different from that?" In this connection the episode of November, 1947, when the plaintiff 's mother came from Patan to Bombay is relevant. It appears to be common ground now that the defendant had agreed to come back to Bombay along with the plaintiff 's mother or after a few days. But on this information being given to the plaintiff he countermanded any such steps on the wife 's part by sending the telegram, exhibit B,aforesaid and the plaintiff 's father 's letter dated November 15, 1947. 'We are keeping out of consideration for the present the letter, exhibit C, dated November 13, 1947, which is not admitted to have been received either by the defendant or her father. The telegram is in peremptory terms: "Must not send Prabha". The letter of November 15, 1947, by the plaintiff 's father to the defendant 's father is equally peremptory. It says "It is absolutely necessary that you should obtain the consent of Chi. Bipinchandra before sending Chi. Prabhavati". The telegram and the letter which is a supplement to the telegram, as found by the courts below, completely negative the plaintiff 's statement in court that he was all along ready and willing to receive the defendant back to his home. The letter of November 13, 1947, exhibit C, which the plaintiff claims to have written to his father in law in explanation of the telegram and is a prelude to it is altogether out of tune with the tenor of the letter and the telegram referred to above. The receipt of this letter has been denied by the defendant and her father. In court this letter has been described as a fake in the sense that it was an afterthought and was written with a. view to the legal position and particularly with a view to getting rid of the effect of the solicitor 's letter of July 15, which the plaintiff found it hard to explain away in the witness box. Neither the trial court, which was entirely in favour of the plaintiff and which had accepted the letter as genuine, nor the appellate Court, which was entirely in favour of the defendant has placed implicit faith in the bona fides of this letter. The lower appellate Court 867 is rather ironical about it, observing "This letter as it were stands in isolated glory. There is no other letter. There is no other conduct of the plaintiff which is consistent with this letter". Without going into the controversy as to the genuineness or bona fldes of this letter, it can be said that the plaintiff 's attitude, as disclosed therein, was that he was prepared to take her back into the matrimonial home provided she wrote a letter to him expressing real repentance and confession of mistake. This attitude of the plaintiff cannot be said to be unreasonable in the circumstances of the case. He was more sinned against than sinning at the beginning of the controversy between the husband and the wife. This brings us to a consideration of the three attempts alleged by the plaintiff to have been made by him to induce his wife to return to the matrimonial home when he made two journeys to Patan in 1948 and the third journey in April May, 1949, to Jalgaon. These three visits are not denied by the defendant. The only difference between the parties is as to the purpose of the visit and the substance of the talk between them. That the plaintiff 's attachment for the defendant had not completely dried up is proved by the fact that when he came to know that she had been suffering from typhoid he went to Patan to see her. On this occasion which was the second visit the plaintiff does not say that he proposed to her to come back and that she refused to do so. He only says that she did not express any desire to come back. That may be explained as being due to diffidence on her part. But in respect of the first and the third visits the plaintiff states that on both those occasions he wanted her to come back but she refused. On the other hand, the defendant 's version is that the purpose of his visit was only to take away the child and not to take her back to his home. It is also the plaintiff 's complaint that the defendant never wrote any letter to him offering to come back. The wife 's answer is that she did write a few letters before the solicitor 's letter was received by the father and that thereafter under her father 's advice she did not write 868 any more to the plaintiff. In this connection it becomes necessary to examine the evidence of her cousin Babulal and her father Popatlal. Her cousin, Babulal, who was a member of her father 's joint family, deposes that on receipt of the letter, exhibit A, a fortnight later he and his father, since deceased, came to Bombay and saw the plaintiff. They expostulated with him and pleaded the defendant 's cause and asked the plaintiff to forgive and forget and to take her back. The plaintiff 's answer was that he did not wish to keep his wife. The defendant 's father 's evidence is to the effect that after receipt of the letter, exhibit A, he came to Bombay and saw the plaintiff 's father at his residence and protested to him that "a false notice had been given to us". The plaintiff 's father is said to have replied that they "would settle the matters amicably" He also deposes as to his brother and his brother 's son having gone to the plaintiff. He further states that he with his wife and the defendant went to Patan and saw the plaintiff 's mother and in consultation with her made arrangements to send her back to 'Bombay. But before that could be done the telegram, exhibit B, and the letter, exhibit D, were received and consequently he gave up the idea of sending the defendant to Bombay without straightening matters. Both these witnesses on behalf of the defendant further deposed to the defendant having done several times and stayed with the plaintiff 's family, particularly his mother at Patan along with the boy. The evidence of these two witnesses on behalf of the defendant is ample corroboration of the defendant 's ,case and the evidence in court that she has all along been ready and willing to go back to the matrimonial home. The learned trial Judge has not noticed this evidence and we have not the advantage of his comment on this corroborative evidence. This body of evidence is in consonance with the natural course of events. The plaintiff himself stated in the witness box that he had sent the solicitor 's ' letter by way of a shock treatment to the defendant 's family so that they might persuade his wife to come back to his matrimonial home. The subsequent 869 telegram and letters (assuming that both the letters of the 13th and 15th November had been posted in the usual course and received by the addressees) would give a shock to the family. Naturally thereafter the members of the family would be up and doing to see that a reconciliation is brought about between the husband and the wife. Hence the visits of the defendant 's uncle and the father would be a natural conduct after they had been apprised of the rupture between them. We therefore do not see any sufficient reasons for brushing aside all that oral evidence which has been believed by the Lower Appellate Court and had not in terms been disbelieved by the trial court. This part of the case on behalf of the defendant and her evidence is corroborated by the evidence of the defendant 's relatives aforesaid. It cannot be seriously argued that evidence should be disbelieved, because the witnesses happened to be the defendant 's relatives. They were naturally the parties most interested in bringing about a reconciliation They were anxious not only for the welfare of the defendant but were also interested in the good name of the family and the community as is only natural in families like these which have not been so urbanised as to completely ignore the feelings of the community. They would therefore be the persons most anxious in the interests of all the parties concerned to make efforts to bring the husband and the wife together and to put an end to a controversy which they con sidered to be derogatory to the good name and, prestige of the families concerned. The plaintiff 's evidence, on the other hand, on this part of the case is uncorroborated. Indeed his evidence stands uncorroborated in many parts of his case and the letters already discussed run counter to the tenor of his evidence in court. We therefore feel inclined to accept the defendant 's case that after her leaving her husband 's home and after the performance of her cousin 's marriage she was ready and willing to go back to her husband. It, follows from what we have said so far that the wife was not in desertion though she left her husband 's home without any fault on the part of the 870 plaintiff which could justify her action in leaving him, and that after the lapse of a few months ' stay at her father 's place she was willing to go back to her matrimonial home. This conclusion is further supported by the fact that between 1948 and 1951 the defendant stayed with her mother in law at Patan whenever she was there, sometimes for months, at other times for weeks. This conduct is wholly inconsistent with the plaintiff 's case that the defendant was in desertion during the four years that she was out of her matrimonial home. It is more consistent with the defen dant 's attempts to. get herself re established in her husband 's home after the rupture in May 1947 as aforesaid. It is also in evidence that at the suggestion of her mother in law the defendant sent her three year old son to Bombay so that be might induce his ' ,father to send for the mother, The boy stayed in Bombay for about twenty days and then was brought. back to Patan by his father as he (the boy) was unwilling to stay there without the mother. , This was in August_September 1948 when the defendant deposes to having questioned her husband why she bad not been called back and the husband 's answer was evasive. Whether or not this statement of the defendant is true, there can be no doubt that the defendant would not have allowed her little boy of about three years of age to be sent alone to Bombay except in the hope that he might be instrumental in bringing about a reconciliation between the father and the mother. The defendant has deposed to the several efforts made by her mother in law and her father in law to intercede on her behalf with the plaintiff but without any result. There is no explanation why the plaintiff could not examine his father and mother in corroboration of his case of continuous desertion for the statutory period by the defendant. Their evidence would have been as valuable, if not more, as that of the defendant 's father and cousin as discussed above. Thus it is not a case where evidence was not available in corroboration of the plaintiff 's case. As the plaintiff 's evidence on many important aspects of the case 871 has remained uncorroborated by evidence which could be available to him, we must hold that the evidence given by the plaintiff falls short of proving his case of desertion by his wife. Though we do not find that the essential ingredients of desertion have been proved by the plaintiff, there cannot be the least doubt that it was the defendant who had by her objectionable conduct brought about a rupture in the matrimonial home and caused the plaintiff to become so cold to her after she left him. In view of our finding that the plaintiff has failed to prove his case of desertion by the defendant, it is not necessary to go into the question of animus revertendi on which considerable argument with reference to case law was addressed to us on both sides. For the aforesaid reasons we agree with the Appellate Bench of the High Court in the conclusion at which they had arrived, though not exactly for the same reasons. The appeal is accordingly dismissed. But as the trouble started on account of the defendant 's con duct, though she is successful in this Court, we direct that each party must bear its own costs throughout. Appeal dismissed.

The parties were married in 1942 and there was a child of the marriage. In 1947 the appellant left for England on business and on his return to India discovered that this wife (respondent) bad been having amorous correspondence with one M, and taxed her with having developed intimacy with him. She was unable to give any answer and went to her father 's place on May 24, 1947, on the pretext of the marriage of her cousin which was to take place in June. On July 15, 1947, the appellant sent a notice to the respondent through his solicitor in which after mentioning the fact that she had, left against his wishes stated that he did not desire to keep her any ' longer under his care and protection, and desired her to send the minor son to him. On July 4, 1951, the appellant instituted the suit for divorce under section 3(1)(d) of the Bombay Hindu Divorce Act, 1947, on the ground that the respondent had been in desertion ever since May 24, 1947, without reasonable cause and without his consent and against his will for a period of over four years. The respondent 's case that it was the appellant who by his treatment of her after his return from England had made her life unbearable and compelled her to leave her marital home against her wishes, 'was not proved but there was evidence that after the solicitor 's notice dated July 15, 1947, was received by the respondent, attempts were made by her father and his relations to bring about reconciliation between the parties but they failed owing to the attitude of the appellant. The question was whether the respondent had been in desertion, entitling the appellant to have a decree for divorce. Held that, on the facts, though the initial fault lay with the respondent, her leaving her marital home was not actuated by any animus to desert her husband but as the result of her sense of guilt, and as subsequently she was willing to come back but could not do, so owing to the attitude of the appellant, there was no proof that she deserted him, much less that she bad harbored that animus for the statutory period, and the appellant 's case must fail. The essential conditions for the offence of desertion, so far as the deserting spouse is concerned, are (i) the factum of separation and (ii) the intention to bring cohabitation permanently to an end 839 (animus deserendi); and as regards the deserted spouse the elements are (i) the absence of consent and (ii) absence of conduct giving reasonable cause to the spouse leaving the matrimonial home to form the necessary intention aforesaid. Desertion is a matter of inference to be drawn from the facts and circumstances of each case and those facts have to be viewed as to the purpose which is revealed by those facts or by conduct and expression of intention, both anterior and subsequent to the actual act of separation. In a suit for divorce on the ground of desertion the burden is on the plaintiff to prove that the deserting spouse has been in desertion throughout the statutory period of four years. Thomas vs Thomas ([1924] P. 194), Bowron vs Bowron ([1925] P. 187), Pratt vs Pratt ([1939] A.C. 417) and Lang vs Lang ([1965] A.C. 402), referred to. Quaere, whether the statutory period of four years specified in section 3(1)(d) should immediately precede the institution of the suit for divorce.

ivil Appeal No. 408 of 1980. From the Judgment and Order dated 21.12.79 of the Alla habad High Court in Second Appeal No. 1235 of 1974. Mrs. section Swaran Mahajan and Arun Madan for the Appellants. S.K. Mehta for the Respondent. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is a tenants ' appeal by special leave from the judgment and order of the High Court of Allahabad. The question involved in this appeal. as is usual, in all these cases, is what is just in the circum stances and events that have happened. The premises in question is in the village and P.O. Dhampur in the District of Bijnor in the State of Uttar Pradesh. The suit was filed in 1967. The suit for the evic tion of the appellants was filed on the ground that tenants had made material alteration in the property and as such became liable for ejectment in view of section 3(1)(c) of the Uttar Pradesh (Temporary) Control of Rent and Eviction Act, 1947 (hereinafter referred to as 'the Act of 1947 '). The said section 3 in the said provision enjoins that no suit without the permission of the District Magistrate shall be filed in any civil court against a tenant for his eviction from any accommodation, except on one or more of the grounds enumerated therein and clause (c) of sub section (1) of section 3 was as follows: 11 "that the tenant has, without the permission in writing of the landlord, made or permitted to be made any such construction as, in the opinion of the court, has materially altered the accommodation or is likely substantially to diminish its value;" It appears that the constructions on the basis of which eviction of the tenants was claimed were not in dispute and were not disputed at any stage. These were (i) that the tenants have placed a khaprail in place of khasposh; (ii) Kuchha kothas had been converted into pucca ones which were six in number; (iii). an open place had been enclosed and included in the accommodation in question. The action was contested. It was asserted by the tenants that these con structions had been made in order to save the buildings from rain water and fire and that these constructions were not such as would make the tenants liable for ejectment within the meaning of section 3 of the Act of 1947. It was further contended that these constructions had been made with the knowledge and consent of the landlord. The learned trial Judge, which in this case was the court of learned Munsif at Nagina, by its order dated 17th December, 1968 and the first Appellate Court, which is the Civil Judge, by its order dated 16th February, 1984 have found that the constructions had been made by the tenants without the consent and knowl edge of the landlord and that the constructions in question amounted to "material alterations". On these grounds, the landlord 's suit was decreed and the appeal by the tenants was dismissed. The tenants went in second appeal before the High Court. The High Court found that these alterations had been made, namely, the conversion of six kuchha kothas into pucca one and this was done after demolition of the old constructions. After the old construction had ceased to exist, entirely new constructions had come up in their place. This, according to the High Court, came within the meaning of structural alterations in the building. The High Court further found that the accommodation had been increased by enclosing the nearby open space and that again must have been done by raising walls either connecting the various kothas or in some other way. In either case, the High Court found, the shape and the extent and preparation of the accommodation had been increased and was thereafter differ ent than what it was before. In those circumstances, the High Court came to the conclusion that the alterations admittedly made by the tenants were "material alterations" and as such came within the mischief of section 3(1)(c) of the Act of 1947. In the aforesaid view of the matter, the High Court dismissed the second appeal and granted two months ' time 12 to the tenants to vacate. The judgment and the order of the High Court was passed on 21st December, 1979. Leave was granted by this Court under Article 136 of the Constitution on 18th February, 1990. Since then, this appeal is before this Court. As mentioned hereinbefore, the action was instituted under the aforesaid Act of 1947, which was the temporary Act. We have set out the relevant provisions of the Act. It is apparent from the said provisions that the ground for eviction could be either such construction which materially altered the accommodation or in the alternative is likely to substantially diminish its value. These are the disjunctive requirements. This Court had occasion to construe section 3(1)(c) of the Act of 1947 in Babu Manmohan Das Shah & Ors. vs Bishun Das; , and was confronted with the question whether the landlord was entitled to evict the tenant if the alterations were material alterations only or whether proof was also necessary of the diminished value of the property as a result of such alteration. This Court had also occasion to consider what amounted to 'material altera tions ' under the said Act. This Court noted that the lan guage of the clause (c) of section 3(1) of the Act of 1947 made it clear that the legislature wanted to lay down two alter natives which would furnish ground to the landlord to sue without the District Magistrate 's permission, that is, where the tenant has made such construction which would materially alter the accommodation or which would be likely to substan tially diminish its value. Therefore, these are disjunctive or alterative requirements. This Court further held that although no general definition can be given of what "materi al alterations" mean, as such a question would depend on the facts and circumstances of each case, the alterations in that case amounted to "material alterations" as the con struction carried out by the tenant had the effect of alter ing the form and structure of the accommodation. In the facts and circumstances of the instant appeal before us, all the courts have accordingly found that construction carried out by the tenants have the effect of altering the form and structure of the accommodation. In view of the contentions urged by Mrs. Swaran Mahajan, it has to be borne in mind that the trial court passed its order on 17th December, 1968 well before the time when the Act of 1972 being the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (13 of 1972) (herein after referred to as 'the Act of 1972 ') came into force. The said Act came into force on 20th September, 1972. The rights of the parties have crystallised after the institution of the suit which was during the continuance of Act of 1947, and before the Act 13 of 1972. The appellants in this appeal could not dispute that there were material alterations. It could not also be disputed before us by Mrs. Mahajan counsel on behalf of the tenants that under the law as it stood and the law as ex plained in Babu Manmohan Das Shah 's case (supra), it was not necessary at that time to further prove that the alteration has or is likely to diminish the value of the property. But what Mrs. Mahajan has sought to canvass before us is that under section 20(2)(c) of the Act of 1972, the ground is that the tenant has without the permission in writing of the landlord made or permitted to be made any such construction or struc tural alteration in the building as is likely to diminish its value or utility or to disfigure it. Mrs. Mahajan there fore contends that now to make the tenants liable to be evicted it is necessary to allege and prove not only that construction has resulted in material alteration in the building but also that such construction is likely to dimin ish either the value or the utility of the building or disfigure it. In this case, according to counsel for the appellants, that being in the possession, the eviction cannot any longer be sustained. She drew our attention to section 20(2)(c) of the Act of 1972. She relied on the observations of this Court in Qudrat Ullah vs Municipal Board, Barejify, ; In that case, this Court had to deal with the Act of 1947 as well as Act of 1972. Krishna Iyer, J. speaking for this Court observed that the general principle regarding the consequence of repeal of a statute is that the enactment which is repealed is to be treated, except as to transactions past and closed, as if it had never existed. The operation of this principle is subject to any savings which may be made expressly or by implication by the repeal ing enactment. If the repealing enactment makes a special provision regarding pending or past transactions it is this provision that will determine. Whether the liability arising under the repealed enactment survives or is extinguished. Section 6 of the Uttar Pradesh General Clauses Act, 1904 applies generally, in the absence of a special saving provi sion in the repealing statute. It was further observed that where a repeal is followed by a fresh legislation on the subject, the Court has to look to the provisions of the new Act to see whether they indicate a different intention. Krishna Iyer, J. further observed in that case that Sec. 43(2)(h) of the Act of 1972 makes it clear that even if the power for recovery of possession be one under the earlier Rent Control Law, the later Act will apply and necessary amendments in the pleadings can be made. This indicates that it is the later Act which must govern pending proceedings for recovery of possession or recovery or fixation of rent. In that case, the suit was not even one under the Act but proceeded on the footing that the contractor was only a licencee and so none of the savings clauses in section 43(2) applied. The provision relating to effect of 14 repeal under U.P. General Clauses Act was set out at p. 539 of the report. section 43(2) of the Act of 1972 is, therefore, relevant. Sub section (1) of section 43 of the Act of 1972 lays down that Act of 1947 is hereby repealed. Sub section (2) makes provision for pending proceedings in different clauses. Clause (h) of Sub section (2) provides as follows: "any court or authority before which any suit or other proceeding relating to the recovery or determination or fixation of rent of, or eviction from, any building is pending immedi ately before the commencement of this Act may, on an application being made to it within sixty days from such commencement, grant leave to any party to amend its pleading in conse quence of the provisions of this Act;" This clause was the subject matter of construction in the decision of this Court in Qudrat Ullah 's, case (supra). Referring to the said clause, Mr. Justice Krishna Iyer observed at p. 540 of the report that it is clear that even if the statute for recovery of possession be one under the earlier Rent Control Law, the later Act will apply and necessary amendments in the pleadings can be made. This definitely indicates, according to that decision, that it is the later Act that must govern pending proceedings for recovery of possession or recovery or fixation of rent. But these observations made therein would not help Mrs. Mahajan, as contended by Mr. Mehta that the rights of the parties have crystallised before the coming into operation of the 1972 Act, and vested rights of the landlord had not been divested by clause (h) of section 43(2) of the Act of 1972. On the other hand, section 43(2)(s) saves the right that have ac crued in favour of the landlord. The said clause (s) reads as follows: "any suit for the eviction of a tenant insti tuted on any ground mentioned in sub section (1) of section 3 of the old Act, or any proceeding out of such suit (including any proceeding for the execution of a decree passed on the basis of any agreement, compromise or satisfaction), pending immediately before the commencement of this Act, may be continued and concluded in accordance with the old Act which shall, for that purpose, be deemed to continue to be in force;" Therefore, the suit which was filed on the ground that there was material alterations simplicitor under section 3(1)(c) of the Act of 1947 would continue to be valid after the coming into operation of Act of 15 1972 in view of clause (s) of sub section (2) of section 43 thereof. That is the consequence of the language used. The observations of this Court in Qudrat Ullah 's, case (supra) do not in any way suggest to the contrary. Mrs. Mahajan tried to urged that the Act of 1947 was a temporary Act. Therefore, it could not create any right in favour of the landlord after the expiry of the time. This argument is under a misconception. Neither the Act of 1947 nor the Act of 1972 gives any right to the landlord. The landlord 's right to evict tenant is guided by the Transfer of Property Act. The Act of 1947 gives protection to the tenants under certain conditions and at the time when the suit was filed, the rights of the parties had been crystallised. On the facts as alleged and proved and found by the Court, the tenants were liable to be evicted. The question of temporary rights in favour of the landlord does not arise. Mrs. Maha jan further submitted that the new provisions of the Act should enlighten us to determine what is just in this case. She submitted that it will be unjust in the facts and the circumstances of the case to permit eviction of the tenants on the ground of constructions which do not in any way alter or diminish the value of the premises in question. She, on the other hand pleaded that the constructions made have improved the building. Therefore, instead of being liable to be evicted, the tenants should be protected. These are, of course, submissions not sustainable in law. The rights of the parties must be determined in accordance with the provi sions of law. What justice of the case entails, and what is just, due and the law says, is to be given to each one whether being a landlord or a tenant. "The Judge is not to innovate at pleasure. He is not a knigh errant roaming at will in pursuit of his own ideal of beauty or of goodness. " Cardozo (The Nature of the Judicial Process, page 141). If that is the position on the date when the rights crystallised and in view of sub section (s) of sec tion 43(2) of the Act of 1972, those rights will continue as if they were under the old Act. The fight had accrued to the landlord to get the eviction even if the alteration had not in any way affected or diminished the value of the premises. That right cannot be deprived. But justice also consists in balancing the rights of the parties. The tenants in this case, it.is said, are poor. There was nothing to dispute this submission. It is further said that these have been there for a long time. In the aforesaid view of the matter, we dismiss the appeal but we direct that the tenants will not be evicted until 30th September, 1990 provided the tenants give the usual undertaking containing the usual terms and stating, inter alia, that they are in possession, within four weeks of this date. The undertaking must be given by each of the 16 appellants. In default of filing undertaking, the decree will be executable forthwith. We must further observe that in view of the condition of the tenants if an application is made for allotment of any other area by these parties to the appropriate authority, and if the appellants are not in possession or occupation of other property, such authority should consider the feasibil ity of giving them fresh allotment of some other property. The appeal is, therefore, dismissed. In the facts and the circumstances of the case, the parties will bear and pay their own costs. Y. Lal Appeal dis missed.

The appellants are the tenants of premises situated in the District of Bijnor. The suit for their eviction was filed in 1967 on the ground that they (tenants) had made material alteration in the property and as such were liable for ejectment under section 3(1)(c) of the U.P. (Temporary) Control of Rent 'and Eviction Act 1947. The appellants did not dispute the constructions in the demised premises, but asserted that the constructions in question had been made with a view to save the building from rain water and fire and the constructions were not such which would render them liable for eviction as contemplated under section 3 of the Act of 1947. The appellants also pleaded that the construc tions were effected with the permission of the landlord. The learned Munsif, who tried the suit held that the construc tions had been made by the tenants appellants without the consent/knowledge of the landlord and that the constructions amounted to "material alterations". He accordingly decreed the landlord 's suit. The First Appellate Court, which is the Civil Judge affirmed the decree of eviction by his order dated 16th Feb. 1984. Thereupon the appellants went in second appeal before the High Court. The High Court too dismissed the appeal. It found that the constructions have been made by demolishing the old structures, by conversion of six Kuchha Kothas into pucca ones and an entirely new constructions had come up in their place. It further found that the accommodation had been increased by enclosing the open space which must have been possible only by raising walls etc. In any case, ac cording to the finding of the High Court, the property looked different from what originally it was. Thus the alterations made by the appellants were material alterations and as such came within the mischief of section 3(1)(c) of the Act 1947. 9 Hence this appeal by the appellants tenants. Dismissing the appeal, this Court, HELD: Under Section 3(1)(c) of the Act it is apparent that the grounds for eviction could be either such construc tion which materially altered the accommodation or alterna tively is likely to substantially diminish its value. These are the disjunctive requirements. In the facts and circum stances of the instant appeal, all the Courts have found that constructions carried out by the tenants have the effect of altering the form and structure of the accommoda tion. [12B C; F] The suit which was filed on the ground that there were material alterations simpliciter under section 3(1)(c) of the Act of 1947 would continue to be valid after the coming into operation of Act of 1972 in view of clause (s) of Sub section (2) of section 43 thereof. This is the consequence of the language used. Neither the Act of 1947, nor the Act of 1972 gives any right to the landlord. The landlord 's right to evict tenant is guided by the Transfer of Property Act. The Act of 1947 gives protection to the tenants under certain conditions and at the time when the suit was filed, the rights of the parties had been crystallised. On the facts as alleged and proved and found by the Court, the tenants were liable to be evicted. The question of temporary rights in favour of the landlord does not arise. [14H; 15A C] The rights of the parties must be determined in accord ance with the provisions of law. What justice of the case entails and what is just, due and the law says, is to be given to each one whether being a landlord or a tenant. "The Judge is not to innovate at pleasure. He is not a knight errant roaming at will in pursuit of his own ideal of beauty or of goodness" (Cardozo The Nature of the Judicial process page 141). If that is the position on the date when the rights crystallised and in view of clause (s) of section 43 (2) of the Act of 1972, those rights will continue as if they were under the old Act. The right had accrued to the landlord to get the eviction even if the alteration had not in any way affected or diminished the value of the premises. That right cannot be deprived. [15D F] Considering the fact that the tenants are poor and in possession since long, the Court directed that the tenants will not be evicted until 30th September 1990 provided the tenants give 'the usual undertaking containing the usual terms stating, inter alia, that they are in possession, within four week of this date. The undertaking must be given by 10 each of the appellants. default of filing of undertak ing, the decree will be executable forthwith. [15H; 16A] The Court further observed that in view of the condition of the tenants, if an application is made for allotment of any other area by these parties to the appropriate authori ty, and if the appellants are not in possession or occupa tion of other property, such authority should consider the feasibility to give them fresh allotment of some other property. [16B] Babu Manmohan Das Shah & Ors. vs Bishun Das, ; and Qudrat Ullah vs Municipal Board, Bareilly, ; , referred to.

ivil Appeal Nos. 14 32, 902, 879, 1130 32, 1121, 1172, 1215, 1201, 1127, 1128, 1222, 1224, 1223, 1275, 1129, 1523, 1539, 1280, 863, 1361, 1323, 1375, 1621, 1374, 1410, 1628, 2117, 1961, 1917, 1918, 1919, 1920 & 2290 of 1978 3447 3450/79. Appeals by Special Leave from the Judgments and order dated 13.10.1977 etc. Of the Andhra Pradesh High Court in Writ Petition No. 1872/77 etc. AND WRIT PETITION Nos: 3973, 3998, 3836, 4198, 4199, 4200, 4210, 4263, 4317, 4318, 4414, 4256, 4537 and 4500 of 1978. F. section Nariman, K. Krishna Rao and K. Rajendra Choudhary far the Appellants in CA Nos. 14 to 23, 25 29, 1223 1224 1628/78, 3447 and 3449/79. A. Subba Rao for the Appellants in CA No. 1126 & WP Nos. 3973, 4198, 4199, 4200, 4317, 4318 4210/78. A. V. V. Nair for the Appellants in CA Nos. 1215, 1361, 2117, 1286 and W.P. No. 1374/78. G. section Rama Rao for the Appellants in CA No. 1121 & Petitioners in WP Nos. 4256 and 3836/78. Vepa Sarathi and B. Ranta Rao for the Appellants/Petitioners in CA Nos. 24, 30, 32, 1172, 1127, 1128, 1129, 1261, 1323 1275/ 78 and WP Nos. 4263, 4500 4537/78. section Venkata Reddy and G. Narsimulu for the Appellants in CA Nos. 31, 902, 879, 1130 32, 1410, 1621, 1917 20, 1961/78 & 1373/78. A. K. Ganguli for the Appellants in CAs 1222 and 863/78. R A. V. Rangam for the Petitioners in WP No. 3998/78. section Balakrishan for the Petitioners in WP 4414/78. V.S. Desai and A. Subba Rao for the Applicant/Intervener. 1147 K. K. Venugopal Addl. , Ram Chandra Reddy Adv. A Genl. A. P. and B. Parthasarthy for the appearing respondents. BHAGWATI, J. These appeals by special leave and the writ petitions represent a last but desperate attempt by the; class of land holders in Andhra Pradesh to defeat an agrarian reform legislation enacted by the State or the benefit of the weaker sections of community. It is indeed a matter of regret that a statute intended to strike at concentration of land in the hands of a few and to act as a great equaliser by reducing inequality in holding of land between the haves and the have nots should have practically remained unimplemented for a period of over seven years. Unfortunately, this is the common fate of much of our social welfare legislation. We can boast of some of the finest legislative measures calculated to ameliorate the socio economic conditions of the poor and the deprived and to reach social and economic justice to them, but regret ably, a large part of such legislation has remained merely on paper, and the benefits of such legislation have not reached the common man to any appreciable extent. The Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act 1 of 1973 (hereinafter referred to as the Andhra Pradesh Act) which is challenged in the present appeals was enacted by the Andhra Pradesh Legislature on 1st January 1973. Soon after its enactment, the constitutional validity of the Andhra Pradesh Act was challenged before the Andhra Pradesh High Court on various grounds, but a full Bench of the High Court negatived the challenge and held the Andhra Pradesh Act to be constitutionally valid. Though this judgment was delivered by the High Court as early as 11th April, 1973, no effective steps for implementation of the Andhra Pradesh Act could be taken, since the Andhra Pradesh Act merely remained on the statute book and for some inexplicable reason, it was. not brought into force until 1st January 1975. Even after the Andhra Pradesh Act was brought into force, not much enthusiasm was shown be the Government in implementing its provisions and in the mean while, it was found necessary to amend the legislation and hence the Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Amendment Act 1977 was enacted with retrospective effect from 1st January 1975 and by this amending Act certain amendments were made which included inter alia the introduction of section 41A. We shall presently refer to the relevant provisions of the amended Andhra Pradesh Act, but before we do so, it is necessary to point out that as soon as the amending Act was passed, another round 1148 of litigation was started by the landholders by filing writ petitions in the High Court challenging once again the constitutional validity of the Andhra Pradesh Act. There were several grounds on which the constitutional validity was challenged but the main ground was that by reason of the enactment of the Urban Land (Ceiling Regulation) Act 1976 (hereinafter referred to as the Central Act), the Andhra Pradesh Act had become void and inoperative. Certain other questions involving the interpretation of the provisions of the Andhra Pradesh Act were also raised in some of the writ petitions, but they too need not be mentioned here, because in the course of the hearing we made it clear to the parties that we would examine only the constitutional validity of the Andhra Pradesh Act and other questions could be agitated by the landholders in the appeals filed by them against the orders determining surplus land. It was pointed out to us that some of the landholders had not filed appeals within the prescribed time and grave injustice would therefore result to them if these question, were not decided by us. But the learned Additional Solicitor General appearing on behalf of the State family stated before us that if appeals have been filed beyond time or are filed within a month of disposal of these appeals, the delay in filing the appeals would be condoned. Turning to the constitutional challenge which in those days was required to be decided by a full Bench of 5 Judges of the High Court, it was held that the enactment of the Central Act did not have the effect of invalidating the whole of the Andhra Pradesh Act, but since the provisions of the Andhra Pradesh Act were repugnant to the provisions of the Central Act so far as concerned land satisfying both the definition of "land" in the Andhra Pradesh Act and the definition of "vacant land" in the Central Act, the Andhra Pradesh Act was held not applicable to "vacant land" falling within the ambit of the Central Act. The High Court accordingly granted a declaration to this effect to the landholders, but save for this limited relief, dismissed the writ petitions in all other respects, since in the opinion of the High Court there was no substance in any of the other contentions raised on behalf of the landholders. The landholders thereupon preferred the present appeals after obtaining special leave from this Court. The principal contention urged on behalf of the landholders in support of the appeals was that the Andhra Pradesh Act was ultra vires and void as being outside the legislative competence of the Andhra Pradesh Legislature. This contention was based on two resolutions, one dated 7th April 1972 passed by the Andhra Pradesh Legislative Council and the other dated 8th April 1972 passed by the Andhra Pradesh Legislative Assembly under clause (1) of Article 1149 252 of the Constitution. This Article carves out an exception derogating from the normal distribution of legislative powers between the Union and the States under Article 246 and is in the following terms: article 252(1) : If it appears to the legislatures of two or more States to be desirable that any of the matters with respect to which Parliament has no power to make laws for the States except as provided in Articles 249 and 250 should be regulated in such States by Parliament by law, and if resolutions to that effect are passed by all the Houses of the Legislatures of those States, it shall be lawful for Parliament to pass an Act for regulating that matter accordingly, and any Act so passed shall apply to such States and to any other State be which it is adopted afterwards by resolution passed in that behalf by the House or, where there are two Houses, by each of the Houses of the Legislature of that State. (2) An Act so passed by Parliament may be amend ed or repealed by an Act of Parliament passed or adopted in like manner but shall not, as respects any State to which it applies, be amended or repealed by an Act of the Legislature of that State. " The effect of passing of resolutions be the Houses of Legislature of two or more States under this constitutional provision is that Parliament which has otherwise power to legislate with respect to a matter, except as provided in Articles 249 and 250, becomes entitled to legislate with respect to such matter and the State Legislatures passing the resolutions cease to have power to make law relating to. that matter. The resolutions operate as abdication or surrender of the powers of the State Legislatures with respect to the matter which is the subject of the resolutions and such matter is placed entirely in the hands of Parliament and Parliament alone can then legislate with respect to it. It is as if such matter is lifted out of List II and placed in List I of the Seventh Schedule to the Constitution. This would seem to be quite clear on a plain natural construction of the language of clauses (1) and (2) of Article 252 and no authority. is necessary in support of it, but if any was wanted, it may be found in the decision of a Full Bench of five Judges of this Court in Union of India vs V. V. Chaudhary in fact the same Bench as the present one where an identical view has been taken. It was in pursuance of clause (l) of this Article that a Resolution 1150 was passed by the Andhra Pradesh Legislative Council on 7th April 1972 to the effect that "the imposition of a ceiling on urban immovable property and acquisition of such property in excess of the ceiling and all matters connected therewith or ancillary and incidental thereto should be regulated in the State of Madhya Pradesh by Parliament by law and an identical resolution in the same terms was passed on the next day by the Andhra Pradesh Legislature Assembly. Similar resolutions were also passed by the Houses of Legislature of some other States, though there is no material to show as to when they were passed. It was however common ground that at best some of these resolutions were passed prior to the enactment of the Andhra Pradesh Act. The result was that at the date when the Andhra Pradesh Act was enacted, Parliament alone was competent to legislate with respect to ceiling on urban immovable property and acquisition of such property in excess of the ceiling and all connected, ancillary or incidental matters, and the Andhra Pradesh Legislature stood denuded of its power to legislate on that subject. Now the Andhra Pradesh Act, as its long title shows, was enacted to consolidate and damned the law relating to the fixation of ceiling on agricultural holdings and taking over of surplus land and matter connected therewith. On its plain terms, it applies to land situate in any part of Andhra Pradesh. Section 3(f) creates an artificial unit called 'family unit ' by defining it as follows: "Sec. 3(f) "family unit" means (i) in the case of an individual who has a spouse or spouses, such individual, the spouse or spouses and their minor sons and their unmarried minor daughters; if any; (ii) in the case of an individual who has no spouse such individual and his or her minor sons and unmarried minor daughters; (iii) in the case of an individual who is a divorced husband and who has not remarried, such individual and his minor sons and unmarried minor daughters, whether in his custody or not; and (iv) where an individual and his or her spouse are both dead, their minor sons and unmarried minor daughters. Explanation Where a minor son is married, his wife and their offspring, if any, shall also be deemed to be members of the family unit of which the minor son is a member: 1151 The term "land" is defined in section 3(j) to mean "land which A is used or is capable of being used for purposes of agriculture, or for purposes ancillary thereto, including horticulture, forest land, pasture land, waste land, plantation and tope; and includes land deemed to be agricultural land under this Act". Explanation I to this definition enacts a rebuttable presumption that land held under Ryotwari settlement shall, unless the contrary is proved, be deemed to be 'land ' under the Andhra Pradesh Act. Section 3(o) defines 'person ' as including inter alia an individual and a family unit. Section 10 is the key section which imposes ceiling on the holding of land by providing that if the extent of the holding of a person is in excess of the ceiling area, the person shall be liable to surrender the land held in excess. If therefore an individual or a family unit holds land in excess of the ceiling area, the excess would have to be surrendered to the State Government. But the question then arises, what is the ceiling area above which a person cannot hold land. The answer is provided by section 4 which reads as follows: "Sec. 4(1) The ceiling area in the case of a family unit consisting of not more than five members shall be an & extent of land equal to one standard holding. (2) The ceiling area in the case of a family unit consisting of more than five members shall be an extent of land equal to one standard holding plus an additional extent of one fifth of one standard holding for every such member in excess of five, so however that the ceiling area shall not exceed two standard holdings. (3) The ceiling area in the case of every individual who is not a member of a family unit, and in the case of any other person shall be an extent of land equal to one standard holding. Explanation: In the case of a family unit, the ceiling area shall be applied to the aggregate of the lands held by all the members of the family unit". It will thus be seen that the ceiling area in the case of an individual who is not a member of a family unit is equivalent to one standard holding and so also in the case of a family unit with not more than five members, the ceiling area is the same, but if the family unit consists of more than five members, the ceiling area would stand increased by one fifth of one standard holding for every additional member of the family unit, subject however to the maximum limit of 2 standard holdings. When the ceiling area is applied to the holding of a 1152 family unit, the Explanation requires that the lands held by all the members of the family unit shall be aggregated for the purpose of computing, the holding of the family unit. Where, therefore, there in a family unit consisting of father, mother and three minor sons or daughters, the lands held by all these persons would have to be clubbed together and then the ceiling area applied to the aggregate holding. There is no distinction made in the definition of 'family unit ' between a divided minor son and an undivided minor son. Both stand on the same footing and a divided minor son is as much a member of the family unit as an undivided minor son, and consequently the lands held by a divided minor son would have to be included in the holding of the family unit for the purpose of application of the ceiling area. Section 7 invalidates certain transfers of land and provides for inclusion of such lands in the holding of an individual or a family unit. Then there is a provision in section 8 for furnishing a declaration in respect of his holding by every person whose land exceeds the ceiling area and the Tribunal is required by section 9 to hold an enquiry. and pass an order determining the land held in excess of the ceiling area. Such land has to be surrendered by the person holding the land and on such surrender, the Revenue Divisional officer is empowered under section 11 to take possession of the land which thereupon vests in the State Government free from all encumbrances. Section 14 provides inter alia that the land vested in the State Government shall be allotted for use as house sites for agricultural labourers. village artisans or other poor persons owning no houses or house sites or transferred to the weaker sections of the people dependent on agriculture for purposes of agriculture/or for purposes ancillary thereto in such manner as may be prescribed by the Rules, subject to a proviso that as far as practicable not less than one half of the total extent of land so allotted or transferred shall be allotted or transferred to the members of the Scheduled Castes and the Scheduled Tribes. Section 15 enacts a provision for payment of compensation for land vested in the State Government at the rates specified in the Second Schedule. These are the only relevant provisions of the Andhra Pradesh Act which need to be referred to for the purpose of the present appeals. We may now turn to examine the relevant provisions of the Central Act. This Act was enacted by Parliament pursuant to the authority conferred upon it by the resolutions passed by the Houses of legislature of several States including the State of Andhra Pradesh under clause (1) of Article 252. It received the assent of the President on 17th February 1 976 and as its long title and recital shows it was enacted to provide for the imposition of a ceiling on vacant 1153 land is urban agglomerations for the acquisition of such land in excess of the ceiling limit, to regulate the construction of buildings on such land and for matters connected therewith, with a view to preventing the concentration of urban land in the hands of a few persons and speculation and profiteering therein and with a view to bringing about an equitable distribution of land in urban agglomerations to sub serve the common good. We shall refer to a few material provisions of this Act. Section 2(a) (i) defines "appointed day" to mean in relation to any State to which this Act applies in the first instance which includes the State of Andhra Pradesh the date of introduction of the Urban Land (Ceiling and Regulation) Bill, 1976 in Parliament. This was the Bill which culminated in the Act and it was introduced in Parliament on 28th January 1976. Consequently, this date would be the 'appointed day ' for the purpose of applicability of the Act to the State of Andhra Pradesh. The definition of "family" in section 2 (f) is materially in the same terms as the definition of "family unit" in the Andhra Pradesh Act. Then follow two important definitions which needed to be set out in extenso. The word "person" is defined in section 2(i) as including inter alia an 'individual ' and the 'family '. Section 2(n) defines "urban agglomeration" in the following terms: "Sec.2(n) (A) in relation to any State of Union territory specified in column (1) of Schedule 1, means (i) the urban agglomeration specified in the corresponding entry in column (2) thereof and includes the peripheral area specified in the corresponding entry in column (3) thereof; and (ii) any other area which the State Government may, with the previous approval of the Central Government, having regard to its location, population (population being more than one lakh) and such other relevant factors as the circumstance of the case may require, by notification in the official Gazette, declare to be an urban agglomeration and any agglomeration so declared shall be deemed to belong to category D in that Schedule and the peripheral area there for shall be one kilometre; (B) xx xx xx xx xx" The term 'urban land ' is defined in section 2(o) to mean: Sec. 2(o)(i): any land situated within the limits of an urban agglomeration and referred to as such in the master plan; or 1154 (ii) in a case where there is no master plan, or where the master plan does not refer to any land as urban land, any land within the limits of an urban agglomeration and situated in any area included within the local limits of a municipality (by whatever name called), a notified area committee, a town area committee, a city and town committee, a small town Committee, a cantonment board or a panchayat, but does not include any such land which is mainly used for the purpose of agriculture. Explanation: For the purpose of this clause and clause (q), (A) "agriculture" includes horticulture, but does not include (i) raising of grass, (ii) dairy farming, (iii) poultry farming, (iv) breeding of live stock, and (v) such cultivation, or the growing of such plant, as may be prescribed. (B) land shall not be deemed to be used mainly for the purpose of agriculture, if such land is not entered in the revenue or land records before the appointed day as for the purpose of agriculture; (C) notwithstanding anything contained in clause (B) of this Explanation, land shall not be deemed to be mainly used for the purpose of agriculture if the land has been specified in the master plan for a purpose other than agriculture; " Section 2(q) gives a definition of "vacant land" by providing that "vacant land" means, subject to certain exceptions which are not material, land not being land mainly used for the purpose of agriculture, in an urban agglomeration. Section 3 is the rebuttal section which imposes ceiling on holding of 'vacant land ' by providing that: "Sec. 3. Except as otherwise provided in this Act, on and from the commencement of this Act, no person shall be n entitled to hold any vacant land in excess of the ceiling limit in the territories to which this Act applies under sub section (2) of section 1." 1155 Section 4 divides urban agglomeration into categories A, B, C and D lays down different ceiling limits for these different categories. Then there is a provision in section 5 invalidating in certain circumstances the transfer of vacant land made at any time during the period commencing on the appointed day and ending with the commencement of the Act. The procedure for determining "vacant land" held in excess of the ceiling limit is laid down in sections 6 to 9 and section 10 enacts a provision for acquisition of such land held in excess of such limit. Section 23 provides for disposal of vacant land acquired under the Act and it empowers the State Government to allot such vacant land to "any person for any purpose relating to or in connection with any industry or for providing residential accommodation of such type as may be approved by the State Government to the employees of any industry. It will thus be seen that the Central Act imposes a ceiling on holding of land in urban agglomeration other than land which is mainly used for the purpose of agriculture and agriculture in this connection includes horticulture, but does not include raising of grass, dairy farming, poultry farming, breeding live stock and cultivation or the growing of such plants as may be prescribed by the Rules, and, moreover, in order to fall within the exclusion, the land must be entered in the revenue or land record before the appointed day as for the purpose of agriculture and must also not have been specified in the master plan for a purpose other than agriculture. Now, as we have already pointed out above, the Andhra Pradesh Legislature had, at the time when the Andhra Pradesh Act was enacted, no power to legislate with respect to ceiling on urban immovable property. That power stood transferred to parliament and as a first step towards the eventual imposition of ceiling on immovable property of every other description, the Parliament enacted the Central Act with a view to imposing ceiling on vacant land, other than land mainly used for the purpose of agriculture, in an urban agglomeration. The argument of the landholders was that the Andhra Pradesh Act sought to impose ceiling on land in the whole of Andhra Pradesh including land situate in urban agglomeration and since the concept of agglomeration defined in section ' 2(n) of the Central Act was an expensive concept and any area with an existing or future population of more than one lakh could be notified to be an urban agglomeration, the whole of the Andhra Pradesh Act was ultra vires and void as being outside the legislative competence of the Andhra Pradesh Legislature. This argument plausible though it may seem, in our opinion, is unsustainable. It is no doubt true that if the Andhra Pradesh Act seeks to impose ceiling on land falling within an urban agglomeration, it would be outside the area of its legislative competence, because it 1156 cannot provide for imposition of ceiling on urban immovable property. But the only urban agglomerations in the State of Andhra Pradesh recognised in the Central Act were those referred to in section 2(n) (A) (ii) and there can be no doubt that so far as these urban agglomerations are concerned, it was not within the legislative competence of the Andhra Pradesh Legislature to provide for imposition of ceiling on land situate within these urban agglomerations. It is, however, difficult to see how the Andhra Pradesh Act could be said to be outside the legislative competence of the Andhra Pradesh Legislature in so far as land situate in the other areas of the State of Andhra Pradesh is concerned. We accept that any other area in the State of Andhra Pradesh with a population of more than one lakh could be notified as an urban agglomeration under section 2(n)(A)(ii) of the Central Act but until it is so notified it would not be an urban agglomeration and the Andhra Pradesh Legislature would have legislative competence to provide for imposition of ceiling on land situate within such area. No sooner such area is notified to be an urban agglomeration, the Central Act would apply in relation to land situate within such area, but until that happens the Andhra Pradesh Act would continue to be applicable to determine the ceiling on holding of land. It may be noticed that the Andhra Pradesh Act came into force on 1st January 1975 and it was with reference to this date the surplus holding of land in excess of the ceiling area was required to be determined and if there was any surplus it was to be surrendered to the State Government It must therefore follow that in an area other than that comprised in the urban agglomerations referred to in section 2(n) (A) (i), land held by a person in excess of the ceiling area would be liable to be determined as on 1st January 1975 under the Andhra Pradesh Act and only land within the ceiling area will be allowed to remain with him. It is only in respect of land remaining with a person whether an individual or a family after the operation of the Andhra Pradesh Act, that the Central Act would apply if and when the area in question is notified to be an urban agglomeration under section 2(n)(A)(ii) of the Central Act. We fail to see how it can at all be contended that merely because an area may possibly in the future be notified as an urban agglomeration under section 2(n)(A)(ii) of the Central Act, the Andhra Pradesh Legislature would cease to have competence to legislate with respect to ceiling on land situate in such area even though it is not an urban agglomeration at the date of the enactment of the Andhra Pradesh Act. Undoubtedly, when an area is notified as an urban agglomeration under section 2(n)(A)(ii), the Central Act would apply to land situate in such area and the Andhra Pradesh Act would cease to have application but by that time the Andhra Pradesh 1157 Act would have already operated to determine the ceiling on holding of land falling within the definition in section 3(j) of that Act and situate within such area. It is therefore not possible to uphold the contention of the landholders that the whole of the Andhra Pradesh Act is ultra vires and void as being outside the area of legislative competence of the Andhra Pradesh Legislature. It is only in respect of land situate within the urban agglomerations referred to in section 2(n) (A) (i) of the Central Act that the Andhra Pradesh Act would not apply but it would be fully applicable in respect of land situate in all the other areas of the State of Andhra Pradesh. The next contention urged on behalf of the landholders was that on a proper construction of the relevant provisions of the Andhra Pradesh Act, a divided minor son was not liable to be included in "family unit" as defined in section 3(f) of that Act. The argument was that sub section (2) of section 7 did not invalidate all partitions of joint family property but struck only against partitions effected on or before 2nd May 1972 and thus by necessary implication recognised the validity of partitions affected prior to that date. If therefore a partition was effected prior to 2nd May 1972 and under that partition a minor son become divided from his father and mother, the divided minor son could not be included in the family unit and his property could not be clubbed with that of his father and mother, because otherwise it would amount to invalidation of the partition though section 7, sub section (2) clearly recognised such partition as valid. This argument is clearly fallacious in that it fails to give due effect to the definition of family unit in section 3(f) and the provisions of section 4. It is undoubtedly true that a partition effected prior to 2nd May 1972 is not invalidated by the Andhra Pradesh Act and therefore any property which comes to the share of a divided minor son would in law belong to him and would not be liable to be required as part of joint family property. But under the definition of family unit in section 3(f) the divided minor son would clearly be included in the family unit and by reason of section 4 his land whether self acquired or obtained on partition would be liable to be clubbed with the land held by the other members of the family unit. The land obtained by the divided minor son on partition would be liable to be aggregated with the lands of other members of the family unit not because the partition is invalid but because the land held by him howsoever acquired is liable to be clubbed together with the lands of others for the purpose of applying the ceiling area to the family unit. We do not therefore see how a divided minor son can be excluded from the family unit. That would be flying in the face of sections 3(f) and 4 of the Andhra Pradesh Act. 1158 Then a contention was advanced on behalf of the landholders that the definition of "family unit" was violative of Article 14, of the Constitution in that it made unjust discrimination between a minor son and the major son by including minor son in the "family unit" while excluding a major son from it. This contention has already been dealt with by learned brother Tulzapurkar, J. in the judgment delivered by him today in the Haryana Land Ceiling matters and we need not repeat what he had already stated there while repelling this contention. Moreover, this contention isl no longer open to the landholders since the Andhra Pradesh Act is admittedly an agrarian reform legislation and it is protected against challenge on the ground of infraction of Articles 14, 19 and 31 by the protective umbrella of Article 31A. We do not therefore see any substance in the contentions urged on behalf of the landholders and we accordingly dismiss the appeals and the writ petitions with costs. S.R. Appeals & Petitions dismissed.

The Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act I of 1973 was enacted on 1st of January 1973. Though a Full Bench of the High Court of Andhra Pradesh when challenged by some of the land holders held by its judgment dated 11th April, 1973, the Act to be constitutionally valid; yet the said Act was not brought into force till 1st January 1975. In ]977, the Act was amended with retrospective effect from 1st January 1975 by the Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Amendment Act 1977. As soon ns the Amending Act was passed, the land holders once again filed writ petitions in the High Court, challenging the constitutional validity of the Andhra Pradesh Act. The main ground, inter alia, was that by reason of the enactment of the Urban Land (Ceiling & Regulation) Central Act, 1976, the Andhra Prdesh Act had become void and inoperative. A Full Bench of five judges of the High Court held that the enactment of the Central Act did not have the effect of invalidating the whole of the Andhra Pradesh Act, but since the provisions of the Andhra Pradesh Act were repugnant to the provisions of the Central Act so far as concerned land satisfying both the definition of "land" in the Andhra Pradesh Act and the definition of "vacant land", in the Central Act, the Andhra Pradesh Act was held not applicable to "vacant lands" falling within the ambit of the Central Act. ave for this limited relief, the High Court dismissed the writ petitions in all other respects. Hence the appeals by the land holders after obtaining special leave from this Court. Writ Petitions were also filed directly in this Court by some of the land holders. Dismissing the appeals, and writ petitions, the Court ^ HELD :1. Article 246 of the Constitution of India carves out an exception derogating from the normal distribution of legislative powers between the Union and the States. The effect of passing of resolutions by the Houses of Legislature of two or more States under this constitutional provision is that Parliament which has otherwise no power to legislate with respect to a matter, 1144 except as provided in Articles 249 and 250, becomes entitled to legislate with regard to such matter and the State Legislature passing the resolutions cease to have power to make law relating to that matter. The resolutions operate as abdication or surrender of the powers of the State Legislatures with respect to the matter which is the subject of the resolutions and such matter is placed entirely in the hands of Parliament and Parliament alone can then legislate with respect to each. It is as if such matter is lifted out of list II and placed in List I of the Seventh Schedule to the Constitution. A plain natural construction of the language of Clauses (1) and (2) of Article 252 makes this position clear. It was in pursuance of clause (1) of Article 352 that a resolution was passed by the Andhra Pradesh Legislative Council on 7th April, 1972 to the effect that "the imposition of ceiling of urban immovable property and acquisition of such property in excess of the ceiling and all matters concerned therewith or ancillary and incidental thereto should be regulated in the State or Andhra Pradesh by Parliament by law" and on identical resolution in the same terms was passed on the next day by the Andhra Pradesh Legislative Assembly. The result was that at the date when the Andhra Pradesh Act was enacted, Parliament alone was competent to legislate with respect to ceiling on urban immovable property and acquisition of such property in excess of the ceiling and all connected, ancillary or incidental matters, and the Andhra Pradesh Legislature stood denuded of its power to legislate on that subject. [1149 A, E H, 1150 A C] Union of India vs V. B. Choudhary, 19791 3 SCR 802; followed. Under the powers thus transferred Parliament enacted the Central Act with a view to imposing ceiling on vacant land, other land mainly used for the purpose of agriculture, in an urban. agglomeration. The Central Act imposes a ceiling on holding of land in urban agglomeration other than land which is mainly used for the purpose of agriculture and agriculture in this connection includes horticulture, but does not include raising of grass, daily farming, poultry farming, breeding live stock and such cultivation or the growing of such plants as may be prescribed by the Rules, and, moreover, in order to fall within the exclusion, the land must be entered in the revenue cr land record before the appointed day as for the purpose of agriculture and must also not have been specified in the master plan for a purpose other than agriculture. [119 C F] 3. It is no doubt true that if the Andhra Pradesh Act seeks to impose ceiling on land falling within an urban agglomeration, it would be outside rh art of its legislative competence, because it cannot provide for imposition of ceiling on urban immovable property. But the only urban agglomerations in the State of Andhra Pradesh recognised in the Central Act were those referred to in Section 2(n) (A) (i) and there can be no doubt that so far as these urban agglomerations are concerned, it was not within the legislative competence of the Andhra Pradesh Legislature to provide for imposition of ceiling on land situate within these urban agglomerations. But, the Andhra Pradesh Act is not out side the legislative competence of the Andhra Pradesh Legislative in so far as lands situate in the other areas of the State of Andhra Pradesh are concerned. Any other area in the State of Andhra Pradesh with a population of more than one lakh could be notified as an urban agglomeration under section 2(n) (A) (ii) of the Central Act but until it is so notified would not be an urban agglomeration and the Andhra Pradesh Legislature would have legislative competence to provide for imposition of ceiling on 1145 land situate within such area. No sooner such area is notified to be an urban agglomeration, the Central Act would apply in relation to land situate within such area, but until that happens the Andhra Pradesh Act would continue to be applicable to determine the ceiling on holding of land. The Andhra Pradesh Act came into force on 1st January 1975 and it was with reference to this date that the surplus holding of land in excess of the ceiling area was required to be determined and if there was any surplus it was to be surrendered to the State Government. Therefore, in an area other than that comprised in the urban agglomerations referred to in section 2(n)(A) (i), land held by a person in excess of the ceiling area would be liable to be determined as on 1st January 1975 under the Andhra Pradesh Act and only land within the ceiling area will be allowed to remain with him. It is only in respect of land remaining with a person whether an individual or a family after the operation of the Andhra Pradesh Act, that the Central Act would apply if and when the area in question is notified to be an urban agglomeration under section 2(n)(A)(ii) of the Central Act. [1155 G H, 1156 A G] Merely because an area may possibly in the future be notified as an urban agglomeration under section 2(n) (A) (ii) of the Central Act, the Andhra Pradesh Legislature would not cease to have competence to legislate with respect to ceiling on land situate in such area even though it is not an urban agglomeration at the date of the enactment of the Andhra Pradesh Act. Undoubtedly, when an area is notified as an urban agglomeration under section 2(n) (A) (ii), the Central Act would apply to land situate in such area and the Andhra Pradesh Act would cease to have application but by that time the Andhra Pradesh Act would have already operated to determine the ceiling on holding of land falling within the definition in section 3(j) of that Act and situate within such area. Therefore, the whole of the Andhra Pradesh Act is neither ultravires nor void as being outside the area of legislative competence of the Andhra Pradesh Legislature. It is only in respect of land situate within the urban agglomerations referred to in section 2(n) (A)(i) of the Central Act that the Andhra Pradesh Act would not apply but it would be fully applicable in respect of land situate in all the other areas of the State of Andhra Pradesh. [1156 G X 1157 A B] 4. A divided minor cannot be excluded from the 'family unit ' as defined in section 3(f) of the Andhra Pradesh Act. That would be flying in the face of sections 3(f) and 4 of the Andhra Pradesh Act. It is true that a partition affected prior to 2nd May 1972 is not invalidated by the Andhra Pradesh Act and therefore any property which comes to the share of a divided minor son would in law belong to him and would not be liable to be regarded as part of joint family property. But under the definition of family unit in section 2(f) the divided minor son would clearly be included in the family unit and by reason of section 4 his land whether self acquired or obtained on partition would be liable to be clubbed with the land held by the other members of the family unit. The land obtained by the divided minor son on partition would be liable to be aggregated with the lands of other members of the family unit not because the partition is invalid but because the land held by him howsoever acquired is liable to be clubbed together with the lands of others for the purpose of applying the ceiling area to the family unit. [1157 C, F HI 14 610 SCI/80 1146 5. The Andhra Pradesh Act is admittedly an agrarian reform legislation and it is protected against challenge on the ground of infraction of Article 14, 19 and 31 by the protective umbrella of Article 31A. [1158 B C] 6. The definition of 'family unit ' is nor violative of Article 14 of the Constitution by including ' a minor son in the family unit while excluding a major son from it. [1158 A] Seth Nand Lal vs State of Haryana. [1980] 3 SCR p. 1181 followed.

ivil Appeal No. 1295 of 1973 From the Judgment and Order dated 14.12. 1972 of the Allahabad High Court in Civil Revn. Petition No. 1572 of 1969. P.H. Parekh and Suhail Dutt for the Appellant. Prithvi Raj, Mrs. Shobha Dikshit and Sudhir Kulshreshta for the Respondent. The Judgment of the Court was delivered by THAKKAR, J. The proposition canvassed by the appellant, namely, that from the point of time that an order for rate able distribution is passed by the executing court the monies in question cease to be 928 the property of the judgment debtor and 'become the property of the decree holder, regardless of whether or not actual payment pursuant to the said order is made, is supported by the decisions of three High Courts namely, Madras, Calcutta and Bombay. As early as in 1922 the Madras High Court in Official Receiver of Tanjore vs M.R. Venkatararna lyer, AIR 1922 Madras p. 31 has taken the view canvassed by the appel lant as is evident from the passage quoted hereunder: "It seems to me that from the time of the order of rateable distribution the money must be treated as belong ing, not to the judgment debtor, Nataraja lyer, but to the decreeholder in whose favour the order was passed. Mr. Devadoss for appellant contended that the effect of a rate able distribution order is merely to allocate the money to the different suits without affecting its ownership. The latter, he says, still rests in the judgment debtor by the sate of whose property it was allocated. I do not think this is so. The section does not speak of distribution among the decree holders. The latter are entitled to draw it out at will; and the judgment debtor most certainly is not. I think the money in this case must be treated as the property of the decree holder, the present respondent and that the Official Receiver could no more recover it from the respond ent if it had actually been paid out to him by court. Mr. Devadoss eventually admitted that he could not recover the money in the circumstances of the present case if it had passed into respondent 's possession. I would dismiss the appeal with costs. " A learned Single Judge of the Calcutta High Court has expressed the same view in Murli Tahilram vs T. Asoornal & Co., AIR 1955 Calcutta p. 423, wherein it is observed: "But where a private citizen has sued another to judgment and has in fact got by an order of Court a Receiver appoint ed of his goods and such goods have been sold by the Receiv er under orders of the Court and where there has been a prior direction in the Court 's order to pay the sale pro ceeds to the private judgment creditor, a subsequent claim by the State for arrears of sales tax cannot defeat the judgment creditor or deprive him of the fruits of his decree which is regarded as property. " 929 And the same view has been reiterated by a Division Bench of the Calcutta High Court in Basanta Kumar Bhattacharjee vs Panchu Gopal Dutta & Ors., AIR 1956 Calcutta p. 23 where in the Court has made recourse to the following reasoning to support the proposition: "This contention, we think, should prevail. The order allowing the application for rateable distribution that was passed on 2 12 1953 should, we think, be reasonably read as deciding that the decree holders had title to the money. What remained to be done was the ascertainment of the exact amount which each decree holder was entitled to and payment of the same. The decision as regards title had already been made and with the decision that 'the money was the decree holder 's money, the position, in our opinion, was that it could no longer be considered in law to be the judgment debtor 's money. The question of priority of the State 's claim does not, therefore, fail to be decided. On the date the letter of attachment of the Certificate Officer was received, there was no money belonging to the judgment debtors in the hands of the Court. " The High Court of Allahabad which has differed from the aforesaid High Courts by the judgment under appeal has proceeded on the assumption that the High Court of Bombay has taken a contrary view in Income tax Officer, Ward C, Sangli & Ant. vs Chandanbai Balaram Doshi & Ors., AIR 1957 Bombay p. 91. We are afraid, by the High Court of Bombay in the said case the principle enunciated has been misunder stood. No order for rateable distribution had been passed by the executing court in the said case. Even, so, while dis cussing the law on the subject in the context of the scheme of the C.P.C., the High Court of Bombay has articulated the principle thus: "The scheme clearly indicates that, until the Court has directed appropriation of the amount to the claim made by the decree holder or of creditors entitled to rateable distribution, the amount received in Court continues to remain as of the judgment debtor. " (Emphasis added) By necessary implication it means that as soon as an order for rateable distribution is made, the amount ordered to be distributed will cease to 930 be the property of the judgment debtor. We are of the same opinion as that of the High Courts of Madras, Calcutta and Bombay. As soon as the question of rateable distribution between the decree holders and the State having statutory priority is determined, and the Court passes an order as to how to appropriate the assets of the judgment debtor, the rights of the parties become crystalized. What then remains is to give effect to the determination made by the court by officials in charge of concerned departments dealing with Accounts and Cash which is a ministerial act. The rights of the respective decree holders or claimants are governed by the order for rateable distribution passed by the Court as a result of the adjudication and determination made by the Court. Nothing further remains to be done by the Court in the judicial sphere thereafter. The order partakes of the character of a judgment and decree passed by the Court. What the officials of the Accounts and Cash department are re quired to do thereafter is to carry out the command of the Court by implementing or giving effect to the order. The test which can be usefully applied is to pose the question whether the said officials can refuse to implement the order by refusing to make payment once the Court has passed the order. Obviously and undoubtedly they cannot. Therefore it is evident that nothing turns on whether or not actual payment pursuant to the order of the Court is made. And when the Court officials make payment to 'the decree holder, they make payment because the property in the said monies has vested unto them by virtue of the order of distribution passed by the Court. What is being paid by the officials of Accounts and Cash Sections will be the decree holder 's money, it having ceased to belong to the judgment debtor the moment the order for distribution was made, eventhough actual disbursement was made later. If the State lays its claim after the order for distribution is made by the Court, it will be of no avail as the property Would have gone beyond the reach of the State, it having ceased to be the property of the debtor against whom the State had a claim. No question of priority can arise in that situation the State having missed the bus. In the present case, the amount had ceased to be the property of the judgment debtor from the point of time that the order forateable distribution was passed by the executing court. There was no question there fore of the State being entitled to claim priority in re spect of the claims lodged by it subsequent to the order for rateable distribution. The High Court was thus in error in reversing the order passed by the executing court. We, therefore, allow the appeal, set aside the order of the High Court in so far as the appellant is concerned, and restore the order of 931 the executing court in so far as the appellant is concerned. The appeal is disposed of accordingly. There will be no order as to costs. A.P.J. Appeal dis posed of.

On the question whether from the point of time an order for rateable distribution is passed by the executing Court the monies in question cease to be the property of the judgment debtor and become the property of the decree hold er, regardless of whether or not actual payment pursuant to the said order is made: Allowing the Appeal, HELD: 1. As soon as the question of rateable distribu tion between the decree holders and the State having statu tory priority is determined, and the Court passes an order as to how to appropriate the assets of the judgment debtor, the rights of the parties become crystalized and the monies in question cease to be the property of the judgment debtor and becomes the property of the decree holder, regardless of whether or not actual payment pursuant to the said order is made. [930A B] Official Receiver of Tanjore vs M.R. Venkatarama lyer, AIR 1922 Madras p. 31, Murli Tahilram vs T. Asoomal & Co., AIR 1955 Calcutta p. 423, Basanta Kumar Bhattacharjee vs Panchu Gopal Dutta & Ors., AIR 1956 Calcutta p. 23 and Income tax Officer, Ward C. SangIi & Anr. vs Chandanbai Balaram Doshi & Ors., AIR 1957 Bombay p. 91, approved. 2.1 The rights of the respective decree holders or claimants are governed by the order for rateable distribu tion passed by the Court as a result of the adjudication and determination made by the Court. Nothing further remains to be done by the Court, in the judicial sphere thereafter. The order partakes of the character of a judgment and decree passed by the Court. [930B C] 927 2.2 Thereafter the officials of the Accounts and Cash department are only required to carry out the command of the Court by implementing or giving effect to the order. [930C D] 2.3 The test which is to be applied is whether the said officials can refuse to implement the order by refusing to make payment once the Court has passed the order. Obviously and undoubtedly they cannot. Therefore, nothing turns on whether or not actual payment pursuant to the order of the Court is made. The Court officials make payment to the decree holder because the property in the said monies has vested unto them by virtue of the order of distribution passed by the Court. What is being paid by the officials of Accounts and Cash Sections will be the decree holder 's money, it having ceased to belong to the judgmentdebtor the moment the order for distribution was made, even though actual disbursement was made later. [930D F] 3. If the State lays its claim after the order for distribution is made by the Court, it will be of no avail, as the property would have gone beyond the reach of the State, it having ceased to be the property of the debtor against whom the State had a claim. No question of priority can arise in that situation the state having missed the bus. [930F G] 4. In the present case, the High Court was in error in reversing the order passed by the executing Court. The order of the High Court is set aside and that of the executing Court restored in so far as the appellant is concerned. [930H]

91, 99, 100, 101, 103 Petitions under Article 32 of the Constitution of India for the enforcement of Fundamental Rights. AND & CIVIL APPELLATE JURISDICTION: Civil Appeals Nos.699 703 of 1957. Appeals by special leave from the decision of the Wage Board for Working Journalists published in the Gazette of India Extraordinary (Part IT, Section 3) dated May 11, 1957. Dec. 3, 4, 5, 6, 10, 11, 12, 13, 17, 18, 19, 20. 1958. Jan. 8, 9, 10, 14, 15, 16, 17, 21, 22, 23, 24, 28. M. K. Nambiar and G. Gopalakrishnan, for the petitioners in Petition No. 91 of 1957. The Working Journalists Act, 1955, is ultra vires as it infringes the fundamental rights of the Petitioners guaranteed by the Constitution under articles 19 (1) (a), 19 (1) (g), 14 and 32. Article 19 (1) (a) which guarantees freedom of speech and expression includes the freedom of the employment of means to exercise those rights and consequently comprehends the freedom of the Press. The guarantee of an abstract freedom of expression would be meaningless unless it contemplated and included in its ambit all the means necessary for the practical application of the freedom. (Freedom of the Press A Framework of Principles Report of the Commission on Freedom of Press in the United States of America, 1947; Report of the Royal Commission for the Press in the United Kingdom 1949; Ramesh Thapar vs The State of Madras, [1950] section C. R. 594; Brij Bhusan vs State of Delhi, ; ; Ex parte Jackson, ; ; Lovell v, City of Griffin; , ; Orosjean vs American Press Co., ; ; Schneider vs Irvington, ; 17 Constitution of the United States of America, Revised and Annotated (1952), U. section Govt.Printing Office pp. 792, 988). If the impugned Act is viewed as a whole it will appear that it authorised the fixation of salary of working journalists at a level which disables the running of the press. The impugned Act thus, impedes, controls and prohibits the free employment of the agencies of expression on that section of the Press which form its vocal chord and therefore the Act infringes the freedom contemplated under article 19 (1) (a) and is not saved by article 19 (2). In judging the validity of the enactment it must be tested by its operation and effect (Dwarkadas Srinivas of Bombay vs The Sholapur Spinning and Weaving Co. Ltd., ; , 683; Minnesota Ex Rel. Olson, ; The Act also violates the right guaranteed by article 19 (1) (g) of the Constitution as it places unreasonable restraint on the petitioners ' freedom to carry on business (Chintaman Rao vs The State of Madhya Pradesh, ; ; cited with approval in Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh, ; and Ch. Tika Ramjidas vs State of U. P. ; ; The State of Madras vs V. G. Row, ; , 606 607; The State of West Bengal vs Subodh Gopal Bose, [1954] section (C. R. 587; Virendra vs State of Punjab, A. 1.R. 1957 section C. 896). The law imposing restrictions on fundamental rights must be reasonable not only in its substantive content but in its procedural content as well (Dr. N. B. Khare vs State of Delhi, ; ; Ourbachan vs State of Punjab, ; The relevant criteria for the fixation of wages were not laid down in section 9 (1) of the Act. The criteria for the fixation of wages laid down in the Act were only relevant for fixing minimum rates of wages, though the word " minimum" used in the Bill 13 of 1955 as introduced in the Rajya Sabha was subsequently dropped before the Bill became the Act. It was not made incumbent on the Wage Board to consider the capacity of industry to pay as an essential criterion or a major factor in 3 18 fixing wages. The other circumstances, viz., " any other circumstances which to the Board may seem relevant " mentioned in section 9 (1) of the Act was left to be determined by the Board on its subjective satisfaction which could not be controlled by any higher authority. The Act thus enables the Board to exercise arbitrary powers in regard to the same and that is unreasonable by itself (Thakur Raghbir Singh vs Court of Wards, Ajmer; , ; R. M. Seshadri vs District Magistrate, Tanjore, ; The procedure to be followed by the Wage Board was not laid down in the Act (c. f. The Bombay Industrial Relations Act, 1946, as amended) and it Was open to the Board to follow any arbitrary procedure disregarding the principle of audi alteration parted and as such the Act is unreasonable. The Wage Board was not exercising legislative functions but functions, which were quasi judicial in character. The intention of the Legislature was to assimilate the Wage Board as much as possible to an Industrial Tribunal constituted under the . If it is held that section 11 of the Act is an enabling provision, and gave the Board the arbitrary discretion whether to exercise the same powers and follow the same procedure of an Industrial Tribunal or any procedure it liked, it is unreasonable. The provisions of sections 2 (f), 3, 4, 5, 8 to 11, 12, 14, 15 and 17 place restraints on newspaper establishments which would have the effect of destroying the business of the petitioners. The right to impose restrictions on the right to carry on business under article 19 (6) conferred no power on the Legislature to destroy the business itself (Stone vs Farmers Loan and Trust Co., ; ; Municipal Corporation of the City of Toronto, vs Virgo, ; A. G.,for Ontario vs A. G. for the Dominion, [1896] A. C. 348). The Act is discriminatory in character and violates article 14 of the Constitution. It is restricted in its scope to a selected section of newspaper employees. it gives them the benefit of the wage fixation by devising machinery in the form of a Pay Commission without the existence of any industrial dispute, without prescribing the major criterion of capacity to pay to be taken into consideration; (Britannia Bldg. and Iron Co. Ltd., , 654; Union Drug Co. Ltd., , 767; Report of the Committee on Fair Wages, pp. 13 15, paras. 21, 23 and 24); or following the procedure prescribed by the , even in disregard of principles of audi alteram partem. The employers of the newspaper establishments are subjected to discriminatory treatment by the Act in that (1) they are singled out from all other industrial employers who are covered by the ordinary law regulating industrial relations under the ; (ii) they have been saddled with new burdens in regard to a section of their workers in matters of gratuity, compensation, hours of work and wages; (iii) section 12 of the Act makes the decision of the Wage Board binding only on the employers and not on the employees and(iv) section 17 provides for recovery of money from employers only and not from employees in the same manner as an arrear of land revenue. The classification made by the impugned Act is arbitrary and unreasonable in so far as it removes the newspaper employers vis a vis the working journalists from the general operation of the . The right to apply to Supreme Court for enforcement of a fundamental right under article 32 is itself a fundamental right guaranteed by the Constitution (Ramesh Thapar V. The State of Madras, ; , 597). The right to claim a writ of certiorari against a decision is dependent on the fact that the impugned decision on its face is a " speaking order ". (Rex vs Northumberland Compensation Appeal Tribunal, Ex parte Shaw, 1, affirmed by the Court of Appeal in ; ; A. K. Gopalan vs The State of Madras; , , 243). The Act 20 contravenes article 32 of the Constitution because it does not provide for giving any reasons for the decision to be made by the Wage Board. Decision of the Wage Board is illegal and void because (1) the Act under which it is made was ultra vires (Mohd Yasin vs Town Area Committee of Jalalabad, ; ; Himatalal Harilal Mehta vs State of U. P., [1954] section C.R. 1122); (ii) the decision itself infringes the fundamental rights of the petitioners (Bidi Supply Co. vs Union of India, ; and (iii) the decision is ultra vires the Act) Pandit Ram Narain vs State of U. P., ; The reconstitution of the Board oil the retirement of one of its members was ultra vires and unauthorised by the Act as it stood at the time, the Rules having been published on July 10, 1956. The procedure followed by the Board offended the principles of natural justice and is therefore invalid. It did not follow the procedure of ail Industrial Tribunal even though on two occasions, viz., when the questionnaire was issued and when a number of newspapers failed to reply to the questionnaire, the Board asserted that it had the powers of an Industrial Tribunal. Neither in the questionnaire nor at any time thereafter were concrete proposals submitted by the Board to the newspaper establishments. The classification of newspapers on the basis of gross revenue is contrary to the provisions of the Act. In the gross revenue which is earned by newspaper establishments advertisement revenue ordinarily forms a large bulk of such revenue and unless the proportion of advertisement revenue to the gross revenue were taken into consideration it would not be possible to form a correct estimate of the financial status of a newspaper establishment with a view to its classification. Profit and loss of newspaper establishment should be the proper test and if that 21 test were adopted it would give an altogether different picture. The wages which are normally fixed after a general inquiry ' applicable to the whole industry have always been minimum wages. Assessment of a wage level and scale only by reference to gross revenue was erroneous. The decision suffers from another major defect in computing gross revenue not for each newspaper but collectively for the Organization which might be running a number of papers. The result of this mode of calculation was that an organisation publishing a large number of papers might well fall within the top class by virtue of its gross revenue although each one of the papers taken individually might be running at a loss. This process of considering the multiple units or a chain of newspapers as one establishment has affected the petitioners adversely and is unauthorised by the Act. The Wage Board was not authorised by the Act to fix the wages of working journalists in relation to the whole industry but could do so only in respect of individual establishments as will appear from the definition of a " newspaper establishment " given in section 2(d) of the Act. An establishment can only mean " an establishment " and not a group of them, even though such an individual establishment may produce or publish one or more newspapers. (Pravat Kumar vs W. T. C. Parker, A. 1. R. , 118; section R. V. Service Co. Ltd. vs State of Madras,A. 1. R. , 121 122). The decision of the Wage Board is illegal as it does not disclose that the capacity to pay of the individual establishment was ever taken into consideration. There is nothing on record to suggest that both as regard rates of wages and the scales of pay the Wage Board ever took into account as to what the impact of its decision would be on the capacity of the industry to pay either as a whole or region wise. Even as regards the fixation of wages the Wage Board does 22 not seem to have taken into account the other provisions of the Act which conferred upon the working journalists other benefits which would affect the paying capacity of the newspaper establishments. Furthermore the working Journalists constitute only 1/5 of the total staff employed by various newspaper establishments. If the conditions of service of working journalists were to be improved by the Wage Board the other employees who form 85% were bound to be restive and likely to raise industrial disputes for betterment of their conditions of service. This would impose an additional financial burden on the newspaper establishments and would substantially affect their capacity to pay. The Wage Board exceeded its power in giving retrospective operation to its decision. The Wage Board had acted illegally in fixing scales of pay for a period of three years when the Act does not give it such authority. Further the Wage Board was handicapped for want of Cost of Living Index. K. M. Munshi, L. K. Jha, section section Shukla, Balbhadra Prasad Sinha and R. J. Joshi, for the petitioners in Petitions Nos.99 to 101 of 1957. The freedom of the Press is a fundamental personal right of the petitioners. It rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public. This is a " preferred right ". The purpose of the constitutional guarantee of free speech is to prevent public authority from assuming the guardianship of the public mind (Thomas vs Collins, 89 L. Ed. 430; The Supreme Court and the right of Free Speech and Press Annotation in ; Beauhairnais vs Illinois; , , 943dissenting opinion of Douglas, J.). While the Press enjoys no immunity from the application of the general laws relating to industrial relations, an Act or any 23 of its provision would violate the right of free speech and expression if it lays a direct and preferential burden on the freedom of the Press ; if it has a tendency to curtail circulation and thereby narrow the scope of disseminating information; if it fetters the petitioners ' freedom to choose the means of exercising ' their right to freedom of expression and if it is likely to undermine the independence of the Press by having to seek Government aid. The Act singles out the Press for levying upon it a direct burden which is excessive and so restrictive as to be prohibitive. It begets a class of workers whose benefits and rights are given a preferential enforceability parallel to that of a public debt. The impugned Act by section 9 leaves, in violation of the Constitution, the fixation of wages to an agency invested with arbitrary and uncannily power to impose an indeterminate burden on the wage structure of the Press, such employer and employee relations at its discretion as it thinks fit, and such burden and restrictions for such time as it thinks fit. The Act and the decision of the Wage Board, which under the Act becomes enforceable as a part of it, have imposed an excessive and prohibitive burden which will have a tendency to curtail the revenue and restrict circulation which is the means of imparting information and giving free expression to speech, impose a penality on the petitioners ' right to choose the instruments for its exercise or to seek alternative media of expression, drive the Press to seek Government aid in order to survive and prevent newspapers from being started. The Act has created an impossible situation in which the petitioner could only say " I cannot live, I cannot die and I cannot commit suicide ". Even if the petitioners were to close down their business and dispose of all their assets they would not be in a position to meet all the liabilities. The Constitution does not permit any abridgment of the fundamental right of freedom of speech and expression unless it falls within the categories of restrictions mentioned in article 19(2). When the permitted restrictions were incorporated special care was taken by the framers of the Constitution to see that 24 freedom of speech was protected and that the right should not be at the mercy of the legislature which might want to impose excessive burden on the Press. It is for this reason that the " Public interest " restriction in article 19(6) appearing against the fundamental right in article 19(1)(g) is not to be found in article 19(2).A distinction has to be drawn between the Constitution of U. section A. and India. What is known as the " due process of law " in America has been specifically omitted from the Constitution of India. In U. section A. the " due process " clause enabled the Supreme Court to read into the Constitution any doctrine restrictive of the fundamental right, e. g., in the 1930 's the U. section Supreme Court had held that statutory fixation of minimum wage in the newspaper industry was violation of fundamental rights of free speech, but after some years the same Court acting under the discretion given by the due process clause took cognizance of altered circumstances in labour relations and held that the imposition of a minimum wage on the Press did not violate the fundamental right (Constitution of the United States of America, Revised and Annotated (1952), U. section Govt. Printing Office, pp. 792, 988). The Indian Constitution does not permit restriction of freedom of speech except under the limitation set by article 19(2). Restrictions that could be held intra vires in respect of other industries would still be ultra vires under article 19(1)(a) of the Constitution in respect of the Press industry because of the special privilege of right of free speech. Any direct restriction placed by Government on the Press would be violation of article 19(1)(a), and therefore even if the Government had sought to impose a minimum wage for the Press by direct legislation it would have been equally unconstitutional. This illegality, however, would not attach to the finding of an adjudicatory machinery such as was contemplated under the . Where Government provided a media for the settlement of disputes and claims between citizen,,, and citizens there was no question of any contravention of fundamental rights which were protected against governmental encroachment. 25 The various sections of the Act have the effect of placing restrictions on the press which would in evitably have the effect of restricting the freedom of speech and expression in contravention of article 19 (1) (a). The Act has created a privileged class of working journalists above the other workers either in this country or anywhere also, above contract and above the law of the land. The Wage Board has exceeded its authority and has arrived at conclusions and findings which restricts the fundamental rights of the petitioners. The Act authorizes the Central Government to constitute a Wage Board for fixing rates of wages. This does not authorize the Board to enter into the wider question of determination of scales of pay. Fixing could only mean fixing with reference to a point of time. The Legislature did not contemplate that single wage should determine the wage scales, for all time to come The whole framework of the Act was based on minimum wage and the sudden removal of the word " minimum " has caused all these difficulties. " Rates of wages " and not " scales of wages", the Wage Board was to consider. The term " rates of wages applies only to a particular point of time. [Sinha, J. Section 9 (2) of the Act says that the Board may fix "rates of wages for time work and for piece work ". They cannot have any reference to scales. The same words in the statute mean the same thing. They cannot mean different things in different sections.] Yes. These words are used again and again in the Act. In the Minimun Wages Act, the Payment of Wages Act, etc., where the same expression " rates of wages " is used to indicate a wage fixed in time and amount. The Wage Board has exceeded its power in fixing the scales of wages and increments and thereby places a fetter on the Press, not contemplated by the Act. The Act and the Wage Board have disregarded all considerations which according to authority and law were germane to the proper fixation of wages without 4 26 placing restrictions on fundamental rights. Even the Minimum Wages Act provides for periodical reviews, and proposals for minimum wages should be notified for inviting the opinions. The decision of the Wage Board has been arrived at in violation of the procedure prescribed by section 11 of the impugned Act and in violation of the rules of natural justice and is thus illegal. The Wage Board has been unreasonable in basing wages on revenue from all sources rather than on the revenue which the working journalists contributed by their labour. Classification of newspapers on the basis of the gross revenue of all papers run by an Organisation and fixation of wages on such classification has led to results which are absurd and discriminatory in effect and ignore the principle enunciated by the Act itself. As an example, take the case of a paper with small circulation in Kutch which is placed in a higher category than a paper in Bombay simply because the former is part of a larger Organisation. The Wage Board has not taken care to remain within the terms of the impugned Act, namely, that the wages should be based on regional consideration. The Wage Board has given its decision in complete disregard of the newspapers ' capacity to pay. it did not take proper care in framing its decision. Lack of such care in framing its decision makes it unreasonable and hence restrictive of fundamental rights. The Wage Board has exceeded its authority by giving retrospective effect to the wage structure devised by it. This is invalid and ultra vires the Act. Section 12 of the Act creates one sided obligation by making decision of the Board binding only on the employers. Such one sided obligation can be appropriate when a minimum subsistence wage is fixed but cannot attach to payment of wages at luxury levels. This unilateral obligation on the employer leaves it open to the journalists to agitate for an increase in wages before an industrial tribunal, but it precludes the employer from seeking any alteration under any circumstances. The Act has provided no machinery 27 for a review or revision of the wage structure even if circumstances changed. Restrictions on fundamental right to do business arise because the Act and the decision of the Wage Board have the effect, firstly, of considerably increasing the operating cost and, secondly, of fettering the conditions of service or the terms of the contract of service between the employer and the employee. By disregarding the disparity in regional conditions the Wage Board has discriminated between paper and paper, employer and employer and employee and employee. section P. Sinha, Gurbachan Singh, Harbans Singh and R. Patnaik, for the petitioners in Petition No. 103 of 1957. section section Shukla, for the petitioners in Petitions Nos. 116 to 118 of 1957. M. C. Setalvad, Attorney General for India, B. Sen and R. H. Dhebar, for respondent No. I (The Union of India) in all the Petitions. Before going into the merits of the case it is necessary to examine the background and the perspective in which the Act was enacted, the careful inquiry which preceded its enactment and the conditions which the Act was designed to meet. (Report of the Press Commission, dated July 14, 1954; Report of the Inquiry Committee constituted in 1947; Report of the C. P. and Berar Press Inquiry Committee constituted on March 27, 1948). The Act does not infringe any of the fundamental rights of the petitioners guaranteed under articles 19(J) (a), 19(1)(g), 14 and 32 of the Constitution. The functions of the Wage Board constituted tinder section 8 of the Act were not judicial or quasi judicial in character; the fixation of the rates of wages by the Wage Board was a legislative act and not a judicial one; the Wage Board arrived at its decision on a consideration of all the criteria laid down in section 9(1) of the Act for fixation of wages and the material as well as the evidence placed before it; a large number of the decisions of the Wage Board was unanimous; under the Act the Wage Board has the power and authority to fix the 28 scales of wages also and to give retrospective operation to its decision. The financial position of the petitioners was not such as to lead to their collapse as a sequel to the enactment of the provisions of the Act and the decision of the Wage Board. Regarding alleged infringement of article 19(1)(a), I submit that the legislation should be examined in order to determine whether it is legislation directly in respect to the fundamental rights mentioned in the Constitution. The principle enunciated by the Supreme Courtney several decisions is that when a legislation is attacked on the round of contravention of a fundamental right, the Court must first examine whether it directly deals with the fundamental right. If the legislation is not one directly with respect to a fundamental right no further question arises, (A. K. Gopalan vs The State of Madras, [1950] section C. R. 88, per Kania, C. J., Ram Singh vs State of Delhi, ; , 455). The Supreme Court has also in this connection invoked the doctrine of "pith and substance ". The fact that a legislation, directed in its path and substance to regulate gambling, incidentally placed certain restrictions on business was held not to make the law violative of the fundamental right to carry on business. (State of Bombay vs R. M. D. Chamarbaugwala, [1957] section C. R. 874). The provisions of the Act are clearly designed to regulate the conditions of service of journalists and not the freedom of expression or speech, and therefore no question of the infringement of fundamental right under article 19(1)(a) arises. The contention of the petitioners based on American decisions, e. g., Minnesota Ex Rel. Olson (75 L. Ed. 1357) cannot be sustained. First, the provisions of the American Constitution are substantially different; secondly, the American Courts have adopted the same view as our Supreme Court in A. K. Gopalan vs The State of Madras, ; , and other cases. (The Associated Press vs The National Labour Relations Board, ; ,960 966; Mabee vs White Plains Publishing Co., ; , 613 where application of U. section Fair Labour Standards Act, 1938, to newspaper undertakings was held not to 29 infringe freedom of speech; Oklahoma Press Publishing Co. vs Walling; , , 621; Murdock vs Pennsylvania, 87 L. Ed. 1292). The restrictions under article 19(6) on the freedom to carry oil business under article 19(1)(g) will not cease to be reasonable even if such restrictions resulted in prohibition of carrying on business in certain cases. Such restrictions can be imposed if they are in the interest of the general public. The Act follows the recommendations of the Press Commission for the most part. The only important deviation it has made is that whereas the Press Commission had recommended fixation of a minimum wage, the Act provides for fixation of all wages. Under the directive principles of State Policy (article 43 of the Constitution) the goal was not merely a minimum wage but a fair wage and a living wage. We have to march to that goal. [Gajendragadkar, J. True, but in marching to that goal we have to consider the capacity to pay.] Yes, capacity to pay region wise and capacity to pay country wise but not capacity to pay unit wise, that is, according to each newspaper 's capacity. The Court has to consider what the Legislature intended. The term " minimum wage" has been understood in two different senses, the first being an " industrial minimum wage " and the second a " statutory minimum wage ". Is it an " industrial minimum ", or is it a " statutory minimum " ? An " industrial minimum " is a subsistence wage that has to be paid by any unit if it wishes to exist; a " statutory minimum " is someting more than a subsistence level wage and may be any level which the Legislature thinks fit to impose. " Wages " has been defined 30 very comprehensively in section 2(rr) of the , and in the Third and Fourth Schedule to that Act wages are stated to include the period and mode of payment. [Sinha, J. Does it refer to scales ?] Wages include in its ambit the scales. It was on this basis that various Industrial Tribunals have fixed scales. Even the Supreme Court decided that way. [Sinha, J. My point is whether the question has been raised and decided or has it been only assumed ?] The matter, so far as I know, has not been raised and decided. It has only been assumed. " Wages " in sections 9 and 8 of the Act has been used in a comprehensive sense. The correct approach is to see what the term " wages " means and to see whether the word " rates " cuts down that meaning. In order to construe the section. One of the criteria specified in section 9(1) of the Act is the prevalent rates of wages for comparable employments. This has no reference to minimum wage (Nellimarla Jute Mills, It shows that section 9(1) contemplates fixation of rates of wages which are higher than the bare subsistence or industrial minimum wage. The criterion " the circumstances relating to newspaper industry in different regions of the country " in section 9(1) can have no other meaning than the capacity to pay region wise. It is the Board which has to decide what is relevant and what is not. Such power is neither unreasonable nor arbitrary. The general policy with regard to the Wage Board was that they were given the widest discretion and there was no question of their discretion being fettered. Even if the Legislature left the fixation of wage to the Board without laying down any criteria it would have been a competent legislative Act because of the nature of the 31 Board. In fact, three criteria have been laid down in section 9(1) of the Act. Having regard to the variety and complexity of the matters involved it was not possible for the Legislature itself to visualise or indicate the various circumstances which might be relevant. There is nothing unusual or arbitrary in leaving to the Wage Board a wide discretion in the matter of its procedure. In U. K. the Central Co ordinating Committee under the Wage Councils Act, 1945, and the Agricultural Wages Board under the Agricultural Wages Regulation Act, 1924, are authorised to regulate their own proceedings. No formal procedure has been prescribed for Wage Boards in Australia. The inclusion of proofreaders in the definition of "Working Journalist" in section 2(1) of the Act is not unreasonable. Proof readers occupy a very important position in the editorial staff of a newspaper (Kemsley Manual of Journalism, p. 337, B. Sen Gupta Journalism as a Career (1955 Edn.). There is nothing unreasonable in the period of notice for retrenchment in section 3(2) of the Act. (Halsbury 's Laws of England, 2nd Edn., Vol. 22, p. 150, para. 249 foot note (e)). The retrospective operation of compensation in certain cases given by section 4 of the Act is designed to meet the few cases of retrenchment by the management anticipating the implementation of the recommendation of the Press Commission and cannot be said to be unreasonable. There is nothing unusual in section 5 of the Act which provides for a gratuity. Under the law of various countries payment of indemnity to an employee who voluntarily resigns is provided for (Legislation for Press, Film and Radio in the World Today (1957) UNESCO publication at p. 404 ; Collective Agreement between the Geneva Press Association and the Geneva Union of Newspaper Publishers dated April 1, 1948). Even in India Labour Courts have awarded gratuity on voluntary resignation (Cipla Ltd., , 358; Indian Oxygen and Acetylene Co. Ltd., (1956) 1 L. L. J. 435). The hours of work provided in section 6 of 32 the Act cannot be said to be unreasonable having regard to the nature of work to be done by a working journalist. Such hours of work are fixed by section 54 of the , (See also, ; Shops and Establishments Acts of different States in India). Sections 8 to II deal with the constitution of the Wage Board and the fixation of rates of wages by the Board. The Wage Board was to consist of an equal number of representatives of employers and employees and an independent chairman. There is nothing unreasonable in the constitution of the Board. The principles for the guidance of the Wage Board in the matter of fixation of wages have been laid down by the Act. It cannot, therefore, be said that these provisions are unreasonable. Section 17 of the Act relates only to the mode of recovery of money from an employer and does not impose any financial burden; therefore it could not be said that it infringes article 19(1)(g). Article 14 of the Constitution does not forbid reasonable classification for the purpose of legislation (Budhan Choudhry vs The State of Bihar, ; , 1048). The work of a journalist is peculiar and demands a high degree of general education and some kind of specialised training (Report of the Press Commission, para. 512; Legislation for Press, Film and Radio in the World Today (1951) UNESCO publication at p. 403). The working journalists are a class by themselves apart from the other employees of the newspaper establishments and also employees in other industries. They can be singled out for the purpose of ameliorating their conditions of service. There would be no discrimination if special. legislation is enacted for the benefit of this class and a special machinery is created for fixing the rates of its wages different from the machinery for other workmen. Even if the Act be considered as a social welfare measure the State c an only make a beginning somewhere. Such a measure need not be all embracing. There is nothing unreasonable in section 12 of the Act which makes the decision of the Board binding on the employers only. A provision which has for its object the protection of 33 employees cannot be said to be repugnant to article 14 on the ground that it discriminates against the employers (South Bank Ltd. vs Pichuthayappan, A. 1.R. 1954 Madras 377). Similar provision is to be found in section 33C of the . There is nothing discriminatory in a provision which governs employees in other industries being extended to working journalists. The object sought to be achieved by the Act is the amelioration of the conditions of service of working journalists. The classification is based on intelligible differentiate which distinguish them from other employees of the newspaper establishments and also in other industries. These differentiae have a rational basis. The legislation amply fulfils the conditions of permissible classification. It is " fantastic " to contend that the Act infringes article 32 of the Constitution. The Act does not prohibit the Wage Board from giving a reason for its decision. No question therefore arises of the infringement of the fundamental right of the petitioners under article 32. Assuming any provision of the Act is void then the question will be whether it is severable. If it is severable then the whole Act will not be void but only the section. Similarly, if the court finds that the Act is constitutional but a decision of the Wage Board is ultra vires the Act or unconstitutional the Court will strike down such decision. That will not affect the validity of the Act. (State of Bombay vs F. N. Balsara, ; ; State of Bombay vs The United Motors (India) Ltd., [1953] section C. R. 1069 and R. M.,D. Chamarbaugwala vs The Union of India, ; In regard to the decisions of the Wage Board the Court has to consider first, whether the decisions are intra vires the Act since an authority to whom the power of subordinate legislation is delegated cannot act contrary to the statute, and secondly, do the decisions being a part of the Act in any way contravene the Constitution. These are the only questions which 34 arise in regard to the decisions of the Wage Board. [Bhagwati, J. They say it is contrary to the principles of natural justice audi alteram partem.] That is a maxim about which we have heard so much. It has, no application to this case of delegated legislation. [Bhagwati, J. Can it not be urged, having regard to section 11, that the Legislature did not contemplate that the Wage Board was to function as delegated authority because it gives the choice of the provisions of the being followed by the Board ?] No, even for a subordinate legislative authority there are procedures to be followed for arriving at certain conclusions. [Kapur, J. Is it not necessary to hear everybody who may be affected by the decisions of the Board ?] No question of hearing arises. It is a question of a subordinate legislative authority gathering such information as it wants and it is obliged to take into consideration all the relevant circumstances. Certiorari and prohibition lie only in respect of judicial or quasi judicial acts. (Halsbury 's Laws of England, 3rd Edn. 11, p. 55, para. The principle audi alteram partem also applies only to judicial or quasi judicial proceedings. (Patterson vs Dist. Commr. of Accrator, For a distinction between judicial and legislative functions, See Cooley 's Constitutional Limitations, 8th Edn. Vol. 1, p. 185; Prentis vs Atlantic Coast Co. Ltd., ; , 226 227, Per Holmes J.; Mitchell Coal Co. vs Pennsylvania, 57 L. Ed. 1479, 1482; Louisville and Nashville Railroad Co. vs Green Garrett, ; , 239). The functions of the Wage Board in the United Kingdom have been characterised by writers as legislative in character. (Robson 's Justice and Administrative Law, 3rd Edn. p. 608; Griffith 's Principles of Administrative Law, p. 39; Barbara Wootton, Social Foundations of Wage Policy, Modern methods of 35 Wage determination, p. 88). This is also the case in Australia. (Federated Saw Mills Case; , ; Australian Boot Trade Employees Federation vs Whybrow and Co., ; , 289, 317, per Isaacs, J.). The Labour and Industry Act, 1953, of Victoria (Australia) in section 39 (2) gives statutory recognition to the decisions in 8 C. L. R. 365 and ; , by providing that every determination shall have force, validity and effect as if enacted in the Act. The very constitution of the Wage Board under the impugned Act, with an equal number of representatives of employers and employees with an independent chairman is against its being judicial or quasi judicial in character, for, no man should be judge in his own cause. (Franklin vs Minister of Town and Country Planning, ; , 103). It is incorrect to infer that once the Wage Board is constituted under section 8 of the Act the power of the Government under the Act is exhausted and nothing more can be done. The power to constitute the Board can by virtue of section 14 of the , be used from time to time as the occasion demands. There was nothing wrong in the Central Government reconstituting the Board on the resignation of Shri K. P. Keshava Menon. The decision by majority is provided by Rules framed by the Central Government under section 20 of the Act which became a part of the Act. Hence a decision by a majority in conformity with the Rules under the Act cannot be impeached. (Pacific States Box and Basketing Co. vs White, ; ; Under section II of the Act the Wage Board "may" exercise the powers and follow the procedure laid down under the . There is nothing to warrant the provision being read as obligatory or mandatory. The provisions of the are basically enacted for the adjudication of disputes between two parties and they are on 36 their face inapplicable to the Wage Board. That is precisely why the Board was given the option to exercise some of the powers conferred by the or to follow procedures prescribed in that Act. It is not incumbent under the Act on the Wage Board to give any reasons for its decisons. The Board would be perfectly within its right if it chose not to give any reasons. While judging the reasonableness of the wage structure for the whole industry it would be entirely fallacious to see how it hit a particular newspaper or a unit. Multiple units or chains could be classified on the basis of the total gross revenues of all the constituent units because economies would be possible in group operations resulting in the reduction of the cost of production. There is nothing in the Act which prohibits the Wage Board from grouping into chains or multiple units. Further, there is nothing in the Act to prohibit the treating of several newspaper establish ments publishing one or more newspapers though in different parts of the country as one establishment for fixing rates of wages. Some sort of classification was inevitable when the newspaper establishments all over the country had to be considered for fixing the rates of wages. If the Wage Board adopted gross revenue as a workable basis for classification there was nothing wrong and that fact could not vitiate its decision. Profits of newspaper establishments were vague and difficult to ascertain as many things are mixed up in calculating profit. It would be dangerous to go by the profit and loss of individual concerns to ascertain their capacity to pay. Even the Bank Award has taken the "turnover" or the aggregate resources as the basis of the classification. The basis of gross revenue was the only proper and convenient method of ascertaining the actual status of a newspaper establishment for fixing a wage structure. Wage structure recommended by the Board would show that compared with the scales and salaries obtaining now in many of the newspaper establishments the scales given by the Board were not exorbitant or 37 unreasonable. What is to be considered is the industry region wise and not individual units. It may be that individual units may suffer hardship or even go out of existence but that would not be a relevant consideration. [Gajendragadkar, J. If the decisions are to be attacked effectively under article 19(1)(g), petitioners have to show that A or B or C class of paper will cease to exist, or, taken as a class they cannot bear the burden.] That is the way the matter should be approached. The figures in individual statements of the petitioners furnish no evidence whatsoever of the unreasonableness of the wage fixation. The decision is given retrospective effect from the date of constitution of the Board. The Act itself in section 13 contemplates interim relief. Instead of granting any interim relief the Board decided to give retrospective effect to its decision. A.V. Viswanatha Sastri, section Viswanathan, B. R. L. lyengar, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for respondent No. 3 in Petition No. 91 of 1957. The balance sheets and profit and loss accounts of the petitioner company for several years when analysed show that with normally prudent management the earnings of the Indian Express group of newspapers admit of payment to working journalists on the scale fixed by the Wage Board and the decision of the Wage Board was legally valid and just having regard to the several factors to be taken into consideration in fixing a fair wage. N. C. Chatterjee, A. section R. Chari, section Viswanathan,A. N. Sinha, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the Indian Federation of Working Journalists in all the Petitions, and for the ]Delhi Union of Journalists in Petition No. 103 of 1957. It is open to Parliament to delegate to the Wage Board the power to legislate with regard to certain subjects. The so called decision of the Wage Board was a valid exercise of such power by a subordinate legislative body functioning under specified conditions under Parliamentary mandate with the limits prescribed by the Constitution. 38 Even if the Wage Board is held to be a quasijudicial body, it acted according to the principle of audi alteram partem and no prerogative writ should be issued to disturb findings arrived at by such a body. M. K. Nambiar, in reply. The Wage Board was not intended to exercise powers of legislation but those of a judicial nature. Under section 10 of the Working Journalist, , Act the Board has to make a "decision", and this term has been used in several enactments to indicate a determination by a judicial tribunal. Under section 8 the decision of the Board has to be made in accordance with the provisions of the Act and therefore the Board had the function of applying the law and not making a law. The Wage 'Board is required under section 11 to adopt the law procedure as is adopted by Industrial Tribunal. ,. The decision of the Board is declared to be binding only on some persons and not all. It can be executed in the same manner as the award of an Industrial Tribunal. Its character is identical to that of an award made by an industrial tribunal and the Supreme Court has held that a tribunal does not exercise legislative functions. Parliament did not intend to confer any powers of subordinate legislation on the Board. This is clear from the rules of business of the Lok Sabha read with the Statement of Objects and Reasons to the Bill. In, the memorandum regarding delegated legislation appended to the Bill the constitution of the Wage Board in the matter of fixation of wages had not been shown as a piece of delegated legislation. (The Rules of Procedure and Conduct of Business in Lok Sabha (1957) Rule 70). The decision of the Wage Board was not to be laid before both the Houses of Parliament. This would have been so had the fixation of wages by the Board was a delegated legislation (laid Rule 317). The Wage Board was not constituted as sub legislative authority. The question is not what the legislature could have enacted but whether by virtue of powers of the Wage Board under the Act as enacted, it is a legislative body or a tribunal with adjudicators functions The Board does not possess any powers of delegated legislation, It has been given all the trappings which 39 were necessary to characterize it as a judicial body. In interpreting the Act the Court is entitled to take into consideration the surrounding circumstances, the object of the legislation and also whether a particular term used in legislation was considered by the legislature at the time of enactment. The court ought to take into consideration the entire background and the effect of dropping of the term "minimum" from the enactment. The Press Commission had directed its attention exclusively to the question of fixing minimum wage and the Act in section 9 followed the pattern and purported to implement the recommendations of the Press Commission. The Press Commission in considering minimum wage ignored the capacity to pay. The Act, similarly, being based on the Report of the Press Commission has made no provision for considering the capacity to pay. This omission which was appropriate with regard to minimum wages rendered the fixation of wages at a different level unreasonable and therefore void. The content of the term "minimum wage" would not be changed by merely calling it a "statutory" minimum. Section 14 of the , can apply if the enactment does not rule it out by necessary implication. The entire scheme of the impugned Act shows that only one Wage Board and one decision is contemplated. It is not open to the Government to reconstitute the Wage Board as and when they desire. Munshi, in reply. Whether or not the Act imposes a direct burden, the Court should see if the Act is a special law singling out an industry for laying the burden on it. If it does so, as in the present Act, it will amount to a direct burden. If it is a general law it would not be a direct burden. The Act stands alone in being arbitrary and excessive and is without parallel in any other country. The Act is unique in that (1) it provides for gratuity even on voluntary resignation. (2) it gives power to the Wage Board to fix indeterminate wages investing them with attributes of minimum wages, and (3) it confers on the Board power to fix wages (i) without specifying 40 essential standards, (ii) without casting a duty to follow a reasonable procedure, (iii) without any control by an appellate tribunal or court, and (iv) without providing any opportunity to the parties concerned to be heard on the merits of the proposal it makes. In other countries there are various safeguards and checks against arbitrary wage decisions. (U. K. Wage Councils Act, 1945; U. section Fair Labour Standards Act, 1938; Factories and Shops Act, 1905, new Act of 1928 of Victoria, Australia). If the mechanism of the Act itself is such that it is unreasonably restrictive of rights to trade then the Act has to be struck down as void under article 19 (1)(g). Even if it is held that there was no excessive delegation, it is still open to the Court to see whether the restrictions impinged on the Constitutional safeguards tinder article 19 (1)(g). Fixation of scales of wages on the basis of grossrevenue without taking into account the liability of newspapers is a devastating doctrine in industrial relations. The Wage Board is not a sub legislative body; but even if it is, it has to act judicially and is subject to writs of certiorari. Even if its decisions become assimilated in the Act it must be considered to be a quasi judicial body, since it is expected to carry out a preliminary investigation before recording its findings. The functions of the Wage Board cannot be characterised either exclusively legislative or exclusively judicial. The functions performed by administrative agencies do not fall in water tight compartments. They may be partly legislative, partly judicial and partly administrative (Stason and Cooper, Cases and other Materials on Administrative Tribunals). The Court has to consider whether the administrative agency performs a predominantly legislative or judicial function and determine its character accordingly (Village of Saratoga Springs vs Saratoga Gas Electric Light and Power Co., (1908) 191 New York 123 People 41 ex rel. Central Park North and East River Co. vs Willcox, (1909) 194 New York 383). In the United Kingdom the decisions of the Wage Councils in the shape of wage regulations proposal acquires legislative character from the order made by the Minister giving effect to the proposals. In Australia the Factories and Shops Act, 1905, and the Labour and Industry Act, 1953, Section 39(2) of Victoria by express provision invests the determination of the Special Board with the characteristics of a legislative act. Under the Fair Labour Standards Act, 1938, of U. section A. the Wage orders ultimately approved by the Administrator are subject to judicial review. In India under the , the recommendations of the Committees are forwarded to the appropriate Government who by notification as a token of approval, in the official Gazette, fix minimum wages in respect of each scheduled employment. Under the recent amendment of the Bombay Industrial Relations Act, 1946, the Wage Boards constituted under the Act are to follow the procedure of the Industrial Court in respect of arbitration proceedings and it cannot be said that they perform any legislative function. The Wage Board under the impugned Act, in spite of its being an administrative body or sub legislative body may nevertheless be exercising quasi judicial functions if certain conditions are fulfilled (Halsbury 's Laws of England, 3rd Edn., Vol. 11, pp. 55 56; Rex vs Manchester Legal Aid Committee, Ex parte R. A. Brand and Co. Ltd., , 428; Rex vs The London County Council, Ex parte the Entertainments Protection Association Ltd., , 233 234; Board of Edu cation vs Rice, ,182; Allen C. K. Law and Order 1956 Edn., pp. 102, 256, 257). The Wage Board has not given any attention to the paramount consideration of capacity to pay as it should, in reason, have done. At no time was any question asked as to the wage burden the Wage Board 's scales would impose on the industry as a ,whole or on a particular unit. The specific burden which the Board proposed to impose has never been 6 42 put even indirectly. At no time has it been considered what would be the potential burden on the industry if the non journalists in newspaper establishments made similar demands. No consideration has ever been given about the effect on the industry or on a unit of the retrospective operation of the wage scales. A. section R. Chari, section Viswanathan, B. R. L. Iyengar,J. B. Dadachanji and section N. Andley, for the Federation of Press Trust of India Employees ' Union, Bombay Union of Journalists and Gujrat Working Journalists Union. R. Ganapathy Iyer and G. Gopalakrishnan, for the ' appellants in C. A. No. 699 of 1957. L. K. Jha, section section Shukla and R. J. Joshi, for the appellants in C. A. Nos. 700 to 702 of 1957. section P. Sinha, Harbans Singh and R. Patnaik, for the appellants in C. A. No. 703 of 1957. B. Sen and R. H. Dhebar, for respondent No. I in all the appeals. N. C. Chatterjee, J. B. Dadachanji and section N. Andley, for the Indian Federation of Working Journalists in all appeals, respondent No. 2 in C. A. No. 700 of 1957 and respondent No. 3 in C. A. No. 703 of 1957. B. R. L. Iyengar, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for respondent No. 3 in C. A. 699 of 1957. March 19. The Judgment of the Court was delivered by BHAGWATI J. As they raise common questions of law and fact they can be dealt with under one common judgment. In order to appreciate the rival contentions of the parties it will be helpful to trace the history of the events which led to the enactment of the impugned Act. The newspaper industry in India did not originally start as an industry, but started as individual 43 newspapers founded by leaders in the national, political, social and economic fields. During the last half a century, however, it developed characteristics of a profit making industry in which big industrialists invested money and combines controlling several newspapers all over the country also became the special feature of this development. The working journalists except for the comparatively large number that were found concentrated in the big metropolitan cities, were scattered all over the country and for the last ten years and more agitated that some means should be found by which those working in the newspaper industry were enabled to have their wages and salaries, their dearness allowance and other allowances, their retirement benefits, their rules of leave and conditions of service, enquired into by some impartial agency or authority, who would be empowered to fix just and reasonable terms and conditions of service for working journalists as a whole. Isolated attempts were made by the Uttar Pradesh and Madhya Pradesh Governments in this behalf. On June 18, 1947, the Government of Uttar Pradesh appointed a committee to enquire into the conditions of work of the employees of the newspaper industry in the Uttar Pradesh. On March 27, 1948, the Government of Central Provinces & Berar also appointed an Inquiry Committee to examine and report on certain questions relating to the general working of the newspaper industry in the province, including the general conditions of work affecting the editorial and other staff of newspapers, their emoluments including dearness allowance, leave, provident fund, pensionary benefits, etc. The Committees aforesaid made their reports on the respective dates March 31, 1949, and March 27, 1948, making certain recommendations. The All India problem, however, remained to be tackled and during the debate in Parliament on the Constitution (First Amendment) Bill, 1951, the Prime Minister said that he was prepared to appoint a committee or a commission, including representatives of the Press, to examine 44 the state of the Press and its content. He elaborated the idea further on June 1, 1951, when he indicated that an enquiry covering the larger issue of the Press, such as had been carried out in the United Kingdom by the Royal Commission, might be productive of good for the Press and the development of this very important aspect of public affairs. The idea was further discussed during the debate in Parliament on the Press (Incitement to Crimes) Bill, later named the Press (Objectionable Matter) Act, 1952. At its session held in April, 1952, at Calcutta, the Indian Federation of Working Journalists adopted a resolution for the appointment of a Commission to enquire into the condi tions of the Press in India with a view to improving its place, status and functioning in the new democratic set up. The appointment of the Press Commission was thereafter announced in a Communique issued by the Govt. The terms of reference inter alia were: "2.The Press Commission shall enquire into the state of the Press in India, its present and future lines of development and shall in particular examine:. . . (iv) the method of recruitment, training, scales of remuneration, benefits and other conditions of employment of working journalists settlement of disputes affecting them and factors which influence the establishment and maintenance of high professional standards The Commission completed its enquiry and submitted its report on July 14, 1954. The Press Commission shall enquire into the state of the Press in India, its present and future lines of development and shall in particular examine:. . . (iv) the method of recruitment, training, scales of remuneration, benefits and other conditions of employment of working journalists settlement of disputes affecting them and factors which influence the establishment and maintenance of high professional standards The Commission completed its enquiry and submitted its report on July 14, 1954. The industry taken as a whole had returned a profit of about 6 lakhs of rupees on a capital investment of about 7 crores, or less than I per cent. per annum. It found that proof readers as a class could not be regarded as working journalists, for there were proof readers even in presses doing job work. It came to the conclusion that if a person had been 45 employed as a proof reader only for the purpose of making him a more efficient sub editor, then it was obvious that even while he was a proof reader, he should be regarded as a working journalist but in all other instances, he would not be counted as a journalist but as a member of the press staff coming within the purview of the . to the capacity of the paper to make adequate payment. . In this connection it may be stated that the Federation of Working Journalists also agreed, when it was put to them, that apart from suggesting a minimum wage it would not be possible for the Commission to undertake standardisation of designations or to fix scales of pay or other conditions of service for the different categories of employees for different papers in different regions. They have stated that these details must be left to be settled by collective bargaining or where an agreement is not possible the dispute could be settled by reference to an industrial court or an adjudicator with the assistance of a Wage Board, if necessary. The All India Newspaper Editors ' Conference and Indian Language Newspapers ' Association have also stated that it would not be possible to standardise designations and that any uniformity of salaries as between one newspaper and another would be impossible. The resources of different newspapers vary and the conditions of service are not the same. We agree in principle that there should be uniformity as far as possible, in the conditions of service in respect of working journalists serving in the same area or locality. But this can be achieved only by a settlement or an adjudication to which the employers, and the employees collectively are parties. " 46 539: DEARNESS ALLOWANCE:. . This again, is a matter which would require very detailed study of the rise in the index numbers of the cost of living for various places where the newspapers are published. We do not know of any case where a uniform rate has been prescribed for dearness allowance applicable all over the country irrespective of the economic conditions at different centres and the paying capacity of the various units. This must be a matter for mutual adjustment between the employers and the employees and if there is no agreement, some machinery must be provided by which disputes between the parties could be resolved. " The position of a journalist was thus characterised by the Commission: " A journalist occupies a responsible position in life and has powers which he can wield for good or evil. It is he who reflects and moulds public opinion. He has to possess a certain amount of intellectual equipment and should have attained a certain educational standard without which it would be impossible for him to perform his duties efficiently. His wage and his conditions of service should therefore be such as to attract talent. This must involve constant study, contact with personalities and a general acquaintance with world 's problems. " It considered therefore that there should be a certain minimum wage paid to a journalist. The possible impact of such a minimum wage was also considered by it and it was considered not unlikely that the fixation of such a minimum wage may make it impossible for small papers to continue to exist as such but it thought that if a newspaper could not afford to pay the minimum wage to the employee which would enable him to live decently and with dignity, that newspaper had no business to exist. It recommended division of localities for taking into account the differential cost of living in different parts of India, and determining what should be the reasonable 47 minimum wage in respect of each area. It endorsed the concept of a minimum wage which has been adopted. In India, however, the level of the national income is so low at present that it is generally accepted that the country cannot afford to prescribe a minimum wage corresponding to the concept of a living wage. However, a minimum wage even here must provide not merely for the bare subsistence of living, but for the efficiency of the worker. For this purpose, it must also provide for some measure of education, medical requirements and amenities." and suggested that the basic minimum wage all over India for a working journalist should be Rs. 125 with Rs. 25 as dearness allowance making a total of Rs. 150. It also suggested certain dearness allowance and City allowance in accordance with the location of the areas in which the working journalists were employed. It compared the minimum wage recommended by it with the recommendations of the Uttar Pradesh and Madhya Pradesh Committees and stated that its recommendations were fairly in line with the recommendations of those Committees particularly having regard to the rise in the cost of living which bad taken place since those reports were made. It then considered the applicability of the to the working journalists and after referring to the award of the Industrial Tribunal at Bombay in connection with the dispute between " Jam e Jamshed " and their workman and the decision of the Patna High Court in the case of V. N. N. Sinha vs Bihar Journals Limited (1), it came to the conclusion that the working journalists did not come within the definition of workman as it stood at that time in the nor could a question with regard to them be raised by others who were admittedly governed by the Act. It thereafter con (1) (1953) 1. L. R. 32 Pat. 48 sidered the questions as to the tenure of appointment and the minimum period of notice for termination of the employment of the working journalists, hours of work, provision for leave, retirement benefits and gratuity, made certain recommendations and suggested legislation for the regulation of the newspaper industry which should embody its recommendations with regard to (i) notice period; (ii) bonus; (iii) minimum wages; (iv) Sunday rest; (v) leave, and (vi) provident fund and gratuity. Almost immediately after the Report of the Press Commission, Parliament passed the Working Journalists (Industrial ]Disputes) Act, 1955 (I of 1955) which received the assent of the President on March 12, 1955. It was an Act to apply the , to working journalists. " Working Journalist " was defined in section 2 (b) of the Act to mean " a person whose principal avocation is that of a journalist and who is employed as such in, or in relation to, any establishment for the production or publication of a newspaper or in, or in relation to, any news agency or syndicate supplying material for publication in any newspaper, and includes an editor, a letter writer, news editor, sub editor, feature writer, copy taster, reporter, correspondent, cartoonist, news photographer and proof reader but does not include any such person who: (i)is employed mainly in a managerial or admini strative capacity, or (ii)being employed in a supervisory capacity,exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature. Section 3 of that Act provided that the provisions of the , shall apply to, or in relation to, working journalists as they apply to or in relation to workmen within the meaning of that Act. The application of the , to the working journalists was not, however, deemed sufficient to meet the requirements of the situation. There was considerable agitation in Parliament for the implementation of the recommendations 49 of the Press Commission, and on November 30, 1955, the Union Government introduced a Bill in the Rajya, Sabha, being Bill No. 13 of 1955. It was a Bill to regulate conditions of service of working journalists and other persons employed in newspaper establishments. The recommendations of the Press Commission in regard to minimum period of notice, bonus, Sunday rest, leave, and provident fund and gratuity, etc., were all incorporated in the Bill; the fixation of the minimum rates of Wages however was left to a minimum wage Board to be constituted for the purpose by the Central Government. The provisions of the (20 of 1946) and the Employees ' Provident Funds Act, 1952 (19 of 1952) were also sought to be applied in respect of establishments exceeding certain minimum size as recommended by the Commission. It appears that during the course of discussion in the Rajya Sabha, the word " minimum " was dropped from the Bill wherever it occurred, the Minister for Labour having been responsible for the suggested amendment. The reason for dropping the same was stated by him as under: " Let the word " minimum " be dropped and let it be a proper wage board which will look into this question in all its aspects. Now, if that is done, I believe, from my own experience of the industrial disputes with regard to wages, in a way it will solve the question of wages to the working journalists for all time to come. " The Act as finally passed was entituled " The Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955 (45 of 1955) and received the assent of the President on December 20, 1955. The relevant provisions of the Act may now be referred to. It was an Act to regulate certain conditions of service of working journalists and other persons employed in newspaper Newspaper establishment " was defined in section 2 (d) to mean " an establishment under the control of any person or body of persons, whether incorporated or not, for the production or publication of one or more 50 newspapers or for conducting any news agency or syndicate ". The definition of " working journalist " was almost in the same terms as that in the Working Journalists (Industrial Disputes) Act, 1955, and included a proof reader. All words and expressions used but not defined in this Act and defined in the , were under section 2 (g) to have the meanings respectively assigned to them in that Act. Section 3 applied the provisions of the , as it was in force for the time being, to working journalists as they applied to, or in relation to workmen within the meaning of that Act subject to the modification that section 25 (F) of that Act in its application to working journalists in regard to the period of notice in relation to the retrenchment of a workman was to be construed as substituting six months in the case of the retrenchment of an editor and three months, in the case of any other working journalist. The period which lapsed between the publication of the report and the enactment of the Working Journalists (Industrial Disputes) Act, 1955, viz., from July 14, 1954, to March 12, 1955, was sought to be bridged over by section 4 enacting special provisions in respect of certain cases of retrenchment during that period. Section 5 provided for the payment of gratuity, inter alia, to a working journalist who had been in continuous service, whether before or after the commencement of the Act, for not less than three years in any newspaper establishment even when he voluntarily resigned from service of that newspaper establishment. Section 6 laid down that no working journalist shall be required or allowed to work in any newspaper establishment for more than one hundred and forty four hours during any period of four consecutive weeks, exclusive of the time for meals. Every working journalist was under section 7 entitled to earned leave and leave on medical certificate on the terms therein specified without prejudice to such holidays, casual leave or other kinds of leave as might be prescribed. After thus providing for retrenchment compensation, payment of gratuity, hours of work, and leave, sections 8 to 1 1 of the Act provided 51 for fixation of the rates of wages in respect of working journalists. Section 8 authorised the Central Government by notification in the Official Gazette to constitute a Wage Board for fixing rates of wages in respect of the working journalists in accordance with the provisions of the Act, which Board was to consist of an equal number of persons nominated by the Central Government to represent employers in relation to the newspaper establishments and working journa lists, and an independent person appointed by the Central Government as the Chairman thereof. Section 9 laid down the circumstances which the Wage Board was to have regard to in fixing rates of wages and these circumstances were the cost of living, the prevalent rates of wages for comparable employments, the circumstances relating to the newspaper industry in different regions of the country and to any other circumstance which to the Board may seem relevant. The decision of the Board fixing rates of wages was to be communicated as soon as practicable to the Central Government and this decision was under section 10 to be published by the Central Government in such manner as it thought fit within a period of one month from the date of its receipt by the Central Government and the decision so published was to come into operation with effect from such date as may be specified, and where no date was so specified on the date of its publication. Section 11 prescribed the powers and procedure of the Board and stated that subject to any rules of procedure which might be prescribed the Board may, for the purpose of fixing rates of wages, exercise the same powers and follow the same procedure as an Industrial Tribunal constituted under the , exercised or followed for the purpose of adjudicating an industrial dispute referred to it. The decision of the Board under section 12 was declared to be binding on all employers in relation to newspaper establishments and every working journalist was entitled to be paid wages at a rate which was to be in no case less than the rate of wages fixed by the Board. Sections 14 and 15 applied the provisions of the Industrial Employment (Standing Orders) , as it was in force for the time being and also the provisions of the Employees ' Provident Funds Act, 1952, as it was in force for the time being, to every newspaper establishment in which twenty or more persons were employed. Section 17 provided for the recovery of money due from an employer and enacted that where any money was due to a newspaper employee from an employer under any of the provisions of the Act, whether by way of compensation, gratuity or wages, the newspaper employee might, without prejudice to any other mode of recovery, make an application to the State Government for the recovery of the money due to him, and if the State Government or such authority as the State Government might specify in this behalf was satisfied that any money was so due, it shall issue a certificate for that amount to the collector and the collector shall proceed to recover that amount in the same manner as an arrear of land revenue. Section 20 empowered the Central Government by. notification in the Official Gazette to make rules to carry out the purposes of the Act and in particular and without prejudice to the generality of the foregoing power, such rules were to provide inter alia for the procedure to be followed by the Board in fixing rates of wages. All rules made under this section, as soon as practicable after they were made were to be laid before both Houses of Parliament. The Working Journalists (Industrial Disputes) Act, 1955, was repealed by section 21 of the Act. In pursuance of the power given under section 20 of the Act the Central Government published by a notification in the Gazette of India Part II Section 3, dated July 30,1956, The Working Journalists Wage Board Rules, 1956 Rule 8 provided that every question considered at a meeting of the Board was to be decided by a majority of the votes of the members present and voting. In the event of equality of votes the Chairman was to have a casting vote. Rule 13 provided for the resignation of the Chairman or any member from his office or membership, as the case may be. The seat held by them was to be deemed to have fallen vacant with effect from the date the 53 resignation of the Chairman or the member was accepted by the Central Government. When a vacancy thus arose in the office of the Chairman or in the membership of the Board, the Central Government was to take immediate steps to fill the vacancy in accordance with the Act and the proceedings might ' be continued before the Board so reconstituted from the stage at which the vacancy was so filled. By a notification dated May 2, 1956, the Central Government constituted a Wage Board under section 8 of the Act for fixing rates of wages in respect of working journalists in accordance with the provisions of the Act, consisting of equal representatives of employers in relation to newspaper establishments and working journalists and appointed Shri H. V. Divatia, Retired Judge of the High Court of Judicature, Bombay, as the Chairman of the Board. The three members of the Board who were nominated to represent employers in relation to newspaper establishments were (1) Shri G. Narasimhan, Manager, The Hindu, Madras and President, Indian and Eastern Newspaper Society; (2) Shri A. R. Bhat, M.L.C., who had been a member of the Press Commission and was the President of the Indian Language Newspapers Association, as also the Chairman of the Minimum Wages Inquiry Committee for the Printing Industry in Bombay and, (3) Shri K. P. Kesava Menon, Editor, Mathrubhumi, Calicut. The other three members of the Board who were nominated to represent working journalists were: (1) Shri G. Venkataraman, M. P., (2) Shri C. Raghavan, Secretary General, Indian Federation of Working Journalists, and (3) Shri G. N. Acharya, Assistant Editor, Bombay Chronicle. Shri H. V. Divatia, the Chairman of the Board, had wide and considerable experience as Chairman of the Textile Labour Enquiry Committee, Bombay, had been the President of the First Industrial Court to be set up in India in 1938, and had worked as an Industrial Tribunal dealing with several disputes as between several banks and employees, as well as between several insurance companies and their employees. 54 The first meeting of the Board was held on May 26, 1956, in the Bharatiya Vidya Bhavan at Bombay. Sri Kesava Menon and Shri G. Narasimhan were not present at this meeting. It was a preliminary meeting at which the Board set up a sub committee consisting Of Shri A. R. Bhat and Shri G. N. Acharya to draft a questionnaire for issue to the various journals and organisations concerned, with a view to eliciting factual data and other relevant information required for the fixation of wages for the working journalists. The sub committee was requested to hear in mind, while framing the questionnaire the need for: (1) obtaining detailed accounts of newspaper establishments; (2) proper evaluation of the nature of and the work of various categories of working journalists; and (3) proper classification of the country into different areas on the basis of certain criteria like population, cost of living, etc. The questionnaire drafted by the sub committee was to be finalised by the chairman and circulated to all concerned by the end of June, 1956. The questionnaire was accordingly drawn up and was sent to Universities and Governments, etc., and several other organisations and individuals interested in the inquiry of the Board, and to all newspapers individually. It was divided into three parts. Part " A" was intended to be answered by newspapers, news agencies, organisations of employers and of workinly Journalists and any individuals who might wish to do so. Part " B " was meant to be answered by all newspapers and Part " C " by all news agencies. At the outset the Board pointed out that except where the question itself indicated a different period or point of time, the reporting period for purposes of parts " B " and " C " of the questionnaire was the financial years (April I to March 31)1952 53, 1953 54, and 1954 55, or in any establishments which followed a different accounting year, a period of three years as near thereto as possible. It further pointed out that tinder section 11 of the Act the Board had the powers of an Industrial Tribunal constituted under the . In Part "A" of the questionnaire under the heading " Cost of Living cost of living 55 index for the respective centres were called for and a special question was addressed whether the basic minimum wage, dearness allowance and metropolitan allowance in the table attached to paragraph 546 of the Press Commission was acceptable to the party questioned and, if not, what variations would the: party suggest. and why. Comparable employment suggested included (a) Higher secondary school teachers; (b) College and university teachers; (c) Journalists employed as publicity and public relations officers in the information departments of the Central and State Governments; (d) Journalistic employees of the news service division of All India Radio and (e) Research personnel of the economic and social research departments of Central Government ministries like finance, labour and commerce. Under the heading " Special Circumstances", the only question addressed was question No. 7: " Are there in your region any special conditions in respect of the newspaper industry which affect the fixing of rates of wages of working journalists ? If so, specify the conditions and indicate how they affect the question of wages. " As regards the principles of wage fixation the party questioned was to categorise the different newspaper establishments and in doing so consider the following factors, among others: (a) Invested capital; (b) Gross revenue; (c) Advertisement revenue; (d) Circulation; (e) Periodicity of publication; (f) The existence of chains, multiple units and combines; and (g) Location. In part B " which was to be answered by newspapers were included under the heading Accounts : (1)Balance sheets and (2) Trading and profit and loss accounts of the newspapers as in the specimen forms attached thereto for the reporting period. Questions were also addressed in regard to the revenue of the newspapers inter alia from the press, a process studio, outside work, foundry, etc., and subscriptions as also the expenditure incurred on postage, distribution/sale, commission and rebate to advertisers, etc., and other items. 56 All information which was considered necessary by the Wage Board for the purposes of fixation of the rates of wages was thus sought to be elicited by the questionnaire. It appears that Shri K. P. Kesava Mellon sent in his resignation on or about June 21, 1956, and by a notification dated July 14, 1956, the Central Government accepted the said resignation and appointed in his place Shri K. M. Cherian, member of the executive committee of the Indian and Eastern Newspapers Association, one of the directors of the Press Trust of India and the Chief Editor, Malayala Manorama, Kottayam, as a member of the Board. Out of 5,465 newspapers, journals, etc., to whom the questionnaire was sent only 381 answered the same; and out of 502 dailies only 138 answered it. The Board had an analysis made of those who had replied to the questionnaire and also of their replies thereto in regard to each of the questions contained in the questionnaire. Further meetings of the Board were held oil August 17, and August 26, 1956, in Bombay. Tile Chairman informed the members that response from journals, organisations, etc., to whom 'questionnaire was sent was unsatisfactory and it was decided to issue a Press Note requesting the papers and journals to send their replies, particularly to Part " B " of the questionnaire, as soon as possible, inviting their attention to the fact that the Board had powers of an Industrial Tribunal under the Act, and if newspapers failed to send their replies, the Board would be compelled to take further steps in the matter. It was decided that for purposes 57 of taking oral evidence, the country be divided into 5 zones, namely, Trivandrum, Madras, Delhi, Calcutta and Bombay and the Secretary was asked to summon witnesses to the nearest and convenient centre. It was further decided that one hour should normally be allotted to each newspaper, 3 hours for regional units and 2 hours for smaller units for oral evidence. The Board also discussed the question as to the number of persons who might ordinarily be called for oral evidence from each newspaper or Organisation. It thought that one of the important factors Governing the findings of the Board would be the circulation of each newspaper, and as such it was decided that the figures with the Audit Bureau of Circulation Ltd., might be obtained at once. The Board also decided to ask witnesses, if necessary, to produce books of accounts, income tax assessment orders or any other document which in its opinion was essential. Meetings of the Board were held at Trivandrum from September 7, to September 10, 1956, in Madras from September 15, to September 20, 1956, in New Delhi from October 19, to October 26, 1956, in Calcutta from November 25, to December 4,1956, and in Bombay from January 4, to January 10, 1957, from January 20, to February 6, 1957, from March 25 to March 31, 1957 and finally from April 22 to April 24, 1957. Evidence of several journalists and persons connected with the newspaper industry was recorded at the respective places and at its meeting in Bombay from March 25, to March 31, 1957, the Board entered upon its final deliberations. At this meeting the chairman impressed upon the members the desirability of arriving at unanimous decisions with regard to the fixation of wages, etc. Members welcomed this suggestion and decided to 58 discuss various issues among themselves in the afternoon and on the following days. After considerable discussion on March 25, 1957, and March 26, 1957, in which the representatives of the newspapers and of working journalists had joint Sittings, unanimous decisions were arrived at on (i) classification of newspapers, (ii) classification of centres and (iii) classification of employees, except on one point, namely, classification of group, multiple units and chains on the basis of their total gross revenue. This was agreed to by a majority decision. The chairman and the representatives of the working journalists voted in favour while the representatives of the employers voted against. Regarding scales of pay, the chairman suggested at the meeting of March 27, 1957, that pending final settlement of the issue the parties should submit figures of scales based on both assumptions, namely, consolidated wages and basic scales with separate dearness allowance. At the Board 's meeting on March 28, 1957, the representatives of the employers stated that the term CC rates of pay " did not include scales of pay ; there fore, the Board was not competent to fix scales of working journalists and they submitted a written statement signed by all of them to the chairman in support of their contention. The representatives of the working journalists argued that the Board was competent to fix scales of pay. The chairman adjourned the sitting of the Board to study this issue. A copy of the written statement submitted by the representatives of the employers was given to the representatives of the working journalists and they submitted a written reply the same afternoon contending that the Board was competent to fix scales of pay of various categories of working journalists. ' At its meeting on March 29, 1957, the Board discussed its own competency to fix scales of pay. The chairman expressed his opinion in writing, whereby he held that the Board was competent to fix scales of pay. Thereafter, several suggestions were made on this question, but since there was no possibility of any agreement on this issue, the chairman suggested that members should submit their specific scales to him for his study to which the mem bers agreed. It was also decided that the chairman would have separate discussions with representatives of working journalists in the morning and with representatives of employers in the afternoon of March 30, 1957. It was also decided that the Board should meet again on March 31, 1957, for further discussions. No final decision was however arrived at in the meeting of the Board held on March 31, 1957, on scales of pay, allowances, date of operation of the decision, etc. It was decided that the Board should meet again on April 22, 1957, to take final decisions. A meeting of the Board was accordingly held from April 22 to 24, 1957, in the office of the Wage Board at Bombay. It was unanimously agreed that the word "decision" should be used wherever the word " report" occurred. The question of the nature of the decisions which should be submitted to the Government was then considered. It was agreed that reasons need not be given for each of the decisions, and that it would be sufficient only to record the decisions. The members then requested the chairman to study the proposals regarding scales of pay, etc., submitted by, both the parties and to give his own proposals so that they may take a final decision. Accordingly, the chairman circulated to all the members his proposals regarding pay scales, dearness allowance, location allowance and retainer allowance. The following were the decisions arrived at by the Board on the various points under consideration and they were unanimous except where otherwise stated. The same may be set out here so far as they are relevant for the purposes of the inquiry before US. For the purpose of fixation of wages of working 60 journalists, newspaper, establishments should be grouped under different classes. Except in the case of weeklies and other periodicals expressly provided for hereinafter, newspaper establishments should be classified on the basis of their gross revenue. For purposes of classification, revenue from all sources of a newspaper establishment, should be taken for ascertaining gross revenue. Classification of Newspaper Establishments: Dailies Newspaper Establishments should be classified under the following five classes: Class Gross Revenue " A" over Rs. 25 lakhs " B" over Rs. 12 1/2 to 25 lakhs " C" over Rs. 5 to 12 1/2 lakhs " D" over Rs. 2 1/2 to 5 lakhs " E" Rs. 2 1/2 lakhs and below 5. It shall be open to the parties to seek re classifi cation of the newspaper establishments on the basis of the average of every three years commencing from the year 1955. Groups, multiple units and chains should be classified on the basis of the total gross revenue of all the constituent units. (This was a majority decision, the chairman and the representatives of the working journalists voting for and the representatives of the employers voting against). 61 20. Working journalists employed in newspaper establishments should be grouped as follows: (a) Full time employees: Group I: Editor Group II: Assistant Editor, Leader Writer, News Editor, Commercial Editor, Sports Editor, Film or Art Editor, Feature Editor, Literary Editor, Special Correspondent, Chief Reporter, Chief Sub Editor and Cartoonist. Group III: Sub Editors and Reporters of all kind and full time correspondents not included in Group(II); news photographers and other journalists not covered in the groups. Group IV: Proof Reader (b) Part time employees: Correspondents who are part time employees of a newspaper establishment and whose principal avocation is that of journalism. An employee should be deemed to be a full time employee if under the conditions of service such employee is not allowed to work for any other newspaper establishments. 23.The wage scales and grades recommended by the chairman were agreed to by a majority decision. The chairman and the representatives of the working journalists voted for and the representatives of the employers voted against. Shri That suggested that wage scales should be conditional on a newspaper establishment making profits in any particular year and also that time should be given to the newspaper establishments for bringing the scales into operation. These suggestions, however, were not acceptable to the majority. Wages, scales and grades: (as agreed to by the majority) were as under: Working journalists of different groups employed in different classes of newspaper establishments should be paid the following basic wages per mensem. Dailies. Class of Group of Starting Scale News Employees Pay papers E IV 90 No Scale III II 150 No Scale I D IV 100100 5 165 (13 Yrs.) EB 7 200 (5 Yrs.) III 115115 7 1/2 205 (12 Yrs.) EB 15 295 (6 Yrs.) II 200200 20 400 (10 Yrs.) I C IV 100100 5 165 (13 Yrs.) EB 7 200 (5 Yrs.) III 125125 10 245 (12 Yrs.) EB 12J 320 (6 Yrs.) II 225225 20 385 (8 Yrs.) EB 30 445 (2 Yrs.) I 350350 25 550 (8 Yrs.) 40 630 (2 Yrs.) B IV 100100 5 165 (13 Yrs.) EB 7 200 (5 Yrs.) III 150150 12J 300 (12 Yrs.) EB 20 420 (6 Yrs.) II 350350 20 510 (8 Yrs.) EB 30 570 (2 Yrs.) I 500500 30 740 (8 YrS.) 40 820 (2 Yrs.) A IV 125125 7 1/2 215 (12 Yrs.) EB 10 275 (6 Yrs.) III 175175 20 415 (12 Yrs.) EB 25 515 (4 Yrs.) II 500500 40 820 (8 Yrs.) EB 50 920 (2 Yrs.) I 10001000 50 1300 (6 Yrs.) 75 1600 (4 Yrs.) Dearness allowance, location allowance and part time employees remuneration were also majority decisions. The chairman and the representatives of the working 63 journalists voting for and the representatives of the employers voting against. Other allowances: In view of the paucity of evidence on the subject, the Board decided that the fixation of conveyance and other allowances should be left to collective bargaining between the working journalists and the newspaper establishments concerned. Fitment of employees: For fitment of the present employees into the new scales, service in a particular grade and category and in the particular newspaper establishment alone should be taken into account. In no case should the present emoluments of the employees be reduced as a; result of the operation of this decision. When a newspaper establishment is re classified as per para. 6 supra, the existing pay of the staff should be protected. But future increments and scales should be those applicable to the class of paper into which it falls. Date of operation: The Board 's decision should be operative from the date of constitution of the Board (i.e., 2 5 1956) in respect of newspaper eseablishments coming under Class " A ", " B " and " C " and from a date six months from the date of appointment of the Board (i.e., 1 11 1956) in the case of newspaper establishments under Class " D " & " E" (This was also a majority decision. The chairman and the representatives of the working journalists voted for and the representatives of the employers voted against). The Government of India should constitute a Wage Board under the Act, to review the effect of the decisions of the Board on the newspaper establishments and the working journalists, after the expiry of 3 years but not later than 5 years from the date of the publication of the decisions of the Board. These decisions were recorded on April 30, 1957, but the representatives of the employers thought fit to append a minute of dissent and the chairman also put on record a note on the same day explaining the 64 reasons for the decisions thus recorded. These documents are of vital importance in the determination of the issues before us. In the minute of dissent recorded by the representatives of the employers they started with an expression of regret that the conditions in the newspaper industry did not Permit them to accept the majority view. They pointed out that: (a) The newspaper industry was a class by itself. The selling price of its product was ordinarily below its cost of production. Further, the cost of production specially that of newsprint, went on varying and the frequent rises in newsprint price made it difficult to plan and undertake any long term commitment of an increasing expenditure. (b) The income of the newspaper industry was principally derived from two main sources: sales of copies and advertisement. While sales depended on public acceptance, income from advertisement depended upon circulation, prestige and purchasing power of readers. All those factors made publishing of newspapers a hazardous undertaking and the hazard continued throughout it , existence with the result that it was obligatory that the rates of wages or scales ,should be fixed at the minimum level, leaving it to the employees to share the prosperity of the units through bonuses. (c) It was not ordinarily easy for newspapers to increase the selling price and it had been the experience of some established newspapers that such a course, when adopted, had invariably brought about a reduction in circulation. The fall in circulation had in turn an adverse effect on the advertisement revenue. The sales or advertisement income of a newspaper was not responsive to a progressive increase in expenditure. 65 (d) In any fixation of wages of a section of employees, its effect on other sections had to be taken into consideration. Editorial employees were one section of a newspaper establishment and any increase in their emoluments would have its inevitable repercussions on the wages of other sections. The salaries of working Journalists would roughly be one fifth of the total wage bill. The factory staff had a great bargaining power and as such any increase in the salaries and introduction of scales in the editorial department would have to be followed by an increase in the wages and introduction of time scales in the factory side. (e) It was the advertisement revenue that principally decided the capacity to pay of a newspaper industry. This meant that minimum salaries and scales to be fixed on an All India basis would perforce have to be low if the newpapers in language of regions with a low purchasing power such as Kerala and Orissa were not to be handicapped. It would therefore be fair both to the industry and employees if wages were fixed regionwise. (f) The proposals, which the majority had made, clearly showed that, according to it the dominating principle of wage fixation wag the need of the worker as conceived by them, irrespective of its effect on the industry. The Board had not before it sufficient data needed for the proper assessment of the paying capacity of the industry. The profit and loss statements of the daily newspaper establishments for the year 19.54 55 as submitted to the Board revealed that while 43 of them had shown profits 40 had incurred losses. condition of the newspaper industry in the country as a whole could not be considered satisfactory. The proposals embodied in the decision made by the majority were therefore unduly high. They would immediately throw a huge burden on many papers, a burden which would progressively grow for some 66 years, and would be still bigger when its impact takes place on the wages of employees of its other sections. All this will in its turn add to the burden of provident fund, gratuity, etc., when the full impact of the burden took place and the wages of the entire newspaper establishments went up, it would throw out of gear the economy of most of the newspapers. It might be that there may not be many closures immediately, because many of the newspapers would not be in a position to meet the liability of retrenchment compensation, gratuity, etc., resulting from such a step, newspapers would try to meet the liability by borrowing to the extent possible and when their credit was exhausted, they must close down. So far as new newspaper promotions were concerned, they would be few and far between, with the result that after a few years it would be found that the number of daily newspapers in the country had not increased but had gone down. (g)As regards chains and groups the criterion for classification adopted by the majority was unfair and unnatural. The total gross revenue of all the units in a chain or a group gave an unreal picture of its capacity to pay. (h)Giving of retrospective effect, would help only to aggravate the troubles of the newspaper industry which had been already called upon to devise ways and means of meeting the burden of retrospective gratuity. (i) As regards the prevalent rates of wages for comparable employments the nature of work of the working journalists in newspaper establishments could not be compared with other avocations or professions and the rates of wages of working journalists should be fixed only in the context of the financial condition of the newspaper industry. Comparison, could, however, be made within limits, namely with respect to alternative employments available to persons with similar educational qualifications in particular regions or localities. From that point of view the salaries paid to secondary school teachers, college and university 67 teachers and employees in commercial firms and banks should be taken into consideration, but the majority had rejected this view. The note of the chairman was meant to explain the reasons of the decisions which he stated he at least had in view and some of which were accepted unanimously and others were accepted by some members and thereby became majority decisions. At the outset the chairman explained that most of the recommendations of the Press Commission were intended for the betterment of the economic condition of small and medium newspapers, such as price page schedule, telescopic rates for Government advertisements and their fair distribution among newspapers, statutory restrictions on malpractices so as to eliminate cutthroat competition and fixation of news agency tariff, , which still remained to be implemented and there had been no stability in the prices of newsprint which constituted a considerable proportion of the expenditure of a newspaper. These circumstances had necessitated the fixing of a minimum wage lower than that recommended by the Press Commission. As regards fixation of the rates of wages, the chairman observed: "In fixing the rates of wages, we have based them on the condition of the newspaper industry as a whole and not on the effect which they will produce on a particular newspaper. We can only proceed on the average gross income of a newspaper falling under the same class and not on the lowest unit in that class. Otherwise, there will be no improvement in any unit of the same class, and the status quo might remain. With the extremely divergent conditions obtaining in both English as well as Indian language newspapers, it is impossible to try to avoid any small or medium newspaper being adversely affected. When the tone and condition of journalism in India has to be brought on a higher level it is inevitable that in doing so, more or less burden will fall on several newspapers ; I realise that in cases where wages are very low and dearness allowance is also low or even non existent and there are no scales 68 at all, the reaction to our wage schedule will be one of resentment by the proprietors. Some anomalies may also be pointed out; but it must be remembered that we had no data of all the newspapers before us and where we had, it was in many cases not satisfactory. Under these circumstances, we cannot satisfy all newspapers as well as journalists. However, wehave tried to proceed on the basis of accepted principles also keeping in view the recommendations of the Press Commission and not on the editorial expenditure of each newspaper. I am also of the opinion that by rational management there is great scope for increasing the income of newspapers and we have evidence before us that the future of the Indian language newspapers is bright, having regard to increasing literacy and the growth of political consciousness of the reading public. When there are wide disparities, there cannot be any adjustment which might satisfy all persons interested. We hope no newspaper is forced to close down as a result of our decision. But if there is a good paper and it deserves to exist, we hope the Government and the public will help it to continue. " The chairman then proceeded to observe: " We do not consider it a matter of regret if our decisions discourage the entry into this industry of persons without the necessary resources required for the payment of a reasonable minimum wage. While we are anxious to promote and encourage the growth of small newspapers, we also feel strongly that it should not be at the expense of the working journalists. The same applies, in our view, to newspapers started for political, religious or any other propaganda. " The reason for grouping all the constituent units of the same group or chain in the same class in which they would fall on the basis of the total gross income of the entire establishment was given by the chairman as under: " One of the difficult tasks before us was to fix the wages of Journalists working in newspapers which have recently come to exist in our country. All the 69 accounts of the constituent units in the same group or chain are merged together with the result that the losses of the weaker units are borne from the high income of prosperous units. There is considerable disparity in the wages of journalists doing the same kind of work in the various constituent units situated in different centres. The Press Commission has strongly criticised the methods of such chains and groups and their adverse effects on the employees. We have decided to group all the constituent units of the same group or chain in the same class in which they would fall on the basis of the total gross income of the entire establishment. We are conscious that as a result of this decision, some of the journalists in the weak units of the same group or chain may get much more than those working in its highest income units. If however, our principle is good and scientific, the inevitable result of its application should be judged from the stand point of Indian Journalism as a whole and not on the burden it casts on a particular establishment. It may be added that in our view, the principle on which we have proceeded is one of the main steps to give effect to the views expressed by the The chairman then referred to the points which the representatives of the newspaper employers had urged as to the burden which might be cast as a result of the decisions and expressed himself as under: " I sympathise with their view point and in my opinion, looking to all the circumstances, especially the fact that this is the first attempt to fix rates of wages for journalists, it is probable that some anomalies may result from the implementation of our decisions. We are, therefore, averse to imposing a wage schedule of all classes of newspapers on a permanent basis. It is, thus important that the wage rates fixed by us should be open to review and revision in the light of experience gained within a period of 3 to 5 years. This becomes necessary especially in view of the fact that the data available to us have not been as complete as we would have wished them to be, and also because it is difficult for us at this stage to 70 work out with any degree of precision, the economic and other effects of our decisions on the newspaper industry as a whole. " The chairman suggested as a palliative the creation by the Government of India immediately of a standsing administrative machinery "which could also combine in itself the functions of implementing and administering our decisions and that of preparing the ground for the review and revision envisaged after 3 to 5 years. This machinery should collect from all newspaper establishments in the country on systematic basis detailed information and data such as those on employment, wage rates, and earnings, financial condition of papers, figures of circulation, etc., which may be required for the assessment of the effects of our decisions at the time of the review. The Commissioner of Labour, Madras, issued a circular on May 30, 1957, calling upon the managements of all newspaper establishments in the State to send to him the report of the gross revenue for the three years, i. e., 1952, 1953 and 1954, within a period of one month from the date of the publication of the Board 's decision, i. e., not later than June 10, 1957. Writ Petition No. 91 of 1957 was thereupon filed on June 13, 1957, by the Express Newspapers (Private) Ltd., against the Union of India & others and this petition was followed up by similar petitions filed on August 9, 1957, by the Press Trust of India Ltd., the Indian National Press (Bombay) Private Ltd., and the Saurashtra Trust, being Petitions Nos. 99, 100, and 101 of 1957 respectively. The Hindustan Times Ltd., New Delhi filed on August 23, 1957, a similar petition, being Petition No. 103 of 1957, and three more petitions, being Petitions Nos. 116, 117 and 118 of 1957, were filed by the Loksatta Karyalaya, Baroda, Sandesh Ltd. ' Ahmedabad and Jan Satta Karyalaya, Ahmedabad, respectively, on September 18, 1957. The Express Newspapers (Private) Ltd., the petitioners in Petition No. 91 of 1957, otherwise termed 71 the " Express Group ", are the biggest chain in the newspaper world in India. They publish (i) Indian Express, an English Daily, from Madras, Bombay, Delhi and Madurai, (ii) Sunday Standard, an English Weekly, from three centres Madras, Bombay and Delhi, (iii) Dinmani, a Tamil Daily from Madras and Madurai, (iv) Dinmani Kadir, a Tamil Weekly from Madras, (v) Lokasatta, a Maratha Daily, and Sunday Lokasatta, a Maratha Weekly, from Bombay, (vi) Screen, an English Weekly from Bombay and (vii) Andhra Prabha, a Telugu Daily and Weekly. The total number of working journalists employed by them are 331, out of whom there are 123 proof readers, as against 1570 who form the other members of the staff. The present emoluments of the working journalists in their employ amount to Rs. 9,77,892, whereas if the decision of the Wage Board were given effect to they would go up to Rs. 15,21,282 12 thus increasing the wage bill of the working journalists annually by Rs. 5,43,390 12. They would also have to pay remuneration to the part time correspondents on the basis of retainer as well as payment for news items on column basis. That would involve an additional burden of about Rs. 1 lakh a year. The retrospective operation of the Wage Board 's decision with effect from May 2, 1956, in their case would further involve a payment of Rs. 5,16,337 20. This would be the extra burden not taking account the liability for past gratuity and the recurring gratuity as awarded under the provisions of the Act and also the increased burden which would have to be borne by reason of the impact of the provisions in regard to reduced hours of working, increase in leave, etc., provided therein. The Press Trust of India Ltd., the petitioners in Petition No. 99 of 1957, are a non profit making cooperative organization of newspaper proprietors. They 72 employ 820 employees in all, out of whom 170 are working journalists and 650 do not come within that definition. The ,increase in their wage bill due to increase in the salary of the working journalists as per the decision of the. Wage Board would come to Rs. 4,05,600 and they would have to pay by way of arrears by reason of the retrospective operation of the decision another sum of Rs. 4,05,600 to the working journalists. There would also be an additional financial burden of Rs. 60,000 every year by reason of the recurring increments in the monthly salaries of the working journalists employed by them. If the benefits of the Wage Board decision were extended to the other members of the staff who are not working journalists within the definition of that term but who have also made similar demands on them, a further annual burden would be imposed on the petitioners which is estimated at Rs. 3,90,000. If perchance the petitioners not being able to run their concern except at a loss intended to close down the same, the amount which they would have to pay to the working journalists under the pro visions of the Act and the decision of the Wage Board would be Rs. 23,68,500 as against the old scale liability of Rs. 11,62,500 and the other members of the staff who do not fall within the category of working journalists would have to be paid a further sum of Rs. 15,50,000. The total liability of the petitioners in such an event would amount to Rs. 39,18,000 as against the old liability of Rs. 27,12,500. The Indian National Press (Bombay) Private Ltd., otherwise known as the Free Press Group, are petitioners in Petition No. 100 of 1957. They publish (i) Free Press Journal, a morning English Daily (ii) Free Press Bulletin, an evening English Daily (iii) Bharat Jyoti, an English Weekly (iv) Janashakti, a morning Gujarati Daily and (v) Navashakthi, a Marathi Dailyall from Bombay. They employ 442 employees including part time correspondents out of whom 65 are working journalists and 21 are proof readers and the 73 rest form members of the other staff not falling within the category of working journalists. The effect of the decision of the Wage Board would be that there would have to be an immediate payment of Rs. 1,73,811 by reason of the retrospective operation of the decision and there will also be an annual 'increase in the wage bill to the same extent, i. e., Rs. 1,73,811. There will also be a yearly recurring increase to the extent of Rs. 22,470 and also corresponding increase for contribution to the provident fund on account of increase in salary. Under the provisions of the Act in regard to reduced hours of work, and increase in leave, moreover, there will be an increase in liability to pay Rs. 90,669 and Rs. 29,806 respectively, in the case of working journalists, besides the liability for past gratuity in another sum of Rs. 1,08,534 and recurring annual liability for gratuity in a sum of Rs. 17,995. If similar benefits would have to be given to the other members of the staff who do not fall within the definition of working journalists the annual burden would be increased by a sum of Rs. 1,80,000. This would be the position by reason of the petitioners being classified and treated as a chain of newspapers and having been classified as " A " class newspaper establishment on a total computation of the gross revenue of all their units. If they were not so treated and the component units were classified on their individual gross revenue the result would be that the Free Press Journal, the Free Press Bulletin and the Bharat Jyoti would fall within class " A ", and Navashakti would fall within class " C " and Janashakti would fall within class "D" thus minimising the burden imposed upon them by the impact of the Wage Board decision. The Saurashtra Trust, the petitioners in Petition No. 101 of 1957, are another chain of newspapers and they publish (i) Janmabhoomi, a Gujrati Daily from Bombay, (ii) Janmabhoomi and Pravasi, a Gujrati Weekly from Bombay, (iii) Lokmanya, a Marathi Daily from Bombay, (iv) Vyapar, a Gujrati Weekly commercial paper from Bombay, (v) Fulchhab, a Gujrati Daily from Rajkot, (vi) Pratap, a Gujrati 10 74 Daily from Surat, (vii) Cuttccha Mitra, a Gujrati Daily from Bhuj (Cutch) and, (viii) Nav Bharat, a Gujrati Daily from Baroda. The effect of the Wage Board decision on them would be to impose on them a burden of Rs. 1,59,528 by reason of the retrospective operation of the decision and an annual increase in the wage bill of Rs. 1,59,528 for the first year and an annual recur ring increase of Rs. 22,000. The operation of sections 6 and 7 of the Act in regard to reduced hours of work and provision for increased leave would impose an additional burden of Rs. 42,000 per year. The liability for pastgratuity would be Rs. 93,376 and the recurring annual increase in gratuity would be Rs. 11,000. The total cost of closing down the concern, if perchance 75 the petitioners have to so close down owing to their inability to carry on the business except at a loss, is worked out at Rs. 6,13,921 for the working journalists as against the old basis of Rs. 1,00,890. The figure for the rest of the staff who are not working journalists is computed at Rs. 3,08,112 with the result that the total cost of closing down on the new basis under the provisions of the Act and the decision of the Wage Board would be Rs. 9,22,033 as against what otherwise would have been a sum of Rs. 4,09,002. The Hindustan Times Ltd., New Delhi, the petitioners in Petition No. 103 of 1957, otherwise called "the Hindustan Times Group", publish (i) Hindustan Times, an English (morning) Daily, (ii) Hindustan Times (Evening News) an English (evening) Daily, (iii) Overseas Hindustan Times, an English Weekly, (iv) Hindustan, a Hindi Daily, and (v) Saptahik Hindustan, a Hindi Weekly all from Delhi. They employ a total number of 695 employees out of whom 79 are working journalists, 14 are proof readers and the rest, viz., 602 are other members of the staff. The wages paid to the working journalists absorb about one third of the total wage bill as against 602 other members of the staff whose wage bill constitutes the remaining two thirds. If the decision of the Wage Board is given effect to the petitioners would be subjected to the following additional liabilities in respect of working journalists alone : (i) Increase in the annual wage bill Rs. 2,16,000 (Approx.) (ii) Arrears of payments from May 2, 1956, to April 30,1957, Rs. 1,89,000 (iii) Past liability in respect of gratuity as on March 31, 1957, Rs. 2,65,000 (iv) Recurring annual liability of gratuity Rs. 28,000. The total liability thus comes to Rs. 6,98,000. The above figures do not include increased liability on account of the petitioners ' contribution towards provident fund, leave rules and payment to part time correspondents. There would also be a further recurring increase in the wage bill by reason of the increments which would have to be given to the various categories of working journalists on the scales of wages prescribed by the Wage Board. If other members of the staff (who are not working journalists") were to be considered for 76 increase in their emoluments, etc. , there will be a further burden on the petitioners computed as under: (a)Increase in the annual wage bill, Rs. 5,02,000 (Approx.), (b) arrears of payments from May 2, 1956, to April 30, 1957, Rs. 4,51,000 (Approx.), (c) Past liability in respect of gratuity as on March 31, 1957, Rs. 5,50,000 (Approx.), (d) Recurring annual liability for gratuity Rs. 60,000 (Approx.). The total comes to Rs. 15,63,000. They employ 15 working journalists. The annual wage bill of working journalists would have to be increased by reason of the decision of the Wage Board by Rs. 10,800; the burden of payment of retrospective liability being Rs. 9,600. Moreover, there will be a recurring annual burden of Rs. 6,340 inclusive of the expenditure involved by reason of the provisions as to (i) Notice pay, (ii) Gratuity, (iii) Retrenchment compensation and (iv) Extra burden of reduced hours of work and increased leave. The Sandesh Ltd., the petitioners in Petition No. 117 of 1957, otherwise styled, the Sandesh Group, Ahmeda bad, publish (i) Sandesh, a morning Gujarati Daily, (ii) Sevak, an evening Gujarati Daily, (iii) Bal Sandesh, a Gujarati Weekly, and (iv) Aram, and (v) Sat Sandesh, Gujarati Monthlies all from Ahmedabad. They employ a total staff of 205 employees out of whom there are 11 working journalists, 7 proof readers and the rest 187 constitute the other members of the staff. The increase in the wage bill of the working journalists under the provisions of the Act would be Rs. 24,807 per year besides a similar liability for Rs. 24,807 by reason of the retrospective operation of the decision. There will be an increase in expenditure to the tune of Rs. 30,900 by reason of the reduced working hours and increase in leave and holidays, a liability of Rs. 31, 597 for past gratuity and Rs. 24,807 every year for recurring gratuity as also Rs. 1,530 for recurring increase in wages of the working journalists. The financial burden in the case of proof readers who 77 are included in the definition of working journalists tinder the terms of the Act would be Rs. 5,724 per year. If similar benefits were to be given to the other members of the staff who are not working journalists the annual increase in the burden will be Rs. 1,89,816. The total costs of closing down if such an eventuality ' were contemplated would be Rs. 1,08,997 for the working journalists only as against a liability of Rs. 22,755 on the old basis. The other members of the staff would have to be paid Rs. 1,46,351 and the total cost of closing down the whole concern would thus conic to Rs. 2,55,349 under the new dispensation as against Rs. 1,69,106 as of old. The Jansatta Karyalaya, Ahmedabad, petitioners in Petition No. 118 of 1957 bring out (i) Jansatta, a Gujarati Daily and (ii) Chandni a Gujarati Monthly from Ahmedabad. The increase in the wage bill of the working journalists would come to Rs. 29,808. The liability for past gratuity would be Rs. 6,624 and the recurring annual gratuity would be Rs. 2,303 and the annual recurring increase in wages would come to Rs. 2,280. The financial burden in case of proof readers would be Rs. 6,480 per year as per the decision of the Wage Board. If similar benefits had to be given to the other members of the staff who are non working journalists the annual burden will increase by Rs. 48,720. The total cost of closing down, if such a contingency ever arose, would come to Rs. 1,00,798 under the provisions of the Act and the Wage Board decision as against Rs. 45,206 on the old basis. All these petitions filed by the several petitioners as above followed a common pattern. After succinctly reciting the history of the events narrated above which led to the enactment of the impugned Act and the decision of the Wage Board, they challenged the vires of the Act and the decision of the Wage Board. The vires of the Act was challenged on the ground that the provisions thereof were violative of the fundamental rights guaranteed by the Constitution under article 19(1)(a), 78 article 19(1)(g), and article 14 ; but in the course of the argu ments before us another Article, viz., article 32 was also added as having been infringed by the Act. The decision of the Wage Board was challenged on various grounds which were in pari materia with the objections that had been urged by the representatives of the employers in the Wage Board in their minute of dissent above referred to. It was also contended that the implementation of the decision would be beyond the capacity of the petitioners and would result in their titter collapse. The reply made by the respondents was that none of the fundamental rights guaranteed under article 19(1)(a), article 19(1)(g), article 14 and/or article 32 were infringed by the impugned Act, that the functions of the Wage Board were not judicial or quasijudicial in character, that the fixation of the rates of wages was a legislative act and not a judicial one, that the decision of the Wage Board bad been arrived at after taking into consideration all the criteria for fixation of wages under section 9(1) of the Act and the material as well as the evidence led before it, that a considerable portion of the decisions recorded by the Wage Board were unanimous, that the Wage Board had the power and authority also to fix the scales of wages and to give retrospective operation to its decision, and that the financial position of the petitioners was not such as to lead to their collapse as a result of the impact of the provisions of the impugned Act and the decision of the Wage Board. The petitioners in Petitions Nos. 91 of ' 1957, 99 of 1957, 100 of 1957, 101 of 1957 and 103 of 1957 also filed petitions for special leave to appeal against the decision of the Wage Board being Petitions Nos. 323, 346, 347, 348 and 359 of 1957 respectively and this Court granted the special leave in all these petitions under article 136 of the Constitution subject to the question of the maintainability of the appeals being open to be urged at the hearing. Civil Appeals arising out of these special leave petitions were ordered to be placed along with the Writ Petitions aforesaid for hearing and final disposal and Civil Appeals Nos. 699 of 1957, 700 of 1957, 701 of 1957, 702 of 1957 and 703 of 1957 79 arising therefrom thus came up for hearing and final disposal before us along with the Writ Petitions under article 32 mentioned above. We took up the hearing of the Writ Petitions first as they were more comprehensive in scope than the Civil Appeals filed by the respective parties and heard counsel at considerable length on the questions arising for our determination therein. Before we discuss the vires of the impugned Act and the decision of the Wage Board, it will be appropriate at this juncture to clear the ground by considering the principles of wage fixation and the machinery employed for the purpose in various countries. The concept of the living wage: "The concept of the living wage which has influenced the fixation of wages, statutorily or otherwise, in all economically advanced countries is an old and well established one, but most of the current definitions are of recent origin. The most expressive definition of the living wage is that of Justice Higgins of the Australian Commonwealth Court of Conciliation in the Harvester case. He defined the living wage as one appropriate for " the normal needs of the average employee, regarded as a human being living in a civilized community ". Justice Higgins has, at other places, explained what he meant by this cryptic pronouncement. The living wage must provide not merely for absolute essentials such as food, shelter and clothing but for " a condition of frugal comfort estimated by current human standards. " He explained himself further by saying that it was a wage " sufficient to insure the workmen food, shelter, clothing frugal comfort, provision for evil days, etc., as well as regard for the special skill of an artisan if he is one ". In a subsequent case he observed that " treating marriage as the usual fate of adult men, a wage which does not allow of the matrimonial condition and the maintenance of about five persons in a home would not be treated as a living wage". According to the South Australian Act of 1912, the living wage means " a sum 80 sufficient for the normal and reasonable needs of the average employee living in a locality where work under consideration is done or is to be done." The Queensland Industrial Conciliation and Arbitration Act provides that the basic wage paid to an adult male employee shall not be less than is " sufficient to maintain a well conducted employee of average health, strength and competence and his wife and a family of three children in a fair and average standard of comfort, having regard to the conditions of living prevailing among employees in the calling in respect of which such basic wage is fixed, and provided that in fixing such basic wage the earnings of the children or wife of such employee shall not be taken into account ". In a Tentative Budget Inquiry conducted in the United States of America in 1919 the Commissioner of the Bureau of Labour Statistics analysed the budgets with reference to three concepts, viz., (i) the pauper and poverty level, (ii) the minimum of subsistence level, and, (iii) the minimum of health and comfort level,and adopted the last for the determination of the living wage. The Royal Commission on the Basic Wage for the Commonwealth of Australia approved of this course and proceeded through norms and budget enquiries to ascertain what the minimum of health and comfort level should be. The commission quoted with approval the description of the minimum of health and comfort level in the following terms: " This represents a slightly higher level than that of subsistence, providing not only for the material needs of food, shelter, and body covering but also for certain comforts, such as clothing sufficient for bodily comfort, and to maintain the wearer 's instinct of selfrespect and decency, some insurance against the more important misfortunes death, disability and fire good education for the children, some amusement, and some expenditure for self development. " Writing practically in the same language, the United Provinces Labour Enquiry Committee classified level of living standard in four categories, viz., (i) the poverty level,81 (ii) the minimum subsistence level, (iii)the subsistence plus level and (iv) the comfort level, and chose the subsistence plus level as the basis of what it called the "minimum living wage". Any definition of a standard of living is necessarily descriptive rather than logical. Any minimum, after all, is arbitrary and relative. No completely objective and absolute meaning can be attached to a term like the living wage standard " and it has necessarily to be judged in the light of the circumstances of the particular time and country. " The Committee then proceeded through the use of norms and standard budgets to lay down what the basic wage should be, so that it might approximate to the living, wage standard " in the light of the circumstances of the particular time and country. " The Minimum Wage Fixing Machinery published by the 1. L. O. has summarised these views as follows: " In different countries estimates have been made of the amount of a living wage, but the estimates vary according to the point of view of the investigator. Estimates may be classified into at least three groups: (1) the amount necessary for mere subsistence, (2) the amount necessary for health and decency,and (3) the amount necessary to provide a standard of comfort. " It will be seen from this summary of the concepts of the living wage held in various parts of the world that there is general argument that the living wage should enable the male earlier to provide for himself and his family not merely the bare essentials of food, clothing and shelter but a measure of frugal comfort including education for the children, protection against ill health, 11 82 requirements of essential social needs, and a measure of insurance against the more important misfortunes including old age. " (1) Article 43 of our Constitution has also adopted as one of the Directive Principles of State Policy that: The State shall endeavour to secure, by suitable legislation or economic Organisation or in any other way, to all workers, agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities. . . " This is the ideal to which our social welfare State has to approximate in an attempt to ameliorate the living conditions of the workers. The concept of the minimum wage: " The International Convention of 1928 prescribes the setting up of minimum wage fixing machinery in industries in which " no arrangements exist for the effective regulation of wages by collective agreement or otherwise and wages are exceptionally low". . " As a rule, though the living wage is the target, it has to be tempered, even in advanced countries, by other considerations, particularly the general level of wages in other industries and the capacity of industry to pay. This view has been accepted by the Bombay Textile Labour Inquiry Committee which says that " the living wage basis affords an absolute external standard for the determination of the minimum " and that " where a living wage criterion has been used in the giving of ail award or the fixing of a wage, the decision has always been tempered by other considerations of a practical character." " In India, however, the level of the national income is so low at present that it is generally accepted that the country cannot afford to prescribe by law a minimum wage which would correspond to the concept of the living wage as described in the preceding paragraphs. (1) Report of the Committee on Fair Wagss (1947 to 1949), pp 5 7,paras. 83 Provincial Governments consider that the minimum wage can at present be only a bare subsistence wage. In fact, even one important All India Organisation of employees has suggested that " a minimum wage is that wage which is sufficient to cover the bare physical needs of a worker and his family." Many others, '; however. . consider that a minimum wage should also provide for some other essential requirements such as a minimum of education, medical facilities and other amenities. For this purpose, the minimum wage must also provide for some measure of education, medical requirements, and amenities. This is the concept of the " minimum wage " adopted by the Committee on Fair Wages. There are however variations of that concept and a distinction has been drawn, for instance, in Australian industrial terminology between the basic wage and the minimum wage. " The basic wage there approximates to a bare minimum subsistence wage and no normal adult male covered by an award is permitted to work a full standard hours week at less than the assessed basic wage rate. The basic wage is expressed as the minimum at which normal adult male unskilled workers may legally be employed, differing from the amounts fixed as legal minima for skilled and semi skilled workers, piece workers and casual workers respectively. . . . . . . The minimum wage is the lowest rate at which members of a specified grade of workers may legally be employed. " (2) There is also a distinction between a bare subsistence or minimum wage and a statutory minimum wage. The former is a wage which would be sufficient to cover the bare physical needs of a worker and his family, that is, a rate which has got to be paid to the worker irrespective of the capacity of the industry to (i) Report of the Committee on Fair Wages, PP. 7 9, paras, 8 10. (2) O.D.R. Feenander Industrial Regulation in Australia (1947), Ch. XVII, P. 155. 84 pay. If an industry is unable to pay to its workmen at least a bare minimum wage it has no right to exist. As was observed by us in Messrs. Crown Aluminium Works vs Their Workmen (1): " It is quite likely that in underdeveloped countries, where unemployment prevails on a very arge scale, unorganised labour may be available on starvation wages, but the employment of labour on Starvation wages cannot be encouraged or favored in a modern democratic welfare state. If an employer cannot maintain his enterprise without cutting down the wages of his employees below even a bar(, subsistence or minimum wage, he would have no right to conduct his enterprise on such terms. " The statutory minimum wage however is the minimum which is prescribed by the statute and it may be higher than the bare subsistence or minimum wage, providing for some measure of education, medical requirements and amenities, as contemplated above. also the connotation of " minimum rate of wages " in section 4 of the (XI of 1948)). tasks in other trades which are of equal difficulty and disagreeableness, which require equally rare natural abilities and an equally expensive training. A wage rate, in his opinion, is "fair in the narrower sense" when it is equal to the rate current for similar workmen in the same trade and neighborhood and "fair in the wider sense" when it is equal to the predominant rate for similar work throughout the country and in the generality of trades. " " The Indian National Trade Union Congress. (1) ; 85 agreements, arbitrators, and adjudicators could at best be treated, like the minimum wage, as the starting point and that wherever the capacity of an industry to pay a higher wage is established, such a higher wage should be deemed to be the fair wage. The minimum a wage should have no regard to the capacity of an industry to pay and should be based solely on the requirements of the worker and his family. Several employers while they are inclined to the view that fair wages would, in the initial stages, be closely related to current wages, are prepared to agree that the prevailing rates could suitably be enhanced according to the capacity of an industry to pay and that the fair" age would in time progressively approach the living wage. It is necessary to quote one other opinion, viz., that of the Government of Bombay, which has had considerable experience in the matter of wage regulation. The opinion of that Government is as follows: " Nothing short of a living wage can be a fair wage if under competitive conditions an industry can be shown to be capable of paying a full living wage. The minimum wage standards set up the irreducible level, the lowest limit or the floor below which no workers shall be paid. . A fair wage is settled above the minimum wage and goes through the process of approximating towards a living wage. " While the lower limit of the fair wage must obviously be the minimum wage, the upper limit is equally set by what may broadly be called the capacity of industry to pay. This will depend not only on the present economic position of the industry but on its future prospects. Between these two limits the actual ", ages will depend on a consideration of the following factors and in the light of the comments given below: (i) the productivity of labour; (ii) the prevailing rates of wages in the same or 86 similar occupations in the same or neighbouring localities; (iii) the level of the national income and its distribution ;and (iv) the place of the industry in the economy of the country. . . (1). It will be noticed that the " fair wage " is thus a mean between the living wage and the minimum wage and even the minimum wage contemplated above is something more than the bare minimum or subsistence wage which would be sufficient to cover the bare physical needs of the worker and his family, a wage which would provide also for the preservation of the efficiency of the worker and for some measure of education, medical requirements and amenities. This concept of minimum wage is in harmony with the advance of thought in all civilised countries and approximates to the statutory minimum wage which the State should strive to achieve having regard to the Directive Principle of State Policy mentioned above. The enactment of the , affords an illustration of an attempt to provide a statutory minimum. It was an Act to provide for fixing minimum rates of wages in certain employments and the appropriate Government was thereby empowered to fix different minimum rates of wages for (i) different scheduled employments; (ii) different classes of work in the same scheduled employment; (iii) adult ,, adolescents, children and apprentices; and (iv) different localities; and (v) such minimum rates of wages could be fixed by the hour, by the day or by any larger period as may be prescribed It will also be noticed that the content of the expressions minimum wage fair wage " and " living wage is not fixed and static. It varies and is bound to vary from time to time. With the growth and Development of national economy, living standards Would improve and so would our notions about the respective categories of wages expand and be more progressive. (1) Report of the Committee on Fair Wages, PP. 4, 9 11, paras, 11 15. 87 It must however be remembered that whereas the bare minimum or subsistence wage would have to be fixed irrespective of the capacity of the industry to pay, the minimum wagg thus contemplated postulates the capacity of the industry to pay and no fixation of wages which ignores this essential factor of the capacity of the industry to pav could ever be supported. The rates of wages and scales of wages are two different expressions with two different connotations. " Similar definition of " wages " is to be found in the , also. They would therefore include all payments made from time to time to a workman during the course of his employment as such and not merely the starting amount of wages at the beginning of his employment. The dictionary meaning of the term in the Concise Oxford ]Dictionary is also the same, viz., " Amount paid periodically, especially by the day or week or month, for time during which workman or servant is at employer 's disposal ". The use of the word " rate " in the expression " rates of wages" has not the effect of limiting the connotation of the term. "Rate" is described in the Concise Oxford Dictionary as " a statement of numerial proportion prevailing or to prevail between two sets of things either or both of which may be unspecified amount, etc., mentioned in one case for application to all similar ones, standard or way of reckoning (measure of) value, etc." In Chambers ' Twentieth Century Dictionary its meaning is given as: estimated amount or value (Shakespeare), and also " amount 88 determined according to a rule or basis; a standard; a class or rank; manner or mode". "Rates of wages" therefore mean the manner, mode or standard of the payments of remuneration for work done whether at the start or in the subsequent stages. Rates of wages would thus include the scales of wages and there is no antithesis between the, two expressions, the expression being applicable both to the initial as well as subsequent amounts of wages. It is true that in references made to Industrial Tribunals fixing of scales of pay has been specifically men tioned, e. g., in the Industrial dispute between certain banking companies and their workers. But that is not sufficient to exclude the " scales of wages " from being comprised within the larger connotation of the expression "rates of wages " which is capable of including the scales of wages also within its ambit. Even without the specific mention of the scales of wages it would be open to fix the same in an inquiry directed towards the fixation of the rates of wages. It is also true that Industrial Tribunals have laid down that the increments of wages or scales of remuneration could only be fixed having due regard to the capacity of the industry to pay. In the case of the Britannia Building & Iron Co. Ltd.(1): " As time scales increase the wage bill year after year which is reflected in the cost of production, such Scales should not, in our opinion, be forced upon the employer of industrial labour unless it is established that the employer has the present capacity to pay and its financial capacity can be counted upon in future. Thus, both financial ability and stability are requisite conditions. " Similar observations were made in the case of the Union Drug Co. Ltd.(1): " For before incremental scales can be imposed by adjudication, it is essential to see whether employer would be able to bear its burden. The financial condition of the Company must be such as to lead to the conclusion that it would be able to pay the increments year by year for an appreciable number of (1) (1954] , 654(2) , 767. 89 years, for wage scales when settled are intended to be long term schemes. " This consideration however of the capacity of the industry to pay does not militate against the construction adopted above that rates of wages do comprise within their scope the scales of wages also and it therefore follows that the fixation of rates of wages would also include the fixation of scales of wages. As a matter of fact, the provisions in regard to the statutory minimum wages in Queensland, Western Australia, and Tasmania prescribe scales of wages which are graduated according to age and experience. The capacity of the industry to pay being thus one of the essential ingredients in the fixation of wages, it is relevant to consider the different methods of measuring such capacity. The capacity of the industry to pay: The capacity of industry to pay can mean one of three things, viz : (i)the capacity of a particular unit (marginal, representative or average) to pay, (ii)the capacity of a particular industry as a whole to pay or (iii)the capacity of all industries in the country to pay. " Ideas on this subject have varied from country to country. In New Zealand and Australia, the capacity to pay is calculated with reference to all industries in the country and no special concessions are shown to depressed industries. In Australia the Arbitration Court considered that " in view of the absence of clear means of measuring the general wage paying capacity of total industry, the actual wage upon which well situated labourers were at the time maintaining the average family unit could justifiably be taken as the criterion of what industry could probably pay to all labourers ". This is at best a secondary definition of capacity, for it could only serve to show that certain industries or units could afford to pay as much as certain others. " The Bombay Textile Labour Inquiry Committee 12 90 came to the conclusion that it was not possible to define the term "capacity to pay" in a precise manner and observed as follows: "The capacity to pay a wage cannot obviously be determined merely by the value of production. The determination of each of a large number of charges involves difficulties, both theoretical and practical. Interest charges, remuneration to salaried staffs and managing agents, sales commissions, profits, all these cannot for any large organised industry be taken as pre determined in a fixed manner. Neither is it to be expected that representatives of Labour would accept without challenge the current levels of expenditure on these items apart from the consideration whether the industry has been reasonably wellmanaged or not." " That Committee was, however, of the opinion that capacity should not be measured in terms of the individual establishment and that " the main criterion should be the profit making capacity of the industry in the whole province. . . . . . . . " In determining the capacity of an industry to pay it would be wrong to take the capacity of a particular unit or the capacity of all industries in the country. The relevant criterion should be the capacity of a particular industry in a specified region and, as far as possible, the same wages should be prescribed for all units of that industry in that region. It will obviously not be possible for the wage fixing board to measure the capacity of each of the units of an industry in a region and the only practicable method is to take a fair cross section of that industry. "(1) It is clear therefore that the capacity of an industry to pay should be gauged on an industry cum region basis after taking a fair cross section of that industry. In a given case it may be even permissible to divide the industry into appropriate classes and then deal with the capacity of the industry to pay classwise. (1) Report of the Committee on Fair Wages, pp. 13 15, paras. 21& 23. 91 As regards the measure of the capacity again there are two points of view in regard to the same: " One view is that the wage fixing machinery should, in determining the capacity of industry to pay, have regard to (i) a fair return on capital and remuneration to management; and (ii)a fair allocation to reserves and depreciation so as to keep the industry in a healthy condition. The other view is that the fair wage must be paid at any cost and that industry must go on paying such wage as long as it does not encroach on capital to pay that wage. . The objective is not merely to determine wages which are fair in the abstract, but to see that employment at existing levels is not only maintained but, if possible, increased. From this point of view, it will be clear that the level of wages should enable the industry to maintain production with efficiency. The capacity of industry to pay should, therefore, be assessed in the light of this very important consideration. The wages board should also be charged with the duty of seeing that fair wages so fixed for any particular industry are not very much out of line with wages in other industries in that region. Wide disparities would inevitably lead to movement of labour, and consequent industrial unrest not only in the industry concerned but in other industries." (1) The main consideration which is to be borne in mind therefore is that the industry should be able to maintain production with efficiency and the fixation of rates,of wages should be such that there are no movements from one industry to another owing to wide disparities and employment at existing levels is not only maintained, but if possible, increased. Different tests have been suggested for measuring the capacity of the industry to pay: viz: (1) The selling price of the product; (2) The volume of the output; (3) the profit and loss in the business; (1) Report of the Committee on Fair Wages, p. 14, para. 92 (4) the rates which have been agreed to by a, large majority of the employers; (5) the amount of unemployment brought about or likely to be brought about by the imposition of the increased wage, etc. They are however not quite satisfactory. The real measure of the capacity of the industry to pay has been thus laid down in " Wage. , & the State " by E.M. Burns at p. 387: " It would be necessary to inquire inter alia into the elasticity of demand for the product, for on this depends the extent to which employers could transfer the burden of the increased wage to consumers. It would also be necessary to inquire how far the enforced payment of a higher wage would lead employers to tighten up Organisation and so pay the higher wage without difficulty. Again unless what the trade can bear be held to imply that in no circumstances should the existing rate of profit be reduced, there is no reason why attempts should not be made to discover how far it is possible to force employers to bear the burden of an increased rate without driving them out of business. This would involve an investigation into the elasticity of supply of capital and organization ability in that particular trade, and thus an inquiry into the rate of profits in other industries, the ease with which transferences might be made, the possibility of similar wage regulation extending to other trades, and the probability of the export of capital and organising ability etc. " The principles which emerge from the above discussion are: (1) that in the fixation of rates of wages which 93 include within its compass the fixation of scales of wages also, the capacity of the industry to pay is one of the essential circumstances to be taken into consideration except in cases of bare subsistence or minimum wage where the employer is bound to pay the same irrespective of such capacity; (2) that the capacity of the industry to pay is to be considered on an industry cum region basis after taking a fair cross section of the industry; and (3) that the proper measure for gauging the capacity of the industry to pay should take into account the elasticity of demand for the product, the possibility of tightening up the Organisation so that the industry could pay higher wages without difficulty and the possibility of increase in the efficiency of the lowest paid workers resulting in increase in production considered in conjunction with the elasticity of demand for the product no doubt against the ultimate background that the burden of the increased rate should not be such as to drive the employer out of business. The machinery for fixations of wages: The fixation of wages may form the subject matter of reference to industrial tribunals or similar machinery under the Labour Relations Law. But this machinery is designed for the prevention and settlement of industrial disputes which have either arisen or are apprehended, disputes relating to wages being one of such disputes. The ensuring of an adequate wage is however a distinctive objective and it requires the setting up of some kind of wage fixing board, whether they be trade boards or general boards. It is seldom that legislative enactments themselves fix the rates of wages, though a few such instances are known. This method of regulation of wages has now become obsolete in view of its inflexibility. " (1) " The Constitution of Boards falls naturally into two main groups. P. 26, para. 94 general and employers in general being represented. This group includes among others the Industrial Welfare Commission of Texas, consisting of the Commissioner of Labour, the representative of employers of labour on the Industrial Accidents Board and the State Superintendent of Public Instruction; the Minimum Wage Board of Manitoba, composed of two representatives of employers, and two of workers (one of each to be a woman) and one disinterested person; and the South Australian Board of Industry, consist ing of a President and four Commissioners, two of whom are to be nominated by the South Australian Employers ' Federation and two by the United Trades and Labour Council of the State. On the other hand are those Boards representative of one trade only or of part of a trade, or of a group of allied trades. An attempt is made to obtain a body of specialists and the membership of the Board reflects this intention. It will contain an equal number of representatives of employers and workers, together with an impartial chairman, and in some cases members of the public as well. Of this type are the British Trade Boards; the South Australian, Victorian and Tasmanian Wages Boards; and the Advisory or Wages Boards set up by many of the Central Commissioners in the United States and Canada. " (1) The following is a brief description of the composition and working of wages boards in the United Kingdom: " In the United Kingdom where trade boards, and not general boards, have been set up, the Minister of Labour appoints a board if lie is satisfied that no adequate machinery exists in a particular trade or industry for effectively regulating the waves and that it is necessary to provide such machinery. The trade board is a fairly large body consisting of an equal number of representatives of employers and workers with a few independent members including the Chairman. 95 are appointed on the recommendation of the associations concerned. The trade board publishes a notice announcing its tentative proposals for the fixation or revision of a wage rate and invites objections or comments. After a two months ' notice the board takes a final decision and submits a report to the Minister who must confirm the rate unless, for any special reasons, he returns the recommendations to the board for further consideration. " (1) The Wage Council Act, 1945 (8 & 9 Geo. VI, ch. 17) provides for the establishment of Wage Councils. The Minister of Labour and National Service has the power to make a wages council order after considering objections made with respect to the draft order on behalf of any person appearing to him to be affected. The Wage Council makes such investigation as it thinks fit and publishes notice of the wage regulation proposals and parties affected are entitled to make written representations with respect to these proposals which representations the Wage Council considers. The Wage Council can make such further enquiries as it considers necessary and thereafter submit the proposals to the Minister either without amendment or with such amendments as it thinks fit in regard to the same. The Minister considers these wage regulations proposals and makes an order giving effect to the proposals from such date as may be specified in the order. Remuneration fixed by the wage regulation orders is called statutory minimum remuneration. There are also similar provisions under the Agricultural Wage Regulation Act, 1924 (14 & 15 Geo. V, ch. 37) in regard to the regulation of wages by Agricultural Wages Committees and the Agricultural Wages Board. In Canada and Syria a board consists of generally 5 members, but in China the size of the board varies from 9 to 15. In all these countries employers and workers obtain equal representation. In Canada the boards are required to enquire into the conditions of work and wages. 25 26, para. 96 the recommendations have to be submitted to the Lieutenant Governor who issues orders. " In the United States of America some state laws prescribe that the representatives of employers and workers should be elected, but in the majority of States the administrative authorities are authorised to make direct appointments. The boards so set up are empowered to make enquiries, to call for records, to summon witnesses and to make recommendations regarding minimum wages. Some of the American laws lay down a time limit for the submission of proposals. The administrative authority may accept or reject a report and refer it back for reconsideration, or form a new board for considering the matter afresh. Some of the laws provide that if the report is not accepted, the matter must be submitted again to the same wages board or a new wages board. " (1) The whole procedure for the determination of wages in the United States of America is described in two decisions of the Supreme Court: (i) Interstate Commerce Com. vs Louisville & M. R. (2) and (ii) Opp. Cotton Mills Inc. vs Administration (3). The Fair Labour Standards Act of 1938 in the U.S.A. provides for convening by the Administrator of industry committees for each such industry which from time to time recommend the minimum rate or rates of wages to be paid by the employers. The committee Recommends to the administrator the highest minimum wage rates for the industry which it determines, having due regard to economic and competitive conditions, will not substantially curtail employment in the industry. In Australia, also there are provisions in various states for the appointment of wage boards the details of which we need not go into. We may only refer to the wage board system in Victoria which was established (1) Report of the Committee on Fair Wages, p. 26, para. (2) ; ; (3) (1940) 312 U S 126; ; 97 in 1896 as a means of directly regulating wages and working conditions in industries subject to " sweating ", and was not intended to control industrial relations as such. " Under the Factories and Shops Act, 1924, wage boards are set up for the various industries with a ' court of Industrial Appeals to decide appeals from a determination of a wage board. Industries for which there is no special wage board are regulated by the General Wages Board, which consists of two employers ' representatives nominated by the Victorian Chamber of Manufacturers, two employees ' representatives nominated by the Melbourne Trade Hall Council, and a chairman, agreed upon by these four members or nominated by the minister for labour. "(1) It may be noted that in the majority of cases these wage boards are constituted of equal number of representatives of employers and employees and one or more independent persons, one of whom is appointed the chairman. The position in India has been thus summarised: " The history of wage fixation in India is a very recent one. There was practically no effective machinery until the last war for the settlement of industrial disputes or the fixation of wages. The Act had limited application and the Court was not charged with the responsibilities of fixing and regulating wages. During the war State intervention in the settlement of industrial dis putes became necessary, and numerous adjudicators were appointed to adjudicate on trade disputes under the Defence of India Rules. The , is the first effective measure of All India applicability for the settlement of industrial disputes. Under this Act various Tribunals have passed awards regulating wages in a number of important industries. " The first enactment specifically to regulate wages in this country is the . (1) Kenneth F. Walker, "Industrial Relations in Australia". 13 98 This Act is limited in its operation to the so called sweated industries in which labour is practically unorganised and working conditions are far worse than in organised industry. Under that Act the appropriate Government has either to appoint a Committee to hold enquiries and to advise it in regard to the fixation of minimum rates of wages or, if it thinks that it has enough material on hand, to publish its proposals for the fixation of wages in the official gazette and to invite objections. The appropriate Government finally fixes the minimum rates of wages on receipt of the recommendations of the Committee or of objections from the public. There is no provision for any appeal. There is an advisory board in each province to co ordinate the work of the various committees. There is also a Central Advisory Board to co ordinate the work of provincial boards. Complaints of non payment of the minimum rates of wages fixed by Government may be taken to claims authorities. Breaches of the Act are punishable by criminal courts. " (1) It is worthy of note that these committee, subcommittees, advisory board and central advisory board are to consist of persons to be nominated by the Central Government representing employers and employees in the scheduled employments, who shall be equal in number, and independent persons not exceeding one third of its total number of members; one of such independent persons shall be appointed the chairman by the appropriate Government. " Under a recent amendment to the Bombay Industrial Relations Act, 1946, wage boards can be set up in the Province of Bombay either separately for each industry or for a group of industries. The wage board is to consist of an equal number of representatives of employers and employees and some independent persons including the Chairman, all of whom are nominated by the Government. 51, 52. 99 pay. When a matter has been referred to a wages board, no proceedings may be commenced or continued before a conciliator, conciliation board, labour court or industrial court. The wages boards are authorised to form committees for local areas for the purpose of making enquiries. It is obligatory on" Government to declare the decisions of the wages boards binding, but where Government feel that it will be inexpedient on public grounds to give effect to the whole or any part of the decision, the matter has to be placed before the Provincial Legislature, the decision of which will be binding. There is provision for the filing of appeals from the decisions of the wages boards to the Industrial Court. " (1) Those wage boards moreover are under the superintendence of the Industrial Court. We may also notice here Recommendation 30, being the recommendation concerning the application of Minimum Wage Fixing Machinery made by the International Labour Office, 1949 (2): (1) The minimum wage fixing machinery whatever form it may take (for instance, trade board for individual trades, tribunals), should operate by way of investigation into the relevant conditions in the trade or part of trade concerned and consultation with the interests primarily and principally affected, that is to say, the employers and workers in the trade or part of trade, whose views on all matters relating to the fixing of the minimum rate of wages should in any case be solicited and be given full and equal consideration. " (2) (a) To secure greater authority for the rates that may be fixed, it should be the general policy that the employers and workers concerned through representatives equal in number or having equal voting strength, should jointly take a direct part in the deliberations and decisions of the wage fixing body; in any case, where representation is accorded to one side, the other side should be represented on the same footing. The wage fixing body should also include one or more independent persons whose votes can ensure (1) Report of the Committee on Fair Wages, P. 27, para. Such independent persons should, as far as possible, be selected in agreement with or after consultation with the employers ' and workers ' representatives on the wage fixing body. (b)In order to ensure that the employers ' and workers ' representatives shall be persons having the confidence of those whose interests they respectively represent, the employers and workers concerned should be given a voice as far as is practicable in the circumstances in the selection of their representatives, and if any organisations of the employers and workers exist these should in any case be invited to submit names of persons recommended by them for appointment on the wage fixing body. (c)The independent person or persons mentioned in paragraph (a) should be selected from among men or women recognised as possessing the necessary qualifications for their duties and as being dissociated from any interest in the trade or part of trade concerned which might be calculated to put their impartiality in question. " The following appraisement of the system of establishing trader boards by the committee on fair wages may be noted in this context: " A trade board has the advantage of expert knowledge of the special problems of the trade for which it has been set up and is, therefore, in a position to evolve a scheme of wages suited to the conditions obtaining in the trade. The system, however, suffers from the limitation that there is no one authority to co ordinate the activities of the various boards with the result that wide disparities may arise between the scales sanctioned for similar industries. The Bombay Textile Labour Inquiry Committee have stated in their report that the trade board system is the best suited to Indian conditions, particularly because the very manner of 101 functioning of trade boards is such that wages are arrived at largely by discussion and conciliation and that it is only in exceptional cases that the deciding votes of the Chairman and of the independent members have to be given." (1) It is clear therefore that a wage board relating to a, particular trade or industry constituted of equal number of representatives of employers and employees, with an independent member or members one of whom is appointed a chairman, is best calculated to arrive at the proper fixation of wages in that industry. Principles for guidance. If a wage board is thus appointed it is necessary that the principles for its guidance in wage fixation should also be laid down by the appointing authority. The following passage from "Minimum Wage An International Survey I.L.O. Geneva, 1939, summarises the position as it obtains in various countries: " As will be clear from the analysis of legislation given earlier in this monograph, the fundamental principle of the Australian system, both in the Commonwealth and in the State sphere, is that of the living wage. Even in those cases where the law contains no reference to this principle its importance is in practice great. . As a criterion of wage regulation the principle of the living wage is however no more than a vague and general indication of the purpose of the legislation. It leaves the broadest possible discretion in practice to the wage fixing tribunals. In the case of the Commonwealth laws indeed the Court is left completely free to determine the principles on which the basic or living wage is to be assessed. Under certain of the State laws specific, though limited, directions are given. Thus in Queensland there is a statutory definition of the family unit on whose requirements the basic wage is to be calculated. In certain cases the general emphasis on the criterion of the workers ' needs is supplemented by directions to fix wage rates that will be " fair and reasonable " and in doing so to take into account the average standard (1) Report of the Committee on Fair Wages, P. 27, para. 53, 102 of comfort being enjoyed by workers in the same locality or in similar occupations. Such references, it may be noted, involve at least an indirect allusion to general economic conditions and the capacity of industry to pay, since the standards currently enjoyed are closely related to these factors. In at least one case (in Queensland) the Court is specifically directed to examine the probable effects of its decisions upon industry and the community in general. " In the United States of America the Fair Labour Standards Act of 1938 enunciates certain principles for the guidance of the industry committees which are convened by the Administrator under the Act: " The committee shall recommend to the Administrator the highest minimum wage rates for the industry which it determines, having due regard to economic and competitive conditions, will not substantially curtail employment in the industry " and further " in determining whether such classifications should be made in any industry in making such classification, and in determining the minimum wage rates for such classification, no classification shall be made, and no minimum wage rate shall be fixed, solely on a regional basis, but the industry committee and the Admini strator shall consider among other relevant factors the following. (1) competitive conditions as affected by transportation, living, and production cost; (2) the wages established for work of like or comparable character by collective labour agreements negotiated between employers and employees by representatives of their own choosing; and (3) the wages paid for work of like or comparable character by employers who voluntarily maintain minimum wage standards in the industry. No classification shall be made under this section on the basis of age or sex. " The normal rule however is to leave a wide discretion to the tribunals responsible for the fixation of wages inasmuch as they being constituted of equal numbers of representatives of the employers and the 103 employees are best calculated to appreciate the whole position and arrive at correct results. Procedure to be followed : The procedure to be followed by the wage boards is equally fluid. The wage councils and the central coordinating committees appointed under the Wages Council Act, 1945, as also the agricultural wages committees and the agricultural boards appointed under the Agricultural Wages Regulation Act, 1924, in the United Kingdom each of them subject, of course, to the regulations which might be made by the minister as to the meetings and procedure of these bodies including quorum, etc., is entitled to regulate its procedure in such manner as it thinks fit. The wage boards in Australia " are called together informally by the chairman upon request of either party. , No legal formalities or procedures need be complied with. Meetings of wage boards are held in the offices of the Department of Labour an officer of the department acting as secretary. " (1) The wage boards thus constituted are left to regulate their procedure in such manner as they think fit and it is not necessary that any regulation should be made in regard to the procedure to be adopted by them in the conduct of the enquiry before them. There are, however, a number of safeguards which have been provided in order to protect the interests of the parties concerned. The wages councils established by the Minister of Labour and National Services in the United Kingdom are so established after considering objections from persons appearing to be affected thereby and wage regulation orders are also recommended by these councils after considering the written representations in regard to their proposals which are duly published in the manner prescribed. These recommendations are again in their turn considered by the minister and it is only after the minister is satisfied that these wage regulation orders are promulgated, the minister having the power in proper cases to send the same back for reconsideration by the wage (1) Kenneth F. Walker " Industrial Relations in Australia ", P. 24. 104 councils. The reports of the industry committees convened by the administrator in the United States of America are subject to scrutiny by the administrator who gives notice to all interested persons and gives them an opportunity of being heard in regard to the same. it is only after this is done that he approves and carries into effect the recommendations in these reports on his being fully satisfied that they are proper and if he disapproves of these recommendations he again refers the matter to such committees for further considerations and recommendations. The orders of the administrator are again subject to review in the Circuit Court of Appeals in the United States and further revision in the U. section Supreme Court upon certiorari or certification. As regards the determinations of the special boards in some of the States of the Commonwealth of Australia appeals lie against the same to the court of industrial appeals and they are also challengeable before the High Court. Such safeguards are also provided in our . Here the work of the committees, sub committees and advisory committees is coordinated by advisory boards and the work of the advisory boards is coordinated by the central advisory board which advises the Central Government in the matter of the fixing of the minimum rates of wages and other matters under the Act and it is after the receipt of such advice from the Central advisory board by the appro priate Government that the latter takes action in the matter of fixation or revision of minimum rates of wages. Where, however, the appropriate Government propose to fix the minimum rates of wages without reference to the various committees, or sub committees, it publishes its proposals by notification in the Official Gazette for the information of persons likely to be affected thereby and fixes the minimum rates of wages only after considering the representations received by it from the interested parties. 105 The wage boards appointed by the amended Bombay Industrial Relations Act, 1946, are subject to the appellate jurisdiction as well as supervisory jurisdiction of the industrial courts in the State and parties affected by their decisions are entitled to file appeals against the same in the industrial courts. If these safeguards are provided against the determinations of the wage boards, it will be really immaterial what procedure they adopt in the course of the proceedings before them. Charactero the functions performed: There is considerable divergence of opinion in regard to the character of the functions performed by these wage boards and a controversy has arisen as to whether the functions performed by them are administrative, judicial or quasi judicial or legislative in character. The question assumes importance on two grounds: viz., (i) whether the decisions of the wage boards are open to judicial review and (ii) whether the principle of audi alteram partem applies to the proceedings before the wage boards. If the functions performed by them were administrative or legislative in character they would not be subject to judicial review and not only would the not be amenable to the writs of certiorari or prohibition under articles 32 and 226 of the ' Constitution, they would also not be amenable to the exercise of special leave jurisdiction under article 136. Their decisions moreover would not be vulnerable on the ground that the principle of audi alteram partem, i. e., no man shall be condemned unheard, was not followed in the course of the proceedings before them I4 106 and the procedure adopted by them was contrary to the principles of natural justice. It is well settled that writs of certiorari and prohibition will lie only in respect of judicial or quasijudicial acts: " the orders of certiorari and prohibition will lie to bodies and persons other than courts stricto sensu. Any body of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially, is subject to the controlling jurisdiction of the High Court of justice, exercised by means of these orders." (1). The principle of audi alteram partem also applies only to judicial or quasi judicial proceedings: As was observed by the Judicial Committee of the Privy Council in Patterson vs District Commissioner of Accra (2): "On this part of the case, counsel suggested that the provisions of section 9 were in the nature of a " mass punishment " of the inhabitants of the proclaimed district and he relied on the well known passage from the judgment of the court in Bonaker vs Evans (3), " no proposition can be more clearly established than that a man cannot incur the loss of liberty or property for an offence by a judicial proceeding until he has had a fair opportunity of answering the charge against him, unless indeed the legislature has expressly or impliedly given an authority to act, without that necessary preliminary. This is laid down in there a number of cases are mentioned] and many other cases, concluding with that of Capel vs Child (4) in which Bayley B. says he knows of no case in which you are to have a judicial proceeding, by which a man is to be deprived of any part of his property, without his having an opportunity of being heard. . Their Lordships have already indicated that, in their view, the section does not contemplate any judicial proceeding, and thus a decision against the appellant does not infringe the principles stated in Bonaker vs Evans." (3) (1) Halsbury 's Laws of England, 3rd Edn., Vol. 11, at p. 55,para. 114. (2)[1948] A.C. 341. (4) (1832) 2 C. (3) 16 Q.B. 162, 171.J. 558. 107 The distinction between a legislative and a judicial function is thus brought out in Cooley 's Constitutional Limitations, 8th Edn., Vol. 1, ch. V under the caption of " the powers which the legislative department may exercise ", at p. 185: " On general principles, therefore, those inquiries, deliberations, orders, and decrees, which are peculiar to such a department, must in their nature be judicial acts. The former decide upon the legality of claims and conduct, and the latter make rules upon which, in connection with the constitution, those decisions should be founded. It is the province of judges to determine what is the law upon; existing cases. In fine, the law is applied by one, and made by the other. But to do the last to pass new rules for the regulation of new controversies is in its nature a legislative act; and if these rules interfere with the past, or the present, find do not look wholly to the future, they violate the definition of a law as " a rule of civil conduct " because no rule of conduct can with consistency operate upon what occurred before the rule itself was promulgated. " It is the province of judicial power, also to decide private disputes between or concerning persons; but of legislative power to regulate public concerns, and to make laws for the benefit and welfare of the State. Nor does the passage of private statutes, when ' lawful, are enacted on petition, or by the consent of all concerned; or else they forbear to interfere with past translations and vested rights. " The following classic passage from the opinion of Holmes, J., in Prentis vs Atlantic Coast Line Co. Ltd., (1), is very apposite in this context: " A judicial inquiry investigates, declares, and enforces liabilities as they stand on present or past facts and under laws supposed already to exist. That is its purpose and end. Legislation, on the other hand (1) ; , 226 227 ; 53 L. Ed. 15o, 158, 159.108 looks, to the future and changes existing conditions by making a new rule, to be applied thereafter to all or some part of those subject to its power. That question depends not upon the character of the body, but upon the character of the proceedings. The nature of the final act determines the nature of the previous enquiry." (See also Mitchell Coal & Coke Co. vs Pennsylvania R. Co. (1) and Louisville & Nashville Railroad Company vs Green Garrett (2) A practical difficulty however arises in thus characterising the functions as legislative or judicial because the functions performed by administrative agencies do not fall within watertight compartments. Stason and Cooper in their treatises on " Cases and other materials on Administrative Tribunals" point out: One of the great difficulties of properly classifying a particular function of ail administrative agency is that frequently and, indeed; typically a single function has three aspects. It is partly legislative, partly judicial and partly administrative. Consider, for example, the function of rate making. It has sometimes been characterised as legislative, sometimes as judicial. In some aspects, actually, it involves merely executive or administrative powers. For example, where the Interstate Commerce Commission fixes a tariff of charges for any railroad, its function is viewed as legislative. But where the question for decision is whether a shipment of a mixture of coffee and chicory should be charged the rate established for coffee or the lower rate established for chicory, the question is more nearly judicial. On the other hand, where the problem is merely the calculation of the total freight charges due for a particular shipment, the determination can fairly be described as an administrative act." (1) ; ; 571. Ed. 1472, 1482. (2) ; ; , 239. 109 This difficulty is solved by the Court considering I in a proper case whether the administrative agency performs a predominantly legislative or judicial or administrative function and determining its character accordingly. (Vide: Village of Saratoga Springs vs Saratoga Gas, Electric Light & Power Co. (1), and People ex rel. Central Park, North ((., East River R. Co. Willcox (2). Robson 's Justice and Administrative Law, 3rd Edn. , states at p. 608 (foot note): " An example of a subordinate body of this type is a Wage Council, which is not an administrative tribunal but a subordinate legislative authority. " Griffith 's Principles of Administrative Lam, contains the following passage at p. 39: " The subordinate legislation which occupies more space than any other subject relates to Wages Councils. By the Wages Councils Act, 1945, the Minister of Labour and National Service was empowered to establish by order Wages Councils to operate in industries and trades. Six such orders were made in 1947. Wages Councils, under the Act, may submit to the Minister detailed "wages regulations proposals" for fixing remuneration and making provisions for holidays. The Minister then makes orders embodying and giving effect to these proposals. In 1947, fifty five such orders were made, covering thirty one different trades. " Barbare Wootton in " Social Foundations of Wage Policy; Modern Methods of Wage Determination makes the following observations at p. 88: " Both arbitration tribunals and courts of inquiry share with one important difference the tripartite structure of statutory wage councils; they are composed of equal numbers of representatives of employers and of workers under an independent chairman together with (in some cases) additional independent members. (2) (1909) 194 New York 383. 110 representative members of the latter are chosen from within the industry concerned, whereas employers and workers on arbitration tribunal come from outside the industry whose disputes they have to resolve; if in any case technical knowledge of a particular industry is required, this is normally supplied by the help of assessors who take no part in the final award. This difference between the constitution of wage boards and that of arbitration tribunals clearly implies a corresponding distinction between the legislative function of the former and the judicial function of the latter. The wages board drafts laws for its own industry, whereas the arbitration court gives judgment on matters submitted by others. The choice of industrial arbitrators unconnected with the industries the merits of whose claims they must pledge, is evidently intended as a guarantee that they, like other judges, will be free from bias arising from personal interest ". The High Court of the Commonwealth of Australia has taken a similar view in Australian Boot Trade Employees Federation vs Whybrow & Co. (1), in discussing an award made by the wages board empowered by a State statute to fix minimum rates of wages. The test applied for determining the character of that function may be stated in the words of Issacs J. at p. 318: " If the dispute is as to the relative rights of parties as they rest on past or present circumstances, the award is in the nature of a judgment, which might have been the decree of an ordinary judicial tribunal acting Linder the ordinary judicial power. There the law applicable to the case must be observed. If, however, the dispute is as to what shall in the future be the mutual rights and responsibilities of the partiesin other words, if no present rights 'are asserted or denied, but a future rule of conduct is to be prescribed, thus creating new rights and obligations, with sanctions for non conformity then the determination that so prescribes, call it an award, or arbitration, determination, or decision or what you will, is essentially of a legislative character, and limited only by the law which authorises it. If, again, there are neither present (1)(1910) ; , 318. 111 rights asserted, nor a future rule of conduct prescribed, but merely a fact ascertained necessary for the practical effectuation of admitted rights, the proceeding, though called an arbitration, is rather in the nature of an appraisement or ministerial act. " As against this trend of opinion it has been urged that the decisions of the Wage Councils in the shape of wage regulation proposals submitted to the minister in Great Britain under the Wage Councils Act derive their sanction from the orders made by the minister giving effect to these proposals; but for such orders of the minister they would merely remain the determinations of the Wage Councils and would not acquire any legislative character. In regard to the determinations of the wage boards empowered by the statutes to fix the minimum rates of wages in the Commonwealth of Australia also it is pointed out that under the provisions of the Factories and Shops Act, 1905, of Victoria "Every determination of any Special Board shall unless and until so quashed. . have the like force, validity and effect as if such determination had been enacted in this Act. . . thus investing the deter mination of the boards with the characteristics of a legislative act. Reference is made to the provisions of the Fair Labour Standards Act of 1938 in the United States of America, where the wages orders ultimately approved by the Administrator are subject to judicial review in the Circui Courts of Appeals or in the United States courts of appeals of the particular ]District and also subject to further review by the Supreme Court of the United States of America on certification. The , in our country also provides for the committees, sub committees, advisory sub committees, advisory boards and central advisory boards for fixing minimum rates of wages and the recommendations of these committees are forwarded to the appropriate Government who by notification in the official gazette fix minimum rates of wages in respect of each scheduled employment. The notification is a token of the approval by the appropriate Government 112 of these recommendations of the Committees and invests them with legal sanction. The recent amendment of the Bombay Industrial Relations Act, 1946, empowers the State Government by notification in the official Gazette to constitute for one or more industries a wage board for the State and enjoins these wage boards to follow the same procedure as the Industrial Court in respect of arbitration proceedings before it and appeals from the decisions of these wage boards lie to the Industrial Courts which has powers of superintendence and control over these wage boards and it cannot, under the circumstances be urged that these wage boards perform any legislative functions. These are the two opposite points of view which have been pressed before us and it is impossible to state that the functions performed by the wage boards are necessarily of a legislative character. If that were the only ' consideration the dictum of Justice Holmes cited above would apply and the functions performed by these wage boards would be invested with a legislative character. This is however not all, and regard must be had to the provisions of the statutes constituting the wage boards. If on a scrutiny of the provisions in regard thereto one can come to the conclusion that they are appointed only with a view to determine the relations between the employers and the employees in the future in regard to the wages payable to the employees there would be justification for holding that they were performing legislative functions. If, however, on a consideration of all the relevant provisions of the statutes bringing the wage boards into existence, it appears that the powers and procedure exercised by them are assimilated to those of Industrial Tribunals or their adjudications are subject to judicial review at the hands of higher Tribunals exercising judicial or quasi judicial 113 functions, it cannot be predicated that these wage boards are exercising legislative functions. Whether they exercise these functions or not is thus to be determined by the relevant provisions of the statutes incorporating them and it would be impossible to lay down any universal rule which would help in the ' determination of this question. Even if on the construction of the relevant provisions of the statute we come to the conclusion that the functions performed by a particular wage board are not of a legislative character, the question still remains whether the functions exercised by them are administrative in character or judicial or quasi judicial in character, because only in the latter event would their decision be amenable to the writ jurisdiction or to the special leave jurisdiction above referred to. There is no doubt that these wage boards are not exercising purely judicial functions. They are not courts in the strict sense of the term and the functions which they perform may at best be quasi judicial in character. The fact that they are administrative agencies set up for the purpose of fixation of wages do not necessarily invest their functions with an administrative character and in spite of their being administrative bodies they can nevertheless be exercising quasi judicial functions if certain conditions are fulfilled. The position in law has been thus summarised in Halsbury 's Laws of England, 3rd Ed., Vol. 11, at pp. 55 56: " The orders of certiorari and prohibition will lie to bodies and persons other than courts stricto sensu. Any body of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially, is subject to the controlling jurisdiction of the High Court of Justice, exercised by means of these orders. It is not necessary that it should be a court; an administrative body in ascertaining facts or law may be under a duty to act judicially notwithstanding that its proceedings have none of the formalities of, and are not in accordance 15 114 with the practice of, a court of law. It is enough if it is exercising, after hearing evidence, judicial functions in the sense that it has to decide on evidence between a proposal and an opposition. A body may be under a, duty, however, to act judicially (and subject to control by means of these orders) although there is no form of lies inter partes before it; it is enough that it should have to determine a question solely on the facts of the particular case, solely on the evidence before it, apart from questions of policy or any other extraneous considerations." " Moreover an administrative body, whose decision is actuated in whole or in part by questions of policy, may be under a duty to act judicially in the course of arriving at that decision. Thus, if in order to arrive at the decision, the body concerned had to consider proposals and objections and consider evidence, if at some stage of the proceedings leading up to the decision there was something in the nature of a lies before it, then in the course of such consideration and at that stage the body would be under a duty to act judicially. If, on the other hand, an administrative body in arriving at its decision has before it at no stage any form of lis and throughout has to consider the question from the point of view of policy and expediency, it cannot be said that it is under a duty at any time to act judicially." (See also the decision of this Court in Nagendra Nath Bora vs Commissioner of Hills Division and Appeals, Assam (1). In order therefore to determine whether an administrative body is exercising a quasi judicial function, it would be necessary to examine in the first instance, whether it has to decide on evidence between a proposal and an opposition and secondly, whether it is under a duty to act judicially in the matter of arriving at its decision. The question whether or not there is a duty to act judicially must be decided (1) ; 115 in each case in the light of the circumstances of the particular case and the construction of the particular statute, with the assistance of the general principles already set out." (Ibid, para. 115). The decision in R. vs Manchester Legal Aid Committee Ex parte R. A. Brand & Co. Ltd. (1), lays down when an administrative body can be said to have a duty to act judicially: " The true view, as it seems to us, is that the duty to act judicially may arise in widely different circumstances which it would be impossible, and, indeed, inadvisable, to attempt to define exhaustively. Where the decision is that of a court, then, unless, as in the case, for instance, of justices granting excise licences, it is acting in a purely ministerial capacity, it is clearly under a duty to act judicially. When, on the other hand, the decision is that of an administrative body and is actuated in whole or in part by questions of policy, the duty to act judicially may arise in the course of arriving at that decision. Thus, if, in order to arrive at the decision, the body concerned had to consider proposals, and objections and consider evidence, then there is the duty to act judicially in the course of that inquiry. That, as it seems to us, is the true basis of the decision in Errington vs Minister of Health (2). . . . . . . (See also Rex vs The London Country Council: Ex parte Entertainments Protection Association Ld. (3). . . " Further, an administrative body in ascertaining facts or law may be under a duty to act judicially not withstanding.that its proceedings have none of the formalities of and are not in accordance with the practice of a court of law." Vide Board of Education vs Rice (4) " More recently it has been held by this Court on ,many occasions that certiorari will lie to quash the decision of rent control tribunals, and this notwith (1) , 428, 429, 430. (2) (3) , 233 4. (4) , 182. 116 standing that such a tribunal is entitled to act on its own knowledge and information, without evidence unless submitted, and without a hearing except on notice from a party; see Rex vs Brighton. and Area Rent Tribunal (1). " If, on the other hand, an administrative body in arriving at its decision at no stage has before it any form of lis and throughout has to consider the question from the point of view of policy and expediency, it cannot be said that it is under a duty at any stage to act judicially: Compare Franklin vs Minister of Town and Country Planning." (2). It is strenuously urged before us by learned counsel for the petitioners that if the functions which the wage boards perform in the matter of fixation of the rates of wages are considered in the light of the principles cited above, it would appear that as between the employers, on the one hand, and the employees, on the other, there is a proposition and opposition. The employees demand that a particular statutory minimum wage should be fixed and the scales of wages should also be determined in a particular manner. The employers on their part would maintain that the status quo should continue or that, in any event, much less than the statutory minimum wage demanded by the employees should be fixed and also that the scales of wages should be fixed on a gradation which is much less than or in any event, different from that suggested by the employees. The employees may say that certain factors which are material in the fixation of wages and which affect the employees should be considered as determinative of the rates of wages while the importance of these factors may be sought to be minimized by the employers who might put forward certain other factors affecting them, in their turn, as determinative of those rates, the importance of which may be sought to be minimized by the employees on the other hand. All these would create proposition and opposition on both sides with the result that a lis would arise between them. The determination of these (1) [1950] 2 K.B 410. (2) ; , 102. 117 points at issue would have to be ' arrived at by the wage boards and the wage boards could only do so after collecting proper data and materials and hearing evidence in that behalf. If the functions performed by the wage board would thus consist of the determination of the issues as between a proposition and an opposition on data and materials gathered by the board in answers to the questionnaire issued to all parties interested and the evidence led before it, there is no doubt that there would be imported in the proceedings of the wage board a duty to act judicially and the functions performed by the wage board would be quasijudicial in character. It has been on the other hand urged before us by the learned counsel for the respondents that the very constitution of the wage boards is against the fundamental principle of jurisprudence which postulates that no man should be a judge in his own cause. It was laid down by the House of Lords in Franklin vs Minister of Town and Country Planning (1) at p. 103: " My Lords, I could wish that the use of the word bias " should be confined to its proper sphere. Its proper significance, in my opinion, is to denote a departure from the standard of even handed justice which the law requires from those who occupy judicial office, or those who are commonly regarded as holding a quasi judicial office, such as an arbitrator. The reason for this clearly is, that having to adjudicate as between two or more parties, he must come to his adjudication with an independent mind, without any inclination or bias towards one side or other in the dispute. " The representatives of the employers and the representatives of the employees who are appointed on the wage board along with an independent chairman and some other members, it is submitted, would necessarily have a bias in favour of those whom they represent and therefore would not be competent to be judges and the wage board thus constituted could hardly be called a judicial body. There is considerable force in these contentions, but (1) ; ,102. 118 we do not feel called upon to express our final opinion on this question in view of the conclusion which we have hereafter reached in regard to the ultra vires character of the decision of the Wage Board itself. We are however bound to observe that whatever be the character of the functions performed by the wage boards whether they be legislative or quasi judicial, if proper safeguards are adopted of the nature discussed earlier, e. g., provision for judicial review or the adopting of the procedure as in the case of the recommendations of the wage councils in the United Kingdom, or the reports of the advisory committees which come to be considered by the administrator under the Fair Labour Standards Act of 1938 in the United States of America, no objection could ever be urged against the determinations of the wage boards thus arrived at on the score of the principles of natural justice having been violated. We now proceed to consider how far the impugned Act violates the fundamental rights of the petitioners. Re : Article 19 (1) (a). it has, however, got to be read along with article 19 (2) which lays down certain constitutionally permissible limitations on the exercise of that right. article 19 (2) as substituted by the Constitution (First Amendment) Act, 1951, with retrospective effect reads as under: " Nothing in sub clause (a) of clause (1) shall affect the operation of any existing law, or prevent the State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the right conferred by the said sub clause in the interests of the security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to contempt of court, defamation or incitement to an offence. " If any limitation on the exercise of the fundamental right under article 19 (1) (a) does not fall within the four corners of article 19 (2) it cannot be upheld. The General Meaning of Freedom: To be free is to have the use of one 's powers of action (i) without restraint or control from outside and (ii) with whatever means or equipment the action requires. To be free is essentially to be free from something some arbitrary impediment to action, some dominating power or authority. And so long as it can be taken for granted that the unhindered person has all he needs to act withwhich is usually the case the negative meaning remains the chief element of the conception. " But since freedom is for action, and action is for an end, the positive kernel of freedom lies in the ability to achieve the end; to be free means to be free for some accomplishment. And this implies command of the means to achieve the end. Unless the equipment necessary for effective action is at hand, unrestraint may be a mockery of freedom. . . Unrestraint without equipment is not liberty for any end which demands equipment." (pp. 54 55). Resulting Conception of Freedom of the Press: " The emerging conception of freedom of the press may be summarised as follows,% As with all freedoms, press freedom means freedom from and freedom for. A free press is free from compulsions from whatever source, governmental or social, external or internal. From compulsions, not from pressures; for no press can be free from pressures except in a moribund society empty of contending forces and beliefs. These pressures, however, if they are persistent and distorting as financial, clerical, popular, institutional pressures may become approach compulsion; and something is then lost from effective 120 freedom which the press and its public must unite to restore. , " A free press is free for the expression of opinion in all its phases. It is free for the achievement of those goals of press service on which its own ideals and the requirements of the community combine and which existing techniques make possible. For these ends it must have full command of technical resources, financial strength, reasonable access to sources of information at home and abroad, and the necessary facilities for bringing information to the national market. The press must grow to the measure of this market. There is paucity of authority in India on the nature, scope and extent of this fundamental right to freedom of speech and expression enshrined in article 19 (1) (a) of the Constitution. The first case which came up for decision before this court was that of Ramesh Thaper vs The State of Madras (1). It was a case of a ban on the entry and circulation of the appellant 's journal in the State of Madras under the provisions of section 9 (1 A) of the Madras Maintenance of Public Order Act, 1949, and it was observed by Patanjali Sastri J. (as he then was) at p. 597: " There can be no doubt that freedom of speech and expression includes freedom of propagation of ideas, and that freedom is ensured by the freedom of circulation. " Liberty of circulation is as essential to that freedom as the liberty of publication. Indeed, without circulation the publication would be of little value.": Ex parte Jackson (2). See also Lovell V. City of Griffin (3). Brij Bhushan & Anr. vs The State, of Delhi (4) was the next case which came up for decision before this Court and it concerned the constitutionality of section 7 (i) (e) of the East Punjab Public Safety Act, 1949. It was a provision for the imposition of pre censorship on a journal. Patanjali Sastri J. (as he then was) (1) [1950] S.C.R 594, 597. (2) (1877)96 U S 727 ; ; (3) (1937) 303 U S 444 ; ; (4) ; , 6o8. 121 who delivered the majority judgment observed at p. 608: " There can be little doubt that the imposition of precensorship on a journal is a restriction on the liberty of the press which is an essential part of the right to freedom of speech and expression declared by article 19 (1) (a). As pointed out by Blackstone in his Commentaries " the liberty of the Press consists in laying no previous restraint upon publications, and not in freedom from censure for criminal matter when published. (Blackstone 's Commentaries, Vol. IV, pp. 151, 152). " These are the only two decisions of this Court which involve the interpretation of article 19 (1) (a) and they only lay down that the freedom of speech and expression includes freedom of propagation of ideas which freedom is ensured by the freedom of circulation and that the liberty of the press is an essential part of the right to freedom of speech and expression and that liberty of the press consists in allowing no previous restraint upon publication. There is however, a considerable body of authority to be found in the decisions of the Supreme Court of the United States of America bearing on this concept of the freedom of speech and expression. vs Bombay Co. 16 122 Ltd. (1) and State of Bombay vs R.M.D. Chamarbaugwala (2). Grosjean vs American Press Co. (3), was a case where a statute imposed a license tax on the business of publishing advertisements and it was observed at p. 668: " The evils to be prevented were not the censorship of the press merely, but any action of the Government by means of which it might prevent such free and general discussion of public matters as seems absolutely essential to prepare the people for an intelligent exercise, of their rights as citizens." (Vide Cooley 's Constitutional Limitations, 8th Edn., Vol. 11, p. 886). The statute was there struck down as unconstitutional because in the light of its history and of its present setting it was seen to be a deliberate and calculated device in the guise of a tax to limit the circulation of information to which the public was entitled in virtue of the constitutional guarantees. The following passage from the dissenting opinion in The Associated Press vs The National Labour Relations Board (4) is also instructive: " If the freedom of the press does not include the right to adopt and pursue a policy without governmental restriction, it is a misnomer to call it freedom. " It was also observed there at p. 965: " Due regard for the constitutional guarantee requires that the publisher or agency of the publisher of news shall be free from restraint in respect of employment in the editorial force. " Schneider vs Irvingtor (5) was concerned with the effect of the Municipal Regulations against littering of (1) [1952] S.C. R. I I 12, I 120. (2) 4, 918. (3) ; , 249; go L. Ed. 66o, 668. (4) 136; ; 963. (5) (1939) 308 U S 147; ; , 164. 123 streets. In the course of its decision the Court made the following observations at p. 164: " This court has characterized the freedom of speech and that of the press as fundamental personal rights and liberties. The phrase is not an empty one and was not lightly used. It stresses, as do many opinions of this court, the importance of preventing the restriction of enjoyment of these liberties. " Non interference by the State with this right was emphasized in Thomas vs Collins (1) at p. 448: " But it cannot be the duty, because it is not the right, of the State to protect the public against false doctrine. The very purpose of the First Amendment is to foreclose public authority from I assuming a guardianship of the public mind through regulating the press, speech, and religion. In this field every person must be his own watchman for truth, because the forefathers did not trust any Government to separate the true from the false for us. . . In 93 L. Ed.at p. 1151 is given a summary of the decisions of the Supreme Court of the United States of America on this subject under the heading " The Supreme Court and the right of Free Speech and Press " and it contains at p. 1153 the following passage under the caption " Right in General : Freedom from Censorship and Punishment ": " The freedom of speech and of press are fundamental personal rights & liberties, the exercise of which lies at the foundation of free Government by free men. . The very purpose of the first Amendment is to foreclose public authority from assuming a guardianship of the public mind through regulating the press, speech, and religion; it rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public." The dissenting opinion of Douglas J. in Beauharnais vs Illinois(2) contains the following at p. 943: (1) (1944) 323 U S 516, 545 ; 89 L. Ed 430, 448.(2) , 285; ; , 943. There is room for regulation of the ways and means of invading privacy. No such leeway is granted the invasion of the right of free speech guaranteed by the First Amendment. Until recent years that had been the course and direction of constitutional law. Yet recently the Court in this and other cases has engraved the right of regulation onto the First Amendment by placing in the hands of the legislative branch the right to regulate " within reasonable limits " the right of free speech. This to me is an ominous and alarming trend. The free trade in ideas which the framers of the Constitution visualised disappears. In its place there is substituted a new orthodoxy an orthodoxy that changes with the whims of the age or the day, an orthodoxy which the majority by solemn judgment proclaims to be essential to the safety, welfare, security, morality, or health of Society. Free speech in the constitutional sense disappears. Limits are drawn limits dictated by expediency, political opinion, prejudices or some other desideratum of legislative action. " It is clear from the above that in the United States of America: (a) the freedom of speech comprehends the freedom of press and the freedom of speech and press are fundamental personal rights of the citizens; (b)the freedom of the press rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public; (c) Such freedom is the foundation of free Government of a free people; (d)the purpose of such a guarantee is to prevent public authorities from assuming the guardianship of the public mind and (e)freedom of press involves freedom of employment or non employment of the necessary means of exercising this right or in other words, freedom from restriction in respect of employment in the editorial force. This is the concept of the freedom of speech and expression as it obtains in the United States of America 125 and the necessary corollary thereof is that no measure can be enacted which would have the effect of imposing a pre censorship, curtailing the circulation or restricting the choice of employment or unemployment in the editorial force. Such a measure would certainly tend to infringe the freedom of speech and expression and would therefore be liable to be struck down as unconstitutional. The press is however, not immune from. It was observed in Grosjean vs American Press Co. (1): " It is not intended by anything we have said to suggest that the owners of newspapers are immune from any of the ordinary forms of taxation for support of the Government; But this is not an ordinary form of tax but one single in kind with a long history of hostile misuse against the freedom of the press. The newspapers, magazines and other journals of the country, it is safe to say, have shed and continue to shed, more light on the public and business affairs of the nation than any other instrumentality of publicity; and since informed public opinion is the most patent of all restraints upon misgovernment, the suppression or abridgment of the publicity afforded by a free press cannot be regarded otherwise than with gave concern. The tax here involved is bad not because it takes money from the pockets of the appellees. If that were all, a wholly different question would be presented. It is bad: Because, in the light of its history and of its present setting, it is seen to be a deliberate and calculated device in the guise of a tax to limit the circulation of information to which the public is entitled in virtue of the constitutional guarantees. A free press stands as one of the great interpreters between the Government and the people. To allow it to be fettered is to fetter ourselves. " (1) (1935) 297 U S 233, 249; ; , 668. 126 In The Associated Press vs National Labour Relations Board (1), it was held that the freedom of the press safeguarded by the First Amendment was not abridged by the application in the case of an editor employed by the Associated Press to determine the news value of the items received and to rewrite them for transmission to members of the association throughout the United States who must function without bias and prejudice, of the provisions of the National Labour Relations Act which inhibited an employer from discharging an employee because of union activities. It was further observed at p. 960: " So it is said that any regulation protective of union activities, or the right collectively to bargain on the part of such employees, is necessarily an invalid invasion of the freedom of the press. We think that the contention not only has no relevance to the circumstances of the instant case but is an unsound, generalization." Murdock vs Pennsylvania (2), was a case of a license fee for the sale of religious books and Mr. Justice Frankfurter in his dissenting opinion at p. 1311 observed: " A tax upon newspaper publishing is not invalid simply because it falls upon the exercise of a constitutional right. Such a tax might be invalid if it invidiously singled out newspaper publishing for bearing the burden of taxation or imposed upon them in such ways as to encroach on the essential scope of a free press. If the Court could justifiably hold that the tax measures in these cases were vulnerable on that ground, I would unreservedly agree. But the Court has not done so, and indeed could not. " In Oklahoma Press Publishing Co. vs Walling (1), and in Mabee vs White Planis Publishing Co. (4) the Federal Fair Labour Standards Act was held applicable to the press and it was observed in the former case at p. 621: " Here there was no singling out of the press for treatment different from that accorded other business in general. Rather the Act 's purpose was to place (1) ; ,136; ; , 963. (2) (1942) 319 U S 105, 136 ; ; , 1311. (3) ; 194; go L. Ed. 614, 621. Nothing in the Grosjean case (1), forbids Congress to exempt some publishers because of size from either a tax or a regulation which would be valid if applied to all. " The Constitution of the United States of America Analysis and Interpretation Prepared by the Legislative Reference Service, Library of Congress, summarises the position thus at p. 792 : " The Supreme Court, citing the fact that the American Revolution " really began when. . . that Government (of England) sent stamps for newspaper duties to the American colonies " has been alert to the possible uses of taxation as a method of suppressing objectionable publications. With respect to license or privilege taxes, however, they stand on a different footing. Their privilege is granted by the Constitution and cannot be withheld by either State or Federal Government. " The application to newspapers of the Anti Trust Laws, the National Labour Relations Act, or the Fair Labour Standards Act, does not abridge the freedom of the press. " The Laws regulating payment of wages have similarly been held as not abridging the freedom of speech and expression and the following observations in the same publication (at p. 988) in regard to the Minimum Wage Laws are apposite: "MINIMUM WAGE LAWS: The theory that a law prescribing minimum wages for women and children violates due process by impairing freedom of contract was finally discarded in 1937 (West Coast Hotel Co. vs Parrish, ; The current theory of the Court, particularly when labor is the beneficiary of legislation, was recently stated by Justice Douglas for a majority of the Court, in the following terms: " Our recent decisions make plain that we do not sit as a super legislature to weigh the wisdom of legislation nor (1) (1935) 297 'U section 233. But the state legislatures have constitutional authority to experiment with new techniques; they are entitled to their own standard of the public welfare; they may within extremely broad ,limits control practice; in the business labor field, so long as specific constitutional prohibitions are not violated and so long as conflicts with valid and controlling federal laws are avoided (Day Brite Lighting, Inc. vs Missouri, 342 U. section 421, 423 (1952) ). " While therefore no such immunity from the general laws can be claimed by the press it would certainly not be legitimate to subject the press to laws which take away or abridge the freedom of speech and expression or which would curtail circulation and thereby narrow the scope of dissemination of information, or fetter its freedom to choose its means of exercising the right or would undermine its independence by driving it to seek Government aid. Laws which single out the press for laying upon it excessive and prohibitive burdens which would restrict the circulation, impose a penalty on its right to choose the instruments for its exercise or to seek an alternative media, prevent news papers from being started and ultimately drive the press to seek Government aid in order to survive, would therefore be struck down as unconstitutional. Such laws would not be saved by article 19(2) of the Constitution. This Court had occasion to consider the scope of article 19(2) in Brij Bhushan & Anr. vs The State of Delhi (1), where Fazl Ali J. in his dissenting judgment observed at p. 619. " It must be recognized that freedom of speech and expression is one of the most valuable rights guaranteed to a citizen by the Constitution and should be jealously guarded by the Court. It must also be recognised that free political discussion is essential for the proper functioning of a democratic government, and the tendency of the modern jurists is to deprecate censorship though they all agree that " liberty of the press " is not to be confused with its " licentiousness (1) [1950) S.C.R. 605, 608. 129 But the Constitution itself has prescribed certain limits and this Court is only called upon to see whether a particular case comes within those limits. " Unless, therefore, a law enacted by the Legislature comes squarely within the provisions of article 19 (2) it would not be saved and would be struck down as ' unconstitutional on the score of its violating the fundamental right of the petitioners under article 19 (1) (a). In the present case it is obvious that the only justification for the enactment of the impugned Act is that it imposes reasonable restrictions in the interests of a section of the general public, viz., the working journalists and other persons employed in the newspaper establishments. It does not fall within any of the categories specified in article 19 (2), viz., " In the interests of the security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to. contempt of court, defamation or incitement to an offence. " Article 19 (2) being thus out of the question the only point that falls to be determined by us is whether the provisions of the impugned Act in any way take away or abridge the petitioners ' fundamental right of freedom of speech and expression. It was contended before us by the learned Attorney General that it was only legislation directly dealing with the right mentioned in article 19 (1) (a) that was protected by it. If the legislation was not a direct legislation on the subject " article 19 (1) (a) would have no application, the test being not the effect or result of legislation but its subject matter. " As the preventive detention order results in the detention of the applicant in a cell it was contended on his behalf that the rights specified in article 19 (1), (a), (b), (c), (d), (e) and (g) have been infringed. 17 130 same argument was urged in respect of the rest of the rights mentioned in sub clauses (b), (c), (d), (e) and (g). Although this argument is advanced in a case which deals with preventive detention, if correct, it should be applicable in the case of punitive detention also to any one sentenced to a term of imprisonment Linder the relevant section of the Indian Penal Code. So considered, the argument must clearly be rejected In spite of the saving clauses (2) to (5), permitting abridgement of the rights connected with each of them punitive detention under several sections of the Penal Code, e. g., for theft,, cheating, forgery and even ordinary assault, will be illegal. Unless such conclusion necessarily follows front the article, it is obvious that such construction should be avoided. In my opinion, such result is clearly not the outcome of the Constitution. The article has to be read. without any pro conceived notions. 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 detent 's life. On that short ground, in my opinion, this argument about the infringement of the rights mentioned in article 19 (1) generally must fail. Any other construction put on the article, it seems to me, will be unreasonable." This opinion was expressed by Kania C. J. alone, the other learned judges forming the Bench not expressing themselves on this question. This passage was, however cited, with approval by a Bench of this 131 Court in Ram Singh & Ors. vs The State of Delhi (1). It was held by the Full Court in that case that though personal liberty is sufficiently comprehensive to include the freedoms enumerated in article 19 (1) and its deprivation would result in the extinction of these freedoms, the Constitution his treated these constitutional liberties as distinct fundamrntal rights and made separate provisions in articles 19, 21 and 22 ,is to the limitations and conditions subject to which alone they could be taken away or abridged. (2) of article 19 and may therefore be void, an order of preventive detention cannot be held to be, invalid merely because: " the detention is made with a view to prevent the making of speeches prejudicial to the, maintenance of public order. . . ." This was also a case of detention under the Preventive Detention Act and the detention of the detenu had been ordered with a view to prevent him from making speeches prejudicial to the maintenance of public order. Public order was not one of the categories mentioned in article 19 (2) as it then stood, and any restriction imposed upon the freedom of speech and expression could nit be justified on that ground, the only relevant ground in that connection then being undermining of the security of the State or its overthrow. A restriction on the freedom of speech and expression ill the maintenance of public order would therefore not have been justified under article 19 (2) and if the Court had come to the conclusion that there was an infringement of the right of freedom of speech and expression the order could not have been saved under article 19 (2). The Court however, took the view that the direct object of the order was preventive detention and not the infringement of the right of freedom of speech and expression, which was merely (1)[1951] S.C.R.451, 455. 132 consequential upon the detention of the detenu and therefore upheld the validity of the order. It was, therefore, urged by the learned Attorney General that the object of the impugned Act was only to regulate certain conditions of service of working journalists and other persons employed in the newspaper establishments and not to take away or abridge the right of freedom of speech and expression enjoyed by the petitioners and that therefore the impugned Act could not come within the prohibition of article 19 (1) (a) read with. article 13 (2) of the Constitution. It was contended, on the other hand, on behalf of the petitioners that the Court has got to look at the true nature and character of the legislation and judge its substance and not its form, or in other words, its effect and operation. It was pointed out that the impugned Act viewed as a whole was one to regulate the employment of the necessary organs of newspaper publications and therefore related to the freedom of the Press and as such came within the prohibition. Reliance was placed in this behalf on the following passage in Minnesota Ex Rel. Olson (1): " With respect to these contentions it is enough to say that in passing upon constitutional questions the Court has regard to substance and not to mere matters of form, and that, in accordance with familiar principles, the statute must be tested by its operation and effect." The following observations of Mahajan J. (as he then was) in Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co., Ltd. (2) were also relied upon: " In order to decide these issues it is necessary to examine with some strictness the substance of the legislation for the purpose of determining _what it is that the legislature has really done; the Court, when such questions arise, is not overpersuaded by the mere appearance of the legislation. In relation to Constitutional prohibitions binding a legislature it is clear that the legislature cannot disobey the prohibitions merely (1)(1930) ; , 708; ; , 1363. (2)[1954] S.C.R. 674, 683. 133 by employing indirect method of achieving exactly the same result. Therefore, in all such cases the court has to look behind the names, forms and appearances to discover the true character and nature of the legislation. " The impugned Act is as its long title shows an act to regulate certain conditions of service of working journa lists and other persons employed in newspaper establishments and in the very forefront of the Act, the , is by section 3 made applicable to working journalists with certain modification in connection with the application of section 25F of that Act. The rest of the provisions contained in ch. II concerned themselves with the payment of gratuity, hours of work and leave and fixation of wages of the working journalists. The regulation of the conditions of service is thus the main object which is sought to be achieved by the impugned Act. Chapter III of the Act applies the provisions of the , and the Employees ' Provident Funds Act, 1952, to all the employees of the newspaper establishments wherein twenty or more newspaper employees are employed and covers working journalists as well as other employees in the employ of the newspaper establishments. The miscellaneous provisions contained in ch. IV are designed merely to implement or to carry out the provisions of the main part of. the Act and they do not make any difference so far as the effect and operation of the Act is concerned. If this is the true nature of the Act, it is impossible to say that the Act was designed to affect the freedom of speech and expression enjoyed by the petitioners or that was its necessary effect and operation. It was conceded in the course of the arguments that if a general law in regard to the industrial or labour relations had been applied to the press industry as a whole no exception could have been taken to it. If the matter had rested with the application of the , to the working journalists or with the application of the , or the Employees ' Provident Fund,% Act, 1952, to them no exception could have been taken to this 134 measure. It was, however, urged that apart from the application of these general laws to the working journalists, there are provisions enacted in the impugned Act in relation to payment of gratuity, hours of work, leave and fixation of the rates of wages which are absolutely special to the press industry qua the working journalists and they have the effect of singling out the press industry by creating a class of privileged workers with benefits and rights which have not been conferred upon other employees and the provisions contained therein have the effect of laying a direct and preferential burden on the press, have a tendency to curtail the circulation and thereby narrow the scope of dissemination of information, fetter the petitioner 's freedom to choose the means of exercising their right and are likely to undermine the independence of the press by having to seek Government aid. It is obvious that the enactment of this measure is for the amelioration of the conditions of the workmen in the newspaper industry. It would not be possible for the State to take up all the industries together and even as a matter of policy it would be expedient to take the industries one by one. Even in regard to the workmen employed it would be equally expedient to take a class of employees who stand in a separate category by themselves for the purpose of benefiting them in the manner contemplated. This circumstance by itself would therefore not be indicative of any undue preference or a prejudicial treatment being meted out to that particular industry, the main object being the amelioration of the conditions of those workmen. It could not also be said that there was any ulterior motive behind the enactment of such a measure because the employers may have to share a greater financial burden than before or that the working of the industry may be rendered more difficult than before. These are all incidental disadvantages which may manifest themselves in the future working of the industry, but it could not be said that the Legislature in enacting that measure was aiming at these disadvantages when it was trying to ameliorate the 135 conditions of the workmen. Those employers who are favourably situated, may not feel the strain at all while those of them who are marginally situated may not be able to bear the strain and may in conceivable cases have to disappear 'after closing down their establishments. That, however, would be a consequence. which would be extraneous and not within the contemplation of the Legislature. It could therefore hardly be urged that the possible effect of the impact of these measures in conceivable cases would vitiate the legislation as such. All the consequences which have been visualized in this behalf by the petitioners, viz., the tendency to curtail circulation and thereby narrow the scope of dissemination of information, fetters on the petitioners ' freedom to choose the means of exercising the right, likelihood of the independence of the press being undermined by having to seek government aid; the imposition of penalty on the petitioners ' right to choose the instruments for exercising the freedom or compelling them to seek alternative media, etc., would be remote and depend upon various factors which may or may not come into play. Unless these were the direct or inevitable consequences of the measures enacted in the impugned Act, it would not be possible to strike down the legislation as having that effect and operation. A possible eventuality of this type would not necessarily be the consequence which could be in the contemplation of the Legislature while enacting a measure of this type for the benefit of the workmen concerned. Even though the impugned Act enacts measures for the benefit of the working journalists who are employed in newspaper establishments, the working journalists are but the vocal organs and the necessary agencies for the exercise of the right of free speech and expression, and any legislation directed towards the amelioration of their conditions of service must necessarily affect the newspaper establishments and have its repercussions on the freedom of Press. The real difficulty, however, in the way of the petitioners is that whatever be the measures enacted for the benefit of the working journalists neither the intention nor the effect and operation of the impugned Act is to take away or abridge the right of freedom of speech and expression enjoyed by the petitioners. The gravamen of the complaint of the petitioners against the impugned Act, however, has been the appointment of the Wage Board for fixation of rates of wages for the working journalists and it is contended that apart from creating a class of privileged workers with benefits and rights which were not conferred upon other employees of industrial establishments, the Act has left the fixation of rates of wages to an agency invested with arbitrary and uncanalised powers to impose an indeterminate burden on the wage structure of the press, to impose such employer employee relations as in its discretion it thinks fit and to impose such burden and relation , for such time as it thinks proper. This contention will be more appropriately dealt with while considering the alleged infringement of the fundamental right enshrined in article 19(1) (g). Suffice it to say that so far as article 19(1) (a) is concerned this contention also has a remote bearing on the same and need not be discussed here at any particular length. Re: Article (19(1) (g). The fundamental right of the petitioners herein is the right to carry on any occupation, trade or business. This freedom also is hemmed in by limitations which are to be found in article 19(6), which in so far as it is relevant for our purposes enacts: " Nothing in sub clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right, conferred by the said sub clause," 137 The contention under this head is thus elaborated on behalf of the petitioners: 1.The impugned Act imposes unreasonable restrictions on the freedom to carry on business: (a) in empowering the fixation of rates of wages on criteria relevant only for fixation of minimum, wages; (b)in empowering fixation of wages, grant of gratuity and compensation without making it incumbent on the Board to consider the major factor of the capacity of the industry to pay; (c)in authorizing the Board to have. regard to not what is relevant for such fixation but to what the Board deems relevant for the purpose; and (d)in providing for a procedure which does not compel the Board to conform to the rules under the , thus permitting the Board to follow any arbitrary procedure violating the principle of audi alteram partem. 2.The restrictions enumerated above in so far as they affect the destruction of the petitioners ' business exceed the bounds of permissible legislation under article 19(1)(g). The unreasonableness of the restriction is further sought to be emphasized by pointing out that under section 12 of the impugned Act, the decision of the Board is declared binding on all employers, though the working journalists axe not bound by the same and are entitled, if they are dissatisfied with it, to agitate for further revision by raising industrial disputes between themselves and their employers and having them adjudicated under the . The test of reasonable restrictions which can be imposed on the fundamental right enshrined in article 19(1)(g) has been laid down by this Court in two decisions: In Chintaman Rao vs The State of Madhya Pradesh(1) Mahajan J. (as he then was) observed at p. 763 : "The phrase "reasonable restriction" connotes that the limitation imposed on a. person in enjoyment (1) ; , 763. 138 of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public. The word " reasonable " implies intelligent care and deliberation, that is, the choice of a course which reason dictates. Legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in article 19(1)(g), and the social control permitted by clause (6) of article 19, it must be held to be wanting in that quality." [cited with approval in Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh & Ors. (1) and in Ch. Tika Ramji vs State of ' Uttar Pradesh & Ors. The State of Madras vs V. G. Rao (3) was the next case in which this phrase came to be considered by this Court and Patanjali Sastri C. J. observed at p. 606: " This Court had occasion in Dr. Khare 's case (4) to define the scope of the judicial review under clause (5) of article 19 where the phrase " imposing reasonable restrictions on the exercise of the right " also occurs and four of the five judges participating in the decision expressed the view (the other judge leaving the question open) that both the substantive and the procedural aspects of the impugned restrictive law should be examined from the point of view of reasonableness: that is to say, the Court should consider not only factors such as the duration and the extent of the restrictions but also the circumstances under which and the manner in which their imposition has been authorised. It is important in this context to bear in mind that the test of reasonableness, where ever 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 (1) ; , 811. (3) ; , 606, 607. (2) ; , 446. (4) ; 139 of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict. " This criterion was approved of in State of West Benqal vs Subodh Gopat Bose & Others (1) where the present Chief Justice further expressed his opinion that the fact of the statute being given retrospective operation may also be properly taken into consideration in determining the reasonableness of the restriction imposed in the interest of the general public [see also a recent decision of this Court in Virendra vs State of Punjab (2)]. The appointment of a wage board for the purposes of fixing rates of wages could not be and was not challenged as such because the constitution of such wage boards has been considered one of the appropriate modes for the fixation of rates of wages. The , can only apply when an industrial dispute actually arises or is apprehended to arise between the employers and the employees in a particular industrial establishment. Though under the amendment of that Act by the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956, (36 of 1956), there is a provision for the appointment of a National Tribunal by the Central Government for the adjudication of industrial disputes which in the opinion of the Central Government involve questions of national importance or are of such a nature that industrial establishments situated in more than one State are likely to be interested in, or affected by, such dispute (Vide section 7 B) the condition precedent, however, is the existence of an industrial dispute or the appre hension of one. If the wages for the employees of a particular industry have got to be fixed without such an industrial dispute having arisen or being apprehended to arise, the only proper mode of such fixation would be the appointment of wage boards for the purpose. They take the place of Industrial Tribunals or National Industrial Tribunals and are generally constituted of equal number of representatives of the employers and the employees in that particular industry along with a quota of independent member or (1) ; , 626. (2) ; 140 members one of whom is appointed the chairman of the Board. The main grievance of the petitioners, however, has been that the relevant criteria for the fixation of rates of wages were not laid down in section 9(1) of the Act. Section 8 empowered the Central Government to constitute a wage board for fixing rates of wages in respect of working journalists in accordance with the provisions of the Act and section 9(1) directed that in fixing such rates of wages the Board &hall have regard to the cost of living, the prevalent rates of wages for comparable employments, the circumstances relating to the newspaper industry in different regions of the country and to any other circumstances which to the Board may seem relevant. These criteria, it was contended, were only relevant for fixing minimum rates of wages, ' though the word " minimum " which had been used in the Bill No. 13 of 1955 as introduced in the Rajya Sabha was deleted when the Act actually came to be passed and it was further contended that the capacity of the Industry to pay which was an essential circumstance to be taken into consideration in the fixation of wages was not set out as one of the circumstances to be taken into consideration by the Board in fixing rates of wages. It was also contended that the other circumstances which the Board was directed to consider in addition to those specifically enumerated in section 9(1) were such as to the Board may seem relevant thus relegating these circumstances to the subjective determination of the Board with the necessary consequence that no Court or other authority could scrutinize the same objectively. We do not propose to enter into any elaborate discussion on the question whether it would be competent to us in arriving at a proper construction of the expression " fixing rates of wages " to look into the Statement of Objects and Reasons attached to the Bill No. 13 of 1955 as introduced in the Rajya Sabha or the circumstances under which the word " minimum " came to be deleted from the provisions of the Bill relating to rates of wages and the Wage Board and the fact of such deletion when the Act came to be passed in its present 141 form. There is a consensus of opinion that these are not aids to the construction of the terms of the Statute which have of course to be given their plain and grammatical meaning [See: Ashvini Kumar Ghosh & Anr. vs Arabinda Bose & Anr. (1) and Provat Kumar Kar and others vs William Trevelyan ' Curtiez Parkar It is only when the terms of the statute are ambiguous or vague that resort may be had to them for the purpose of arriving at the true intention of the legislalature. We have already stated in the earlier part of this judgment that the Act was passed with a view to implement the recommendations of the Press Commission 's Report and we have already seen that the concept of minimum wage, as adopted by the Press Commission was not that of a bare subsistence or minimum wage but what it termed a minimum wage was meant to provide for not merely the bare subsistence of living, but for the efficiency of the worker, making provision also for some measure of education, medical requirements and amenities. This was the concept of a minimum wage which was sought to be implemented by the legislature and for that purpose the capacity of the industry to pay was an essential circumstance to be taken into consideration and the deletion of the word " minimum ", if at (1) [1953] S.C.R. I. (2) A.I.R. 1950 Cal. 142 all, had the effect of widening the scope of the enquiry before the Wage Board. if the word " minimum " had been used in relation to the rates of wages and the Wage Board in the impugned Act, the wage Board in its deliberations would have been necessarily confined (to a consideration of that aspect alone. But, by the deletion of that wordfrom the context the Wage Board was invested with a power to determine the question of the fixation of rates of wages unfettered by any such limitations and to fix the rates of wages in any pro per manner having regard to the circumstances of the case, whether the resultant wages would be a statutory minimum wage or would approximate to a standard of wage, though having regard to the economic conditions of our country at present they could not find it within their power to fix living wages for the working journalists. The criteria which were specified in section 9(1) of the Act comprised also the prevalent rates of wages for comparable employments. This criterion had no relation whatever to Minimum wages. Reference may be made in this connection to a decision of the Industrial Court in the case of Nellimarla Jute Mills (1), where it was held that the comparison with rates of waves in other concerns could be undertaken for determining fair wage and the upper limit of wages but not for determining the minimum or floor level of wages which should depend on the minimum requirements of the workers ' family consisting of three consumption units. If, therefore, the criterion of the prevalent rates of wages for comparable employments can on a true construction of section 9(1)be considered consistent only with the fixation of rates of wages which are higher than (1) [1053] , 143 the bare subsistence or minimum wage whether they be statutory minimum wage or fair wage or even living wage, it could not be urged that the criteria specified in section 9(1) of the Act were relevant only for fixation of minimum wages. The capacity of the industry to pay was therefore one of the essential circumstances to be taken into consideration by the Wage Board whether it be for the fixation of rates of wages or the scales of wages which, as we have observed before, were included within the expression " rates of wages ". This was by no means an unimportant circumstance which could be assigned a minor role. It was as important as the cost of living, and the prevalent rates of wages for comparable employments and ought to have been specifically mentioned in section 9(1). The Legislature however, was either influenced in not mentioning it as such by reason of the view taken by the Press Commission in that behalf or thought that the third criterion which was specified in section 9(1), viz., the circumstances relating to the newspaper industry in different regions of the country was capable of including the same. Even here, there is considerable difficulty in reconciling oneself to this mode of construction. Even if it were thus capable of being included, the minor role assigned to it along with literacy of the population, the popularity of the newspapers, predilections of the population in the matter of language and other circumstances of the like nature prevailing in the different regions of the country would make it difficult to imagine that this circumstance of the capacity of the industry to pay was really in the mind of the Legislature, particularly when it is remembered that the Press Commission attached no signifi cance to the same. From that point of view, the criticism of the petitioners would appear to be justified viz., : that it was not made incumbent on the Board to consider the major factor of the capacity of the 144 industry to pay as an essential circumstance in fixing the rates of wages. It is, however, well recognized that the Courts would lean towards the constitutionality of an enactment and if it is possible to read this circumstance as comprised within the category of circumstances relating to the newspaper industry in different regions of the country, the court should not strike down the provisions as in any manner whatever unreasonable and violative of the fundamental right of the petitioners. We are therefore of opinion that section 9(1) did not eschew the consideration of this essential circumstance, viz., the capacity of the industry to pay and it was not only open but incumbent upon the Wage Board to consider that essential circumstance in order to arrive at the fixation of the rates of wages of the working journalists. The last criterion enumerated in section 9(1) of the Act was " any other circumstance which to the Board may seem relevant " and it was urged that this was left merely to the subjective determination of the Board and the Board was at liberty to consider the circumstances, if any, falling within this category in its own absolute discretion which could not be Controlled by any higher authority. If the matters were left to be objectively determined then it would certainly be enquired into and the existence or otherwise of such circumstances would be properly scrutinized in appro priate proceedings. The manner in which, however, this criterion was left to be determined by the Board on its subjective satisfaction was calculated to enable the Board to exercise arbitrary powers in regard to the same and that was quite unreasonable in itself. The case of Thakur Raghubir Singh vs Court of Wards, Ajmer & Ors. (1), was pointed out as an illustration of such an arbitrary power having been vested in the Court of Wards which could in its own discretion and on its subjective determination assume the superintendence of the property of a landed proprietor who habitually infringed the rights of his tenants. The provision was there struck down because such subjective (1)[1953] section C. R. 1049,1052. 145 determination which resulted in the superintendence of the property of a citizen being assumed could, not be scrutinized and the propriety thereof investigated by higher authorities. This argument, however, does not help the petitioners because this criterion is on a par with or ejusdem generis with the other criteria which have been specifically enumerated in the earlier part of the section. The major and important criteria have been specifically enumerated and if would be impossible for the Legislature exhaustively to enumerate the other circumstances which would be relevant to be considered by the Board in arriving at the fixation of the rates of wages. In the course of the enquiry the Board might come across other relevant circumstances which would weigh with it in the determination of the rates of wages and it would not be possible for the Legislature to think of them or to enumerate the same as relevant considerations and it was therefore, and rightly in our opinion, left to the Board to determine the relevancy of those circumstances and take them into consideration while fixing the rates of wages. If the principles which should guide the Board in fixing the rates of wages were laid down with sufficient clarity and particularity and the criteria so far as they were of major importance were specifically enumerated there was nothing wrong in leaving other relevant considerations arising in the course of the enquiry to the subjective satisfaction of the Board. The Board was, after all, constituted of equal numbers of representatives of employers and the employees and they were best calculated to take into account all the relevant circumstances apart from those which were, specifically enumerated in the section. It was, however, contended that the procedure to be followed by the Board for fixing the rates of wages was not laid down and it was open to the Board to follow any arbitrary procedure violating the principle of audi alteram partem and as such this also was unreasonable. Section 20 (2) (d) of the impugned Act gave power to the Central Government to make rules 19 146 inter alia in regard to the procedure to be followed by the Board in fixing rates of wages and section 11 provided that subject to any rules which might be prescribed the Board may, for the purpose of fixing rates of wages, exercise the same powers and follow the same procedure as an Industrial Tribunal constituted under the , exercises or follows for the purpose of adjudicating an industrial dispute referred to it. This was, however, an enabling provision which vested in the Board the discretion whether to exercise the same powers and follow the same procedure as an Industrial Tribunal. It has to be remembered, however, that in the United Kingdom the Wage Councils and the Central Co ordinating Committees under the Wages Councils Act, 1945, and the Agricultural Wages Board under the Agricultural Wages Regulations Act, 1924, also are empowered to regulate their proceeding in such manner as they think fit. The Wage Boards in Australia have also no formal procedure prescribed for them, though the Wage Boards which are established under the amended Bombay Industrial Relations Act, 1946, are enjoined to follow the same procedure as an industrial court in respect of industrial proceedings before it. It would not therefore be legitimate to hold that the procedure to be followed by the wage board for fixing rates of wages must necessarily be prescribed by the statute constituting the same. It is no doubt contemplated in each of these statutes that rules of procedure may be prescribed; but even though they, may be so prescribed, it is left to the discretion of the wage boards to regulate their procedure in such manner as they think fit, subject of course to the rules thus prescribed. A wide discretion is thus left with the wage boards to prescribe their own rules of procedure, but it does not therefore follow that they are entitled to follow any arbitrary rules of procedure. The wage boards are responsible bodies entrusted with the task of gathering data and materials relevant for the 147 determination of the issues arising before them and even though they are not judicial tribunals but administrative agencies they would elicit all relevant information and invite answers to the questionnaire or representations from the parties concerned, hear evidence and arrive at their determination after conforming to the principles of natural justice. Even though they may perform, quasi judicial functions, the exercise of arbitrary powers by them would not be countenanced by, any court or higher authority. No doubt certain specific provisions as to payment of gratuity, hours of work and leave are specifically enacted, but when we come to the fixation of rates of wages we find that a wage board has been constituted for the purpose. The principles to be followed by the Wage Board for fixing rates of wages are also laid down and the decision of the Board is to be published in the same manner as awards of industrial courts,under the . Then follows section 11 which talks of the powers and procedure of the Board and there also, subject to any rules of procedure which may be prescribed by the Central Government, the Board is empowered to exercise the same powers and follow the same procedure as an Industrial Tribunal constituted under the of wages, exercise the same powers and follow the same procedure. All these 148 circumstances point to the conclusion that even though the Board was not bound to exercise the same powers and follow the same procedure as an industrial tribunal constituted under the , the Board was, in any event, not entitled to 'adopt any arbitrary procedure violating the principles of natural justice. If on the construction of the relevant sections of the statute the functions which the Wage Board was performing would be tantamount to laying down a law or rule of conduct for the future so that all the employers and the employees in the ' industry not only those who were participating in it in the present but also those who would enter therein in the future would be bound by it, the dictum of Justice Holmes would apply and the functions performed by the wage board could be characterized as legislative in character. Where, however, as in the present case, the constitution of the Wage Board is considered in the background of the application of the provisions of the to the working journalists and the provisions for the exercise of the same powers and following the same procedure as an industrial tribunal constituted under the , it would be possible to argue that the Wage Board was not exercising legislative functions but was exercising functions which were quasi judicial in character. In this connection, it was also pointed out that the Legislature itself while enacting the impugned Act did not consider these functions as legislative at all. The Rules of Procedure and Conduct of Business in Lok Sabha (1957) provide in Rule No. 70 for a Bill involving proposals for the delegation of legislative power shall further be accompanied by a memorandum explaining such proposals and drawing attention to their scope and stating also whether they are of normal or exceptional character. There is also a committee on subordinate legislation which is established for scrutinizing and reporting to the House; whether the powers to make regulations, rules, sub rules, by laws, etc., conferred by the Constitution or delegated by Parliament are being properly exercised within 'such 149 delegation (vide Rule 317 ibid). The constitution by the Legislature of the Wages Board in the matter of the fixation of rates of wages was not considered as a piece of delegated legislation in the memorandum regarding delegated legislation appended to the draft Bill No. 13, of 1955 introduced in the Rajya Sabha on September 28, 1955, and the only reference that was made there was to Cl. 19 of the Bill which empowered the Central Government to make rules in respect of certain matters specified therein and it was stated that these were purely procedural matters of a routine character and related inter alia to prescribing hours of work, payment of gratuity, holidays, earned leave or other kinds of leave and the procedure to be followed by the Minimum Wager, Board in fixing minimum wages and the manner in which its decisions may be published. Clause 19 (3) of the Bill further provided that all rules made under this section shall as soon as practicable after they are made, be laid before both Houses of Parliament. These clauses were ultimately passed as section 20 of the impugned Act but they were the only piece of delegated legislation contemplated by the Legislature and were covered by the memorandum regarding the same which was appended to the Bill. The decision of the Wage Board was not to be laid before both the Houses of Parliament which would have been the case if the fixation of rates of wages was a piece of delegated legislation. It was only to be published by the Central Government after it/ was communicated to it by the Wage Board in such manner as the Central Government thought fit, a provision which was akin to the publication of award,,; of the Industrial Tribunals by the appropriate Government under the provisions of the . This circumstance also was pointed out as indicative of the intention of the Legislature not to constitute the Wage Board a sub legislative authority. While recognizing the force of these contentions we may observe that it is not necessary for our purposes to determine the nature and character of the functions performed by the Wage Board here. It is sufficient to say that the Wage Board was not empowered or 150 authorised to adopt any arbitrary,procedure and flout the principles of, natural justice. It was next contended that the restrictions imposed on newspaper establishments under the terms of the impugned Act were unreasonable in so far as they would have the effect of destroying the business of the petitioners and would therefore exceed the bounds of permissible legislation under article 19(6). This power to regulate is not a power to destroy, and limitation is not the, equivalent of confiscation. " Similar observations of the Judicial Committee of the Privy Council in the Municipal Corporation of the City of Toronto vs Virgo (2) and the Attorney General for Ontario vs Attorney General for the Dominion (3) were also relied upon and particularly the following observations in the former case: " But their Lordships think there is a marked distinction to be drawn between the prohibition or prevention of a trade and the regulation or governance of it and indeed a power to regulate and govern seem,,; to imply the continued existence of that which is sought to be, regulated or governed." These observations were considered by this Court in Saghir Ahmed vs State of U. P. & Ors. (4) and after considering the various cases which Were cited by both sides, this Court observed: " Be that as it may,, although in our opinion the normal use of the word " restrictionseems to be in the sense of I., limitation" and notextraction ", we would on this occasion prefer not toexpress any final (1) ; , 331; ; , 644.(2) , 93 (J C) (4) ; ,724.(3) , 363. 151 opinion on this matter" and the Court ultimately wound up by saving that ,whether the restrictions are reasonable or not would depend to a large extent on the nature of the trade and the conditions prevalent in it." Even if the provisions of the impugned Act would not necessarily have the effect of destroying the business of the petitioners but of crippling it and making it impossible for the petitioners to continue the same except under onerous conditions, they would have the effect of curtailing their circulation and drive them to seek government aid and thereby impose an unreasonable burden on their right to carry on business and would come within the ban of article 19(1) (g) read with article 13(2) of the Constitution. Several provisions of the impugned Act were referred to in this context. Section 2(f) of the Act which defines working journalist " so as to include " proofreader was pointed out in this connection and it was urged that even though the Press Commission Report recommended the exclusion of certain class of proof readers from the definition of working journalists the Legislature went a step further and included all proof readers within that definition thereby imposing upon the newspaper establishments an unreasonable burden far in excess of what they were expected to bear. The provision as to the notice in relation to the retrenchment of working journalist was also extended beyond the limitations specified in section 25F of the , and was extended to six months in the case of an Editor and three months in the case of any other working journalist. The provision with regard to retrenchment was also made applicable retrospectively to all cases of retrenchment which had occurred between July 14, 1954, and March 12, 1955 ; so also the payment of gratuity was ordered not only in the cases usually provided for but also in cases where a working journalist who had been in continuous service for not less than three years voluntarily resigned from service from a newspaper establishment. The hours of work prescribed were 144 hours only during any period of four consecutive weeks and they were 152 far less in number than the hours of work recommended by the Press Commission Report. The fixation of rates of wages was entrusted to the Wage Board which could fix any wages which it thought proper irrespective of the capacity of the industry to pay and might be such as the industry could not bear. These provisions taken each one by itself may not have the effect of destroying the petitioners ' business altogether or even crippling it in the manner indicated but taken cumulatively along with the provisions contained in sections 14 and 15 of the impugned Act which applied the provisions of the , and, the Employees ' Provident funds Act, 1952, to newspaper establishments would certainly bring about that result and would therefore constitute an unreasonable restriction on the, petitioners ' right to carry on business. We shall deal with these contentions one by one. B. Sen Gupta in his " Journalism as a Career " (1955) talks of the position of the proof reader as follows: " The proof reader is another important link in the production of a newspaper. On him depends, not to a small extent, the reputation of a paper. He has to be very careful in correcting mistakes and pointing out any error of fact or grammar that has crept into any news item or article through oversight or hurry on the part of the sub editor. He has not only to correct mistakes but also to see that corrections are carried out ", and the Kemsley Manual of Journalism has the following passage at p. 337: " Having thus seen the proof reader in action, lot us consider in detail what proof reading denotes. It is primarily the art and practice of finding mistakes in printed matter before publication and of indicating the needed corrections. It includes the detection of variations between the type and the copy from which it was 153 set, misstatements of facts, figures or dates, errors in grammar, inaccuracies in quotations, and other defects. Often, too, it happens that, though the proof reader does not feel justified in himself making a correction, he takes other action. If he thinks there is a mistake but is not sure, he must query the proof so that the editorial staff may decide. He may spot a libel, or think he has. In either case it is important that the matter shall be queried and passed back to editorial authority. " It is obvious from this that proof readers should be men of exceptional knowledge and sound judgment. They should be conversant with current affairs, familiar with names of public men and quite sure how they should be spelled. Some specialize in different branches of sport, others in theatre, the cinema, music and so on. This saves much time in looking up books of reference, though, of course, the books are there." As a matter of fact, the Wage Board in the Schedule to its decision defines "proof reader" as " a person who checks up printed matter or " Proof " with edited copy to ensure strict conformity of the former with the latter. " If this is the important role played by the proofreaders then no wonder that the Legislature in spite of the recommendations of the Press Commission included them also in the definition of working journalist. The provisions in regard to notice cannot be said to be per se unreasonable. 249, foot note (e), contains the following statement in regard to the periods of reasonable notice to which persons of various employments have been found entitled: Newspaper editor, from six months (Fox Bourne vs Vernon & Co. Ltd., ; to twelve months (Grundy vs Sun Printing and Publishing Association, (1916) 33 T. L. R. 77, C. A.). Sub editor of a newspaper, six months (Chamberlain vs Bennett, Foreign correspondent to The Times, six months period (Lowe vs Walter, The Press Commission also recommended that the period of notice for the termination of services should be based on the length of the service rendered and the nature of the appointment. There could be no hard and fast rule as to what the notice period should be. The practice upheld by law or by collective bargaining varies from country to country. In England the practice established by some judicial decisions is that the editor is entitled to a year 's notice and an assistant editor to six months ' notice. After examining the provisions in regard to notice which are in vogue in England, the Commission also noticed a decision in Bombay (Suit No. 735 of 1951 in the City Civil Court) where the judge concerned held that in the circumstances of the particular case the plaintiff, an assistant editor was entitled to a notice of four months although in normal times, he said, the rule adopted in England of six months should be the correct rule to adopt in India and a longer period of notice was suggested for editors because it was comparatively much more difficult to secure another assignment for a journalist of that seniority and standing in the profession. The period of six months, in the case of an editor, and three months, in the case of any other working journalists prescribed under section 3(2) of the impugned Act was therefore not open to any serious objection. The retrospective operation of this provision in regard to the period between July 14, 1954, and March 12, 1955, was designed to meet the few cases of those employees in the editorial staff of the newspaper 155 establishments who had been retrenched by the managements anticipating the implementation of the recommendations of the Press Commission. There was nothing untoward in that provision also. When we come however to the provision in regard to the payment of gratuity to working journalists who voluntarily resigned from service from newspaper establishments, we find that this was a provision which was not at all reasonable. A gratuity is a scheme of retirement, benefit and the conditions for its being awarded have been thus laid down in the Labour Court decisions in this country. In the case of Ahmedabad Municipal Corporation it was observed at p. 158 : " The fundamental principle in allowing gratuity is that it is a retirement benefit for long services, a provision for old age and the trend of the recent authorities as borne out from various awards as well as the decisions of this Tribunal is in favour of double benefit We are, therefore, of the considered opinion that Provident Fund provides a certain measure of relief only and a portion of that consists of the employees ' wages, that he or his family would ultimately receive, and that this provision in the present day conditions is wholly insufficient relief and two retirement benefits when the finances of the concern permit ought to be allowed. " (See also Nundydroog Mines Ltd. (2). These were cases however of gratuity to be allowed to employees on their retirement. The Labour Court decisions have however awarded gratuity benefits on the resignation of an employee also. In the case of Cipla Ltd. (3), the Court took into consideration the capacity of the concern and other factors therein referred to and directed gratuity on full scale which included (2) on voluntary retirement or resignation of an employee after 15 years continuous service. Similar considerations were imported in the case of (1) , 58. (2) , 267. (3) , 358. 156 the Indian Oxygen & Acetylene Co., Ltd. where it was observed: " It is now well settled by a series of decisions of the Appellate Tribunal that where an employer company has the financial capacity the workmen would be entitled to the benefit of gratuity in addition to the benefits of the Provident Fund. In considering the financial capacity of the concern what has to be seen is the general financial stability of the concern. The factors to be considered before granting a scheme of gratuity are the broad aspects of the financial condition of the concern, its profit earning capacity, the profit earned in the past, its reserves and the possibility of replenishing the reserves, the claim of capital put having regard to the risk involved, in short the financial stability of the concern. There also the court awarded gratuity under ground No. 2, viz., on retirement or resignation of an employee after 15 years of continuous service and 15 months ' salary or wage. It will be noticed from the above that even in those cases where gratuity was awarded on the employee 's resignation from service, it was granted only after the completion of 15 years continuous service and not merely on a minimum of 3 years service as in the present case. 1503), there would be no justification for awarding the same when an employee voluntarily resigns and brings about a termination of his service, except in exceptional circumstances. One such exception is the operation of what is termed " The conscience clause ". 157 Among the benefits which the status of professional journalist may confer (whether it stems from the law or from an agreement) is one of particular importance, since it goes to the very core of the profession. It concerns freedom of information. It is intended to safeguard the journalist 's independence, his freedom of thought and his moral rights. It constitutes what has been called in France the " conscience clause ". The essence of this clause is that when a journalist 's integrity is seriously threatened, he may break the contract binding him to the newspaper concern, and at the same time receive all the indemnities which are normally payable only if it is the employer who breaks the contract. In France, accordingly, under the law of 1935, the indemnity for dismissal which, as we have seen, may be quite substantial, is payable even when the contract is broken by a professional journalist, in cases where his action is inspired by " a marked change in the character or policy of the newspaper or periodical, if such change creates for the person employed a situation prejudicial to his honour, his reputation, or in a general way his moral interests. " This moral right of a journalist is comparable to the moral right of an author or artist, which the law of 1935 was the first to recognize, has since been acknowledged in a number of countries. It was stated in the collective contract of January 31, 1938, in Poland in this form: " The following are good and sufficient reasons for a journalist to cancel hip, contract without warning; (a) the exertion of pressure by an employer upon a journalist to induce him to perform an immoral action; (b) a fundamental change in the political outlook of the journal, proclaimed by public declaration or otherwise made manifest, if the journalist 's employment would thereafter be contrary to his political opinions or the dictates of his conscience. In these circumstances he shall be entitled to an indemnity. . This indemnity is payable in the same manner as was the salary. " The other exception is where the employee has been in continuous service of the employer for a period of more than 15 years. Where however an employee voluntarily resigns from service of the employer after a period of only three years, there will be no justification whatever for awarding him a gratuity and any such provision of the type which has been made in section 5(1)(a)(iii) of the Act would certainly be unreasonable. The provision in regard to the hours of work also cannot be considered unreasonable having regard to the nature and quality of the work to be done by working journalists. That leaves the considerations of fixation of rates of wages by the Wage Board. As we have already observed, the Wage Board is constituted of equal numbers of representatives of the newspaper establishments and the working journalists with an independent chairman at its head and principles for the guidance of the Wage Board in the fixation of such rates of wages directing the Wage Board to take into consideration amongst other circumstances the capacity of the industry to pay have also been laid down and it is impossible to say that the provisions in that behalf are in any manner unreasonable. that the decision of the Wage Board may be arrived at ignoring some of these essential criteria which have been laid down in section 9(1) of the Act or that the procedure followed by the Wage Board may be contrary to the principles of natural justice. But that would 159 affect the validity of the decision itself and not the constitution of the Wage Board which as we have seen cannot be objected to on this ground. The further provision contained in section 17 of the Act in regard to the recovery of money due from an employer empowering the State Government or any such authority appointed in that behalf to issue a certificate for that amount to the collector in the same manner as an arrear of land revenue was also impeached by the petitioners on this ground. We shall have occasion to deal with this provision in connection with the alleged infringement of the fundamental right under article 14 hereafter. We do not subscribe to the view that such a provision infringes the fundamental right of the petitioners to carry on business under article 19(1)(g). This attack of the petitioners on the constitutionality of the impugned Act under article 19(1)(g), viz., that it violates the petitioners ' fundamental right to carry on business, therefore, fails except in regard to section 5(1)(a)(iii) thereof which being clearly severable from the rest of the provisions, can be struck down as unconstitutional without invalidating the other parts of the impugned Act. Re. Article 14. The question as formulated is that the impugned Act selected the working journalists for favoured treatment by giving them a statutory guarantee of gratuity, hours of work and leave which other persons in similar or comparable employment had not got and in providing for the fixation of their salaries without following the normal procedure envisaged in the . The following propositions are advanced: 1. In selecting the Press industry employers from all industrial employers governed by the ordinary law regulating industrial relations under the , and Act I of 1955, the impugned Act subjects the Press industry employers to discriminatory treatment. 160 2. Such discrimination lies in (a) singling out newspaper employees for differential treatment; (b)saddling them with a new burden in regard to a section of their workers in matters of gratuities, compensation, hours of work and wages; (c)devising a machinery in the form of a Pay Commission for fixing the wages of working journalists; (d)not prescribing the major criterion of capacity to pay to be taken into consideration; (e)allowing the Board in fixing the wages to adopt any arbitrary procedure even violating the principle of audi alteram partem; (f)permitting the Board the discretion to operate the procedure of the for some newspapers and any arbitrary procedure for others; (g) making the decision binding only on the employersand not on the employees, and (h) providing for the recovery of money due from the employers in the same manner as an arrear of land revenue. 3.The classification made by the impugned Act is arbitrary and unreasonable, in so far as it removes the newspaper employers vis a vis working journalists from the general operation of the , and Act I of 1955. The principle underlying the enactment of article 14 has been the subject matter of various decisions of this Court and it is only necessary to set out the summary thereof given by Das J. (as be then was) in Budhan Choudhry & Others vs The State of Bihar (I). " The provisions of article 14 of the Constitution have come up for discussion before this Court in a number of cases, namely, Chiranjit Lal Chowdhuri vs The Union of India (2), The State of Bombay vs F. N. Balsara (3), The State of West Bengal vs Anwar Ali (1)[1955] I S.C.R. 1045, 1048. (2) ; (3) ; 161 Sarkar (1), Kathi Raning Rawat vs The State of Saurashtra (2), Lachmandas Kewalram Ahuja vs The State of Bombay (3), Quasim Razvi vs The State of Hyderabad (1), and Habeeb Mohamad vs The State of Hyderabad (5). It is now well established that while article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (ii) that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases; namely, geographical, or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. It is also well established by the decisions of this Court that article 14 condemns discrimination not only by a substantive law but also by a law of procedure. " It is in the light of these observations that we shall now proceed to consider whether the impugned Act violates the fundamental right of the petitioners guaranteed under article 14 of the Constitution. A further passage from the Report may also be quoted in this context: " It is essential to realise in this connection that the work of a journalist demands a high degree of general education and some kind of specialised training. They thus form an essential adjunct to democracy. The profession must, therefore, be manned by men of high intellectual and moral qualities. The journalists are in a sense creative artists and the public rightly or, wrongly, expect from them a general omniscience and a capacity to express opinion on any topic that may arise, under the sun. Apart from the nature of their work the conditions under which that work is to be performed, are peculiar to this profession. Journalists have to work at very high pressure and as most of the papers come out in the morning, the journalists are required to work late in the night and round the clock. The edition must go to press by a particular time and all the news that breaks before that hour has got to find its place in that edition. Journalism thus becomes a highly specialized job and to handle it adequately a person should be well read, have the ability to size up a situation and to arrive quickly at the correct conclusion, and have the capacity to stand the stress and strain of the work involved. His work cannot be measured, as in other industries, by the quantity of the output, for the quality of work is an essential element in measuring the capacity of the journalists. Moreover, insecurity of tenure is a peculiar feature of this profession. This is not to say that no insecurity exists in other professions but circumstances may arise in connection with profession of journalism which may lead to unemployment in this profession, which would not necessarily have that result in other professions. Their security depends to some extent on the whims and caprices of the proprietors. We have come across cages where a change in the ownership of the paper or a, change in the editorial policy of the paper has resulted in a considerable change in the editorial staff. In the case of other industries a change in the proprietorship does not normally entail a change in the staff. But as the essential purpose of a newspaper is not only to give news but to educate &. d guide public opinion, a change in the proprietorship or in the editorial policy of the paper may result 163 and in some cases has resulted in a wholesale change of the staff on the editorial side. These circumstances, which are peculiar to journalism must be borne in mind in framing any scheme for improvement of the conditions of working journalists." (para. 512). These were the considerations which weighed with the Press Commission in recommending the working journalists for special treatment as compared with the other employees of newspaper establishments in the matter of amelioration of their conditions of service We may also in this connection refer to the following passage from the Legislation for Press, Film and Radio in the world to day (a series of studies published by UNESCO in 1951) (supra) at p. 403: " Under certain systems, special advantages more extensive than those enjoyed by ordinary employees are conferred upon journalists. These may be sanctioned by the law itself. For instance, certain Latin American countries have enacted legislation in favour of journalists which is in some cases very detailed and far reaching and offers special benefits, more particularly in the form of protection against the risk of sickness or disability, dismissal or retirement. " In France, the law of 29 March, 1935, conferred on journalists substantial advantages which at the time were far in advance of general social legislation. Thus, for example, this law gives all professional journalists the right to an annual holiday with pay. One month 's holiday is granted to journalists who have been working for a newspaper or periodical for at least one year, and five weeks to journalists whose contract has been in force for 10 years at least. Should a contract of indefinite duration be terminated, the journalist is entitled to one or two month 's notice and also to an indemnity for dismissal which may not be less than one month 's salary per year or part of a year of service, at the most recent rate of pay. However, if the period of service exceeds 15 years, the 164 amount of the indemnity is fixed, as we have seen, by an arbitral committee. " The working journalists are thus a group by themselves and could be classified as such apart from the other employees of newspaper establishments and if the Legislature embarked upon a legislation for the purpose of ameliorating their conditions of service there was nothing discriminatory about it. They could be singled out thus for preferential treatment against the other employees of newspaper establishments. A classification of this type could not come within the ban of article 14. The only thing which is prohibited under this article is that persons belonging to a particular group or class should not be treated differently as amongst themselves and no such charge could be levelled against this piece of legislation. If this group of working journalists was specially treated in this manner there is no scope for the objection that group had a special legislation enacted for its benefit or that a special machinery was created, for fixing the rates of its wages different from the machinery employed for other workmen under the . The payment of retrenchment compensation and gratuities, the regulation of their hours of work and the fixation of the rates of their wages as compared with those of other workmen in the newspaper establishments could also be enacted without any such disability and the machinery for fixing their rates of wages by way of constituting a wage board for the purpose could be similarly devised. What was contemplated by the provisions of the impugned Act how. ever, was a general fixation of rates of wages of working journalists which would ameliorate the conditions of their service and the constitution of a wage board for this purpose was one of the established modes of achieving that object. If, therefore, such a 165 machinery was devised for their benefit, there was nothing objectionable in it and there was no discrimination as between the working journalists and the other employees of newspaper establishments in that behalf. The capacity of the industry to pay was certainly to be taken into consideration by the Wage Board, as we have already seen before, and the procedure of the Board also was assimilated to that adopted by an industrial tribunal under the , or was, in any event, to be such as would not be against the principle of audi alteram partem or the principles of natural justice. There was no occasion, if the Wage Board chose to exercise the same powers and follow the same procedure as the Industrial Tribunal under the Industrial Disputes Act, 1947, for it to discriminate between one set of newspaper establishments and others. If it in fact assumed unto itself the powers of the Industrial Tribunal it would be bound to follow the procedure prescribed under the , and if it were thus to follow the same, no discrimination could ever be made in the manner suggested. The decision of the Wage Board was no doubt made binding only on the employers and the working journalists were at liberty to agitate the question of increase in their wages by raising an industrial dispute in regard thereto. Once the rates of wages were fixed by the Wage Board, it would normally follow 'that they would govern the relationship between the employers and the working journalists, but if liberty was reserved to the working journalists for further increase in their wages under the provisions of the there was nothing untoward in that provision and that did not by itself militate against the position that what was done for the benefit of the working journalists was a, measure for the amelioration of their conditions of service as a group by themselves. There could not be any question of discrimination between the employers on the one hand and the working journalists on the other. They were two contesting parties ranged on opposite sides and the fact that one of them was treated in a different manner from the other in the 166 matter of the amelioration of the conditions of service of the weaker party would not necessarily vitiate the decision of the Wage Board. The weaker of the two parties could certainly be treated as a class by itself and the conferment of special benefits in the matter of trying to ameliorate their conditions of service could certainly not be discriminatory. The provisions contained in section 17 of the Act in regard to the recovery of money due from the employers in the same manner as an arrear of land revenue also was not discriminatory. In the conflict between the employers and the employees it very often came about that the employers did not implement the measures which had been enacted for the benefit of the employees and the employees were thus hard put to realise and cash those benefits. Even the , contained a like provision in section 33C thereof (vide the amendment incorporated therein by Act 36 of 1956) which in its turn was a reproduction of the old section 25 1 which had been inserted therein by Act 43 of 1953. It may be remembered that if the provisions of the , which was a general Act, had been made applicable to the working journalists there would have been no quarrel with the same. Much less there could be any quarrel with the introduction of section 17 into the impugned Act when the aim and object of such provision was to provide the working journalists who were a group by themselves from amongst employees employed in the newspaper establishments with a remedy for the recovery of the monies due to them in the same manner as the workmen under the . We do not see anything discriminatory in making such a provision for the recovery of monies due by the employers to these working journalist 'section Similar is the position in regard to the alleged dis crimination between Press industry employers on the one hand and the other industrial employers on the other. The latter would, certainly be governed by the ordinary law regulating industrial relations under the . Employers qua the working journalists again would be a class by them 167 selves and if a law was enacted to operate as between them in the manner contemplated by the Act that could not be treated as discriminatory. If measures have got to be devised for the amelioration of the conditions of working journalists who are employed in the newspaper establishments, the only way in which it could be done was by directing this piece of legislation against the Press Industry employers in general. Even considering the Act as a measure of social welfare legislation the State could only make a beginning somewhere without embarking on similar legislations in relation to all other industries and if that was done in this case no charge could be levelled against the State that it was discriminating against one industry as compared with the others. The classification could well be founded on geographical basis or be according to objects or occupations or the like. The only question for consideration would be whether there was a nexus between the basis of classification and the object of the Act sought to be challenged. In our opinion, both the conditions of permissible classification were fulfilled in the present case. The classification was based on an intelligible differentia which distinguished the working journalists from other employees of newspaper establishments and that differentia had a rational relation to the object sought to be achieved, viz., the amelioration of the conditions of service of working journalists. This attack on the constitutionality of the Act also therefore fails. Re. Article 32: In regard to the infringement of article 32, the only ground of attack ha, , been that the impugned Act did not provide for the giving of the reasons for its decision by the Wage Board and thus rendered the petitioners ' right to approach the Supreme Court for enforcement of their fundamental right nugatory. It is contended that the right to apply to the Supreme Court for a writ of certiorari required an order infringing a fundamental right, that such a right was itself a fundamental right and any legislation which attempted to restrict or defeat this right was an infraction of 168 article 32 and was as such void. It is further contended that a writ of certiorari could effectively be directed only against a speaking order, i. e., an order disclosing reasons, and if a statute enabled the passing of an order that need give no reasons such statute attempted ,to sterilize the powers of this Court from investigating the validity of the order and was therefore violative of article 32. Learned Counsel for the petitioners has relied upon a decision of the English Court in Rex vs Northumberland Compensation Appeal Tribunal, Ex parte Shaw where Lord Goddard C. J. observed at p. 718: " Similarly anything that is stated in the order which an inferior court has made and which has been brought up into this court can be examined by the court, if it be a speaking order, that is to say, an order which sets out the grounds of the decision. If the order is merely a statement of conviction that there shall be a fine of 40s. , or an order of removal or quashing a poor rate, there is an end of it, this court cannot examine further. If the inferior court tells this court why it had done what it has and makes it part of its order, this court can examine it. " This decision was affirmed by the Court of Appeal (and the decision of the Court of Appeal is reported in Rex vs Northumberland Compensation Appeal Tribunal, Ex parte Shaw (2) and while doing so Denning L. J. (as he then was) discussed at p. 352, what was it that constituted the record : " What, then, is the record?. Following these cases I think the record must contain at least the document which initiates the proceedings; the pleadings if any; and the adjudication; but not the evidence, nor the reasons, unless the tribunal chooses to incorporate them. If the tribunal does state its reasons, and these reasons are wrong in law, certiorari lies to quash the decision. " This decision only affirmed that certiorari could lie only if an order made by the inferior tribunal was a speaking order. It did not lay down any duty on the inferior tribunal to set out the reasons for its order but (1) , 718. (2) ; 169 only pointed out that if no reasons were given it would be impossible for the High Court to interfere by exercising its prerogative jurisdiction in the matter of certiorari. A more relevant decision on this point is that of this Court in A. K. Gopalaa vs The State of Madras and, Anr. In that case the provision of law which was impugned amongst others was one which prevented the detenu on pain of prosecution from disclosing to the Court the grounds of his detention communicated to him by the detaining authority. This provision was struck down as ultra vires and void. The reason given by Mahajan J. (as he then was) is stated at p. 243: " This Court would be disabled from exercising its functions under article 32 and adjudicating on the point that the grounds given satisfy the requirements of the sub clause if it is not open to it to see the grounds that have been furnished. It is a guaranteed right of the person detained to have the very grounds which are the basis of the order of detention. This Court would be entitled to examine the matter and to see whether the grounds furnished are the grounds on the basis of which he has been detained or they contain some other vague or irrelevant material. The whole purpose of furnishing a detained person with the grounds is to enable him to make a representation refuting these grounds and of proving his innocence. In order that this Court may be able to safeguard this fundamental right and to grant him relief it is absolutely essential that the detenu is not prohibited under penalty of punishment to disclose the grounds to the Court and no injunction by law can be issued to this Court disabling it from having a look at the grounds. Section 14 creates a substantive offence if the grounds are disclosed and it also lays a duty on the Court not to permit the disclosure of such grounds. It virtually amounts to a suspension of a guaranteed right provided by the Constitution inasmuch as it indirectly by a stringent provision makes administration of the law by this Court impossible and at the same (1) ; , 100. 22 170 time it deprives a detained person from obtaining justice from this Court. In my opinion, therefore, this section when it prohibits the disclosure of the grounds contravenes or abridges the rights given by Part III to a citizen and is ultra vires the powers of Parliament to that extent. " It is no doubt true that if there was any provision to be found in the impugned Act which prevented the Wage Board from giving reasons for its decision, it might be construed to mean that the order which was thus made by the Wage Board could not be a speaking order and no writ of certiorari could ever be available to the petitioners in that behalf. It is also true that in that event this Court would be powerless to redress the grievances of the petitioners by issuing a writ in the nature of certiorari and the fundamental right which a citizen has of approaching this Court under article 32 of the Constitution would be rendered nugatory. The position, however, as it obtains in the present case is that there is no such provision to be found in the impugned Act. The impugned Act does not say that the Wage Board shall not give any reason for its decision. It is left to the discretion of the Wage Board whether it should give the reasons for its decision or not. In the absence of any such prohibition it is impossible for us to hold that the fundamental right conferred upon the petitioners under article 32 was in any manner whatever sought to be infringed. It may be noted that this point was not at all urged in the petitions which the petitioners had filed in this Court but was taken up only in the course of the arguments by the learned Counsel for the petitioners. It appears to have been a clear after thought; but we have dealt with the same as it was somewhat strenuously urged before us in the course of the arguments. Apart from challenging the vires of the Act dealt with above, the petitioners contend that the decision of the Wage Board itself is illegal and void because: (1) Reconstitution of the Board was ultra vires and unauthorised by the Act as it stood at the time, the rules having been published only on July 30, 1956. (2)The decision by a majority was unwarranted by the Act and since there was no provision in the Act, the Rules providing for the same went beyond the Act and were therefore ultra vires. (3)The procedure followed by the Board offended the principles of natural justice and was therefore invalid; (4) The decision was invalid, because (a) no reasons were given, (b) nor did it disclose what considerations prevailed with the Board in arriving at its decision; (5) Classification on the basis of gross revenue was illegal and unauthorised by the Act. (6)Grouping ;into chains or multiple units was unauthorised by the Act. (7)The Board was not authorised by the Act to fix the salaries of journalists except in relation to a particular industrial establishment and not on an All India basis of all newspapers taken together; (8)The decision was bad as it did not disclose that the capacity to pay of any particular establishment was ever taken into consideration. (9) The Board had no authority to render a decision which was retrospective in operation. (10) The Board had no authority to fix scales of pay for a period of 3 years (subject to review by the Govt.by appointing another Wage Board at the end of these 3 years) and (11) The Board was handicapped for want of Cost of Living Index. 172 The position in law is that the decision would be illegal on any of the following three grounds, viz., (A)Because the Act under which it was made was ultra vires; [ See Mohammad Yasin vs Town Area Committee, Jalalabad & anr. (1) and Himmatlal Harilal Mehta vs State of Madhya Pradesh (2) ]. (B)Because the decision itself infringed the fundamental rights of the petitioners. [ See Bidi Supply Co.v. Union of India & (3) ]. (C) Because the decision was ultra vires the Act. See Pandit Ram Narain vs State of Uttar Pradesh & ors. (4) ]. The decision of the Wage Board before us cannot be challenged on the grounds that the impugned Act under which the decision is made is ultra vires or that the decision itself infringes the fundamental rights of the petitioners. The first ground of attack is based on the circumstance that Shri K. P. Kesava Menon who was originally appointed a member of the Wage Board resigned on or about June 21, 1956, which resignation was accepted by the Central Government by a notification dated July14, 1956, and by the same notification the Central Government appointed in his place Shri K. M. Cherian and thus reconstituted the Wage Board. There was no provision in the Act for the resignation of any member from his membership or for the filling in of the vacancy which thus arose in the membership of the Board. A provision in this behalf was incorporated only in the Working Journalists Wage Board Rules, 1956, which were published by a notification in the Gazette of India Part 11 Section 3 on date July 31, 1956. It was, therefore, contended that such reconstitution of the Board by the appointment of Shri K. M. Cherian in place of Shri K. P. Kesava Menon was unauthorised by the Act as it then stood (1) ; , 578. (2) ; , 1127. (3) [1956] S.C.R.267. (4) ; 173 and the Board which actually published the decision in question was therefore not properly constituted. It is necessary to remember in this connection that section 8 of the Act empowered the Central Government by notification in the Official Gazette to constitute a Wage Board. This power of constituting the Wage Board must be construed having regard to section 14 of the , which says that where by any Central Act or Regulation made after the commencement of the Act, any power is conferred then, unless a different intention appears that power may be exercised from time to time as occasion arises. If this is the true position there was nothing objectionable in the Central Government reconstituting the Board on the resignation of Shri K. P. Kesava Menon being accepted by it. The Wage Board can in any event be deemed to have been constituted as on that date, viz., July 14, 1956, when all the 5 members within the contemplation of section 8(2) of the Act were in a position to function. Shri K. P. Kesava Menon had not attended the preliminary meeting of the Board which had been held on May 26, 1956, and the real work of the Wage Board was done after the appointment of Shri K. M. Cherian in his place and stead and it was only after July 14, 1956, that the Wage Board as a whole constituted as it was on that date really functioned as such. The objection urged by the petitioners in this behalf is too technical to make any substantial difference in regard to the constitution of the Wage Board and its functioning. Re. 2. This ground ignores the fact that the Working Journalists Wage Board Rules, 1956, which were published on July 31, 1956, were made by the Central Government in exercise of the power conferred upon it by section 20 of the Act. That section empowered the Central Government to make rules to carry out the purposes of the Act, in particular to provide for the procedure to be followed by the Board in fixing rates of wages. Rule 8 provided that every question considered at a meeting of the Board was to be decided by a majority of the votes of the members present and 174 voting. In the event of equality of votes the Chairman was to have a casting vote. . . This Rule therefore prescribed that the decision of the Board could be reached by a majority and this was the rule which was followed by the Board in arriving at its decision. The rule was framed by the Central Government by virtue of the authority vested in it under section 20 of the Act and was a piece of delegated legislation which if the rules were laid before both the Houses of Parliament in accordance with section 20(3) of the Act acquired the force of law. After the publication of these rules, they became a part of the Act itself and any decision thereafter reached by the Wage Board by a majority as prescribed therein was therefore lawful and could not be impeached in the manner suggested. This ground has reference to the alleged violation by the Wage Board of the principles of natural justice. It is urged that the procedure established under the was not in terms prescribed for the Wage Board, the Board having been given under section 11 of the Act the discretion for the purpose of fixing rates of wages to exercise the same powers and follow the same procedure as an Industrial Tribunal constituted under the , while adjudicating upon an industrial dispute referred to it. On two distinct occasions, however, the Wage Board definitely expressed itself that it had the powers of an Industrial Tribunal constituted under the ' The first occasion was when the questionnaire was issued by the Wage Board and in the questionnaire it mentioned that it had such powers under section 11 of the Act. The second occasion arose when a number of newspapers and journals to whom the questionnaire was addressed failed to send their replies to the same and the Wage Board at its meeting held on August 17, 1956, reiterated the position and decided to issue a Press Note requesting the newspapers and journals to send their replies as soon as possible, inviting their attention to the fact that the Board had powers of an Industrial Tribunal under the 175 Act and if newspapers failed to send their replies, the Board would be compelled to take further steps in the matter. This is clearly indicative of the fact that the Wage Board did seek to exercise the powers under the terms of section 11 of the Act. Even though, the exercise of such powers was discretionary with the Board, the, Board itself assumed these powers and assimilated its ,position to that of an Industrial Tribunal constituted under the . If, then, it assumed those powers, it only followed that it was also bound to follow the procedure which an Industrial Tribunal so constituted was bound to follow. It is further urged that in the whole of the questionnaire which was addressed by the Wage Board to the newspaper establishments, there was no concrete proposal which was submitted by the Wage Board to them for their consideration. The only question which was addressed in this behalf was Question No. 4 in Part "A" which asked the newspaper establishments whether the basic minimum wage, dearness allowance and metropolitan allowance suggested by the Press Commission were acceptable to them and if not, what variations would they suggest and why. The question as framed would not necessarily focus the attention of the newspaper establishments to any proposal except the one which was the subject matter of that question, viz., the proposal of the Press Commission in that behalf and the newspaper establishments to whom the questionnaire was addressed would certainly not have before them any indication at all as to what was the wage structure which was going to be adopted by the Wage Board. Even though the Wage Board came to the conclusion, as a result of its having collected the requisite data and gathered sufficient materials, after receiving the answers to the questionnaire and examining the witnesses, that certain wage structure was a proper one in its opinion, it was necessary for the Wage Board to communicate the proposals in that regard to the various newspaper establishments concerned and invite them to make their representations, if any, within a specified period. It was only after such representations were received from the interested parties 176 that the Wage Board should have finalized its proposals and published its decision. If this procedure had been adopted the decision of the Wage Board could not have been challenged on the score of its being contrary to the principles of natural justice. It would have been no doubt more prudent for the Wage Board to have followed the procedure outlined above. The ground No. 8 is, in our opinion, sufficiently determinative of the question as to the ultra vires character of the Wage Board decision and in view of the 'conclusion reached by us in regard to the same, we refrain from expressing any opinion on this ground of attack urged by the Petitioners. Re. 4. This ground is urged because no reasons were given by the Wage Board for its decision. As a matter of fact, the Wage Board at its meeting dated April 22, 1957, agreed that reasons need not be given for each of the decisions and it was only sufficient to record the same and accordingly it did not give any reasons for the decision which it published. In the absence of any such reasons, however, it was difficult to divine what considerations, if any, prevailed with the Wage Board in arriving at its decision on the various points involved therein. It was no doubt not incumbent on the Wage Board to give any reasons for its decision. The Act made no provision in this behalf and the Board was perfectly within its rights if it chose not to give any reasons for its decision. Prudence should, however, have dictated that it gave reasons for the decision which it ultimately reached because if it had done so, we would have been spared, the necessity of trying to probe into its mind and find out whether any particular circumstance received due consideration at its hands in arriving at its decision. The fact that no reasons are thus given, however, would not vitiate the decision in any manner and we may at once say that even though no reasons are given in the form of a regular judgment, we have sufficient indication of the Chairman 's mind in the note which he made on April 30, 1956, which is a contemporaneous record ex plaining the reasons for the decision of the majority. 177 This note of the Chairman is very revealing and throws considerable light on the question whether particular circumstances were at all taken into consideration by the Wage Board before it arrived at its decision. Re. 5. This ground concerns the classification of newspaper establishments on the basis of gross revenue. Such classification was challenged as illegal and unauthorised by the Act. The Act certainly says nothing about classification and could not be expected to do so. What the Act authorised it to do was to fix the rates of wages for working journalists having regard to the principles laid down in section 9(1) of the Act. In fixing the wage structure the Wage Board constituted under the Act was perfectly at liberty if it thought necessary to classify the newspaper establishments in any manner it thought proper provided of course that such classification was not irrational. If the newspaper establishments all over the country had got to be considered in regard to fixing of rates of wages of working journalists employed therein it was inevitable that some sort of classification should be made having regard to the size and capacity of newspaper establishments. Various criteria could be adopted for the purpose of such classi fication, viz., circulation of the newspaper, advertisement revenue, gross revenue, capital invested in the business, etc., etc. Even though the proportion of advertisement revenue to the gross revenue of newspaper establishments may be a relevant consideration for the purpose of classification, we are not, prepared to say that the Wage Board was not justified in adopting this mode of classification on the basis of gross revenue. It was perfectly within its competence to do so and if it adopted that as the proper basis for classification it cannot be said that the basis which it adopted was radically wrong or was such as to vitiate its decision. It may be remembered in this connection that the Newspaper Industry Inquiry Committee in U. P. had suggested in its report dated March 31,1949, classification of newspapers in the manner following: "A " Class Papers with (1) a circulation of 10,000 copies or above or (2) an invested capital of rupees 3 lakhs or more : (3) an annual income between rupees one lakhs and 3 lakhs or more: "B " Class Papers with (1) a circulation below 10,000 but above 5,000 copies or (2) an invested capital between rupees one lakh and 3 lakhs or (3)an annual income between rupees one lakh and 3 lakhs; "C " Class Papers with (1)a circulation below 5000 copies or (2) an invested capital below rupees one lakh or (3) an annual income below rupees one lakh. The classification on the basis of gross revenue was attacked by the petitioners on the ground that in the gross revenue which is earned by the newspaper establishments, advertisement revenue ordinarily forms a large bulk of such revenue and the revenue earned by circulation of newspapers forms more often than not a small part of the same, though in regard to language newspapers the position may be some what different. The petitioners on the other hand suggested that the profit and loss of the newspaper establishments should be adopted as the proper test and if that were adopted a different 179 picture altogether would be drawn. The balancesheets and the profit and loss accounts of the several newspaper establishments would require to be considered and it was contended that even if the gross revenue of a particlar newspaper establishment were so large as to justify its inclusion on the basis of gross revenue in Class " A " or Class " B " it might be working at a loss and its classification as such would not be justified. We have already referred in the earlier part of this judgment to the unsatisfactory nature of the profit and loss test. Even though the profit and loss accounts and the balance sheets of the several limited companies may have been audited by their auditors and may also have been accepted by the Income tax authorities, they would not afford a satisfactory basis for classification of these newspaper establishments for the reasons already set out above. As a matter of fact, even before us attempts were made by the respondent, the Indian Federation of Working Journalists to demonstrate that the profit and loss accounts and the balance sheets of several petitioners were manipulated and unreliable. We are not called upon to decide whether the profit and loss test is one which should be accepted; it is sufficient for our purpose to say that if such a test was not accepted by the Wage Board, the Wage Board was certainly far from wrong in doing so. Re. 6. This ground relates to grouping into chains or multiple units and the ground of attack is that such grouping is unauthorised by the Act. The short answer to this contention is that if such grouping into chains or multiple units was justified having regard to the conditions of the newspaper industry in the country, there was nothing in the Act which militated against such grouping. The Wage Board was authorised to fix the wage structure for working journalists who were employed in various newspaper establishments all over the country. If the chains or multiple units existed in the country the newspaper establishments which formed ' such chains 180 or multiple units were well within the purview of the inquiry before the Wage Board and if the Wage Board thus chose to group them together in that manner such grouping by itself could not be open to attack. The Act could not have expressly authorized the Wage Board to adopt such grouping. It was up to the Wage Board to consider whether such grouping was justified under the circumstances or not and unless we find something in the Act which prohibits the Wage Board from doing so, we would not deem any such grouping as unauthorised. The real difficulty, however, in the matter of grouping into chains or multiple units arises in connection with the capacity of the industry to pay, a topic which we shall discuss hereafter while discussing the ground in connection therewith. Re. 7. This ground is based on the definition of " newspaper establishment" found in Sec. 2 (d) of the Act. " Newspaper establishment" is there defined as " an establishment under the control of any person or body of persons, whether incorporated or not, for the production or publication of one or more newspapers or for conducting any news agency or syndicate. " So, the contention put forward is that " an establishment " can only mean " an establishment " and not a group of them, even though such an individual establishment may produce or publish one or more newspapers. The definition may comprise within its scope chains or multiple units, but even so, the establishment should be one individual establishment producing or publishing a chain of newspapers or multiple units of newspapers. If such chains or multiple units were, though belonging to some person or body of persons whether incorporated or not, produced or published by separate newspaper establishments, common control would not render. the constitution of several newspaper establishments as one establishment for the purpose of this definition, they would none the less be separate newspaper establishments though under common control. Reliance was placed in support of this contention on a decision of the Calcutta High Court in Pravat Kumar 181 vs W. T. C. Parker (1), where the expression which came up for construction before the Court was " employed in an industrial establishment " and it was observed that: " Employed in an industrial establishment " must mean employed in some particular place, that place being the place used for manufacture or an activity amounting to industry, as that term is used in the Act. " A similar interpretation was put on the expression industrial establishment " by the Madras High Court in section R. V. Service Ltd. vs State of Madras (2), where it was observed at p. 12: " They referred only to a dispute between the workers and the management of one industrial establishment, the Kumbakonam branch of the section R. V. section Ltd. I find it a little difficult to accept the contention of the learned counsel for the Madras Union, that the Kumbakonam branch of the section R. 'V. section Ltd., is not an industrial establishment as that expression has been used in the several sections of the Act. . . . . . I need refer only to section 3 of the Act to negative the contention of the learned counsel for the Madras Union, the section R. V. section Ltd., with all its branches should betaken as one industrial establishment. " These decisions lend support to the contention that a newspaper establishment like an industrial establishment should be located in one place, even though it may be carrying on its activities of production or publication of more newspapers than one. If these activities are carried on in different places, e. g., in different towns or cities of different States, the newspaper establishments producing or publishing such newspapers cannot be treated as one individual establishment but should be treated as separate newspaper establishments for the purpose of working out the relations between themselves and their employees. There would be no justification for including these different newspaper establishments into. one chain or multiple unit and treating them, as if they were one (1) A. I. R. , 118, para. (2) A. I. R. , 122. 182 newspaper establishment. Here again, the petitioners are faced with this difficulty that there is nothing in the Act to prohibit such a grouping. If a classification on the basis of gross revenue could be legitimately adopted by the Wage Board then the grouping into chains or multiple units could also be made by it. There is nothing in the Act to prohibit the treating of several newspaper establishments producing or publishing one or more newspapers though in different parts of the country as one newspaper establishment for the purpose of fixing the rates of wages. It would not be illegitimate to expect the same standard of employment and conditions of service in several newspaper establishments under the control of any person or body of persons, whether incorporated or not; for an employer to think of employing one set of persons on higher scales of wages and another set of workers on lower scales of wages would by itself be iniquitous, though it would be quite legitimate to expect the difference in scales having regard to the quality of the work required to be done, the conditions of labour in different regions of the country, the standard of living in those regions and other cognate factors. All these considerations would necessarily have to be borne in mind by the Wage Board in arriving at its decision in regard to the wage structure though the relative importance to be attached to one circumstance or the other may vary in accordance with the conditions in different areas or regions where the newspaper establishments are located. Re. 8. We now come to the most important ground, viz., that the decision of the Wage Board has not taken into consideration the capacity to pay of any particular newspaper establishment. As we have already seen, the fixings: of rates of wages by the Wage Board did not prescribe whether the wages which were to be fixed were minimum wages, fair wages, or living, wages and it was left to the discretion of the Wage Board to determine the same. The principles for its guidance were, However, laid down and they prescribed the circumstances which were to be taken into consideration before 183 such determination was made by the Wage Board. One of the essential considerations was the capacity of the industry to pay and that was comprised within the category " the circumstances relating to newspaper industry in different regions of the country ". It remains to consider, however, whether the Wage Board really understood this category in that sense and in fact applied its mind to it. At its preliminary meeting held on May 26, 1956, the Board set up a SubCommittee to draft a questionnaire to be issued to the various journals and organisations concerned, with a view to eliciting factual data and other relevant information required for the fixation of wages. The Sub committee was requested to bear in mind the need inter alia for 'proper classification of the country into different areas on the basis of certain criteria like population, cost of living, etc. This was the only reference to this requirement of section 9(1) and there was no reference herein to the capacity of the industry to pay which we have held was comprised therein. The only question in the questionnaire as finally framed which had any reference to this criterion was Question No. 7 in Part " A " under the heading " Special Circumstances " and that question was: " Are there in your regions any special conditions in respect of the newspaper industry which affect the fixing of rates of wages of working journalists ? If so, specify the conditions and indicate how they affect the question of wages. The Wage Board no doubt asked for detailed accounts of newspaper establishments and also required information which would help it in the proper evaluation of the nature and quality of work of various categories of working journalists, but the capacity of the industry to pay which was one of the essential considerations was nowhere prominently brought in issue and no information on that point was sought from the various newspaper establishments to whom the questionnaire was going to be addressed. The answers to Question No. 7 as summarized by the Wage Board no doubt referred in some cases to the capacity 184 of the industry to pay but that was brought in by the newspaper establishments themselves who answered the question in an incidental manner and could not be said to be prominent in the minds of the parties concerned. It is pertinent to observe that even before the Press Commission the figures had disclosed that out of 127 newspapers 68 had been running into loss and 59 with profits and there was an overall profit of about 1% on a capital investment of seven crores. The profit and loss accounts and the balance sheets of the various companies owning or controlling newspaper establishments were also submitted before the Wage Board but they had so far as they went a very sorry tale to tell. The profit and loss statements for the year 1954 55 revealed that while 43 of them showed profits 40 had incurred losses. Though no scientific conclusion could be drawn from this statement it showed beyond doubt that the condition of the newspaper industry as a whole could not be considered satisfactory. Under these circumstances, it was all the more incumbent upon the Wage Board even though it discounted these profit and loss statements as not necessarily reflecting the true financial position of these newspaper establishments, to consider the question of the capacity of the industry to pay with greater vigilance. There was again another difficulty which faced the Wage Board in that behalf and it was that out of 5,705 newspapers to whom the questionnaire was addressed only 312 or at best 325 had responded and the Wage Board was in the dark as to what was the position in regard to other newspaper establishments. As a matter of fact, the chairman in his note dated April 30, 1957, himself pointed out that the Wage Board had no data before it of all the newspapers and where it had, that was in many cases not satisfactory. This aspect was again emphasized by him in his note when he reiterated that the data available to the Wage Board had not been as complete as it would have wished them to be and therefore recommended in the end the establishment of a standing administrative machinery which would collect from all newspaper 185 establishments in the country on a systematic basis detailed information and data such as those on employment, wage rates and earnings, financial condition of papers, figures of circulation, etc., which may be required for the assessment of the effects of the decision of the Wage Board at the time of the review. The Wage Board, in fact, groped in the dark in the absence of sufficient data and information which would enable it to come to a proper conclusion in regard to the wage structure which it was to determine. In the absence of such data and materials the Board was not in a position to work out what would be the impact of its proposals on the capacity of the industry to pay as a whole or even region wise and the chairman in his note stated that it was difficult for the Board at that stage to work out with any degree of precision, the economic and other effects of its decision on the newspaper industry as a whole. Even with regard to the impact of these proposals on individual newspaper establishments the chairman stated that the future of the Indian language newspapers was bright, having regard to increasing literacy and the growth of political con sciousness of the reading public, and by rational management there was great scope for increasing the income of newspapers and even though there was no possibility of any adjustment which might satisfy all persons interested, it was hoped that no newspaper would be forced to close down as a result of its decision; but that if there was a good paper and it deserved to exist, the Government and the public would help it to continue. This was again a note of optimism which does not appear to have been justified by any evidence on the record. Even though, the Wage Board classified the newspaper establishments into 5 classes from " A " to " E " on the basis of their gross revenue the proportion of the advertisement revenue to the gross revenue does not appear to have been taken into consideration nor was the essential difference which subsisted between the circulation and the paying capacity of the language newspapers as compared with newspapers in the 24 186 English language taken into account. If this had been done, the basis of gross revenue which the Wage Board adopted would have been modified in several respects. The grouping of the newspapers into chains or multiple units implied that the weaker units in those groups were to be treated as on a par with the stronger units and it was stated that the loss in the weaker units would be more than compensated by the profits in the more prosperous units. The impact of these proposals on groups of newspapers was only defended on principle without taking into consideration the result which they would have on the working of the weaker units. Here also the Chairman expressed the opinion that the Board was conscious that as a result of its decision, some of the journalists in the weaker units of the same group or chain may get much more than those working in its highest income units. He however stated that if the principle was good and scientific, the inevitable result of its application should be judged from the stand point of Indian Journalism as a whole and not the burden it casts on a particular establishment. It is clear therefore, that this principle which found favour with the Wage Board was sought to be worked out without taking into consideration the burden which it would impose upon the weaker units of a particular newspaper establishment. The representatives of the employers objected to the fixation of scales of wages on the plea that fixation of rates of wages did not include the fixation of scales of wages. This contention was negatived by the representatives of the employees as also by the Chairman and the Wage Board by its majority decision accepted the position that it could, while fixing the rates of wages also fix the scales of wages. The Press Commission itself had merely suggested a basic minimum wage for the consideration of the parties concerned but had suggested that so far as the scales of wages were concerned they were to be settled by collective bargaining or by adjudication. Even though the Wage Board took upon itself the burden of fixing scales of wages as really comprised within the terms of their reference, it was incumbent upon it to consider what the impact of 187 the scales of wages fixed by it would be on the capacity of the industry to pay. There is nothing on the record to suggest that both as regards the rates of wages and the scales of wages which it determined the Wage Board ever took into account as to what the impact of its decision would be on the capacity of the industry to pay either as a whole or region wise. There is, however, a further difficulty in upholding the decision of the Wage Board in this behalf and it is this that even as regards the fixation of the rates of wages of working journalists the Wage Board does not seem to have taken into account the other provisions of the Act which conferred upon the working journalists the benefits of retrenchment compensation, payment of gratuity, hours of work and leave. These provisions were bound to have their impact on the paying capacity of the newspaper establishments and if these had been borne in mind by the Wage Board it is highly likely that the rates of wages including the scales of wages as finally determined might have been on a lesser scale than what one finds in its decision. This difficulty becomes all the more formidable when one considers that the working journalists only constituted at best one fifth of the total staff employed in the various establishments. The rest of the 80% comprised persons who may otherwise be described as factory workers who would be able to ameliorate their conditions of service by having resort to the machinery under the . If the conditions of service of the working journalists were to be improved by the Wage Board the other employees of newspaper establishments were bound to be restive add they would certainly, at the very earliest opportunity raise industrial disputes with a view to the betterment of their conditions of service. Even though the Industrial Courts established under the , might not give them relief commensurate with the relief which the Wage Board gave to the working journalists, there was bound to be an improvement, in their conditions of service which the Industrial Court would certainly determine having regard to the benefits which the working journalists 188 enjoyed and this would indeed impose an additional financial burden on the newspaper establishments which would substantially affect their capacity to pay. This consideration also was necessarily to be borne in mind by the Wage Board in arriving at its final decision and one (foes not find anything on the record which shows that it was actually taken into consideration by the Wage Board. The retrospective operation of the. decision of the Wage Board was also calculated to impose a financial burden on the newspaper establishments. Even though this may be a minor consideration as compared with the other considerations above referred to, it was none the less a circumstance which the Wage Board ought to have considered in arriving at its decision in regard to the fixing of rates of wages. The financial burden which was imposed by the decision of the Wage Board was very vividly depicted in the statements furnished to us on behalf of the petitioners in the course of the hearing before us. These statements showed that the wage bill of these newspaper establishments was going to be considerably increased, that the retrospective operation of the decision was going to knock off a considerable sum from their reserves and that the burden imposed upon the newspaper establishments by the joint impact of the provisions of the Act in regard. to retrenchment compensation, payment of gratuity, hours of work and leave as well as the decision of the Wage Board in regard to the fixing of rates of wages and the scales of wages would be such as would cripple the resources of the newspaper establishments, if not necessarily lead to their complete extinction. These figures have been given by us in the earlier 189 part of our judgment and we need not repeat the same. The conclusion, however, is inescapable that the decision of the Wage Board imposed a very heavy financial burden on the newspaper establishments, which burden was augmented by the classification on the basis of gross revenue, fixation of scales of wages, provisions as, regards the hours of work and leave, grouping of newspapers into chains or multiple units and retrospective operation given to the decision of the Wage Board as therein mentioned. If these proposals had been circulated, before being finalized, by the Wage Board to the various newspaper establishments so that these newspaper establishments could, if they so desired, submit their opinions thereupon and their representations, if any, in regard to the same to the Wage Board for its consideration and if the Wage Board had after receiving such opinions and representations from the newspaper establishments concerned finalised it decision, this attack on the ground of the Wage Board not having taken into consideration the capacity of the industry to pay as a whole or region wise would have lost much of its force. The Wage Board, however, did nothing of the type. Proposals were exchanged between the representatives of the employers and the representatives of the employees. The discussion that the chairman had with each set of representatives did not bear any fruit and the chairman himself by way of mediation, as it were, submitted to them his own proposals presumably having regard to the different points of view which had been expressed by both these parties. The decision in regard to the scales of wages, was, as we have seen before, a majority decision which was not endorsed by the representatives of the employers. The proposals of the chairman also were not acceptable to the representatives of the employers but the representatives of the employees accepted them and they thus became the majority decision of the Wage Board. The ultimate decision of the chairman on those points does not appear to have been the result of any consideration of the capacity of the industry to pay as a whole or region wise but reflects a compromise 190 which he brought about between the diverse views but which also was generally accepted only by the representatives of the employees and not the representatives of the employers. We are supported in this conclusion by the observations of the chairman himself in the note which he made simultaneously with the publication of the decision on April 30, 1957, that it was difficult for the Wage Board at that stage to work out with any degree of precision, the economic and other effects of the decision on the newspaper industry as a whole. An attempt was made on behalf of the respondents in the course of the hearing before us to shew that by the conversion of the currency into naye pyse and the newspapers charging to the public higher price by reason of such conversion, the income of several newspapers had appreciably increased. These figures were, however, controverter on behalf of the petitioners and it was pointed out that whatever increase in the revenue was brought about by reason of this conversion of price into naye pyse was more than offset by the fall in circulation, ever rising price of newsprint and the higher commission, etc., which was payable by the newspaper establishments to their commission agents. The figures as worked out need not be described here in detail; but we are satisfied that the conversion of the price into naye pyse had certainly not the effect which was urged and did not add to the paying capacity of the newspaper establishments. The very fact that the Wage Board thought it necessary to express a pious hope that if there is a good paper and it deserves to exist, the Government and the public will help it to continue, and also desired the interests which it felt had been hit hard by its decision not to pass judgment in haste, but to watch, the effects of its decision in actual working with patience for a period of 3 to 5 years, shows that, the Wage Board was not sure of its own ground and was publishing its decision merely by way of an experiment. The chairman urged upon the Government of India 191 the desirability of creating immediately a standing administrative machinery which could also combine in itself the functions of implementing and administering its decision and that of preparing the ground for the review and revision envisaged after 3 to 5 years. This was again a, pious hope indulged in by the Wage Board. It was not incumbent on the Government to fulfill that expectation and there was no knowing whether the Government would ever review or revise the decision of the Wage Board at the expiration of such period. We have carefully examined all the proceedings of the Wage Board and the different tables and statements prepared by them. Neither in the proceedings nor in any of the tables do we see satisfactory evidence to show that the capacity of the industry to pay was examined by the Board in fixing the wage structure. As we have already observed, it was no doubt open to the Board not to attach undue importance to the statements of profit and loss accounts submitted by various newspaper establishments, but, since these statements prima facie show that the trade was not making profit it was all the more necessary for the Board to satisfy itself that the different classes of the newspaper establishments would be able to bear the burden imposed by the wage structure which the Board had decided to fix. Industrial adjudication is familiar with the method which is usually adopted to determine the capacity of the employer to pay the burden sought to be imposed on him. If the industry is divided into different classes it may not be necessary to consider the capacity of each individual unit to pay but it would certainly be necessary to consider the capacity of the respective classes to bear the burden imposed on them. A cross section of these respective classes may have to be taken for careful examination and all relevant factors may have to be borne in mind in deciding what burden the class considered as a whole can bear. If possible, an attempt can also be made, and is often made, to project the burden of the wage structure into two or three succeeding years and determine how it affects the financial position of the employer. The whole of the 192 record before the Board including the chairman 's note gives no indication at all that an attempt was made by the Board to consider the capacity of the industry to pay in this manner. Indeed, the proceedings show that the demands made by the representatives of the employees and the concessions made by the employers ' representatives were taken as rival contentions and the Chairman did his best to arrive at his final decision on the usual basis of give and take. In adopting this course, all the members of the Board seem to have lost sight of the fact that the essential prerequisite of deciding the wage structure was to consider the capacity of the industry to pay and this, in our opinion, introduces a fatal infirmity in the decision of the Board. If we had been satisfied that the Board had considered this aspect of the matter, we would naturally have been reluctant to accept any challenge to the validity of the decision on the ground that the capacity to pay had not been properly considered. After all, in cases of this kind where special Boards are set up to frame wage structures, this Court would normally refuse to constitute itself into a court of appeal on questions of fact; but, in the present case, an essential condition for the fixation of wage structure has been completely ignored and so there is no escape from the conclusion that the Board has contravened the mandatory requirement of section 9 and in consequence its decision is ultra vires the Act itself. Re. 9. This ground, viz., that the Board had no authority to render a decision which was retrospective in operation in also untenable. The Wage Board certainly had the jurisdiction and authority to pronounce a decision which could be retrospective in effect from the date of its appointment and there was no legal flaw in the Wage Board prescribing that its decision should be retrospective in operation in the manner indicated by it. We have already dealt with it above. 193 Be. Ground No. 10 talks of the authority of the Wage Board to fix scales of pay for a period of 3 years, subject to review by the Government by appointing another Wage Board at the end of that period. We are not concerned with such fixation of the period for the ' simple reason that the Board has not in terms done so. The only authority which it had was to fix the rates of wages and submit its decision in respect thereof to the Government. Any pious hope expressed that the decision should be subject to review or revision by the Government by appointment of another Wage Board after the lapse of 3 or 5 years was not a part of its decision and we need not pause to consider the effect of such fixation of the period, if any, because it has in fact not been done. Re. 11. The last ground talks of the Wage Board being handicapped for want of Cost of Living Index. This ground also cannot avail the petitioners for the simple reason that the decision of the Wage Board itself referred in Clause 24 thereof to the all India cost of living index number published by the Labour Bureau of the Government of India 0 Base 1944: 100 and fixed the dearness allowance in relation to the same. These statistics were available to the Wage Board and it cannot be said that the Wage Board was in any manner whatever handicapped in that respect. On a consideration of all the grounds of attack thus levelled against the validity and the binding nature of the decision of the Wage Board, we have, therefore, come to the conclusion that the said decision cannot be sustained and must be set aside. The petitions will, therefore, be allowed and the petitioners will be entitled to an order declaring that section 5 (1) (a) (iii) of the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955, is ultra vires the Constitution of India and that the decision of the Wage Board dated April 30, 1957, is illegal and void. As regards the costs, in view of the fact that the 25 194 petioners have failed in most of their contentions in regard to the constitutionality of the Act, the fairest, order would be that each party should bear and pay its own costs of these petitions Civil Appeals Nos.699 703 of 1957. These Civil Appeals are directed against the decision of the Wage Board and seek to set aside the same as destroying the very existence of the newspaper establishments concerned and infringing their fundamental rights. Special leave under article 136 of the Constitution was granted by this Court in respect of each of them, subject to the question of maintainability of the appeals being open to be urged. These appeals are also covered by the judgment just delivered by us in Petition No. 91 of 1957 & Ors., and the appellants would be entitled to a declaration in each one of them that the decision of the Wage Board is ultra vires the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955, and therefore void and inoperative. The appellants having substantially succeeded in their respective petitions under article 32 of the Constitution, the question has now become purely academic and we need not spend any time over the same.

These petitions on behalf of certain newspaper establishments challenged the constitutional validity of the Working journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955, and the legality of the decision of the Wage Board, constituted thereunder, purporting to act under section 9 of the Act. The impugned Act, which was passed in order to implement the recommendations of the Press Commission and had for its object the regulation of the conditions of service of working journalists and other persons employed in newspaper establishments, provided, inter alia, for the payment of gratuity to a working journalist who had been in continuous service, whether before or after the commencement of the Act, for not less than three years, even when he voluntarily resigned from service, regulated hours of work and leave, provided for the payment of retrenchment compensation with retrospective effect in certain cases and by section 9(1) laid down the principles that the Wage Board was to follow in fixing the rates of wages of working journalists. Under those principles the Wage Board was to have regard to the cost of living, the prevalent rates of wages for comparable employments, the circumstances relating to the newspaper industry in different regions of the country and to any other circumstances which it might consider relevant. The petitioners contended on various grounds that the provisions of the impugned Act violated their fundamental rights under articles 19(1)(a), 19(1)(g), 14 and 32 Of the Constitution and that the decision of the Wage Board fixing the rates and scales of wages, which was arrived at without any consideration whatsoever as to the capacity of the newspaper industry to pay the same, imposed too heavy a financial burden on the industry and spelled its total ruin, was vitiated by a wrong approach and non application of the proper criteria and transgressed the principles of natural justice and was, therefore, illegal and void: Held, that the constitutional validity of the impugned Act, with the sole exception of section 5(1)(a)(iii) of the Act which infringed 13 article 19(1)(g) of the Constitution, was beyond question and as that section, severable as it was from the rest of the Act, must alone be declared ultra vires. Section 9(1) of the Act, properly construed, made it incum bent on the Wage Board to take into consideration the capacity of the newspaper industry to pay the rates and scales of wages recommended by it and as there was nothing to indicate that it bad done so, its decision was void and inoperative. Held, further, that there could be no doubt, in view of the interpretation put upon article 19(1)(a) of the Constitution by this Court, that liberty of the press was an essential part of the freedom of speech and expression guaranteed by that Article and the press had thereunder the right of free propagation and free circulation without any previous restraint on publication. Ramesh Thaper vs The State of Madras, ; and Brij Bhushan vs The State of Delhi, ; , referred to. It was legitimate and proper to refer in this connection to the decisions of the Supreme Court of the United States of America, since article 19(1)(a) of the Constitution was based on Amendment 1 of the Constitution of that country, and the rules that could be deduced therefrom made it clear that although freedom of the press included freedom from restriction in respect of employment in the editorial staff, the press was not immune from ordinary forms of taxation or from the application of general laws relating to industrial relations or laws regulating payment of wages. Case law reviewed. But if a law were to single out the press for laying prohibitive burdens on it that would restrict the circulation, penalise its freedom of choice as to personnel, prevent newspapers from being started and compel the press to seek Government aid, it would be violative of article 19(1)(a) and would fall outside the protection afforded by article 19(2) of the Constitution. The impugned Act, judged by its provisions, was not such a law but was a beneficent legislation intended to regulate the conditions of service of the working journalists and the consequences aforesaid could not be the direct and inevitable result of it. Although there could be no doubt that it directly affected the press and fell outside the categories of protection mentioned in article 19(2), it had not the effect of taking away or abridging the freedom of speech and expression of the petitioners and did not, therefore, infringe article 19(1)(a) of the Constitution. A.K. Gopalan vs The State of Madras, ; , Ram Singh vs The State of Delhi, Minnesota Ex Rel. Olson, ; ; and Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co., Ltd., ; , considered. 14 Nor could the impugned Act be held to be violative of article 19(1)(g) of the Constitution in view of the test of reason ableness laid down by this Court. Chintaman Rao vs The State of Madhya Pradesh, [1950] S.C.R. 759, The State of Madras vs V. G. Rao, ; , a State of West Bengal vs Subodh Gopal Bose, [1954] section C. R. 587 and Virendra vs State of Punjab, ; , referred to. It was not correct to say that section 9(i) of the Act did not lay down the relevant criteria for the fixation of rates of wages. On a true construction of that section it must be held that the criterion of prevalent rates of wages for comparable employment could be consistent only with the wages higher than the bare subsistence or minimum wages and, since rates of wages must be held to include scales of wages as well, it was essential that the Wage Board should take into consideration the capacity of the newspaper industry to pay before it could fix the rates of wages. Although the Act did not specifically say so, it was possible to hold that the third criterion laid down by the section, namely, the circumstances relating to the newspaper industry in different regions of the country, included such a consideration. The provisions of the section were not, therefore, unreasonable and violative of article 19(1)(g) of the Constitution. The provisions of section 9(1) of the impugned Act did not vest uncontrolled power in the Wage Board. The last criterion of that section which empowered the Board to take into consideration any other circumstances that it might think relevant, must be read ejusdem generis with the other criteria that preceded it and as they laid down with sufficient clarity and particularity the principles for the guidance of the Board, the Legislature was perfectly justified in leaving such considerations as might arise in course of the enquiry to the subjective satisfaction of the Board constituted, as it was, of equal number of representatives of both the employers and employees. Thakur Raghbir Singh vs Court of Wards, Ajmer, [1953] S.C.R. 1049, considered. It was not correct to say, having regard to the provisions of sections 11 and 20(2)(d) of the impugned Act, that the Act did not lay down any procedure for the Board to follow or that it was open to the Board to follow any arbitrary procedure violating the principles of natural justice. There could be no substance in the contention of the peti tioners that the provisions of the impugned Act relating to proofreaders, whom it included within the definition of working journalists, period of notice under section 3(2), retrospective operation in cases specified by section 4 and hours of work, imposed unreasonable restrictions on their fundamental right to carry on business. Gratuity, however, was a reward for good, efficient and faithful service rendered for a considerable period and there could be 15 no justification for awarding the same when an employee voluntarily resigned, except in certain exceptional circumstances. The award of gratuity, therefore, to an employee who voluntarily resigned from service after a period of only three years, under section 5(1)(a)(iii) of the Act, must be held to be unreasonable and wholly unjustified. The impugned Act was not discriminatory in character and did not violate article 14 of the Constitution. Working journalists formed a separate class by themselves and could be classified apart from the rest of the newspaper employees on a perfectly intelligible differentia rationally related to the object which the Act had in view. Nor could the provisions of either section 12 or section 17 of the Act, therefore, be said to be discriminatory in character. Budhan Choudhary vs The State of Bihar, [1955] 1 S.C.R. 1045, applied. The impugned Act contained no prohibition nor did it in any way prevent the Wage Board from giving reasons for its decision and thus passing a speaking order where it chose to do so, and it could not, therefore, be said to have violated the fundamental right of a citizen to move the Supreme Court for a writ of certiorari under article 32 of the Constitution. Rex vs Northumberland Com. Appeal Tribunal, Ex Parte Shaw, and Rex vs Northumberland Compensation Appeal Tribunal, Ex Parte Shaw, ; , held inapplicable. A.K. Gopalan vs The State of Madras, ; , relied on. The question whether a particular body was exercising legislative, administrative or judicial or quasi judicial functions has to be determined in the light of the statute under which it was constituted and an administrative body functioning as such can also be acting in a quasi judicial capacity. The test would be whether it had to decide on evidence and decide judicially. So judged, there could be no doubt that the Wage Board under the impugned Act was functioning in a quasi judicial capacity. Nagendra Nath Bora vs Commissioner of Hills Division and Appeals, Assam, ; , referred to. Case law reviewed. Although this Court would not normally enter into questions of fact, in this case the Wage Board had wholly ignored an essential condition for the exercise of its function and imposed a very heavy financial burden on the newspaper industry. Although the Classification of the newspaper industry on the basis of grossrevenue, fixation of scales of wages, provisions as to the, hours of work, leave, retrospective operation in specified cases, and grouping of newspapers into chains or multiple units could not be said to be improper or unjustified, they made the burden heavier still. 16 The Board made no enquiry whatsoever as to the ability of the industry to pay either as a whole or region wise and did not call for or hear representations from them before finalising its decision. Its decision was, therefore, ultra vires the Act and contrary to the principles of natural justice.

ON: Criminal Appeal No. 165 of 1957. Appeal by special leave from the judgment and order dated the 4th August, 1955, of the Patna High Court in Criminal Appeal No. 699 of 1953 with Criminal Revision No. 205 of 1954, arising out of the judgment and order dated the 12th December, 1953, 769 of the Court of the Assistant Sessions Judge, Second Court Chapra in Trial No. 70 of 1953. G. C. Mathur., for the appellants. section P. Varma, for the respondent. October 28. The following judgment of the Court was delivered by SINHA J. The only question for determination in this appeal is whether the High Court in its revisional jurisdiction, has the power to enhance the sentence, as it has done in the instant case, beyond the limit of the maximum sentence that could have been imposed by the trial court, on the accused persons. The appellants, along with others, were placed on their trial before the Assistant Sessions Judge of Chapra in the district of Saran, for the offence of dacoity under section 395, Indian Penal Code. They, along with two others, were convicted under section 395, Indian Penal Code, and sentenced to rigorous imprisonment for 5 years, by the Assistant Sessions Judge, by his Judgment and order dated December 12, 1953. The other accused were acquitted. The convicted persons preferred an appeal to the High Court at Patna. The High Court, in its revisional jurisdiction, while admitting the appeal, called upon the appellants to show cause why, in the event of their convictions being maintained, their sentence should not be enhanced. The appeal and the rule for enhancement of sentence were heard together by a Division Bench of that Court. The High Court, by its judgment and order dated August 4, 1955, allowed the appeal of two of the appellants and acquitted them but maintained the conviction as against the remaining six appellants. On the question of sentence, the High Court observed that the " offence of dacoity has increased tremendously. It is a very heinous offence as innocent persons, while sleeping in their houses, are attacked and their belongings are taken by force. " The High Court, therefore, was of the opinion that a sentence of five years ' rigorous imprisonment was "extremely inadequate". It, therefore, enhanced the sentence to 10 years ' rigorous imprisonment in each 770 and obtained special leave to appeal limited to the question of sentence only, the question being whether the High Court had the jurisdiction to enhance the sentence beyond the limits of the power of the trial court itself The occurrence of dacoity which is the subjectmatter of the charge against the appellants, along with others, took place on the night between July 1 and 2, 1952, in the house of Ranjit Bahadur, a minor. After midnight, 16 or 17 dacoits, fully armed with various deadly weapons, broke open the main entrance door of the house with an axe. After going into the house, they broke open boxes and tampered with the iron safe, and removed articles worth twenty thousand rupees. The inmates of the house were over powered. Some of them, slipping out of the house, raised a big fire which is the customary form of alarm raised against the invading crowd of dacoits. On that alarm, a number of people of the village turned up but had not the courage to face the dacoits for fear of being shot. They contented themselves with using brickbats against the dacoits who made good their escape with their booty. It would, thus, appear that it was a serious occurrence involving the lives and fortunes of the inmates of the house, and naturally, the High Court took a very serious view of the offence. In this Court, the learned counsel for the appellants, who appeared amicus curiae, contended, in the first place, that the High Court had exceeded its powers in enhancing the sentence from 5 to 10 years inasmuch as the trial court itself could not have inflicted a sentence of imprisonment for more that 7 years. Alternatively, he contended that the High Court had not kept in view the dictum of this Court in the case of Bed Raj vs The State of Uttar Pradesh (1), while enhancing the sentence against the appellants before it. And lastly, it was contended that in any view of the matter, in the circumstances of this case, the sentence of 10 years rigorous imprisonment is too severe. In our opinion, there is no substance in any one of these contentions. (1) ; 771 The main point on which the special leave was granted is the question of the competence of the High: Court to impose a higher sentence than that which could have been imposed by the learned Assistant Sessions Judge under section 31(3) of the Code of Criminal Procedure. The learned trial judge could not have imposed a term of imprisonment exceeding 7 years. The argument is that the High Court could enhance the sentence from 5 to 7 years and no more. This argument is sought to be enforced by the consideration that it must be presumed that the learned Assistant Sessions Judge had been entrusted with the trial of the accused persons with the full knowledge that, on conviction, the accused persons could be punished with a term of imprisonment not exceeding 7 years. In its revisional jurisdiction, the High Court could exercise its powers only to correct any mistakes made by the learned trial judge. The High Court could, therefore, at the most, say that the trial judge should have inflicted the highest punishment, it had been empowered by the Code, to impose. The High Court could not, at the revisional stage, it was further argued, insist upon a higher punishment being awarded by the trial court than 7 years ' rigorous imprisonment. The power of the High Court to enhance a sentence, is contained in sub section (1) of section 439 of the Code, which clothes the High Court with the powers of a Court of Appeal under the Code, as also the power to enhance the sentence. Sub section (1) itself, does not contain any words of limitation on the power to enhance the sentence. Hence, the High Court could impose any sentence up to the maximum limit prescribed by the Indian Penal Code, for a particular offence. In this case, therefore, the High Court could impose the maximum sentence of imprisonment for life under section 395, Indian Penal Code. Is there anything in the Code of Criminal Procedure, which limits that power ? The fact that the trial of the case was entrusted to a court with a limited jurisdiction in the matter of sentence, could not be used to impose a limit on the power of a High Court to impose a proper and 98 772 adequate sentence. That the Legislature did not intend to impose a limit on the power of the High Court to inflict an adequate sentence in a trial held by a Court of Session, is made clear by the provisions of sub section (3) of section 439, Criminal Procedure Code, which is in these terms: " (3) Where the sentence dealt with under this section has been passed by a Magistrate acting otherwise than under section 34, the Court shall not inflict a greater punishment for the offence, which, in the opinion of such Court, the accused has committed, than might have been inflicted for such offence by a Presidency Magistrate or a Magistrate of the first class. " Section 32 of the Code lays down the sentence which magistrates may, ordinarily, impose, which is a term of imprisonment not exceeding two years, in the case of Presidency Magistrates and Magistrates of the first class (omitting all reference to fine). But in certain specified areas, section 30 empowers the Government to invest a District Magistrate or a Magistrate, first class, with the power to try, as a magistrate, all offences not punishable with death. A magistrate so empowered under section 30, may pass a sentence of imprisonment for a term of 7 years or less. Thus, the powers of an Assistant Sessions Judge, under section 31(3) and of a magistrate specially empowered under section 30 to impose a sentence of imprisonment, are the same, the terms of section 31 (3) and section 34 being almost identical. From the terms of section 439(3), it is clear that the only limitation on the power of a High Court to impose punishment is in respect of cases tried by magistrates other than those specially empowered under section 30, and thus, vested with higher powers of punishment under section 34. Sub section (3) aforesaid, does not impose any limits on the powers of the High Court in cases dealt with by a magistrate specially empowered under section 30. Hence, in such a case, the High Court has the power to impose a sentence higher than that which could have been imposed by such a magistrate. That sub section has no reference to a trial held by a Court of Session. If the High Court can enhance the sentence beyond 773 the maximum sentence which could be awarded by a magistrate specially empowered under section 30, and acting under section 34, there is no reason to hold that the High Court 's power in respect of enhancing the sentence in a trial held by an Assistant Sessions Judge, should be limited in the way suggested on behalf of the appellants. Sub section (3) of section 439, thus, makes it clear that there is no limitation on the power of the High Court to enhance a sentence to the maximum prescribed by the Indian Penal Code, except in cases tried by magistrates other than those especially empowered under section 30, Criminal Procedure Code. The learned counsel for the appellants very properly informed us that there are some reported decisions of some of the High Courts which have gone against his contention, and that there is no decision which has taken a view; in support of his contention. In our opinion, there is no provision in the Code of Criminal Procedure, which limits the power of the High Court in the way suggested on behalf of the appellants, and there are no reasons which militate against the decision of the High Courts taking that view. The case relied upon on behalf of the appellants in support of their second contention (Bed Raj vs The State of Uttar Pradesh (1)), also seems to point to the same conclusion as will appear from the following observations at p. 584: " Now, though no limitation has been, placed on the High Court 's power to enhance it is nevertheless a judicial act and, like all judicial acts involving an exercise of discretion, must be exercised along wellknown judicial lines. " On the second contention, there is no doubt that the question of sentence is a matter of discretion which has to be exercised in a judicial way, that is to say, the sentence imposed by the trial court should not be lightly interfered with and should not be enhanced. unless the appellate court comes to the conclusion, on a consideration of the entire circumstances disclosed in the evidence, that the sentence imposed is inadequate. In the instant case, the High Court has (1) ; 774 pointed out that the incidence of the offence of dacoity has gone up to such an extent that in proved cases of serious dacoity, like the one in hand, deterrent punishment is called for. The High Court was, therefore, justified in imposing the sentence of 10 years ' rigorous imprisonment. In view of the circumstances disclosed in the case, as indicated above, it cannot be asserted that the sentence as enhanced by the High Court is excessive. The appeal is, accordingly, dismissed. Appeal dismissed.

The appellants were tried before an Assistant Sessions judge for the offence of dacoity under section 395 Indian Penal Code. Under 3. 31(3) Code of Criminal Procedure, (as it then stood) the Assistant Sessions judge could award a maximum sentence of seven years rigorous imprisonment. He convicted the appellants and sentenced them to five years rigorous imprisonment each. The appellants appealed to the High Court, and the High Court, in its revisional jurisdiction, issued a notice to the appellants for enhancement of sentence. The High Court dismissed the appeal and enhanced the sentence to ten years rigorous imprisonment. Held, that the High Court had, in its revisional jurisdiction under section 439 Code of Criminal Procedure, the power to enhance the sentence beyond the limit of the maximum sentence that could have been imposed by the trial Court. Bed Raj vs The State of Uttar Pradesh, ; , referred to.

Appeal No. 74 of 1956. Appeal by special leave from the judgment and order dated September 22, 1955, of the Nagpur High Court in Letters Patent Appeal No. 2 of 1955. C.K. Daphtary, Solicitor General for India, J. N. Bannerji and P. C. Agarwala, for the appellant. M.C. Setalvad, Attorney General for India and Naunit Lal, for respondent No. 1. 1956. September 30. The Judgment of the Court was delivered by SINHA J. This is an appeal by special leave from the judgment and order, dated September 22, 1955, passed by the Letters Patent Bench of the Nagpur High Court reversing those of a single Judge of that Court, dated December 13, 1954, refusing to issue a writ in the nature of a certiorari. The facts of this case lie in a short compass and may be stated as follows: The Suwarna Transport Company Limited, which will be referred to as the first respondent in the course of this judgment, held seven permits for running buses on the Buldana Malkapur route, as the 100 sole operator on that route. It applied for another permit for the same route. The appellant, The New Prakash Transport Co. Ltd., as also another party, called the Navjivan Transport Service (not cited in this Court) applied for a similar permit on that route. On May 26, 1953, all the three applicants aforesaid were heard by the Regional Transport Authority of Amraoti, which is the third respondent in this Court, in connection with the permit applied for. Consideration of the several applications was postponed, but a resolution was passed to the effect that "No one service should have monopoly on Buldana Malkapur route. " On March 30, 1954, another meeting of the Regional Transport Authority took place and the first respondent was granted the permit. The appellant 's application was rejected on the ground that the police report was against it. The appellant preferred an appeal to the Appellate Authority (constituted under R. 73 of the Motor Vehicles Act), Madhya Pradesh, Nagpur, which is the second respondent to this appeal. The appellant challenged the correctness of the police report against it and applied to the District Superintendent of Police personally to verify the facts stated in the first report on the basis of which the appellant 's application for permit had been rejected, as aforesaid. The police made a further report, which was placed before the second respondent. That further report by the police was read out to the parties by the Chairman of the Appellate Authority at the time of the hearing of the appeal. At the hearing no objection appears to have been raised by any of the parties to the course adopted by the second respondent. By its order dated July 29, 1954, the second respondent set aside the order of the third respondent, allowed the appeal and ordered the permit to be issued to the appellant. The first respondent moved the High Court at Nagpur for a writ of certiorari under article 226 of the Constitution, substantially on two grounds, namely, (1) that the order passed by the second respondent was vitiated by an error apparent on the face of the record, and (2) that it contravened the ' principles of natural justice. The first ground was founded on the allegation that the second 101 respondent had misread the police report, and the second on the allegation that the revised report by the police had not been shown to the petitioner who had been afforded no " real and effective opportunity to deal with the report or to meet any relevant allegations made therein, and to study that report and make his submissions in regard thereto before the appeal was decided. " The appellant and the second respondent showed cause against the rule issued by the court. The appellant while showing cause, admitted that the third respondent had rejected its application on the basis of the police report dated March 27, 1954, which "was full of mistakes and falsehoods," that it moved the District Superintendent of Police personally to verify the contents of the said report and that the fresh report submitted by the police after due verification had absolved the appellant from the allegations of misconduct contained in the first report. It also controverted the ground that there was any mistake apparent on the face of the record. The fresh report submitted by the police after verification at the appellant 's request was received by the second respondent and the Chairman read the same during the hearing of the appeal and that, therefore, it was wrong to suggest that there had been a failure of justice,. The second respondent also showed cause and corroborated the appellant 's statement that the first police report had been subsequently modified by the District Superintendent of Police by the report dated May 13, 1954, which showed that the previous report was " based on some misunderstanding. " It was also stated that the report was actually read out to the parties by the Chairman while the appeal was being heard. The petition under articles 226 and 227 made, as aforesaid, by the first respondent was heard by a single Judge (Mr. Justice V. R. Sen) who by his orders dated December 13, 1954, discharged the rule with costs. In the course of his judgment the learned Judge after ' referring in detail to the orders of the authorities under the Motor Vehicles Act, that is to say, the second and third respondents, observed that there was no substance in the contention that the procedure 102 adopted by the Appellate Authority was opposed to the principles of natural justice and had operated to the prejudice of the first respondent; and that there was no error apparent on the face of the record. The learned Judge also pointed out that when the report was brought to the notice of the first respondent, it did not indicate that it wished to controvert the report. The first respondent preferred an appeal under the Letters Patent and repeated its grounds of attack against the orders of the Appellate Authority. The appeal was heard by a Division Bench consisting of Chief Justice Hidayatulla and Mr. Justice section P. Kotwal. The Letters Patent Bench seemed to be inclined to negative the plea that there was a mistake apparent on the face of the record and pointed out that though the language used by the second respondent was ambi guous and not quite accurate, it was possible to take the view that it had in fact considered the subsequent police report when it observed that the police bad practically absolved the appellant from all blame except on a minor question, not necessary to be referred to in detail here. On the second ground it differed from the learned single Judge and came to the conclusion "that the Appellate Authority erred in rushing through without giving a proper and effective chance to the appellant to state its case. " In the result it granted a writ quashing the order of the Appellate Authority and directing it to rehear the appeal in the light of the observations made in the course of the judgment. The appellant made an application to the High Court for a certificate of fitness for appeal to this Court. Having been unsuccessful there, the appellant came up to this Court and obtained special leave to appeal. The only question which requires determination by this Court is whether or not there has been a failure of natural justice in this case as a result of the procedure adopted by the Appellate Authority. On this question there has been a marked difference of opinion in the two stages of the case in the High Court. It has been 103 argued on behalf of the appellant that the Appeal Bench of the Nagpur High Court has erred in coming to the conclusion that in the circumstances of this case, there has been a failure of justice, in disagreement with the learned single Judge who was clearly of the opposite opinion. It has also been argued that there are no well defined criteria by which this question falls to be determined. It depends upon the terms of the legislation creating the statutory body which has to function according to its obligations laid down in the statute. If it has done all that was required by the law to do, it cannot be said that it has failed in the discharge of its statutory duty. In this connection reference was made to the provisions of sections 47, 48 and 64 of the Motor Vehicles Act read along with the relevant rules framed under section 68 of the Act. On behalf of the respondents it was argued that it had no opportunity of studying the subsequent police report and of making submissions thereon with the result that there has been a failure of natural justice in the sense that the respondent had been deprived of a fair and full opportunity of being heard. Though the High Court on appeal did not base its decision on the other question, namely, whether there was any error apparent on the face of the record, it was sought to be argued that there was an error in the order of the second respondent in so far as it made reference to only the first report and read into it the maatter contained in the subsequent report. At the outset we may observe that, in our opinion, there is no substance in the second ground sought to be resuscitated in this Court by the learned counsel on behalf of the res . pondent. Error apparent on the face of the record in the context of this case must mean an assumption of facts which are not borne out by the record. We are not concerned with other grounds which may in the context of each particular case support a contention of error apparent on the face of the record. In this case if there was any such error, it was with reference to the two police reports. As observed by the Appellate Bench of the High Court, though the language used by the Appellate Authority with regard to strict 104 grammatical construction may refer to the first police report, it was difficult to hold that the matters referred to in the order challenged before the High Court were not contained in the subsequent report submitted by the police at the instance of the appellant. The judgment under appeal did not take the view that there was any such mistake apparent on the face of the record as was contended for on behalf of the first respondent. We have been referred to the orders of the Appellate Authority as read by the Appellate Bench of the High Court and, in our opinion, no such mistake has been shown to have vitiated the orders impugned before the High Court. Coming back to the question whether or not there has been a failure of natural justice, we may shortly review the relevant provisions of the statute in order to find out the obligations imposed upon the Appellate Authority while disposing of an appeal from the orders of the Regional Transport Authority. The matters to be considered by a Regional Transport Authority at the time of disposing of an application for a stage carriage permit are set out in section 47. They include the interest of the public generally, the adequacy of existing road transport service and the benefits to any particular locality. The Authority is also enjoined to take into consideration any representations made by persons already providing road transport facilities along the proposed route or by any local authority or police authority within whose jurisdiction the proposed route lies. Section 48 empowers a Regional Transport Authority, after taking into consideration matters set forth in section 47, to restrict the number of stage carriages and to impose conditions on stage carriage permits. Section 64 provides for right of appeal against specified kinds of orders passed by the Provincial or Regional Transport Authority to the "prescribed authority". It also in terms provides that on an appeal being filed to the prescribed authority, it shall give the appellant and the original authority, that is to say, the authority against whose orders the appeal had been brought., "an opportunity of being heard. " Section 64 which creates the right of appeal does not in terms speak of a like 105 opportunity being given to the persons against whom the appeal had been filed. But r. 73 framed by the Government in pursuance of its rule making power conferred by section 68, lays down that the authority to decide ' an appeal against the orders of a Regional Transport Authority under section 64 of the Act shall be the Chairman and two members of the Provincial Transport Authority. The rule further provides that on receipt of an appeal, the Chairman shall appoint the time and place for hearing the appeal and shall give not less than thirty days notice to the appellant, the original authority, and "any other person interested in the appeal" and on such appointed or adjourned date the Appellate Authority "shall hear such persons as may appear and, after such further enquiry, if any, as it may deem necessary, confirm, vary, or set aside the order against which the appeal is preferred and make any consequential or incidental order that may be just or proper". It will. thus be seen that though the substantive section creating the right of appeal does not in terms create any right in a respondent to be heard, the rules framed providing for the procedure before the Appellate Authority contemplate that sufficient notice shall be given to " any other person interested in the appeal" which expression must include persons other than the appellant who may be interested in being heard against the points raised in support of the appeal. Neither the sections nor the rules framed under the Act contemplate anything like recording oral or documentary evidence in the usual way as in courts of law. Besides, the parties interested in the grant of stage carriage permits or those interested against it, the police authority of the locality is also entitled to be heard both at the original stage and at the appellate stage. Thus the Motor Vehicles Act and the rules framed thereunder with particular reference to the Regional Transport Authority and the Appellate Authority do not contemplate anything like a regular hearing in a court of justice. No elaborate procedure has been prescribed as to how the parties interested have to be 14 106 heard in connection with the question, who is to be granted a stage carriage permit. The judgment of the High Court under appeal has made copious quotations from the decisions of the House of Lords and the Court of Appeal in support of its conclusion that the principles of natural justice had not been sufficiently complied with in the present case by simply reading out the subsequent police report at the time the Appellate Authority was hearing the appeal. The learned Judges of the Appeal Court have observed that the contents of a long report such as the second report was, could not be carried in one '. , head. They also observed that in order to present its case effectively the first respondent was entitled not only to have the report read out but also to study it so that it could understand it and state its case fully and effectively before the Appellate Authority. We have to examine those several precedents relied upon by the High Court to see how far its conclusions are supported by authority. But before we do that, it has got to be observed that the question whether the rules of natural justice have been observed in a particular case must itself be judged in the light of the constitution of the statutory body which has to function in accordance with the rules laid down by the legislature and in that sense the rules themselves must vary. The Regional Transport Authority is charged with the duty of granting or refusing a stage carriage permit, only to mention the matter with which we are immediately concerned. In that connection the statute requires that authority to have regard to the matters set forth in section 47 of the Act, as already indicated. The police authority within whose local jurisdiction any part of the proposed route lies, has also been given the right to make representations. But the police report submitted to the Regional Transport Authority or to the Appellate Authority, if it requires the police authority to do so, is not intended to be anything more than an expression of opinion by an authority interested in the maintenance of law and order, with particular reference to the question as to whether any of the applicants for a permit had anything to its credit or discredit as 107 supplier of transport facilities. Such a report is meant more for the use of the authority in making or refusing a grant than for the use of the several applicants or any one of them. In other words, it is in the nature of information supplied by the police in order to assist the authority in making up its mind. In the present case when the subsequent police report was read out by the Chairman, neither the appellant nor the first respondent, nor for the matter of that any of the other parties, raised any objection to the use of that document or asked for an adjournment on the ground either that it had been taken by surprise or that it had materials to offer in opposition to the report. The learned Judges of the High Court have observed in the course of their judgment under appeal that though it is the essence of the business of tribunals like the one under the Motor Vehicles Act to transact business expeditiously, the business of the authority would not have suffered much if a copy of the report had been given to the parties concerned and the case adjourned for a short time. It appears that no such adjournment had been prayed for on behalf of any of the parties who, it appears, had been represented by counsel. But then the High Court has observed further that "the duty is laid not upon counsel who appears but upon the tribunal which administers justice. It is incumbent on every tribunal which acts judicially to see that justice is not only done but is seen to be done, arid that the elementary rule of natural justice of giving a fair and proper hearing to every one concerned is followed. We think that the Appellate Authority erred in rushing through without giving a proper and effective chance to the appellant to state its case. " In our opinion, the High Court has made a number of assumptions in making those observations which do not appear to be justified by the scheme of the legislation we are dealing with or by any a priori considerations of what has been characterized as "natural justice". The tribunal in question was not administering justice as a court of law, though while deciding as between the rival claims of the applicants for a permit it had to deal with them in a fair and just manner. 108 But a tribunal even acting " judicially " is not obliged to grant an adjournment suo motu without any application on behalf of any of the parties interested. We do not find that any of the parties made at that time any grievance about the procedure adopted by the Appellate Authority. But the question appears to have been raised for the first time before the High Court after the Appellate Tribunal had decided to grant the permit to the appellant. In this connection it has also to be observed that the subsequent police report had said nothing directly against the first respondent which it would be interested in controverting. The subsequent police report had only withdrawn some of the adverse comments against the conduct of the appellant which had been found to have been made under a misunderstanding. But the subsequent report still contains some minor complaints against the appellant. Those matters were apparently considered by the Appellate Authority not to be so serious as to stand in the way of the appellant getting the permit, especially when that authority had previously decided upon the policy that monopoly of supplying transport facility should not be allowed to continue in favour of the first respondent. Hence, in our opinion, there was nothing in the rules requiring a copy of the police report to be furnished to any of the parties, nor was there any circumstance necessitating the adjournment of the hearing of the appeal, particularly when no request for such an adjournment had been made either by the first respondent or by any other party. At that time none of the parties appears to have made any grievance about the police report only being read at by the Chairman or any request for an adjournment in order to adduce evidence pro and con. The rules framed under Chapter IV for "the conduct and hearing of the appeals that may be preferred under this chapter (section 68 (2) (b)) " do not contemplate any such facilities being granted to the parties, though it is open to the Appellate Authority to make any such " further enquiry, if any, as it may deem necessary. " But the High Court Bench appears to have, taken the view that, rule or no rule, request or no request for an 109 adjournment,the rules of natural justice made it incumbent upon the Appellate Authority to stay its hands in order that " a proper and effective chance was given to the first respondent to state its case. " There was not much of a case to state because, each party applying for the permit must be presumed to have pressed its claim upon the Appellate Authority. We have therefore to examine the precedents discussed in detail in the judgment under appeal to see how far the Appellate Bench was justified in holding that the rules of natural justice had been contravened by the Appel late Authority. The earliest decision of the House of Lords brought to our notice in this connection is the case of Spackman vs Plumstead Board of Works (1). In that case the question arose on a prosecution for infringement of an Act of Parliament making provision for fixing the " general line of buildings " in a road. The certificate of the superintending architect as to the general line of buildings came in for discussion as to whether the architect, before deciding as to how the general line has to be fixed, had to hear the parties concerned. In that connection the Earl of Selborne, L.C., made the following observations : " No doubt, in the absence of special provisions as to how the person who is to decide is to proceed, the law will imply no more than that the substantial requirements of justice shall not be violated. He is not a judge in the proper sense of the word; but he must give the parties an opportunity of being heard before him and stating their case and their view. He must give notice when he will proceed with the matter, and he must act honestly and impartially and not under the dictation of some other person or persons, to whom the authority is not given by law. There must be no Malversation of any kind. There would be no decision within the meaning of the statute if there were anything of that sort done contrary to the essence of justice. But it appears to me to be perfectly consistent with reason, that the statute may have intentionally (1) , 240. 110 omitted to provide for form, because this is a, matter not of a kind requiring form, not of a kind requiring litigation at all, but requiring only that the parties should have an opportunity of submitting to the person by whose decision they are to be bound such considerations as in their judgment ought to be brought before him. When that is done, from the nature of the case no further proceeding as to summoning the parties, or as to doing anything of that kind which a judge might have to do, is necessary. " Another leading case on the subject is the decision of the House of Lords in the well known case of Board of Education vs Rice (1). Their Lordships in that case had to discuss the duty of the Board of Education under section 7 of the Education Act, 1902. Lord Loreburn, L.C., in the course of his speech referred to the provisions of the Act and made the following observations as to the duty to decide certain questions relating to nonprovided schools: " Comparatively recent statutes have extended, if they have not originated, the practice of imposing upon department. ,; or officers of State the duty of deciding or determining questions of various kinds. In the present instance, as in many others, what comes for determination is sometimes a matter to be settled by discretion, involving no law. It will, I suppose, usually be of an administrative kind; but sometimes it will involve matter of law as well as matter of fact, or even depend upon matter of law alone. In such cases the Board of Education will have to ascertain the law and also to ascertain the facts. I need not add that in doing either they must act in good faith and fairly listen to both sides, for that is a duty lying upon every one who decides anything, But I do not think they are bound to treat such a question as though it were a trial. They have no power to administer an oath, and need not examine witnesses. They can obtain information in any way they think best, always giving a fair opportunity to those who are parties in the controversy for correcting or contradicting any relevant statement prejudicial to their view." (1) ,182. How far judicial opinion may vary as to the content of the rule of natural justice is amply illustrated by the case of Rex vs Local Government Board, Ex parte Arlidge (1), at different stages. The rule nisi for a certiorari was first heard by Ridley, Lord Coleridge and Bankes, JJ. The case related to the powers of the, Local Government Board under the Housing, Town Planning, etc. Act, 1909 (9 Edw. 7, c. 44) refusing to terminate its orders closing a dwelling house as unfit for habitation and the procedure for hearing an appeal against such an order. Section 29 of the Act provided that such an appeal shall be heard and disposed of according to the procedure laid down by the Local Government Board, provided that the rules shall provide that the Board shall not dismiss any, appeal without having first held a public local inquiry. , It was unanimously held by the Court discharging the rule that the Local Government Board was not bound to hear the appellant or any one on his behalf after the report of the inspector on the public local inquiry had been received, before dismissing the appeal. At the public local inquiry the owner of the house affected by the closing order had been represented. But at the time the appeal was finally disposed of, there was no hearing of the appellant or his representative as in a court of law. The Court repelled the argument that the appellant had a right to be heard by the Local Government Board and to know the contents of the report made by the inspector who had held the public local inquiry. Rely Vingmainly upon the judgment of Lord Loreburn, L.C, in the case of Board of Education vs Rice (supra), the Court decided that the procedure indicated by the rules framed under the statute in question had been followed and that there was no other or further obligation on the Board to hear the appellant either personally or through his representative or counsel, because there was no indication in the statute to that effect. The matter was taken in appeal in Rex vs Local Government Board, Ex parte A rlidge (2), and the Court of Appeal by a majority (Vaughan Williams and Buckley, L.JJ., Hamilton, L.J. dissenting (1) (2) , 112 allowed the appeal holding that it was contrary to the principles of natural justice that the Board should have dismissed the appeal without disclosing to the appellant the contents of their inspector 's report and without giving the appellant an opportunity of being heard in support of the appeal. They, therefore, quashed the order dismissing the appeal. The majority judgment pointed out that the Act and the rules framed thereunder except for certain matters were silent as to the procedure and that in the absence of such specific provisions the non disclosure of the `nspector 's report was contrary to principles of natural justice on which English law is based. It further held that the appellant before the Board was entitled to a hearing and that as the appellant had not the opportunity of seeing and considering the report and the documents which the deciding authority had before it, the appellant had been denied full opportunity of being heard. It went to the length of observing that the nondisclosure of the report and the documents which were taken into consideration by the Board when the disclosure had been asked for, was itself inconsistent with natural justice. Hamilton, L.J., in his dissenting judgment pointed out that the report of the inspector in the case, as in other Government departments, is only a statement of facts made for the information of the officials of the department and that it could not be assumed that the legislature meant all such reports to be communicated to those interested where it does not say the contrary. He further pointed out that the practice was the other way, namely, to specify how and to whom such reports were to be communicated, (when they are intended to be communicated at all.) Dealing with the question how far the requirements of natural justice had been fulfilled, the Lord Justice observed at p. 199 that "It has often been pointed out that the expression (natural justice) is sadly lacking in precision. " Then he referred to a number of precedents dealing with the question of natural justice as to how the connotation of the expression differed in different contexts. He further observed at pp. 201 & 202: 113 " The Local Government Board here is a statutory tribunal, anomalous as compared with common law Courts, created by the Legislature for a special class of appeals and endowed by it with the power of formulating its own procedure. " He also adopted the dictum of Loreburn, L.C., in Board of Education vs Rice (supra) that the Board must " act in good faith and fairly listen to both sides. " Against the judgment of the majority of the Court quashing the determination of the appeal by the Board there was an appeal to the House of Lords. The House of Lords unanimously adopted the opinion of Hamilton, L.J. (later Lord Sumner), allowed the appeal and set aside the majority decision. [Vide Local Government Board vs Arlidge (1)]. In the course of his speech Viscount Haldane, L.C., made the following observations: " My Lords, when the duty of deciding an appeal is imposed, those whose duty it is to decide it must act judicially. , They must deal with the question referred to them without bias, and they must give to each of the parties the opportunity of adequately presenting the case made. The decision must be come to in the spirit and with the sense of responsibility of a tribunal whose duty it is to mete out justice. But it does not follow that the procedure of every such tribunal must be the same. " His Lordship adopted the dictum of Lord Loreburn, L.C., in the leading case of Board of Education vs Rice (supra). Lord Shaw in his speech made the following observations which are very apposite to the facts and circumstances of this case: " The judgments of the majority of the Court below appear to me, if I may say so with respect, to be dominated by the idea that the analogy of judicial methods or procedure should apply to departmental action. Judicial methods may, in many points of administration, be entirely unsuitable, and produce delays, expense, and public and private injury. The department must obey the statute." (1) , 132. 15 114 He further observed at p. 138 as follows " And the assumption that the methods of natural justice are ex necessitate those of Courts of justice is wholly unfounded. This is expressly applicable to steps of procedure or forms of pleading. In so far as the term 'natural justice ' means that a result or process should be just, it is a harmless though it may be a high sounding expression; in so far as it attempts to reflect the old jus naturale it is a confused and unwarranted transfer into the ethical sphere of a term employed for other distinctions; and, in so far as it is resorted to for other purposes, it is vacuous." Lord Parmoor in his speech also reiterated the principle governing the procedure of a quasi judicial tribunal in these words: " Where, however, the question of the propriety of procedure is raised in a hearing before some tribunal other than a Court of law there is no obligation to adopt the regular forms of legal procedure. It is sufficient that the case has been heard in a judicial spirit and in accordance with the principles of substantial justice." Another recent decision of the House of Lords in the case of General Medical Council vs Spackman (1) was relied upon by the High Court in the judgment under appeal. In that case the General Medical Council, which had been constituted a domestic forum to determine whether a case had been made out for striking off the name of a medical practitioner from the medical register " for infamous conduct in a professional respect," was the appellant before their Lordships, and the respondent had been found guilty by the Divorce Court of having committed adultery. In the proceedings before the Medical Council the medical practitioner proceeded against desired to call fresh evidence on the issue of adultery and requested the Council to rehear that issue. The Council declined to reopen the issue and to hear fresh evidence and directed his name to be erased from the register. The Court of Appeal unanimously affirmed the view of the dissenting Judge in the Court of first instance that there had been no (1) 115 " due inquiry " as required by section 29 of the Medical Act, 1858. The Appeal Court set aside the majority decision of Viscount Caldecote, C.J., and Humphreys, J., who had held that the requirements of the law had been satisfied by adopting the judgment and decree of the Divorce Court. On appeal by the Medical Council to the House of Lords, the House unanimously agreed with the unanimous decision of the Appeal Court and held that the requirement of due inquiry enjoined by the Act creating the Tribunal had not been satisfied. Viscount Simon, L.C., examined the provisions of the Act and the relevant rules and pointed out that they require the practitioner proceeded against " to state his case, and to produce the evidence in support of it." The Lord Chancellor in the course of his speech observed that the General Medical Council was not a judicial body in the ordinary sense, was master of its own procedure and was not bound by strict rules of evidence. It was bound to satisfy the requirements of the law and the rules made thereunder. The Council had to decide on sworn testimony after due inquiry. He also adopted the language of Lord Loreburn, L.C., in the aforesaid case of Board of Educatian vs Rice (supra). Lord Atkin in the course of his speech pointed out that the rules under the Act provided that the Council was bound, if requested, to hear all the evidence that the practitioner charged wished to bring before them. He also pointed out the antithesis between convenience and justice by saying " convenience and justice are often not on speakin terms." His Lordship further pointed out the difference between the procedure which may be prescribed in respect of different tribunals which were creations of statutes, in these words: " Some analogy exists, no doubt, between the various procedures of this and other not strictly judicial bodies, but I cannot think that the procedure which may be very just in deciding whether to close a ,school or an insanitary house is necessarily right in deciding a charge of infamous conduct against a professional man. I would, therefore, demur to any suggestion that the words of Lord Loreburn, L.C., in Board of Education vs Rice (supra) afford a complete guide to 116 the General Medical Council in the exercise of their duties. As I have said, it is not correct that I they need not examine witnesses. ' They must examine witnesses if tendered, and their own rules rightly provide for this. Further it appears to me very doubtful whether it is true that 'they have no power to administer an oath '. " It may be noticed that the Lords who sat on that case particularly emphasized the requirements of the law as laid down in the statute and the rules framed thereunder. In view of those statutory provisions they found it necessary to uphold the decision of the Court of Appeal which had set aside the judgment and orders of the King 's Bench Division which had taken the con tarry view, to the effect that the decree in the Divorce Court was conclusive evidence on which the Medical Council could act. The case is therefore authority for the proposition that the rules of natural justice have to be inferred from the nature of the tribunal, the scope of its enquiry and the statutory rules of procedure laid down by the law for carrying out the objectives of the statute. There is another class of cases which lay down that if a person is to be deprived of his professional status, he must be heard and be given effective opportunity of meeting any allegation made against him on the question of his fitness to pursue his profession. If the tribunal constituted by the statute in question to decide about the fitness of an individual to pursue that profession, decides against him without giving him an opportunity of meeting any allegations against him bearing on his capacity or qualification for the profefession to which he claims admission, it has been held that it was improper for the tribunal acting in a quasi judicial capacity to act to his prejudice upon evidence or adverse report without his having an opportunity of meeting such relevant allegations made against him. To that class belongs the case of R. vs Architects Registration Tribunal (1). In that case the King 's Bench Division issued an order of certiorari to, quash (1) 117 the tribunal 's decision refusing an application for registration as an architect. The cases of Leeson vs General Council of Medical Education and Registration (1), and Allinson vs General Council of Medical Education and Registration (2) also belong to that category. They deal with the power of the General Council of Medical Education under the Medical Act (21 & 22 Viet. c. 90) to strike off a medical practitioner for unprofessional conduct. Those were cases in which the Medical Council had to function as a quasi judicial body and had to proceed according to the procedure laid down in the rules framed under the Act aforesaid. They had therefore to function, not exactly as courts of law, but as domestic tribunals created by the statute to function according to the statutory rules in a fair and just manner, that is to say, that they should have no personal interest in the con;, troversy and should have given a full and fair opportunity to the person proceeded against to place his case before the tribunal. Another class of cases is illustrated by the decision of the Court of Appeal in R. vs Archbishop of Canterbury(3). In that case the Archbishop of Canterbury reviewing the order of the Bishop refused to approve the clerk presented by the patron to a benefice. Acting under section 3 of the Benefices (Exercise of the Rights of Presentation) Measure, 1931, the Court repelled the argument on behalf of the disappointed patron that as the decision involved a deprivation of property rights there was an obligation upon the Archbishop to act in a quasijudicial manner. Lord Greene, M.R., who delivered the judgment of the Court, observed that there was no " justification for regarding the matter when it comes before the Archbishop as in any sense, or by any remote analogy, a his inter parties". Hence the Court on a true construction of a. 3 of the Measure came to the conclusion that the Archbishop was not required to arrive at his decision by conducting a quasi judicial enquiry. This case, therefore, is an authority for the (1) (2) (3) 118 proposition that simply because property rights are involved, the authorities charged with the duty of deciding claims to such rights are not necessarily, apart from the provisions of the statute, required to function as quasi judicial tribunals. As already pointed out, the Appellate Authority had to function in a quasi judicial capacity in accordance with the rules made under the Motor Vehicles Act. That Act has made ample provisions for safeguarding the interests of rival claimants for permits. The provisions of the Act were examined in detail by a Bench of five Judges of this Court in the case of Veerappa Pillai vs Raman & Raman Ltd. (1). This Court examined elaborately the provisions of the Act vis a vis the authorities created by the Act to administer its provisions relating to the grant of stage carriage permits. It also examined how far the High Court exercising its special powers to issue writs under article 226 of the Constitution could interfere with the orders made by those authorities. In the course of its judgment this Court made the following observations at page 596, which are very relevant to the present purpose : " Thus we have before us a complete and precise scheme for regulating the issue of permits, providing what matters are to be taken into consideration as relevant, and prescribing appeals and revisions from subordinate bodies to higher authorities. The remedies for the redress of grievances or the correction of errors are found in the statute itself and it is to these remedies that resort must Generally be bad. " Keeping in view the observations of this Court quoted above and the principles of natural justice discussed in the several authorities of the highest Courts in England, we have to see how far the provisions of the Motor Vehicles Act and the rules framed thereunder justify the criticism of the High Court that the Appellate Authority did not give full and effective opportunity to the first respondent to present his point of view before it. As already indicated, the statutory (1) ; 119 provisions do not contemplate that either the Regional Transport Authority or the Appellate Authority had to record evidence or to proceed as if they were functioning as a court of law. They had to decide between a number of applicants as to which of them was suitable for the grant of the fresh permit applied for. They took into consideration all the relevant matters and came to their decision which has not been attacked as partial or perverse. The only ground which survived before the Appellate Bench of the High Court was that the requirements of natural justice had not been satisfied. The only question that we have to determine is whether the Appellate Authority was justified in using the second report made by the police, though it had not been placed into the hands of the parties. That report did not directly contain any allegations against the first respondent. Hence there was nothing in that report which it could be called upon to meet. The only effect of the report was that many of the objections raised against the suitability of the appellant had been withdrawn by the police on further consideration of their records. The police report is more for the information of the authorities concerned with the granting of permits than for the use of the several applicants for such permits. In our opinion, therefore, the fact that the Appellate Authority had read out the contents of the police report was enough compliance with the rules of natural justice. We have also pointed out that no grievance was made at the time the Appellate Authority was hearing the appeal by any of the parties, particularly by the first respondent, that the second report should not have been considered or that they wished to have a further opportunity of looking into that report and to controvert any matter contained therein. They did not move the Appellate Authority for an adjournment of the hearing in order to enable it to meet any of the statements made in that report. But the learned counsel for the respondent suggested that the requirements of natural justice could not be waived by any of the parties and that it was incumbent upon the Appellate Authority to observe the so called rules of natural justice. In our 120 opinion, there is no warrant for such a proposition. Even in a court of law a party is not entitled to raise the question at the appellate stage that he should have been granted an adjournment which he did not pray for in the court of first instance. Far less, such a claim can be entertained in an appeal from a tribunal which is not a court of justice, but a statutory body functioning in a quasi judicial way. For the reasons aforesaid, in our opinion, the judgment under appeal is erroneous and must be set aside and we are further of the opinion that the judgment of the learned single Judge of that Court had taken the more correct view of the legal position. The appeal is accordingly allowed with costs throughout. Appeal allowed.

Rules of natural justice vary with the varying constitutions of statutory bodies and the rules prescribed by the legislature under which they have to act, and the question whether in a particular case they have been contravened must be judged not by any preconceived notion of what they may be but in the light of the provisions of the relevant Act. Case law discussed. The provisions of sections 47, 48, 64 and the rules framed under section 68 of the Motor Vehicles Act make it abundantly clear that a Regional Transport Authority and an Appellate Authority in hearing an appeal, function in a quasi judicial capacity and not as courts of law and are not required to record oral or documentary evidence and, in deciding as between the rival claims of applicants for stage carriage permits, what they are required to do is to deal with such claims in a fair and just manner. The Act, however, amply provides for the safeguarding of their interests. Veerappa Pillai vs Raman & Raman Ltd, ; , referred to, 99 Consequently, in a case where the Regional Transport Autho rity refused to grant a permit to an applicant on account of an adverse police report and the Appellate Authority granted the same on the basis of a further report by the police, whereby all material allegations against him were withdrawn and nothing was said against his rival which would require to be controverted by him, and the Chairman read out such report at the hearing of the appeal without any objection by any of the interested parties or any request for adjournment and a Division Bench of the High Court in appeal, reversing the decision of a single judge made under articles 226 and 227 Of the Constitution, held that the rules of natural justice had been contravened by reason of the failure on the part of the Appellate Authority to adjourn the proceeding suo motu in order to afford the rival claimant an opportunity to meet the revised police report, its decision was erroneous and must be set aside. Held, further, that the reading out of the contents of the poiice report by the Chairman at the hearing of the appeal was enough compliance with the rules of natural justice as there was nothing in the rules requiring a copy of it to be furnished to any of the parties.

Appeal No. 707 of 1962. Appeal by special leave from the order dated December 11, 1961, of the Central Government Labour Court, Delhi in L.C.A. No. 605 of 1961. M. K. Ramamurtthi, R. K. Garg, D. P. Singh and section C. Aggarwala, for the appellant. H. N. Sanyal, Solicitor General of India., H.L. Anand, Vidya Sagar and B. C. Das Gupta, for the respondent. April 22. The judgment of the Court was delivered by DAS GUPTA J. The appellant was appointed as a clerk in the State Bank of India, the respondent before us, on December 14, 1953. At the time of 277 appointment his salary was Rs. 95/ per month with a dearness allowance of Rs. 50/ . The Sastry Award in the disputes between certain banking companies and their workmen as modified by the labour Appellate Tribunal was given statutory force by the Industrial Disputes (Banking Companies) Decisions Act, 1955. In applying to the appellant this award which is admittedly applicable to him the bank proceeded on the basis that under it the appellant was entitled to get his annual increment in each year on April 1. According to the appellant, however, he is entitled under the award to have his annual increment in December each year. On December 14, 1960, the appellant made an application under section 33 (c) (2) of the before the Labour Court, Delhi, praying that the benefit under the award of which he is being deprived by the bank by the alleged error in its implementation should be computed and directed to be paid to him. A schedule was annexed to the application purporting to show that on the basis that the annual increment has to be allowed on December 14, of each year and not on April, 1, the appellant was entitled to an additional sum of Rs. 146/ plus dearness allowance. In resisting this application the Bank raised a preliminary objection that the question whether or not the appellant was entitled to the benefits as alleged by him could not be raised or decided in an application under section 33 (c) (2). On the merits the bank pleaded that it had acted in accordance with the terms of the Sastry Award in allowing increments on the 1st April of each year. The Labour Court rejected the preliminary objection but held on the merits that the annual increment of the appellant fell due from after April 1, 1954, and on April 1, in succeeding years. Accordingly, the Court rejected the application. 278 Against this order of rejection this appeal has been filed by special leave of this court. Before us the appellant contends that the Labour Court has erred in thinking that tinder the award annual increments to workmen appointed after January 31, 1950 and before the new scales were brought into force, fell due on April 1, of each year, starting from April 1, 1954. The respondent in addition to supporting the decision of the Labour Court on merits further contended that the Court had wrongly rejected the preliminary objection raised by the bank. The scope of section 33 (c) (2) of the has been elaborately considered by us in the Central Bank of India Ltd. vs P.S. Rajagopalan (1), and we have decided there that the Labour Court has got jurisdiction to decide on an examination of an award or settlement whether or not the workman is entitled to the benefits claimed by him. The preliminary objection must therefore be held to have been rightly rejected by the Court. It is necessary therefore to decide the appellant 's contention that the Labour Court had erred in its decision on the merits. The appellant 's case in the written statement was that under the Sastry Award his pay had to be fixed in accordance with the directions in cl. 7 of para 292 but that the bank had wrongly fixed his pay on the same basis as the employees who entered service of the respondent before January 31, 1950. He claimed that if his pay had been fixed in accordance with cl. 7 of para 292 his annual increment would have fallen due on December 14, of each year and not April 1, each year as calculated by the bank. The bank contended however that as the adjusted salary would have effect under para. 292 (1) [1964] Vol, 3 section C. R. 140. 279 from April l, '1954 the increments were rightly given on April 1, of each year, after April 1, 1954. The Labour Court considered the appellant 's petition and four other petitions together and disposed of these by the same order. It may be mentioned that in other four petitions, two persons were appointed on February 24, 1950, one on March 15, 1951 and one on June 1, 1953, while the appellant, as already stated, was appointed on December 14, 1953. In all the cases the Labour Court accepted the bank 's contention based on para. 292 (12) which after modification by the Labour Appellate Tribunal says : "The adjusted pay shall have effect from April 1, 1954. " The Court was of opinion that this rule should apply to all persons appointed after January 31, 1950 but before April 1, 1954. It is necessary to notice that para. 292 of the award dealt with the question of fitting the existing staff into the revised scales of pay. The revised scales of pay were brought into operation under para 627 with effect from April 1, 1953. The award, it may be mentioned, was signed by the members of the Tribunal between March 5, and March 20, 1953. It is easy to see that persons who joined the service of the bank after the date when the new scales came into force would not be governed by para. 292 for the simple reason that they were not "existing staff" of the bank. Such workmen would come straight into the revised scales of pay. Thus, the present appellant appointed on December 14, 1953 would get the benefit of the new scales of pay from the very date of his appointment In consequence. , he would get the increments under the new scale on December 14 of each year and would thus he entitled to payment of Rs. 100/ per month from December 14,1954 to December l3, 1955 at the rate of Rs. 106 per month from December 14, 1955 to December 13, 1956 and so on, as claimed by him in the schedule to his petition. He is therefore 280 entitled to Rs. 146/ plus dearness allowance as the benefit to which he is entitled under the Sastry Award but which has not been paid. The Labour Court was, therefore, wrong in rejecting the appellant 's petition. We allow the appeal, set aside the order of the Labour Court, Delhi, and compute the sum to which he is entitled under the Award at Rs. 146/ plus dearness allowance. No order as to costs. Appeal allowed.

The appellant was appointed as a clerk in the State Bank of India on December 14, 1953. He made an application under s.33(c)(2) of the before the Labour Court. He prayed before the Labour Court that he was enti tled to Rs. 146/ plus dearness allowance as the benefit to which he was entitled under the Sastry Award but which had not been paid. The case of the appellant was that he was entitled under the Sastry Award to have his annual increment in December each year as he was appointed on December, 14, 1953. The case of the Bank was that on the basis of the Sastry Award the appellant was entitled to get his annual increment in each year on April 1. The respondent raised a preliminary objection that the question in regard to the increment of the appellant could not be decided in an application under s.33(c) (2) 276 of the Act. The Labour Court rejected this preliminary objection but on merits accepted the case of the Bank. Hence the appeal. Held that under s.37(c)(2) of the the Labour Court has got jurisdiction to decide on an exami nation of an award or settlement whether or not the workman is entitled to the benefits claimed by him. The preliminary objection must therefore be held to have been rightly rejected by the Labour Court. (2) that para 292 of the Sastry Award dealt with the question of fitting the existing staff into the revised scales of pay. Persons who joined the service of the Bank after the date when the new scales came into force would not be governed by para 292 of the award for the simple reason that they were not "existing staff" of the Bank. Such workmen would come straight into the revised scales of pay. Thus, the present appellant appointed on December 14, 1953, would get the benefit of the new scales of pay from the very date of his appointment. In consequence, he would get the increments under the new scale on December 14, each year.

ivil Appeal No. 223 of 1989. From the Judgment and Order dated 31.10.88 of the Cus toms Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. E. 12068/84 BI (Order No. 432/88 BI). Soli J. Sorabjee, A.N. Haksar, Ravinder Narain, P.K. Ram and D .N. Misra for the Appellant. The judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is an appeal under section 35 L of the Central Excises & Salt Act, 1944 (hereinafter referred to as 'the Act '). against the order dated 31.10.1988 passed by the Customs, ExciSe & Gold (Control) Appellate Tribunal (hereinafter referred to as 'the Tribu nal '). The issue involved in this appeal mainly relates to the classification of the goods, namely, whether the products of the appellant in this case were end fittings or nuts? The question was whether the goods were classifiable under Tariff Item 52 or Tariff Item 68 of the erstwhile First Schedule to the Act. The appellant applied for requisite central excise licence for manufacture of goods falling under Tariff Item 68 and for the purpose of such goods L 4 licence was also furnished, and also the requisite ground plans of the facto ry showing the requisite sanction of the factory in which the various goods were manufactured. The excise authorities granted L 4 licence. The appellant contends that the same was done after verifying the ground plans. Necessary classi fication list was supplied on 22nd March, 1979 for approval by the excise authorities and the appellant claimed benefit of exemption of notification No. 89/79 Central Excise dated 1.3.79. The said classification list submitted by the appel lant was approved by the Assistant Collector of Central Excise by his letter dated 25th May, 1979. For the period from 1.4.79 to 30.6.79, the appellant filed his RT 12 for the assessment, which was also finally assessed without any protest or objection. Inasmuch as, the appellant claimed that its goods were wholly exempted by virtue of the notifi cation No. 89/79CE dated 1.3.79, the appellant wrote to the Superintendent of Central Excise asking for dispensation from filing RT 12 every month. The Superintendent by his order informed the appellant that it need not file RT 12, but should inform 874 the Excise Department monthly by means of a simple letter the total clearance effected in the month in question. Thereafter, the appellant submitted classification lists in 1980, 1981 and 1982 in respect of the said goods and claimed the benefit of the exemption under notification No. 105/80 Central Excise, dated 19.6.80, which was a subsequent noti fication. The Assistant Collector of Central Excise duly approved the said classification lists. It is stated that the Central Excise Officers attached to the Preventive Branch visited on or around 13.7.82, the factory of the appellant and examined the products manufactured by the appellant. The excise authorities once again, it is stated, visited the factory of the appellant on 20th July, 1982. However, on 17th .January, 1983, a show cause notice was issued to the appellant asking it to show cause as to why excise duty should not be demanded under Tariff Item 52 in respect of 14,88,838 pieces of nuts manufactured and removed by the appellant during the period 1st April, 1981 to 19th July, 1982 without payment of appropriate excise duty there on. It was further stated in the show cause notice to show cause why penalty should not be imposed on the appellant for failing to obtain the requisite L 4 licence under Tariff Item 52 in respect of the said goods and for failing to file price lists and classification lists in respect thereof and further to show cause why the material seized on 26th Au gust, 1982 should not be confiscated. The appellant showed cause, and drew attention to the Indian Standard Institution publication for specification of High Pressure Connection meant for lubricating arrangement of oil in Fuel Injection Equipment for Diesel Engines which according to the appel lant, showed that the goods in question were not nuts but end products or connectors for lubricating purposes and as such were integral parts of the Diesel Engine Pipes falling under Tariff Item 68. On 16th July, 1984, the Collector of Central Excise passed orders holding that fittings were nuts classifiable under Tariff Item 52 and that appropriate duty on the clear ances effected by the appellant during the period 1st April, 1981 to 19th July, 1982 should be paid, and that the seized goods were liable to confiscation but in lieu thereof a redemption fine of Rs.4,000 could be paid within three months, the exports effected indirectly by the appellant were not entitled to benefit of Notification No. 89/79 CE and, therefore, the differential duty in respect of those clearances was payable under Tariff Item 68 and that the show cause notice was not barred by time. The Collector, accordingly, imposed a penalty of Rs. 1 lac. Aggrieved thereby, the appellant went up in appeal before the Tribunal. The Tribunal partly allowed the appeal of the appellant and 875 partly upheld the order of the Collector. So far as the question of classification of the different fittings was concerned, the Tribunal held that the classification should have been as nuts under Tariff item 52 of the Central Excise Tariff. The Tribunal also held that the appellant was guilty of suppression and therefore rejected the submission of the appellant that the show cause notice was barred by time. The contention of the appellant in respect of the benefit of exemption being available to the extent of export effected indirectly on the basis of the earlier decision of the Tribunal, was accepted by the Tribunal and the order of the Collector was modified to that extent. The Tribunal also reduced the amount of penalty imposed by the Collector from Rs. 1 lac to Rs.50,000. Aggrieved thereby, the appellant is in appeal before this Court. The first contention that was agitated before us and which was decided against the appellant in the order of Tribunal is, whether the goods in question involved in this appeal were classifiable under Tariff Item 52 of the Central Excise Tariff or whether these goods were classifiable under Tariff Item 68. The Tribunal noted that these goods were described as 'nuts ' by the Consultant on behalf of the appellant in the arguments submitted before the Tribunal. The appellants were purchasing nuts, both threaded and unthreaded, and the latter being threaded, this was to be taken for captive consumption. Therefore, it was contended on behalf of the appellant that the function of such nuts was not merely fastening but also facilitating the flow of oil under high pressure without leakage. It was emphasised that these nuts were leak proof. The Tribunal on appraise ment of all the materials, held that these were nuts manu factured by the appellant. It was evident from the Tribu nal 's judgment that the appellant was itself purchasing, both threaded and unthreaded nuts as such and the unthreaded nuts were threaded by the appellant. Apart from captive consumption, some of these nuts were also sold as nuts to outside parties. These facts were found by the Tribunal and recorded in its order. The Tribunal in those circumstances was of the view that it was difficult to accept the appel lant 's contention. The impugned goods were commercially known and bought and sold as nuts. It is true that specifi cation of the Indian Standard Institution was drawn atten tion to. But there was evidence, as noted by the Tribunal, about the commercial indentify of these goods. If these goods not being defined as such and are commercially known as nuts, as found by the Tribunal then, in our opinion, such finding cannot be said to be wrong or perverse. Such finding was arrived at after giving opportunity to both the parties and considering all relevant materials. Such finding cannot be assailed in this appeal. 876 The functional approach to the identify of the goods as canvassed by the appellant was also duly considered by the Tribunal. It was contended that the function of the nuts was not only to fasten but also to enable the flow of oil under high pressure without leakage. But the Tribunal noted that the flow of oil is possible only after nuts are fastened. To that extent, according to the Tribunal, it can be stated that nuts permit the flow of oil without leakage. The ques tion is, however, not as to what is the process facilitated as a result of the nuts, but the question which the Tribunal itself posed is whether the nuts are fasteners or do they have any other 'independent function? The Tribunal found that it had not been shown before them that they had any such independent function. To say that these nuts are leak proof, was only to reiterate the fact of their essential character and quality as fasteners and not to substantiate any argument as regards their independent function. In that view of the matter, the Tribunal even taking the functional approach to the identity of the goods, came to the conclu sion that the goods in question were properly classifiable as nuts. That conclusion of the Tribunal cannot be assailed in appeal in view of the evidence on record as noted before. Certain decisions were referred to before the Tribunal by the appellant in support of its contention that in certain cases goods of these types had not been considered to be nuts. These goods, as the Tribunal noted, were in the nature of bolts, nuts and rods of special type manufactured by a particular party. Therefore, these were not classifiable as merely bolts and nuts under Tariff Item 52 of the Central Excise Tariff, but as integral parts of the machine for which they were specifically designed with a distinct and specific function in the operation of the motor cycle of which these were components parts. It was held in those cases that the components manufactured solely on the orders of the buyers, as per their drawings and specifications, were components of mining and project machinery and, there fore, not classifiable under Tariff Item 52 CET, But the facts involved in these items of goods in the instant case, dealt with by the appellant, are different. These goods were not manufactured according to any special specifications as integral parts of machinery. Some of these nuts required were also purchased from market ' while those being manufac tured were also sold to outside buyers as nuts. Attention of the Tribunal was also drawn to the case of M/s. Precision Fasteners Ltd. vs Collector of Central Ex cise, Bombay II. In that case, however, the Tribunal did not take any final view on the product. In view of the type of goods involved in that case, the Tribunal had remanded the matter for re adjudication. In that view of 877 the matter, the Tribunal was of the view that the commercial identify of the goods in the instant case, was different from the goods involved in the Precision Fasteners Ltd. 's case (supra). In the light of these submissions, the Tribu nal came to the conclusion that the goods were classifiable under Tariff Item 52 of the Central Excise Tariff. It was this finding which is assailed before us in appeal. We find, however, as noted hereinbefore, no cogent ground to sustain any challenge to the aforesaid finding of the Tribunal. The Tribunal has considered all the relevant evidence. The Tribunal has not ignored any relevant piece of evidence. It had applied the correct principle of law ap plicable to the determination of this question. It had also applied the test of commercial identity of the goods and examined the matter from the angle of the conduct of the appellant. In that view of the matter, we are of the opinion that these findings of the Tribunal cannot be assailed. The next question that has to be determined is whether the claim for duty is only to be confined to the period of six months because it was contended, in view of the facts and the circumstances narrated hereinbefore, that there was no suppression of any fact. It may be relevant in this connection to refer to Section 11 A of the Act, which pro vides as follows: "When any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, a Central Excise Officer may, within six months from the rele vant date, serve notice on the person charge able with the duty which has not been levied or paid or which has been short levied or short paid or to whom the refund has errone ously been made, requiring him to show cause why he should not pay the amount speci fied in the notice: Provided that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded by reason of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub section shall have effect, as if for the words "Central Excise Officer", the words "Collector of Central Excise", and for the words "six months", the words "five years" were substituted. 878 Explanation: Where the service of the notice is stayed by an order of a Court, the period of such stay shall be excluded in computing the aforesaid period of six months or five years, as the case may be. " Therefore, we have to find out whether there was any fraud, collusion, wilful misstatement or suppression of facts for the Department to be justified to claim duty beyond a period of six months. This is a question of fact. It was found by the Tribunal that it was not possible for the appellant to contend that the appellant had made a correct statement. The Tribunal noted that the appellant could hardly contend that it discharged the onus of making correct declaration if it had withheld the description which was commonly used in respect of the goods not only by it self, but also by those from whom it bought or to whom it sold the products. The appellant itself was both buying and selling these nuts and as such there was no conceivable reason why these nuts were described as end fittings in the declaration to the Department. It may be noted that in the declaration it was so described. The Tribunal was of the view, and it cannot be said not without justification that these goods should have been described as nuts because the appellant itself had treated these as nuts. Therefore, from this conduct suppression is established. The fact that the Department visited the factory of the appellant and they should have been aware of the production of the goods in question, was no reason for the appellant not to truly and properly to describe these goods. As a matter of fact, not only did the appellant, as found by the Tribunal, not de scribed these goods properly but also gave a misleading description. In the aforesaid view of the matter, we are of the opinion that the Tribunal was right in classifying the goods under Tariff Item 52 of the Central Excise Tariff and in upholding the demand of the duty for a period beyond six months as contemplated by Section 11 A of the Act. The Tribunal duly gave benefit of the exemption notification in respect of the goods which had been exported. This part of the order is not challenged and cannot be challenged. The Tribunal, however, reduced the penalty from Rs. 1 lac to Rs.50,000. Mr. Sorabji, learned counsel for the appellant, contended that this was not right. There should not have been any penalty imposed. We are, however, unable to accept that position. Having come to the conclusion that there was deliberate suppression of wrong statement, it follows auto matically that the Tribunal was justified in upholding the imposition of penalty. The quantum of penalty, however, was a matter which the Tribunal was free to fix as they thought fit, as the justice of the case demanded. 879 Nothing has been shown to us that the conclusion of the Tribunal was bad. In that view of the matter, the order of the Tribunal is upheld. The appeal must, therefore, fail and is accordingly dismissed. N.V.K. Appeal dis missed.

The appellant company applied for a requisite central excise licence for manufacture of goods falling under Tariff Item 68 and for the purpose of such goods L 4 licence was also furnished and also the requisite ground plans of the factory in which the various goods were manufactured. The excise authorities granted L 4 licence. The appellant claimed benefit of exemption of Notification No. 89/79 CE dated March 1, 1979. The classification list submitted by the appellant was approved by the Assistant Collector by his letter dated May 25, 1979. For the period April 1, 1979 to June 30, 1979 the appellant filed his RT 12 for assessment which was also finally assessed without any protest or objection. As the appellant claimed that his goods were wholly exempted by virtue of notification No. 89/79 CE dated March 1, 1979, the appellant wrote to the Superintendent asking for dispensation from filing RT 12 every month. The Superintendent informed the appellant that it need not file RT 12, but should inform the excise authorities monthly by means of a simple letter the total clearance effected in the month in question. Thereafter, the appellant submitted classification list in 1980, 1981 and 1982 and claimed benefit of exemption under notification No. 105/80 CE dated June 19, 1980. The Assistant Collector approved the classification list. The Central Excise Officer attached to the preventive branch visited the factory in July 1982 and examined the products manufactured by the appellant. In January 1983, a show cause notice was issued to the appellant asking it to show cause as why excise duty should not be demanded under Tariff Item 52 in respect of the piece of nuts manu 871 factured and removed by the appellant during the period April 1, 1981 to July 19, 1982 without payment of appropri ate excise duty thereon, and also to show cause why penalty should not be imposed for failure to obtain the requisite L 4 licence under Tariff Item 52 and to show cause why the material seized on August 26, 1982 should not be confiscat ed. The appellant showed cause and drew the attention of the authorities to the fact that the goods in question were not nuts but end products or connectors for lubricating purposes and as such were integral parts of Diesel Engine Pipes failing under Tariff item 68. The Collector of Central Excise passed orders on July 16, 1984 holding that fittings were nuts classifiable under Tariff Item 52, and that appropriate duty on the clearance effected by the appellant during the period April 1, 1981 to July 19, 1982 should be paid and the seized goods were liable to confiscation but in lieu thereof a redemption fine of Rs.4,000 could be paid. The Collector also imposed a penalty of Rs. 1 lakh. The appellant went up in appeal before the Tribunal, which partly allowed the appeal and partly upheld the order of the Collector. With regard to classification of the different fittings was concerned, it was held that the classification should have been as nuts under Tariff Item 52 of the Central Excise Tariff. It further held that the appellant was guilty of suppression and therefore rejected the submission of the appellant that the show cause notice was barred by time. It, however, reduced the amount of Penalty imposed by the Collector from Rs. 1 lakh to Rs.50,000. The appellant appealed to this Court by special leave. In the appeal to this Court, on the question whether the goods manufactured by the appellant were end products or connectors for lubricating purposes and as such were inte gral parts of the Diesel Engine Pipes failing under Tariff Item 68 as claimed by the appellant or nuts classifiable under Tariff Item 52. Dismissing the appeal, HELD: 1. The Tribunal was right in classifying the goods under Tariff Item 52 of the Central Excise Tariff and in upholding the demand of the duty for a period beyond six months as contemplated by section 11 A of the Act. The Tribunal duly gave benefit of the exemption notification in respect of the goods which had been exported. [878F] 872 2(a) The Tribunal was right in upholding the demand of duty for a period beyond six months as contemplated by section 11 A of the Act. [878F] 2(b) Whether there was any fraud, collusion, wilful mis statement, or suppression of fact, for the department to be justified to claim duty beyond a period of six months under the proviso to section 11 A of the Act is a question of fact. [878B] 2(c) The appellant. was both buying and selling these nuts and as such there was no conceivable reason why these nuts were described as end fittings in the declaration to the Department. In the declaration it was so described. [878C D] 2(d) The fact that the officers of the Department visit ed the factory of the appellant and they should have been aware of the production of the goods in question, was no reason for the appellant not to truly and properly describe these goods. [878D E] 2(e) Not only did the appellant, as found by the Tribu nal, not described these goods properly, but also gave a misleading description. [878E] 3. The Tribunal on appraisement of all the materials, held that these were nuts manufactured by the appellant. Such finding cannot be said to be wrong or perverse. It was arrived at after giving opportunity to both the parties and considering all relevant materials. There is no cogent ground to sustain any challenge to the findings of the Tribunal. The Tribunal has considered all the relevant evidence, and not ignored any relevant piece of evidence. It had applied the correct principle of law applicable to the determination of the question. It has also applied the test of commercial identity of the goods and examined the matter from the angle of the conduct of the appellant. These find ings of the Tribunal cannot be assailed in appeal under section 35L of the Act. [875E; 877B C] 4. The Tribunal having come to the conclusion that there was deliberate suppression or wrong statement, it follows automatically that the Tribunal was justified in upholding the imposition of penalty. The quantum of penalty was a matter which the Tribunal was free to fix as it thought fit, as the justice of the case demanded. Nothing has been shown that the conclusion was bad. [878G H; 879A] 873

minal Appeals Nos. 50 52 of 1964. Appeals from the judgment and order dated January 17, 24, 1964 of the Bombay High Court in Criminal Appeals Nos. 961 to 963 of 1962. A. K. Sen, R. Jethmalani, Jethmalani, Kumar M. Mehta, B. Parthasarathy and J. B. Dadachanji, for the appellants (in Cr. A. No. 50 of 1964). R. Jethmalani, Kumar M. Mehta, Jethmalani and J. B. Dada chanji, for the appellants (in Cr. 51 and 52 of 1964). K. G. Khandalawala, H. R. Khanna, B. A. Panda, R. H. Dhebar and section P. Nayar, for the respondent (in all the appeals). The Judgment of the Court was delivered by Hidayatullah, J. The appellants who are three brothers appeal 'by certificate against their conviction under section 120 B of the Indian Penal Code and section 167(81) of the Sea Customs Act and the sentences of imprisonment and fine respectively imposed on them. A ,fourth brother had filed Criminal Appeal No. 55 of 1964 but did not press it at the hearing. One other person (section L. Daga) was also convicted with them but has not appealed. These persons were found to have entered into a criminal conspiracy among themselves and with others including one Yau Mockchi, a Chinese citizen in Hong Kong, to smuggle gold into India. The method adopted was to insert strips of gold (about 250 tolas) under the .lining of the lid of a suitcase, which could be retrieved by 627 unscrewing the metal comer supports and pulling on strings attached to the strips. The suitcases were brought into India by air stewardnesses, and Ethyl Wong (P.W. 1), an Anglo Chinese girl employed by Air India, was one of them. Discovery came, after gold was successfully smuggled on many occasions, when Yau Mockch approached one Sophia Wong of the B.O.A.C. line. She was en gaged to a police officer and informed her superior officers. A trap was laid. Yau Mockchi was caught with a suit case with gold in it after he had explained to Sophia how the gold was inserted and how it could be taken out. On the search of his person and also of his place of business, visiting cards of several persons including those of Ethyl Wong and Laxmipat Choraria (Crl. Appeal 50/64), photographs of Laxmipat and Balchand Choraria (Crl. Appeal No. 52/64), their addresses and telephone num bers, and other incriminating letters, accounts, cables, etc., were found. Immediately thereafter raids took place in India and at Hong Kong where the other two accused who are not before us (Kundanmal Choraria and section L. Daga) were running a firm called Global Agencies. Numerous documents (some in simple code) and account books were seized. Many of these documents were photostated. The originals were unfortunately returned under the orders of the Supreme Court of Hong Kong and have since been suppressed. On the strength of these materials the prosecution was started. At the commencement of the trial Ethyl Wong was examined as the first witness and gave a graphic account of the conspiracy and the parts played by the accused and her own share in the transactions. Her testimony was clearly that of an accomplice. Although she could have been prosecuted, she was not arraigned and it is her testimony which has been the subject of a major part of the arguments before us. No effort has been spared to have it excluded. In two other appeals which we are deciding today with these appeals, the evidence of the accomplices was also questioned on the same grounds. For convenience the whole question has been considered here. In these appeals it is, however, admitted that if her evidence is received, it is sufficiently corroborated both generally and in respect of the three appellants before us. But the evidence of Ethyl Wong is questioned in respect of the identification of Laxmipat and Balchand because she was shown their photographs before her statement was taken. The use of the photostats without the originals is also questioned and it is submitted that these documents should be excluded. The main argument is that Ethyl Wong could not be examined as a witness because (a) no oath could be administered to her as she was an accused person since section 5 of the Indian Oaths Act bars such a course and (b) it was the duty of the prosecution and/or the Magistrate to have tried Ethyl Wong jointly with the appellants. L2SupCI./68 10 628 The breach of the last obligation, it is submitted, vitiated the trial and the action was discriminatory. In the alternative, it is submitted that even if the trial was not vitiated as a whole, Ethyl Wong 's testimony must be excluded from consideration and the appeal reheard on facts here or in the High Court. It is further submitted that in any event, Ethyl Wong 's evidence was so discrepant as to be worthless. In the appeal of Balchand an additional point is urged and it is that the incriminating documents against him were compared with a letter Z 217 purported to be written by him but not proved to be so written. Since the appeals were argued mainly on law, we need not trouble ourselves with the facts. Ethyl Wong admittedly carried gold for Yau Mockchi on several occasions. She admitted this in court and her evidence receives ample corroboration as to the mode employed from the statement of Sophia Wong and the seizure of the suitcase when Yau Mockchi had explained how the gold was secreted. We may say at once that if Ethyl Wong 's evidence is not to be excluded from consideration for any reason, then we see no reason not to believe her. Apart from the fact that the High Court and the, court below have concurrently believed it already, we find ample corroboration for it from her own previous statements made without warning, her pointing out the flats where she delivered gold, her cable written in code to inform the parties in Hong Kong after successful smuggling, her visiting card in the possession of Yau Mockchi, the passenger manifests showing her trips, the entries in the hotel registers and the telephone calls made by her to the flat of the accused and so on and so forth. No doubt there are some discrepancies in her account and she corrected her first version on points on which she had made mistakes. But this is explained by the fact that when she was first accosted, she was unprepared and shocked by the discovery. The corrections were made by her after reviewing in her mind her past trips and without any prompting by the customs authorities. Both statements were voluntary and without any collusion on the part of the customs officials. On the whole her testimony impressed us and as it has been accepted by the High Court and the Magistrate we shall not go into it for the third time. We shall accordingly address ourselves to the objections to its admissibility and the propriety of examining a self confessed criminal as a witness against her former associates. The argument is that section 5 of the Indian Oaths Act prohibits the administering of oath or affirmation to an accused person in a criminal proceeding and Ethyl Wong, by her own statements made earlier to the customs officials and later in court, showed herself to be the unknown carrier shown at No. 12 of the complaint. It is, therefore, contended that she could not be examined 629 as a witness. Next it is submitted that as the provisions relating to tender of pardon to accomplices contained in Chapter XXIV of the Code do not apply to offences under section 120 B (First Part) of the Indian Penal Code and section 168(81) of the Sea Customs Act, the only two ways in which Ethyl Wong 's testimony could have been obtained was either to take her plea of guilty and convict and sentence her or to withdraw the prosecution against her under section 494, Indian Penal Code. Not to send up a person for trial with the sole object of taking accomplice evidence is said to be illegal. Further it is argued that under section 351 read with section 91 of the Code it was the duty of the Court to have detained Ethyl Wong and included her in the array of accused before it. We shall now consider these arguments. The offences were non cognizable and were not investigated by the police. The investigation was by customs officers under the Sea Customs Act and not by the police under Chapter XIV of the Code. Therefore, no question of the application of sections 169 and 170 arose. Ethyl Wong 's statements were obtained under section 171 A of the Sea Customs Act. The persons were placed for trial on the complaint of the Assistant Collector of Customs under the authority of the Chief Customs Officer, Bombay. Although the Magistrate was taking cognizance of offences and not of offenders, it was no part of his duty to find offenders in view of the bar of section 187A if the complaint did not name a particular offender. All that the Magistrate could do was lo take a bond from Ethyl Wong for her appearance in court if required. At the time of Ethyl Wong 's examination the appellants had raised the question that she should also be tried. The Magistrate said that he would later consider the matter. Then it appears to have been forgotten. Nor did the appellants raise the question again. Apparently they only wanted that Ethyl Wong should be tried jointly with them so that her testimony might not be available against them but were not interested in her separate trial. In so far as the customs authorities are concerned it is clear that they had some reason to think that Ethyl Wong might be one of the carriers as her visiting card was found with 26 other such cards in Yau Mockchi 's possession. But it was not certain that she was one of the carriers until she was questioned or there was some other evidence against her. The complaint was filed in court on April 6, 1960 and the case was to commence on January 2, 1961. On December 27, 1960 Ethyl Won landed at the Bombay Air Terminal. Two customs officers were waiting for her and questioned her. It was then that Ethyl Wong made her first statement (exhibit 1) admitting her own share, in the smuggling racket set up by Yau Mockchi. On December 29, 1960 she gave a second statement (exhibit 2) and corrected certain inaccuracies in 630 her first statement. On January 2 ', 1961 she was examined as the first prosecution witness. Now there can be no doubt that Ethyl Wong was a competent witness. Under section 118 of the Indian Evidence Act all persons are competent to testify unless the court considers that they are prevented from understanding the questions put to them for reasons indicated in that section. Under section 132 a witness shall not be excused from answering any question as to any matter relevant to the matter in issue in any criminal proceeding (among others) upon the ground that the answer to such question will incriminate or may tend directly or indirectly to expose him to a penalty or forfeiture of any kind. The safeguard to this compulsion is that no such answer which the witness is compelled to give exposes him to any arrest or prosecution or can it be proved against him in any criminal proceeding except a prosecution for giving false evidence by such answer. In other words, if the customs authorities treated Ethyl Wong as a witness and produced her in court, Ethyl Wong was bound to answer all questions and could not be prosecuted for her answers. Mr. Jethmalani 's argument that the Magistrate should have promptly put her in the dock because of her incriminating answers overlooks section 132 (proviso). In India the privilege of refusing to answer has been removed so that temptation to tell a lie may be avoided but it was necessary to give this protection. The protection is further fortified by article 20(3) which says 'that no person accused of any offence shall be compelled to be a witness against himself. This article protects a person who is accused of an offence and not those questioned as witnesses. A person who voluntarily answer questions from the witness box waives the privilege which is against being compelled to be a witness against himself, because he is then not a witness against himself but against others. Section 132 of the Indian Evidence Act sufficiently protects him since his testimony does not go against himself. In this respect the witness is in no worse position than the accused who volunteers to give evidence on his own behalf or on behalf of a coaccused. There too the accused waives the privilege conferred on him by the article since he is subjected to cross examination and may be asked questions incriminating him. The evidence of Ethyl Wong cannot, therefore, be ruled out as that of an incompetent witness. Since Ethyl Wong was a self confessed criminal, in conspiracy with others who were being tried, her evidence was accomplice evidence. The word accomplice is ordinarily used in connection with the law of evidence and rarely under the substantive law of crimes. Accomplice evidence denotes evidence of a participant in crime with others. Section 133 of the Evidence Act makes the accomplice a competent witness against an accused person. Therefore, Ethyl Wong 's testimony was again that of a competent witness. It has been 631 subjected to scrutiny and the usual checks for corroboration and was, therefore, received with due caution. The short question that remains is whether she could be administered an oath in view of the prohibition in section 5 of the Indian Oaths Act. We have already shown above that Ethyl Wong was not an saccused person at the trial. Now the Indian Oath Act provides "5. Oath or affirmation shall be made by the following persons : (a) all witnesses, that is to say, all persons who may lawfully be examined or give, or be required to give, evidence by or before any court or person having by law or consent of parties authority to examine such persons or to receive evidence; Nothing herein contained shall render it lawful to administer, in a criminal proceeding, an oath or affirmation to the accused person unless he is examined as a witness for the defence. . Mr. Jethmalani in interpreting the exclusionary clause argues that every person against whom there is an accusation (whether there be a prosecution pending against him or not) is an accused person, more so a person against whom an investigation is going on or has been made. In this connection he has referred to those sections of the Code of Criminal Procedure where the word 'accused ' occurs and has attempted to establish that sometimes the word is employed to denote a person on trial and sometimes a person against whom there is an accusation but who is not yet put on his trail. He has also referred to the expression 'in a criminal proceeding ' which he says are words of sufficient amplitude to take in a person against whom an investigation is to be made or has been made on an accusation. In either case, he submits, the case of Ethyl Wong must fall within the exclusionary clause. There is no need to refer to the sections of the Code of Criminal Procedure because it may safely be assumed that the word 'accused ' bears these different meanings according to the context. That does not solve the problem of interpretation of the same word in the Code for there it may have been used in one of the two senses or both. The historical reason behind the prohibition in the Indian Oaths Act and section 342 of the Code, need not be gone into either. It is well known that formerly a person on his trial could not give evidence. At Common Law, the parties to a civil action were not allowed to give evidence because of their personal 632 interest and in criminal trials, the private prosecutor could give evidence because he represented the Crown but not the accused. The Common Law of England was altered by statutory enactments between 1843 and 1898 and finally by the Criminal Evidence Act 1898 the accused was allowed to give evidence. The discomfiture of the first person to give evidence on his own account while under cross examination is also well known. He was literally convicted out of his own mouth by the cross examination by the Attorney General. In India the right was first conferred by the Code of Criminal Procedure Amendment Act XXVI of 195 5. This Amending Act added section 342A to the Code: "342. Accused person to be competent witness. Any person accused of an offence before a Cri minal Court shall be a competent witness for the defence and may give evidence on oath in disproof of the charges made against him or any person charged together with him at the same trial : Provided that and added the words "unless he is examined as a witness for the defence" to the exclusionary clause in section 5 of the Indian Oaths Act. Yet the provisions of section 343 of the Code continues that except as provided in sections 337 and 338 of the Code, no influence, by means of any promise or threat or otherwise shall be used on an accused person to induce him to disclose or withhold any matter within his knowledge. The section prohibits influence in two ways in the making of the disclosure and in the withholding of the disclosure. In other words, the prosecuting agency has to be neutral unless it seeks to prosecute the person himself. If they do not prosecute a particular person and tender him as a witness, the bar of the Indian Oaths Act ceases because the person is hot an accused person in a criminal proceeding. The interrelation of section 342(4) of the Code and section 5 of the Indian Oaths Act, which both prohibited the giving of oath or affirmation to an accused on. trial is fully evidenced by the simultaneous amendment of the Code in 1955 by which the right to give evidence on oath is conferred on the accused and provisions in pari materia are made in section 5 of the Oaths Act. The only prohibition against the use of accomplice testimony exists in the rule of caution about corroboration and the interdiction of influence in any form by section 343 of the Code. If any influence by way of promise of pardon has to be made, the provisions of sections 337 and 338 or of the Criminal Law Amendment Act have to be observed. That, however, applies to special kinds of cases of which the present is not one. They are 633 concerned with offences triable exclusively by the High Court or the Court of Session, or offences punishable with imprisonment which may extend to seven years and certain offences specially named for which special provision has been made in the Criminal Law Amendment Act. In other words, we are not concerned with the provisions for tender of a pardon found in the Code or the Criminal Law Amendment Act. The position that emerges is this : No pardon could be ten dered to Ethyl Wong because the pertinent provisions did not apply. Nor could she be prevented from making a disclosure, if she was so minded. The prosecution was not bound to prosecute her, if they thought that her evidence was necessary to break a smugglers ' ring. Ethyl Wong was protected by section 132 (proviso) of the Indian Evidence Act even if she gave evidence incriminating herself. She was a competent witness although her evidence could only be received with the caution necessary in all accomplice evidence. The expression 'criminal proceeding ' in the exclusionary clause of section 5 of the Indian Oaths Act cannot be used to widen the meaning of the word accused. The same expression is used in the proviso to section 132 of the Indian Evidence Act and there it means a criminal trial and not investigation. The same meaning must be given to the exclusionary clause of section 5 of the Indian Oaths Act to make it conform to the provisions in pari materia to be found in sections 342, 342A of the Code and section 132 of the Indian Evidence Act. The expression is also not rendered superfluous because if given the meaning accepted by us it limits, the operation of the exclusionary clause to criminal prosecution, , as opposed to investigations and civil proceedings. It is to be noticed that although the English Criminal Evidence Act, 1898, which (omitting the immaterial words) provides that "Every person charged with an offence. shall be a competent witness for the defence at every stage of the proceedings" was not interpreted as conferring a right on the prisoner of giving evidence on his own behalf before the grand jury or in other words, it received a limited meaning; see Queen vs Rhodes(1). Before we leave this subject we may refer to certain rulings to which our attention was drawn. Mr. Jethmalini has referred to Karim Buksh vs Q.E., (2 ) Da vs Sivan Chetty(3), Parameshwarlal vs Emperor (4) , Emperor vs Johrit (3), Albert vs State of Kerala(6) These cases arose in connection with section 211 of the Indian Penal Code. The expression "causes to be instituted criminal proceedings" was held to include the making of a report to the police or to such officer whose duty it is to forward the report for action (1) (3) I.L.R. (5) A.I.R. 1931 All. 269. (2) I.L.R. (4) I.L.R. 4 Patna 472. (6) A.I.R. 1966 Kerala.1. 634 by the police. It is argued that in section 5 of the Indian Oaths Act the words 'criminal proceedings ' must receive wide interpretation. Mr. Jethmalini also relied upon Karam Ilahi vs Emperor(1) where a Division Bench of the Lahore High Court has held that, since according to the Criminal Procedure Code a person becomes an accused person as soon as he has been arrested by the police for an offence, the word 'accused ' in section 5 of the Indian Oaths Act must also receive a similar meaning. We have already shown that the exclusionary clause in section 5 is to be interpreted as a whole and 'criminal proceedings ' means a criminal inquiry or a trial before a court and the 'accused ' means a person actually arraigned, that is, put on a trial. In fact this meaning finds support even from the Lahore ease on which Mr. Jethmalini relies. The scheme of the two provisions being different it is impossible to use the meaning given in respect of section 211 of the Indian Penal Code, in aid of the construction of similar words in section 5 of the Indian Oaths Act. On the side of the State many cases were cited from the High Courts in India in which the examination of one of the suspects as a witness was not held to be illegal and accomplice evidence was received subject to safeguards as admissible evidence in the case. In those cases, section 342 of the Code and section 5 of the Indian Oaths Act were considered and the word 'accused ' as used in those sections was held to denote a person actually on trial before a court and not a person who could have been so tried. The witness was, of course, treated as an accomplice. The evidence of such an accomplice was received with necessary caution in those cases. These cases have all been mentioned in In re Kandaswami Gounder(2), and it is not necessary to refer to them in detail here. The leading cases are: Queen Emperor vs Mona Puna(3), Banu Singh vs Emperor(4), Keshav Vasudeo Kortikar vs Emperor(5 ) , Empress vs Durant(6) Akhoy Kumar Mookerjee vs Emperor(7), A. V. Joseph vs Emperor() Amdumiyan and others vs Crown(8), Galagher vs Emperor(10), and Emperor vs Har Prasad, Bhargava(11). In these cases (and several others cited and, relied upon in them) it has been consistently held that the evidence of an accomplice may be read although he could have been tried jointly with the accused. In some of these cases the evidence was re ceived although the procedure of section 337, Criminal Procedure Code was applicable but was not followed. It is not necessary to deal with this question any further because the consensus of opinion (1) A.T.R. (2) A.T.R. (3) I.L.R. (4) I.L.R. (5) I.L.R. (6) I.L.R. (7) I.L.R. (8) I.L.R. 3 Rang. (9) I.L.R. (10) I.L.R. (II) I.L.R. 45 All. 635 in India is that the competency of an accomplice is not destroyed because he could have been tried jointly with the accused but was not and was instead made to give evidence in the case. Section 5 of the Indian Oaths Act and section 342 of the Code of Criminal Procedure do not stand in the way of such a procedure. It is, however, necessary to say that where section 337 or 338 of the Code apply, it is always proper to invoke those sections and follow the procedure there laid down. Where these sections do not apply there is the procedure of withdrawal of the case against an accomplice. The observations of Cockburn, C.J. and Black burn and Mellor, JJ. in Charlotte Winsor vs Queen(1) must always be borne in mind. Cockburn, C.J. observed: "No doubt that state of things, which the resolution of the judges, as reported to have been made in Lord Hold 's time, was intended to prevent, occurred; it did place the prisoner under this disadvantage; whereas, upon the first trial that most important evidence could not be given against her, it was given against her upon the second, so that the discharge of the jury was productive to her of that disadvantage. I equally feel the force of the objection that the fellow prisoner was allowed to give evidence without having been first acquitted, or convicted and sentenced. I think it much to be lamented. " To keep the sword hanging over the head of an accomplice and to examine him as a witness is to encourage perjury. Perhaps it will be possible to enlarge section 337 to take in certain special laws dealing with customs, foreign exchange, etc. where accomplice testimony will always be useful and witnesses will come forward because of the conditional pardon offered to them. We are, therefore, of the opinion that Ethyl Wong 's evidence was admissible. The case was one under section 120 B of the Indian Penal Code. As the existence o f a conspiracy is proved beyond a shadow of doubt, section 10 of the Indian Evidence Act is attracted. That section provides : "10. Things said or done by conspirator in reference to common design. Where there is reasonable ground to believe that two or more persons have conspired together to commit an offence or an actionable wrong, anything said, done or written by any one of such persons in reference to their common intention, after the time when such intention (1) 636 was first entertained 'by any one of them, is a relevant fact as against each of the persons believed to be so conspiring, as well for the purpose of proving the existence of the conspiracy as for the purpose of showing that any such person was a party to it. " The conspiracy was headed by Yau Mockchi who in a sense was the brain behind the whole racket. The discovery with him of the visiting card and photograph of Laxmipat and the photograph and addresses of Balchand was an incriminating circumstance as Ethyl Wong was connected with Yau Mockchi on the one hand and these brothers at the other. Further letters and writings of all the brothers were seized which were related to the conspiracy. Unfortunately, the originals were not available at the trial but only photostats of the letters. The photostats have been proved to our satisfaction to be genuine photographs of the letters. The copies were made through the Indian Embassy and bore the certificate. The use of the photostats without the originals was questioned before us but not in the High Court. Since it was a pure question of law, we allowed it to be raised. It is submitted that expert testimony as to handwriting can only be based upon the examination of the originals and not photographs. It is pointed out that there is nothing in the Evidence Act which makes a photograph of a disputed writing the basis of conviction. Nor, it is submitted, expert testimony can be invited about it. Reliance is placed on M 'Cullough vs Munn(1) and Phipson on Evidence 10th Edition p. 146. In our opinion this submission cannot be accepted. Apart from the fact that this was not argued in the High Court and the handwriting was admitted there, the law as propounded is not sound. The originals were suppressed by the appellants after they were returned. The order of the Supreme Court of Hong Kong has not been produced before us and we do not know why the original documents were returned. Adequate precaution against the suppression of these documents apparently was not taken. This was perhaps necessary because the offence was a part of an international smuggling racket, in which offenders had to be tried in two different countries and both countries needed the documents as evidence. If the photostats were not available this prosecution would have been greatly jeopardised. Even if the originals be not forthcoming, opinions as to handwriting can be formed from the photographs. It is common knowledge that experts themselves base their opinion on enlarged photographs. The photos were facsimiles of the writings and could be compared with the enlargements of the admitted comparative (1) 637 material. In Phipson (10th Edn.) paragraphs 316/317 the rules as to identification of handwriting is stated from the Criminal Procedures Act, 1865 as follows : " Comparison of a disputed writing with any writing proved to be satisfaction of the judges to be genuine shall be permitted to be made by witnesses etc. . (para 316) In dealing with the scope of the rule, Phipson observes "Under the above Act, both the disputed and the genuine writings must be produced in court, and the former, if lost, cannot be compared, either from memory or from a photographic copy, with the latter, and the latter must also be duly proved therein." (para 317). Phipson himself in paragraph 316 observes that the production of 'real ' evidence is not now compulsory. For the first part of the proposition in paragraph 317 reference is made to M 'Cullough vs Munn.(1). That was an action for libel contained in a letter alleged to have been written by the defendant. The original was lost but a photographic copy of the letter was available, and the envelope had been preserved. The photograph was seen by the jury but the Judge ruled that the photograph was evidence of the contents of the letter but not of the handwriting and could not be compared with other admitted writings. The jury gave a verdict for the plaintiff which was set aside by the Divisional Court and a new trial was ordered. At the second trial, the photograph was not tendered but a 'plain copy ' was put in. The trial resulted in a verdict for the defendant. The Divisional Court refused to set aside the verdict. The plaintiff then relied upon Lucas vs Williams (2 ) claiming that the photograph was evidence. The Lord Chancellor and Holmes L.J. observed: "The plaintiff would have been justified in putting in the photograph as evidence of the contents of the libel, and apparently it was the only legal evidence by way of copy of its contents; and, I think, they might also, on the authority of the decision in Brookes vs Tichborne ; have used it for purposes of calling attention to peculiarities of spelling and use of capital letters and punctuation. " At the first trial Lord Chief Baron ruled (with which Wright, J.agreed in the King 's Bench) (1) (2) 638 .lm15 "that upon the loss of the original letter the photograph was admissible to prove the contents of that letter, but that it could not be used for purposes of comparison with genuine documents. " The above observations have received adverse comments from Wigmore (3rd Edition) Vol. III paragraph 797. The earlier cases probably took into account the possibility of trick photography and the changes likely by adjustment of the apparatus. Wigmore rightly points out that unless we are prepared to go to the length of maintaining that exact reproduction of the handwriting by photography is in the nature of things impossible, the photograph must be admissible in proof. Wigmore then observes "The state of the modern photographic art has long outlawed the judicial doubts above quoted. All that can be said is that a photograph of a writing may be made to falsify, like other photographs and like other kinds of testimony, and that a qualified witness affirmation of its exactness suffices to remove this danger, as much as any such testimonial danger can be removed. Ac cordingly, it is generally conceded that a photographic copy of handwriting may be used instead of the original, so far as the accuracy of the medium is concerned. " In the footnotes to the above passage many cases are cited from various countries and in regard to the Irish case just cited by us the author observes that it raised "a doubt which was perversely unnecessary". On the whole, we think that if the court is satisfied that there is no trick photography and the photograph is above suspicion, the photograph can be received in evidence. It is, of course, always admissible to prove the contents of the document, but subject to the safeguards indicated, to prove the authorship. This is all the more so in India under section 10 of the Evidence Act to prove participation in a conspiracy. Detection and proof of crime will be rendered not only not easy but sometimes impossible if conspirators begin to correspond through photographs of letters instead of originals, Many conspiracies will then remain unproved because one of the usual methods is to intercept a letter, take its photograph and then to send it on and wait for the reply. But evidence of photographs to prove writing or handwriting can only be received if the original cannot be obtained and the photographic reproduction is faithful and not faked or false. In the present case no such suggestion exists and the originals having been suppressed by the accused, were not available. The evidence of photographs as to the contents and as to handwriting was receivable. 639, Regarding the specimen writing in the letter Z 217, with which, the impugned writings were compared, we think the letter must be treated as genuine for the purpose of comparison of handwriting. The letter was written on June 1, 1960 from Bombay to one Begraj Choraria at Bidsedar. It was admittedly recovered. from Balchand appellant 's ancestral house. It was addressed to Dadaji Sahib and it contains numerous references to domestic matters which are usually written in such letters. Corroboration of some of the things said there was available from other sources. It is impossible to think that such a letter could have been forged and planted at Bidsedar in the ancestral home. The letters in BC series 1 45 were rightly compared with it to determine Balchand 's handwriting. The next question is whether Ethyl Wong 's identification of Laxmipat and Balchand, whose photographs were shown to her at the Air Terminal at Bombay should be accepted. Reference in this connection has been made to English cases in which it has been laid down that the showing of a large number of photographs to a witness and asking him to pick out that of the suspect is a proper procedure but showing a photograph and asking the witness whether it is of the offender is improper. We need not refer to these cases because we entirely agree with the proposition. There can be no doubt that if the intention is to rely on the identification of the suspect by a witness, his ability to identify should be tested without showing him the suspect or his photograph, or furnishing him the data for identification. Showing a photograph prior to the identification makes the identification worthless. If the prosecution had to rely on the identification by Ethyl Wong to fix the identity of the suspects, the fact that ' photographs were shown would have materially affected the value of identification. But the prosecution was not required to rely on Ethyl Wong 's identification. It had other evidence on this point. Further, before Ethyl Wong had seen the photographs she had given the names and description of the suspects. In addition to identifying the suspects from the photograph, Ethyl Wong had shown the flat in Bombay and the record of telephone calls at her hotel showed that she was in touch with the suspect in Bombay. Again, she spoke of the suspect at Calcutta and gave a description of the visiting card without having seen it. This visiting card is blue in colour and has the device in the left hand corner of a heart with a Swastika as an inset in the heart. When she pointed out the flat, she was accompanied by a customs officer who did not even know what it was all about. It is also significant that Balchand 's photograph was demanded from Hong Kong. It was also said that if the photograph was not available, address and telephone number would do. 'In Yau Mockchi 's possession photographs, addresses and visiting cards were found. There are other letters which speak of certain goods 640 to be brought and the account books show that they were sent from Hong Kong. One significant article is a Rolex watch which was asked for and was bought in Hong Kong. The letters themselves and the account of gold purchased etc. and the commission paid speak volumes. Gold was described as 'lali ' and its fineness and price were mentioned. To refer to gold as 'lali ' in the letters was to employ a childish code which is easily broken when one sees the weight of 'lali ' in tolas, the price and the fineness. The internal evidence of the letters furnishes all necessary clues to the identity and inter relation of the several conspirators. No wonder the identity of the writers and recipients of the letters was not specially challenged in the High Court. Mr. Jethmalini attempted to argue several questions of fact but in view of the practice of this Court and the concurrent findings of the High Court and the Magistrate, we have not attempted to go into the evidence. In fact we can only say that there is such overwhelming evidence of the complicity of the appellants that when the points of law fail there is very little to be said in their favour. The last contention that there has been discrimination and violation of articles 14 and 20 is without substance. Reliance was placed on section G. Jaisinghani vs Union of India and others(1) that the absence of arbitrary power is the first essential of the rule of law and here there is room for selecting one out of several accused to lead accomplice evidence. Reference was made to other cases of this Court where unrestrained power of selection without guidelines was held to offend article 14. But the case of the accomplice evidence is different. Section 337 of the Code of Criminal Procedure has already been held not to offend article 14 and the matter of taking accomplice evidence outside section 337 by using section 494 or otherwise is not very different. We do not hold that there was any breach of the Constitution in receiving Ethyl Wong 's evidence, To hold otherwise would shut out accomplice evidence completely. There is thus no force in the appeals. Mr. Jethmalini argued that the High Court was wrong in enhancing the sentences of Balchand and Poonamchand appellants and the sentence of Laxmipat which is the maximum permissible under law was also too severe. Gold smuggling has become one of the major difficulties in maintaining our economic structure. The case evidences an international ring of smugglers. In view of this we see no reason to interfere. The appeals will stand dismissed. Appellants to surrender to their bail. R.K.P.S. (1) ; Appeals dismissed.

The three appellants were convicted under section 120B I.P.C. and section 167(81) of the Sea Customs Act for having entered into a criminal conspiracy among themselves and with a Chinese citizen in Hong Cong to smuggle gold into India with the, help of E, an Airlines stewardess. E gave evidence at the trial as a witness for the prosecution. Her testimony was clearly that of an accomplice and although she could have been prosecuted, she was not arraigned. It was contended, inter alia, on behalf of the appellants (i) that it was the duty of the prosecution and/or the Magistrate to have tried E jointly with the appellants and the breach of this obligation vitiated the trial; in the alternative, E 's testimony must be excluded from consideration and the appeal re heard on the facts; (ii) that no oath could be adminis tered to E as she was an 'accused person in 'a criminal proceeding ' within the meaning of section 5 of the Indian Oaths Act as shown by her own statements made to the Customs officials and in Court; she could not therefore be examined as a witness; furthermore, the provisions relating to tender of pardon to accomplices contained in Chapter XIV of the Criminal Procedure Code do not apply to offences under section 120B (first Part) I.P.C. and section 168 (81) of the Sea Customs Act; the only ways in which E 's testimony could have been obtained was either to, take her plea of guilty and convict and sentence her or withdraw the prosecution against her under section 494 Cr. P. C. Not to send up a person for trial with the sole object of taking accomplice evidence is illegal. Furthermore, under section 351 read with section 91 of the Code it was the duty of the Court to. have detained E and included her in the array of accused before it; (iii) the evidence of E in respect of the identification of two of the appellants was inadmissible because she had been shown "heir photographs before her statements were taken; (iv) the photostats of certain document 's without the production of the originals were wrongly admitted and should have been excluded; and (v) selection, of E as once out of several accused ",,is discriminatory. HELD : dismissing the appeal, (i) The offences were non cognizable and were investigated by Customs officers under the Sea Customs Act and not by the Police under Chapter XIV of the Code. Therefore, no question of the application of sections 169 and 170 arose. The accused were placed on trial on the complaint of the 625 Assistant Collector of Customs under the authority of the Chief Customs Officer, Bombay. Although the Magistrate was taking cognizance of offences and not of offenders, it was no part of his duty to find offenders in view of the bar of section 187A if the complaint did not name a particular offender. All that the Magistrate could do was to take a bond from E for her appearance in court if required. [629 C E] Under section 118 of the Evidence Act, all persons are competent to testify unles the court considers that they are prevented from under standing the questions put to them for reasons indicated in that section. Under section 132 a witness is not excused from answering any relevant question upon the ground that the answer will incriminate him or expose him to a penalty of forfeiture of any kind and when compelled to answer such question is protected 'against arrest or prosecution by the safeguard in the proviso to section 132 as well as in Art, 20(3). The evidence of E could not therefore be ruled out, as that of an incompetent witness. Since E was a self confessed criminal, in conspiracy with others who were being tried, her evidence was accomplice evidence. section 133 of the Evidence Act makes the accomplice a competent witness against an accused person. For this reason also E 's testimony was that of a competent witness. [630 B H] (ii) The competency of an accomplice is not destroyed because he could have been tried jointly with the accused but was not and was instead made to give evidence in ;the case. Section 5 of the Indian Oaths Act and section 342 of the Code of Criminal Procedure do not stand in the way of such a procedure. If any accomplice is not prosecuted but is tendered as a witness, the bar of the Indian Oaths Act ceases because the person is not an accused person in a criminal proceeding. The interrelation of section 342(4) of the Code and section 5 of the Indian Oaths Act. both of which prohibited the giving of oath or affirmation to an accused on trial is fully evidenced by the simultaneous amendment of the Code in 1955 by which the right to give evidence on oath is conferred on the accused and provisions in pari materia are made in section 5 of the Oaths Act. The only prohibition against the use of accomplice testimony exists in the rule of caution about corroboration and the interdiction, of influence in any form by section 343 of the Code. If any influence by way of promise of pardon has to be made, the provisions of sections 337 and 338 or of the Criminal Law Amendment Act have to be observed. That, however, applies to special kinds of cases of which the present was not one. [632 F H] The expression, 'criminal proceeding ' in the exclusionary clause of section 5 of the Indian Oaths Act cannot be used to widen the meaning of 'he word 'accused '. The same expression is used in. the proviso to section 132 of the Indian Evidence Act and there it means a criminal trial and not investigation. The same meaning must be given to the exclusionary clause of section 5 of the Indian Oaths Act to make it conform to the provisions in pari materia to be found in sections 342, 342A of the Code and section 132 of the Indian Evidence Act. The expression is also not rendered superfluous because, given this meaning, it limits the operation. of the exclusionary clause to criminal Prosecutions as opposed to investigations had civil proceedings. [633 D F] (iii) If the court is satisfied that there is no trick photography and the photograph is above suspicion, the photograph can be received in evidence. It is, of course, always admissible to prove the contents of the document, but subject to the safeguards indicated to prove the authorship. This is all the more so in India under section 10 of the Evidence Act 626 to prove participation in a conspiracy. Detection and proof of crime will be rendered not only not easy but sometimes impossible if conspirators begin to correspond through photographs of letters instead of originals. But evidence of photographs to prove writing or handwriting can only be received if the original cannot be obtained and the photo graphic reproduction is faithful and not faked or false. In the present case no such suggestion exists and the originals having been suppressed by the accused, were not available. The evidence of photographs as to the contents and as to handwriting was receivable. [638 F H] (iv) If the prosecution had to rely only on the identification by E to fix the identity of the suspects, the, fact that their photographs were shown to her would have materially affected the value of identification. How, ever there was considerable other evidence of identification and the prosecution was not required to rely only on this identification. (v) Section 337 Cr. P.C. has been held not to offend article 14 and the matter of taking accomplice evidence outside section 337 by using section 494 or otherwise is not very different. It cannot be held that there was any breach of the Constitution in selecting E out of several accused to give evidence. [640 F] Case law discussed.

Civil Appeal No. 1773 of 1971. (From the Judgment and order dated 20 2 1970 of the Allahabad High Court in Civil Misc. Writ Petition No. 2943/69) S.C. Manchanda and O.P. Rana, for the Appellants. V.S. Desai, P.B. Agarwala and B.R. Agarwala, for the Respondents. 838 The Judgment of the Court was delivered by JASWANT SINGH, J. This appeal by certificate which is directed against the judgment and order dated February 20, 1970, passed by the High Court of Judicature at Allahabad in writ petition No. 2943 of 1969 raises two interesting ques tions viz. ( 1 ) whether carbon paper is paper falling within the purview of the word 'paper ' as used in serial No. 2 of Notification Ng. ST 3124/X 1012(4) 1964 dated July 1, 1966, issued by the Governor of Uttar Pradesh in exercise of the power vested in him under section 3 A of the U.P. Sales 'Fax Act, 1948 (U.P. Act No. XV of 1948) so as to be liable to sales tax at the point and at the rate specified in the Schedule to the Notification and (2) whether ribbon is an accessory or a part of the typewriter. It appears that the respondent which is a company incor porated under the Indian Companies Act dealing in carbon paper, typewriter, ribbon, stepler machines and stepler pins, despatches the said goods from its head office at Bombay to its branch office at Kanpur wherefrom sales there of are effected in the State of Uttar Pradesh. During the course of the assessment proceedings for the assessment year 1956 57, the respondent claimed that carbon paper not being paper falling within the ambit of Entry No. 2 of the Schedule to the aforesaid Notification but a specialised article used for copying purposes, its turnover had to be assessed at the rate of 2 per cent prescribed for unclassi fied goods and not at the rate of 6 paise per rupee i.e. 6% prescribed in the aforesaid Notification. The respondent further claimed that ribbon being an accessory anti not a part of the typewriter, its turnover could not be subjected to sales tax at the rate of 10% prescribed inter alia for typewriters and parts thereof by Notification No. ST 1738/X I012 1963 dated June 1, 1963. The Sales Tax Officer, (Section IV), Kanpur, did not accede to the conten tions of the respondent and holding that carbon paper re mained paper even after going through certain chemical processes and that ribbon was a part of the typewriter, taxed the turnover of carbon paper for the period commencing from July 1, 1966, to the end of March, 1967 at 6% and that of ribbon at 10%. He, however, taxed the turnover of carbon paper for the period April 1, 1966 to June 30, 1966 at 2%. The validity and correctness of this order in so far as it related to the levy of tax on carbon paper at 6% and ribbon at 10% was challenged by the respondent by means of the aforesaid writ petition before the High Court at Allahabad which by its aforesaid judgment and order allowed the same and quashed the levy. Hence this appeal. Appearing in support of the appeal, Mr. Manchanda has assailed the reasoning and approach of the High Court and has vehemently urged that carbon paper does not lose its character as paper even after being subjected to chemical processes and that ribbon is not an accessory but an essen tial part of the typewriter. We have carefully considered the submission made by Mr. Manchanda but find ourselves unable to accept the same. 839 It is well settled that a word which is not defined in an enactment has to be understood in its popular and commer cial sense with reference to the context in which it occurs. In Attorney General vs Winstanley (1), Lord Tenterden started as follows: "Now, when we look at the words of an Act of Parliament, which are not applied to any particular science or art, we are to construe them as they are understood in common language. " In Grenfell vs Commissioners of Inland Revenue (2) Pollock, J, pointed out: "As to tile construction of the Stamp Act, I think it was very properly urged that the statute is not to be construed according to the strict or technical meaning of the language contained in it, but that it is to be construed in its popular sense, meaning, of course, by the words 'popular sense ' that sense which people conversant with the sub ject matter with which the statute is dealing would attribute to it." The word 'paper ' admittedly not having been defined either in the U.P. Sales Tax Act, 1948 or the Rules made thereunder, it has tO be understood according to the afore said well established canon of construction in the sense in which persons dealing in and using the article understand it. It is, therefore, necessary to know what is paper as commonly or generally understood. The said word which is derived from the name of reedy plant papyrus and grows abundantly along the Nile river in Egypt is explained in 'The Shorter Oxford English Dictionary (Volume 2) (Third Edition) as "a substance composed of fibres interlaced into a compact web, made from linen and cotton rags, straw, wood, certain grasses, etc., which are macrated into a pulp, dried and pressed; it is used for writing. printing, or drawing on, for wrapping things in, for covering the interior of wails, etc. " In 'Encyclopaedia Britannica ', (Volume 13), (15th Edition), 'paper ' has been defined as the basic material used for written communication and the dissemination of information. " In the Unabridged Edition of "The Randon House Dicition ary of the English Language", the word 'paper ' has been defined as "a substance made from rags, straw wood ' or other fibrous material, usually in thin sheets, used to bear writing or printing or for wrapping things, decorating walls etc. " From the above definitions, it is clear that in popular parlance, the word 'paper ' is understood as meaning a sub stance which is used for bearing, writing, or printing, or for packing, or for drawing on, or for decorating, or cover ing the walls. Now carbon paper which is manu (1) [1831] 2 Dow & Clark 302=(1901) ; (2) at 248. 840 factured by coating the tissue paper with a thermo setting ink (made to a liquid consistency) based mainly on wax, non drying oils, pigments and dyes by means of a suitable coat ing roller and equalising rod and then passing it through chilled rolls cannot be used for the aforesaid purposes but is used. according to 'The Randon House Dictionary of the English Language ' between two sheets of plain paper in order to reproduce on the lower sheet that which is written or typed on the upper sheet i.e. making replicas or carbon copies cannot properly be described as paper. It will be well at this stage to refer to a few deci sions which confirm our view. In Kilburn & Co. Ltd. vs Commissioner of Sales Tax U.P., Lucknow(I) a Bench of Allahabad High Court while examining the very same entry in the Notification with which we are concerned in the instant case and holding that "Ammonia paper and ferro paper used for obtaining prints and sketches of site plans are not paper us understood generally and, therefore, will not come within the expression 'paper other than hand made paper ' as used in Notification No. ST 3124/X 1012(4) dated 1st July, 1966, issued under section 3 A of the U.P. Sales Tax Act, 1948" observed : "The word 'paper ' has not been defined in the Act or the Rules, and, as such, it has to be given the meaning which it has in 'ordinary parlance. Paper, as understood in common parlance, is the paper which is used for printing. writing and packing purposes. " In Sree Rama Trading Company vs State of Kerala(2) the High Court of Kerala after a good deal of research held that cellophane is not paper coming within entry 42 in the First Schedule to the Kerala General Sales Tax Act, 1963, as it stood at the time relevant to the year 1966 67. In State of Orissa vs Gestetner Duplicators (P) Ltd.(3) the HIgh Court of Orissa held that stencil paper was not paper within the meaning of serial No. 7 A of the Schedule to the Notification issued by the State Government under the first proviso to section 5(1) 'of the Orissa Sales Tax Act, 1947 and that sale of stencil paper was, therefore, not taxable at the rate of 7 per cent but is exigible to tax at the rate of 5 per cent. In Commissioner of Sates Tax, U.P, vs S.N. Brothers(1) this Court while upholding the decision of the Allahabad High Court which held that 'food colours ' and 'syrup es sences ' arc .edible goods while 'dyes and colours and compo sitions thereof and 'scents and perfume ' did not seem prima facie to connote that they are edible goods observed: (1) 31 S.T.C. 625. (2) 28 S.T.C. 469. (3) 33 S.T.C. 333. (4) 31 S.T.C. 302. 841 "The words 'dyes and. colours ' used in entry No. 10 and the words: scents and perfumes ' used in entry No. 37 have to be construed in their own context and in the sense, as ordinarily understood and attribut ed to these words by people usually conver sant with and dealing in such goods. Simi larly, the words "food colours" and "syrup essences", which are descriptive of the class of goods the sales of which are to be taxed under the Act, have to be construed in the sense in which they are popularly understood by those who deal in them and who purchase and use them. " Bearing in mind the ratio of the above mentioned decisions, it is quite clear that the mere fact that the word 'paper ' forms part of the denomination of a specialised article is not decisive of the question whether the article is paper as generally understood. 'the word 'paper ' in the common parlance or in the comercial sense means paper which is used for printing, writing or packing pur poses. We are, therefore, clear of opinion that Carbon paper is not paper as envisaged by entry 2 of the aforesaid Notification. Regarding ribbon also to which the above mentioned rule construction equally applies, we have no manner of doubt that it an accessory and not a part of the typewriter (unlike spool) though it may not be possible to use the latter without the former. Just as aviation petrol is not a part of the aero plane nor diesel is a part of a bus in the same way, ribbon is not a part of the type writer though it may not be possible to type out any matter without it. The very same question with which we are here confronted came up for decision before the High Court of Mysore in State of Mysore vs Kores (India)Ltd. (1) where it was held: "Whether a typewriter ribbon is a part of a typewriter is to be considered in the light of what is meant by a typewriter in the commer cial sense. Typewriters are being sold in the market without the typewriter ribbons and therefore typewriter ribbon is not an essen tial part of a typewriter so as to attract tax as per entry 18 of the Second Schedule to the Mysore Sales Tax Act, 1957. " For the foregoing reasons, we do not find any force in this appeal which is dismissed but in the circumstances of the case without any order as to costs. M.R. Appeal dismissed (1) 26 S.T.C. 87.

The Governor of U.P. issued a Notification under Section 3 A of the U.P. Sales Tax Act, 1948, and the Sales Tax Officer (Section IV) Kanpur, ordered the respondent company to pay tax on the turnover of ' carbon paper at 6%, and that of ribbon at 10%, as per entry 2 of the Notification. The respondent challenged the order in a writ petition before the High Court. contending that carbon paper was not 'paper ' with the meaning of entry 2 and its turnover was therefore to be assessed at the rate of 2% prescribed for unclassified goods, and that 'ribbon ' being an accessory and not a part of the typewriter, could only be taxed at the rate of 6% and not 10%. The High Court allowed the writ and quashed the levy. The appellant contended that carbon paper does not lose its character as paper in spite of being subjected to chemi cal processes, and that ribbon is not an accessory but an essential part of the typewriter. Dismissing the appeal the Court, HELD :(1) A word which is not defined in an enactment has to be understood in its popular and commercial sense with reference to the context in which it occurs. It has to be understood according to the well established canon of construction in the sense in which persons dealing in and using the article understand it. [839 A B] Attorney General vs Winstanley (1831) 2 Dow & Clark 302:(1901) ; , and Grenfell vs Commissioner of Inland Revenue (1876)1 exhibit D. 242 at p. 248 applied. (2) The word 'paper ' is understood as meaning a sub stance which is used for bearing writing or printing, or for packing. or for drawing on. or for decorating, or covering the wails. Carbon paper cannot be used for these purposes but is used for making replicas or carbon copies, and cannot properly be described as paper. [839 G, 840 A B] K. Kilburn & Co. Ltd. vs Commissioner of Sales Tax, U.P. Lucknow (31 S.T.C. 625), Sree Rama Trading Company vs State of Kerala (28 S.T.C. 469). state of Orissa vs Gestetner Duplicators (P) Ltd. (33 S.T.C. 333 ) Commissioner of Sales Tax, U.P.v. S.N. Brothers (31 S.T.C. 302) applied. (3) The above mentioned rule of construction equally applies to ribbon. an accessory and not a part of the typewriter, though it may not be possible type out any matter without it. [841 D E] State of Mysore vs Kores (India) Ltd. (26 S.T.C. 87) ap proved.

NO. 893 and 967 of 1979 and W. P. No, 295 of 1980 Under Article 32 of the Constitution of India Dr. Y. section Chitale, and Vineet Kumar for the petitioners m W. P. NOS. 823 & 967 of 1979. T. M. Sampat and P. N. Ramnalingam for the Petitioners in W. P. No. 295/80. Anil Devan, K. section Ramamurthy, V. M. Tarkunde, M. K. D. Namboodry and section BalaKrishnan for the respondents in W. P. Nos. 893 & 967 of 1979 and W. P. No 295 of 1980. The Judgment of the Court was delivered by TULZAPURKAR, J. By these three writ petitions filed under article 32 of the Constitution the petitioners, who are tenants in a building belonging to respondent No. 2 Society, have challenged the validity of the exemption granted to all buildings owned by all Co operative Societies in the State of Tamil Nadu from all the provisions of the T. N. Act 18 of 1960 under sec. 29 thereof. The facts giving rise to the aforesid challenge lie in a narrow compass. The petitioners are tenants in different portions on the ground floor of the building bearing Door No. 188, Mount Road, Madras belonging to second respondent which is an Apex Society registered under the Tamil Nadu Co operative Societies Act, 1961. It appears that the property was purchased in 1961 by the second respondent from its previous owners M/s. Mohammed Ibrahim and Company, and soon thereafter the second respondent applied to the State Government under sec. 29 of the Act and sought exemption for it from all the provisions of the Act But on hearing the objections raised by the petitioners and other tenants the application was rejected. Respondent No 2 thereupon made two attempts to evict the petitioners from their respective premises. The first was on the ground that the premises are required by it for its own occupation but at the end of a long drawn out litigation respondent No. 2 failed to obtain possession; the second was on the ground that it required the premises for demolition and new construction and it was during the tendency of this litigation that the State Government issued its Notification No. II (2) H.O. 6060/76 dated 21.11 1976 under sec. 29 419 of the Act whereby the State Government exempted the buildings A belonging to all Co operative Societies in the State of Tamil Nadu from all the provisions of the Act. On the issuance of this Notification respondent No. 2 Withdrew its eviction petitions preferred on the ground of demolition and new construction and served notices upon the petitioners under sec. 106 of the Transfer of Property Act terminating their tenancies and filed civil suits against them in the City Civil Court, Madras for recovery of vacant possession of the premises in their respective occupation. The petitioners have filed their written statements and suits are awaiting trial. But since the protection available to them has been withdrawn the petitioners arc facing the imminent prospect of suffering eviction decrees against them and therefore, have approached this Court by means of these writ petitions challenging the constitutional validity of the Notification in question of the ground that the same is violative of article 14 of the Constitution and have obtained stay of further proceedings in the suits. The impugned Notification dated 21st November, 1976 runs thus: "No. II (2) H.O. 6060176 In exercise of the powers conferred by Sec. 29 of the Tamil Nadu Buildings (Lease and Rent Control) Act 1960 (Tamil Nadu Act 18 of 1960), the Government of Tamil Nadu hereby exempts the. buildings owned by all Government Undertakings including Government Companies registered under the Indian Central Act I of 1956) and by all the Co operative Societies from all the provisions of the said Act. " As was done in the earlier case dealing with the total exemption granted in favour of all buildings belonging to public religious trusts and public charities, here also Counsel for the petitioners fairly stated that treating the buildings owned by all the Co operative Societies in the State of Tamil Nadu as falling into one group while exercising the power under sec. 29 of the Act will have to be regarded as a rational classification based on an intelligible differentia inasmuch as Co operative Societies while carrying on their activities in various fields do serve a great public purpose of attaining the social and economic welfare of a large section of the people belonging to the middle class and the rural class by encouraging thrift, selfhelp and mutual aid amongst them and by eliminating the middle 420 man and as such do form a distinct group different from other bodies undertaking similar activities on commercial lines and as such buildings belonging to Co operative Societies may need special or preferential treatment in some matters like registration of documents, payment of stamp duty, recovery of their dues etc. at the hands of the State Government but according to Counsel the differentia on which this classification is based has no nexus with the object with which the powers to grant exemption has been conferred upon the State Government under sec. 29 of the Act and since the impugned Notification does not satisfy the test of nexus the exemption granted to all such buildings cannot be sustained and will have to be regarded as discriminatory and violative of article 14. By way of elaborating the aforesaid contention Counsel for the petitioners urged that the Act was put on the statute book for the purpose of curbing the two evils of rack renting and unreasonable eviction and that the power to grant exemption could as per the guidance afforded by the scheme all the provisions of the Act be exercised by the State Government ill cases where the mischief sought to be remedied by the Act is neither prevalent nor apprehended are in cases where an inflexible application of the law is likely to result in undue hardship or in cases where the beneficial provision of the Act is likely to be or is being abused by persons for whom it is intended and according to Counsel the exemption in favour of the buildings belonging to all Co operative Societies in the State of Tamil Nadu does not conform to such guidance. Counsel pointed out that Rule 11 of the Rules made under the T.N. Co operative Societies Act 1961 specifies as many as 13 different classes of Co operative Societies, such as farming society, credit society, housing society, marketing society etc. and the impugned Notification indiscriminately and unconditionally exempts all buildings belonging to all types of Co operative Societies with no regard to their nature or functions Further, according to sec. 4 of the T.N. Co operative Societies Act the very object of every Co operative Society is the promotion of the economic interest of its Members and sec. 62 of that Act provides not only for payment of dividends o n shares to members but also for payment of bonus to members and paid employees of the Society. Hence it is unrealistic to assume that Co operative Societies are not or will not indulge in rack renting or unreason eviction or will be ideal landlords whose tenants will not be in need of any statutory protection. Tn other words Counsel urged that there was and is no warrant of any 421 presumption that Co operative Societies qua landlords will not indulge in rack renting or will not unreasonably evict tenants; in fact they would not be different from other private landlords so far as the two evils sought to be curbed by the Act are concerned and therefore Counsel urged that the exemption granted could not be said to be in conformity with the guidance afforded by the scheme and the provisions of the Act. In support of the above contention Counsel relied upon a decision of this Court in Baburao Shantaram More vs The Bombay Housing Board and Anr.(1) where the validity of sec. 3 A of the Bombay Housing Board Act, 1951 was challenged as infringing article 14. It was urged in that case that sec. 3 A exempted lands and buildings belonging to the Bombay Housing Board from the operation of the Bombay Rent Act, 1947 while lands and buildings belonging to numerous Co operative Housing Societies, which were similarly situated and whose object was also to solve housing problems, were not given any exemption from the operation of the Rent Act and the result was that while tenants of the Co operative Housing Societies were fully protected against unreasonable eviction and enhancement of rent, the tenants of the Housing Board were denied such protection and therefore sec. 3 A was violative of article 14. The contention was negatived on the ground that the Housing Board and the Cooperative Housing Societies incorporated under the Cooperative Societies Act were not similarly situated and in that behalf this Court observed thus: "Further, though these Co operative Housing Societies are no doubt incorporated bodies, they nevertheless may earn profits which may be distributed amongst their members. The Board, on the other hand, is incorporated body brought into existence for the purpose of framing housing schemes to solve the problem of acute shortage of housing in Bombay. There are no share holders interested in the distribution of any profits. It is under the control of the Government and acts under the orders of the Government. In effect, it is a Government sponsored body not having any profits making motive. No material has been placed before us which may remotely be regarded as suggesting, much less proving, that Co operative Housing (1) ; 422 Societies or their members stand similarly situated vis a vis the Board and its tenants. " Relying upon the above observations Counsel for the petitioners submitted that this Court had recognised the position that various activities are undertaken by Cooperative Societies with the motive of earning profits and as such there was and is no warrant for treating them differently from other private landlords in the context of two evils sought to be remedied by the Act and in this sense the exemption granted does not satisfy the test or nexus and therefore the same infringes article 14. The above contention so presented, though seemingly plausible, will, on deeper scrutiny, be found to be without substance and we shall presently indicate our reasons for saying so. It is true that under sec. 4 of the Tamil Nadu Co operative Societies Act the very object of every Co operative Society registered thereunder is the promotion of economic interests of its members and section 62 of the Act provides for payment of dividends on shares to its members as also for payment of bonus to its members and paid employees. But these aspects of a Co operative Society do not mean that it could be linkened to any other body undertaking similar activities on commercial lines and to do so would be to miss the very basis on which the cooperative movement was launched and propagated and has been making progress in the country during the last several decades. Indisputably, Co operative Societies which carry on their activities in various fields do 50 for the purpose of attaining the social and economic welfare of a large section of the people belonging to the middle class and the rural class by encouraging thrift, self help and mutual aid amongst them, especially by eliminating the middle man. But the object of promoting the economic interests of the members has to be achieved by following cooperative principles where the profit motive will be restricted to a reasonable level unlike other commercial bodies where sky` is the limit so far as their desire to earn profits is concerned. Sections 4 and 62 of the T.N. Co operative Societies Act and Rule 46 of the Rules made under that Act bring out this aspect of the matter very eloquently. Section 4 itself states that a society, which has as its object the promotion of economic interest of its members in accordance With cooperatives principle, may, subject to the provisions of the Act be registered thereunder In other words the promotion of economic interests of the members has to be achieved in accordance with co operative principles and the realisation thereof has been made subject to the provisions of the 423 Act. Section 62 which deals with disposal of net profits puts A restrictions on the disbursement of such profits and it runs as follows: "62. Disposal of net profits ( 1 ) (a) A registered society shall out of its net profits as declared by the Registrar for the purposes of this Act in respect of any co operative year contribute such amount not exceeding, (i) five percent of the net profits to the co operative development fund; and (ii) two per cent of the net profits to the co operative education fund, as may be specified in the Rules. (b) Such contribution shall be made within such time and in such manner as may be prescribed. 2) The balance of the net profits so declared shall be appropriated firstly, for being credited to a reserve fund, the amount so credited being not less than twenty per cent, but not exceeding thirty per cent, af the net profits; secondly, towards contribution to such other funds and at such rates as may be specified in the Rules: thirdly, towards payment of dividends on shares to members at such rate as may be specified in the Rules; fourthly, towards payment of bonus to members and paid employees of the registered society at such rate and subject to such conditions as may be specified in the Rules; fifthly, towards contribution to such other funds and such rates as may be specified in the by laws; sixthly, towards contribution to the common good fund at such rate not exceeding ten per cent of the net profits as may be specified in the Rules; and 424 seventhly, the remainder, if any, of the net profits being credited to the reserve fund. " Rule 46 prescribes the limits on payment of dividends on shares to its members as also on payment of bonus to its members and paid employees. Sub Rule (3) of Rule 46 says that the payment of dividends on shares to members by a Society shall not exceed 6 percent per annum on the paid up value of each share; provided that the Government may by special or general order permit any Society or class of Societies to pay dividend at the rate exceeding 6 per cent. Similarly under Sub Rules (4) and (5) restrictions have been placed on payment of bonus to members and to paid employees. In view of these provisions it will appear clear that in the matter of distribution of profits by way of payment of dividend to members and payment of` bonus to members as well as paid employees restrictions have been placed by law and the same is maintained at a reasonable level and considerable portion of the net profits is apportioned and required to be carried to various kinds of funds, like cooperative development fund, co operative education fund, reserve fund etc. In fact it is such statutory appropriations and restrictions on payment of dividends and bonus which differentiates Co operative Societies from other bodies undertaking similar activities on commercial lines and therefore, the buildings belonging to such Co operative Societies are substantially different from the buildings owned by private landlords. Further, it has to be appreciated that these statutory provisions are applicable to all types of Co operative Societies specified in Rule 14 whatever be their nature or functions. The profit element being maintained at a reasonable level by provisions of law in all types of Co operative Societies there is every justification for the assumption that no cooperative society will indulge in rack renting or unreasonable eviction. In this view of the matter if the State Government came to the conclusion that in the case of Co operative Societies there being no apprehension that they would indulge in either of these two evils exemption from the provisions of the T.N. Act No. 18 of 1960 should be granted in favour of buildings belonging to such Co operative Societies it will have to be regarded as a legitimate exercise of the power conferred on it under section 29 of the Act the same being in conformity with the guidance afforded by the preamble and provisions of the Act in that behalf. Besides, on the factual sides of the issue it has been specifically averred in the counter affidavit filed on behalf of the State Govern 425 ment that it duly took note of the fact that all types of Co operative Societies functioning in Madras City and at several centers throughout the State as a class were engaged in various kinds of activities promoting social welfare, rural development and economic good by providing employment to lacs of people and were doing excellent work by way of implementing one of the Directive Principles of State Policy embodied in article 43 of the Constitution, that several complaints were received from these Co operative Societies that they were facing problems arising out of a literal application of the T.N. Act 18 of 1960, particularly in the matter of securing accommodation in their own buildings for carrying on their activities and that they got involved in long drawn out litigations in that behalf and requesting for an exemption from the provisions of the Act so that they could be relieved of the hardships from which they were suffering; it has been further averred that the Government also took note of the fact that it was not the business activity of any Co operative Society including even a Co operative Housing Society to purchase buildings for the purpose of letting them out and earning income therefrom and as such there was no apprehension of indulging in rack renting on their behalf and that on a consideration of all the relevant factors the Government was satisfied that the protection given to the tenants of such buildings, if withdrawn, would not result in rack renting or unreasonable eviction and that the granting of exemption to them was necessary to relieve them of great hardship lt may be stated that all these averments have gone unchallenged and in our view the facts and circumstances put forward by the State Government clearly show that the differential on the basis of which the classification was made had a clear nexus with the object with which the power to grant exemption has been conferred upon the State and therefore the impugned Notification will have to be regarded as valid In regard to respondent No. 2 being the Apex Society herein, the additional factors taken into consideration were that out of its total share capital of 13.78 crores the State Government 's contribution was to the tune of 12.81 crores, that the Government had guaranteed the loans borrowed by it for its working capital. that as the apex body it had membership of about 1488 primary societies (Handloom Weavers Co operative Societies and that it had 34 branches and two godowns in Madras and was required to pay for its rented premises rent at the rate of Rs. 2 50 per square foot while the tenants of their own building were paying rent at the rate of 20 paisa per square feet; respondent No. 2 society was also involved in a long 426 drawn out litigation under the provisions of the T.N. Act 18 of 1960 In other words, respondent No 2 society was a glaring instance of undue hardship being suffered by a Co operative Society as a result of the literal application of the Act. We are sure that a large number of similar instances must have prompted the State Government to issue the impugned Notification which as we have said above will have to be regarded a legitimate exercise of power conferred on the State Government under sec 29 of the Act Counsel has of course placed strong reliance upon the observations made by this Court in Baburao Shantaram 's case (supra) which have been quoted above in support of his contention but in our view neither the ratio nor the observations are of any avail to the petitioners. It will be clear at once that the decision in question is no authority for the proposition that exemption from the provisions of any rent control enactment cannot be granted in favour of the buildings owned by Co operative Societies. the case was con concerned with the constitutional validity of sec 3 A of the Bombay Housing Board Act, 1951 where under exemption had been granted to lands and buildings belonging to the Bombay Housing Board from the operation of the Bombay Rent Act, 1941 and its validity was upheld by this Court. One of the contentions urged before the Court was that buildings belonging to Co operative Housing Societies in Bombay were similarly situated as the buildings belonging to the Housing Board inasmuch as the object served by Co operative Housing Societies and the Housing Board was the same namely, solving the housing problems of the city of Bombay and even so, though the tenants of Co operative Housing Societies were fully protected against unreasonable eviction and enhancement of rent, the tenants of Housing Board were denied such protection and therefore sec. 3 A was discriminatory and this contention was negatived by the Court by observing that the Co operative Housing Societies and their members were not similarly situated vis a vis the Board and its tenants and while pointing out the difference the Court stated that while Cooperative Housing Societies may earn profits distributable among its members there was no question of the Housing Board making any profits. The Court was not concerned with the question as to whether a similar exemption if granted to buildings belonging to Co operative Societies would be valid or rot. The difference pointed by this Court was sufficient to refute the charge of discrimination levelled against the particular piece of legislation (sec. 3 A of the Bombay Housing Boards Act 1951) but it 11 will be fallacious to rely upon this difference for the purpose of 427 striking down the exemption granted in favour of buildings of Cooperative Societies under another enactment if such exemption is otherwise justified on the facts and circumstances obtaining in regard to such buildings. In fact as explained earlier the Co operative principles which govern the functioning of these Co operative Societies put a curb on their profit motive and as pointed there are statutory provisions which maintain their profit element at reasonable level which warrant the assumption that Co operative Societies would not indulge in rack renting or unreasonable eviction and it was in the light of this position as also after careful study of all relevant factors obtaining in their case the, State Government was satisfied that the grant of total exemption in favour of the buildings of all Co operative Societies functioning in the entire State was necessary. The observations relied upon cannot therefore support the Petitioners ' contention. In the result the writ petitions are dismissed. Interim orders, if any are vacted. There will be no order as to costs.

In exorcise of the powers conferred by section 29 of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 (Tamil Nadu Act 18 of 1960), the Government of Tamil Nadu by a Notification No. II (2) H. O. 6060/76 dated 21 t November, 1976 exempted the Buildings owned, inter alia by all the co operative societies from all the provisions of the said Act. Since the protection available to the petitioners, who wore tenants in a building belonging to respondent No. 2, an Apex Society registered under the Tamil Nadu Co operative Societies Act, 1961 and covered by the said notification. had been withdrawn and since the petitioners were facing the imminent prospect of suffering eviction decrees against them, they filed the present writ petitions challenging the constitutional validity of the impugned notification on the ground that the same was violative of article 14 of the Constitution. The petitioners contended that treating the buildings owned by all the co operative societies in the State of Tamil Nadu as falling into one group while exercising the power under sec. 29 of the Act will have to be regarded as a rational classification based on an intelligible differentia but the differentia on which this classification was based had no excuse with the object of curbing the two evils of rack renting and unreasonable eviction for which the power to grant exemption had been conferred upon the State Government under sec. 29 of the Act and since the impugned notification did not satisfy be test of nexus the exemption granted to all such buildings could not be sustained and Will have to be regarded as discriminatory and violative of article 14. In other words Counsel urged that there was and is up warrant OF any presumption that co operative societies qua landlords will not indulge in rack renting or will not unreasonably evict tenants; in fact they would not be different from other private landlords so far as the two evils sought to be curbed by the Act are concerned and therefore Counsel urged that the exemption granted could not be said to be in conformity with the guidance afforded by the scheme and the previsions of the Act. 417 Dismissing the petitions, ^ HELD: It is true that under sec. 4 of the Tamil Nadu Co operative Societies Act the very object of every co operative society registered thereunder is the promotion of economic interests of its members and sec. 62 of the Act provides for payment of dividends on shares to its members as also for payment of bonus to its members and paid employees. But these aspects of a co operative society do not mean that it could be likened to any other body undertaking similar activities on commercial lines and to do so would be to miss the very basis on which the co operative movement was launched and propagated and has been making progress in the country during the last several decades. Indisputably, co operative societies which carry on their activities in various fields do so for the purpose of attaining the social and economic welfare of a large section of the people belonging to the middle class and the rural class by encouraging thrift, self help and mutual aid amongst them, especially by eliminating the middle man. But the object of promoting the economic interrupts of the members has to be achieved by following co operative principles where the profit motive will be restricted to a reasonable level unlike other commercial bodies where sky is the limit so far as their desire to earn profits is concerned. Sections 4 and 62 of the Act and Rule 46 of the Rules make it clear that in the matter of distribution of profits by way of payment of dividend to members and payment of bonus to members as well as paid employees restrictions have been placed by law and the same is maintained at a reasonable level and considerable portion of the net profits is apportioned and required to be carried to various kinds of funds, like co operative development fund, co operative education fund, reserve fund etc. In fact it is such statutory appropriations and restrictions on payment of dividends and bonus which differentiates co operative societies from other bodies undertaking similar activities on commercial lines and therefore, the buildings belonging to such co operative societies are substantially different from the buildings owned by private landlords. Further it has to be appreciated that these statutory provisions are applicable to all types of co operative societies specified in Rule 14 whatever be their nature or functions. The profit element being maintained at a reasonable level by provisions of law in all types of co operative societies there is every justification for the assumption that no co operative society will indulge in rack renting or unreasonable eviction. In this view of the matter if the State Government came to the conclusion that in the case of co operative societies there being no apprehension that they would indulge in either of these two evils exemption from the provisions of the Tamil Nadu Act No. 18 of 1960 should be granted in favour of buildings belonging to such co operative societies it will have to be regarded is a legitimate exercise of the power conferred on it under sec. 29 of the Act the same being in conformity with the guidance afforded by the preamble and provisions of the Act in that behalf. [422D 5; 424C G] Besides, on the factual side of the issue the facts and circumstances put forward by the State Government in its counter affidavit which have gone unchallenged clearly show that the differentia on the basis of which the classification was made had a clear nexus with the object with which the power to grant exemption has been conferred upon the State and therefore the impugned notification will have to be regarded as valid. [425E F] 418

section 82 of 1960 and 148, 168 to 174 and 357 to 361 of 1961. Petition under article 32 of the Constitution of India for the enforcement of Fundamental Rights. WITH Civil Appeals Nos. 453 to 474 of 1961. Appeals from the,, judgment and order dated May 25. 1959, of the Punjab High Court in Civil Writ Nos. 428, 303, 398, 402, 459 to 462, 421, 472, 473, 475, 490, 503, 509, 519, 520, 555, 590, 710 and 712 of 1958. AND Civil Appeal No. 50 of 1962. Appeal by special leave from the judgment and order date(] May 25, 1959, of the Punjab High Court in Civil Writ No. 347 of 1958. Achhru Ram and Naunit Lal,for the petitioner (in Potn. No. 82 of 60) and the appellant (in C. A. No. 50 of 62). 348 I. N. Shroff, for the petitioners (in Petn. No. 148 of 61) and the appellants (in C. As. 457 to 474. of 61). Hardev Singh and Y. Kumar, for the petitioers (in Petns. 168 to 174 and 357 to 361 of 61). C. K. Daphtary, Solicitor General of India, K. L. Gosain, B. R. L. Iyengar, Lakshmi Chand and I. N. Shroff, for the appellants (in C.As. Nos 453 and 456 of 1961). K. L. Gosain, B. R. L. Iyengar, Lakshmi Chand and I. N. Shroff, for the appellants I in C. A. No. 454 of 196 I). B. R. L. Iyengar, Lakshmi, Chand and I.N.Shroff, for the appellants (in C. A. No. 455 of 1961). S.M. Sikri, Advocate General, for the State of Punjab N. section Bindra and P. D. Menon, for the respondents (in all petitions and Civil Appeals). M. C. Setalvad, Attorney General of India, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for Intervener No.1 (Satinder Singh). K. L. Mehta, for Intervener No. 2 (Raghuvinder Singh and others). February 20. The Judgment of the Court was delivered by VENKATARAMA AIYAR, J. The question that rises for our decision in the above writ petitions and appeals is whether certain jagirs in the State of Punjab known as the "Cis Sutlej" jagir are liable to be resumed under the provisions of the Punjab Resumption of Jagirs Act, 1957 (Punjab Act No. 39 of 1957), hereinafter referred to as "the Act". This Act came into force on November 14, 1957, and the respondent State then proceeded to take action thereunder for resuming the jagirs. A number of petitions were thereupon filed in the 349 High Court of Punjab under article 226 of the Constitution challenging the validity of the Act and of the proceedings taken by the respondent State thereunder on the ground, firstly, that the Act was ultra vires the powers of the State Legislature and that its provisions were unconstitutional and void ; and, secondly, that even if the Act was intra vires the jagirs held by the petitioners were not "jagirs" as defined in the Act, and were therefore not liable to be resumed under its provisons. By their judgment dated May 25, 1959, the learned Judges held that the legislation was within the competence of the State, and that it did not contravence any of the constitutional provisions. They further held that the jagirs held by the petitioners fell within the definition of "jagir" under the Act, and were liable to be resumed thereunder, and that accordingly no writ could be issued against the State for proceeding under the provisions of the Act. By their Order dated January 27, 1960, the learned Judges granted leave to appeal to this Court under article 133 (1) (a), and pursuant to the same, Civil Appeals Nos. 453 to 474 of 1961 have been preferred to this Court. Appeal No. 50 of 1962 by special leave is also directed against the judgment of the Punjab High Court in a Writ Petition tinder article 226. Some of the jagirdars have also filed petitions in this Court under article 32) of the Constitution, impugning the Act and the action of the State thereunder on the same grounds as those raised in the appeals. We have accordingly heard arguments of learned Counsel both in the writ petitions and in the appeals, and this Judgment will govern all of them. Though a number of grounds have been taken in the pleadings, impugning the Act as ultra vires and its provisions as unconstitutional, in the argument before us, the only contention that was pressed was that the Cis Sutlej jagirs do not fall 350 within the definition of jagirs contained in the Act and that accordingly the State had no authority to resume them under the provisions of the Act. And this contention is sought to be sustained on two ground: (i) that there was at no time any grant of the Cis Sutlej jagirs to their holders, much less any assignment of land revenue to them; and (ii) that even if there was such a grant, it was not one made by or on behalf of the State Government as required by section 2 (1). It is argued that if either of these contentions succeeds, the jagirs in question would fall outside the purview of the Act, and the State would have no right under its provisions to resume them. It will be convenient at this stage to set out the relevant provisions of the Act. Section 2 (1) defines "jagir" as follows: " "jagir" means (a) any assignment of land revenue made by or on behalf of the State Government; or (b) any estate in land created or affirmed by or on behalf of the State Government carrying with it the right of collecting land revenue or receiving any portion of the land revenue; or (c)any grant of money made or continued by or on behalf of the State Government which purports to be or is expressed to be payable out of the land revenue; or (d) any grant of money including anything payable on the part of the State Government in respect of any right, privilege, perquisite or office; and includes any such grant or assignment existing in favour of Cis Sutlej jagirdars. " 351 "Jagirdar" is defined in section 2 (2) as meaning the holder of a jagir. Section 2 (5) defines State Government as follows: "State Government" (a) as respects any period before the 1st November 1956, shall mean: (i) the Government of the Patiala and East Punjab State Union or any of the Indian States which formed into the Patiala and East Punjab States Union on the 20th August, 1948 and (ii) the Government of the State of Punjab and all predecessor Governments thereof by whatever name called, the Governor General or the Governor General in Council, as the case may be, and the Sikh Rulers, but shall not include the Central Government as defined in the , after the period commencing on the 15th August, 1947. (b) as respects any period after the 1st November, 1956 shall mean the Government of the State of Punjab. " Section 3 enacts that "Notwithstanding anything to the contrary contained in any law or usage any grant settlement, sanad or other instrument, or any decree or order of any Court or authority, all jagirs shall, on and from the commencement of this Act, be extinguished and stand resumed in the name of the State Government. It is common ground that the jagirs which are concerned in the present writ petitions and appeals consist of a right to the revenue payable, on lands, and not of any estate such as will fall under section 2 (1) (b) of the Act and that they must fall, if at all within section 2 (1) (a). Therefore the discussion narrows 352 itself to the question whether there was, as required by section 2 (1) (a) of the Act, any assignment of the revenue of these jagirs and whether such assignment was by the State Government. On the first question, as to whether there was assignment of land revenue, the contention of the petitioners and of the appellants and they will hereafter be referred to compendiously as jagirdars is that the so called jagirs are not jagirs as ordinarily understood, that they were not the subject matters of any grant by any State that they were in fact originally independent States held by rulers with sovereign rights, that in course of time the British Government imposed their sovereignty over them, and finally took over the administration of the State and paid the revenue collected therefrom to the rulers, not as person to whom the land revenue had been assigned, because there was no such assignment but as sovereigns of the States. Therefore, it is contended, the co called jagirs are not within the definition of section 2 (1). That brings us on to the question of the true status of the Cis Sutlej jagirdars. The origin of these jagirs goes back to 1763. The collapse of the Moghul Empire had created a void in the political ,stage of this country, and many were the powers which stepped in with the ambition of establish ing their sovereignty. The British had established their rule and bad extended their dominion up to the Jumna. The Sikhs had also developed during this period from being a purely religious sect into a military Organisation, and established several States beyond the Sutlej. The tract of territory between the Jumna and the Sutlej was at this time under the administration of a weak Afghan Governor called Zain Khan. The policy of the British during this period was to hold the Jumna as the frontier, and so they were indifferent to the fate of this Cis Sutlej area. But the Sikh Chiefs 353 beyond the Sutlej could not resist the temptation of overthrowing the Afghan Governor, seizing his territory and establishing themselves as its rulers. In 1763 the storm burst when a number of them crossed the Sutlej, overwhelmed the Afghan Governor and occupied the whole country upto Jumna. "Tradition still describes", says Cunningham in his History of the Sikhs, P. I 10, I 'how the Sikhs dispersed as soon as the battle was won and how riding day and night each horseman would throw his be It and scabbard, his articles of dress and acooutrement, until he was almost naked into successive villages to mark them as his. " when the conquest was over each Chief declared himself the ruler of the territory which he was able to occupy, and constituted himself its sovereign. This state of affairs continued until 1806. By this time, Ranjit Singh the ', 'Lion of the Punjab", had built up a powerful State across the Sutlej. He had already subdued the petty rulers within that area and was turning his attention to the territories 'south of the Sutlej and had occupied some of them. The Cis Sutlej rulers became alarmed about their future and appealed for protection to the British, who had, by this time, changed their policy of non intervention. The appeal was welcome, and met with prompt response. The result was that in 1809 the British entered into a treaty with Ranjit Singh whereby he surrendered his acquisitions south of Sutlej and agreed not to interfere with the Cis Sutlej States. And this was followed by a proclamation by Colonel Ochterlony in May 1809 whereby the Cis Sutlej Chiefs were assured of their rights as sole owners of their possessions and exempted from payment of tribute, but were required to furnish supplies to the British Government and assist them against their enemies. The British Government also promulgated a rule that whenever any of the rulers died without issues, his State would lapse to the British Government. 354 This was the position until 1846 when a drastic change in the situation took place. In 1845, there was war between the British and the Sikhs, and in that war the Cis Sutlej rulers far from helping the British against the Trans Sutlej Sikhs, were either unsympathetically neutral or actively hostile to them, and that brought about a change in the policy of the British Government towards them. The position is thus stated by Kensington in the Ambala Gazetteer at p. 26: "Having thus already lost the confidence of the Government the Sikh Chiefs in the Sutlej campaign forfieted all claim to consideration. It was seen that the time had arrived for the introduction of sweeping measures of reform and the Government unhesitatingly resolved upon a reduction of their privileges. Several important measures were at once adopted. The police jurisdiction of most of the chiefs was abolished, the existing system being most unfavourable to the detection and punishment of crime. All transit and customs duties were also abolished; and thirdly, a commutation was accepted for the personal service of the chief and his contingent. The despatch of the Governor General embodying this resolution was dated November 7th, 1846. " While the sweeping changes aforesaid were being introduced, the second Sikh War broke out and that ended in the annexation of the Punjab. And with that the Deed for maintaining appearances and for recognizing the Cis Sutlej Chiefs as rulers came to an end. The British Government then proceeded to act swiftly and firmly, and in June, 1849, they made a declaration that the Chiefs should "cease to hold sovereign powers, should lose all criminal, civil and fiscal jurisdiction, and should be considered as no more than ordinary subjects of the British Government in the possession of certain exceptional 355 privileges" (1). Pursuant to this declaration, the Chiefs were stripped of all their governmental functions and the final denouement took place in 1852 when the British took over the collection of revenue for the jagir lands. The rules for settlement of revenue were made by them, and the actual settlement and collection of revenue were made under their authority, and out of the collections the jagirdars were paid their share. On these facts, the question is whether it can be said that their was an assignment of the land revenue to the jagirdars. Express grants to them, there were none. The point in debate before us is whether grants of the land revenue could be implied from the facts stated above. A somewhat similar question came up for decision before this Court in Thakar Amar Singhji vs State of Rajasthan (2) with reference to a class of jagirdars in the State of Rajasthan known as Bhomicharas. They were once the rulers of the territories which were claimed to be jagirs, and later on the State of Jodhpur imposed its suzerainty over them and exacted an annual payment called "Foujbal". The Bhomioharas contended that they had come into possession of the territories as rulers and held them as rulers and not as jagirdars under grants made by any ruler. In repelling this contention, this Court held that a grant may be implied as well as express, and that on the facts which were Proved, the Bhomicharas, though they held originally as rulers, must be held to have been reduced to the status of subjects, and that their position was that of jagirdars under an implied grant. The position of the Cis Sutlej jagirdars bears a close analogy to that of the Bhomicharas in Thakur Amar Singji 's case (2). They became rulers of the territories when they took possession of them by conquest in 1763. The first inroads into their (1 ) Griffin 's "Rajas of that Punjab", P. 199. (2) ; 356 sovereignty were made in 1809 when the British established their suzerainty over them and further declared that the territories of the rulers who died without heirs would escheat to them. Then in 1846 the British Government deprived them of police jurisdiction, and the power to levy customs, and in 1849, of all their sovereign functions. It is not disputed that as a result of all these acts they were reduced to the position of ordinary subjects, that indeed being the objective of the British Government as avowed in their declaration of June, 1849. It is with reference to this background that we must examine the true character of the revenue settlement made in 1852. If the jagirdars had sunk to the position of subjects on that date the payment of revenues to them by the British Government can only be on the basis of an implied grant to them. Learned Counsel for the jagirdars however demur to this conclusion. They contend that the position of the Cis Sutlej jagirdars differs fundamentally from that of the Bhomicharas in Thakur Amar Singhji 's case (1), that the latter were conquered by the rulers of Jodhpur and compelled to pay to them a tribute called "Foujbal", but that the Cis Sutlej Chiefs were never conquered by the British, and never paid any tribute to them, that they were receiving revenue from the lands as rulers before the British came on the scene, and that they continued to receive the same without a break even after the British had established themselves, and that there was nothing which the British Government did from which a resumption and a re grant could be inferred. Under the circumstances, it is said, the, payment of land revenue to them must be related to their status as sovereigns, and if the British Government took upon themselves the work of settlement and collection of land revenue, it was (1) [ ; 357 oh their behalf and under their authority and under an implied arrangement with them. The assumption underlying this argument is that, as the cis Sutlej Chiefs ;are not conqaered by the British, their status must necessarily be that of sovereigns, and that in consequence the payment of land revenue to them could not be as jagirdars holding under an implied grant from the Govern ment. That, however, is not correct. It is settled law that conquest is not the only mode by which one State can acquire sovereignty over the territories belonging to another State, and that the same result can be achieved in any other mode which has the effect of establishing its sovereignty. Thus, discussing what is an , 'act of State", the Judicial Committee observed in Cook vs Sir James Gordon Sprigg (1) : "The taking possession by Her Majesty, whether by cession or by any other means by which sovereignty can be acquired, was an act of State ' " To the same effect are the 'following observations of Lord Danedin in Vajesing Jaravarsingji vs Secretary of State for India in Council (2) : "When a territory is acquired by a sovereign State for the first time, that is an act of State. It matters not how the acquisition has been brought about. It may be by conquest, it may be by cession following on treaty, it may be by occupation of territory hitherto unoccupied by a recognised ruler." Laying down the law in similar terms, this Court observed in M/s. Dalmia Dadri Cement Co. Ltd.v. The Commissioner of Income tax (3) : "The expression act of State ' is, it is scarcely necessary to say not limited to hostile (1) (2) (1923 24) L. R. 51 I. A. 357, (3) [1959] R. 729, 739. 358 action between rulers resulting in the occupa tion of territories. It includes all acquisitions of torritory by a sovereign State for the first time, whether it be by conquest or cession. Vide Vajesingji Joravar Singji V. Secretary of State and Thakur Amar Singji vs State of Rajasthan . " And, more recently, this question has been considered by this Court in Promod Chandra Deb vs The State of Orissa (1), and the result was thus stated : " 'Act of State ' is the taking over of sovereign powers by a State in respect of territory which was not till then a part of its territory, either by conquest; treaty or cession, or otherwise. " The fact, therefore, that the Cis Sutlej jagirdars were not conquered by the British does not conclude the question as to whether they arc to be regarded as sovereigns or not. That must depend on who were in fact exercising sovereign powers over the territories in the States the Chiefs or the British. If the latter, then it must be held that the sove reignty over the area had passed to them, otherwise than by conquest, and that the true status of the Chiefs was that of subjects. Viewed in this light, the case does not present much of a problem. It has been already seen that from 1809 onwards, the Chiefs had been gradually stripped of their powers as sovereigns and that the process of disintegration was completed in 1849. It is indeed conceded on behalf of the jagirdars that after that date it was the British Government which was exercising sovereign powers over the territories and that the Chiefs had been rodaced to the status of its subjects. But the contention that is urged is that even when every thing else had been (1) Writ Petitions Nos. 79 of 1957, 167 and 168 of 1958 and 4 of 1959 decided on November, 16, 1961. 359 lost, there was still one relie of sovereignty left with them and that was the right to receive the land revenue. If this were the true position, the status of the jagirdars would be that of subjects of the British in respect of all matters except as to the right to receive revenue, in respect of which alone they would have to be regarded as sovereigns. This is clearly untenable, because a person cannot be both a sovereign and a subject at the same time. Dealing with this identical contention, this Court observed in Thakur Amar Singhji 's case (1) : "The status of a person must be either that of a sovereign or a subject. There is no tertium quid. The law does not recognise an intermediate status of a person being partly a sovereign and partly a subject, and when once it is admitted that the Bhomicharas had ack nowledged the sovereignty of Jodhpur their status can only be that of a subject. A subject might occupy an exalted position and enjoy special privileges, but he is none the less a subject ; and even if the status of Bhomicharas might be considered superior to that of ordinary jagirdars, they were also subjects." (pp. 336 337) If the status of the Cis Sutlej jagirdars is in all other respects that of subjects, the right to receive the revenue collections must also be ascribed to their character as subjects, and that can only be under an implied grant. But it is contended that the implication of a grant in favour of the jagirdars could not be made here as in the case of Bhomicharas in Thakur Amar Singhji 's case (1), because a proposal for resumption and re grant of the territories of the Cis Sutlej Chiefs was actually put forward in 1846 but was negatived. Reference was made to the following (1) [19551 2 section C. R. S03. 360 account thereof given in J. M. Douie 's "Punjab Land Administration Manual", 1931, p. 45 para 102: "It was indeed proposed in 1846 after the first Sikh War to declare all the estates forfeit on account of the laches of their holders, and to re grant them under sanads from the British Government. But Lord Hardinge deemed it impolitic to proclaim to all India the misconduct of the Cis Sutlej Chiefs and negatived proposal. In a, sense then the Cis Sutlej jagirdars, great and small, are mediatized rulers, and little though they have as a body deserved at our hands, this fact should not be lost sight of in our dealings with them. " The argument is that though a grant could be implied in certain circumstances where no express grant was forthcoming, that could not be done when a proposal for grant is shown to have been actively considered and rejected. This contention sounds plausible but breaks down when the reason for the rejection of the proposal is examined. That was, as stated in the despatch of Lord Hardinge dated November 17, 1846, that "a general measure of resumption would create alarm and must be preceded by a public declaration of the disloyalty of the largest portion of the Sikh protected States explaining the grounds of forfeiture," and this was considered inexpedient. Consistently with this reason it is impossible to hold that the British Government, in declining to make a resumption and re grant, intended to continue the recognition of the Chiefs a,, sovereigns. On the other hand, the true inference to be drawn is that the British wanted to give the chieftains only the status of jagirdars but for reasons of policy they sought to do it in such manner as to avoid publicity, and that is why the proposal for making resumption and regrant was not adopted. In the very despatch of 361 Lord Hardinge dated November 17, 1346, wherein the proposal for resumption and re grant was dropped, it was stated that there was no need for it as the same ends could be obtained by adopting certain measures such as the taking over of the police administration and customs and the like. The reason, therefore, for not making a resumption and an express grant is one which would support an inference of implied grant. An argument is also sought to be built on the description given of the Cis Sutlej jagirdars as "mediatized rulers" in the extract from J. M. Douie 's "Punjab Land Administration Manual" already given, that their status is that of sovereigns. This expression was originally used with reference to German Princes in Holy Roman Empire who, having been at one time vassals of the Emperor, were subsequently subjugated by other Princes who were also vassals of the Emperor. The meaning of the word "mediatise" in modern usage is given in The Oxford English Dictionary, Vol. VI, P. 292, as "annex (Principality) to another State, leaving former sovereign his title and (usually) more or less of Ilia rights of Government". It might be 'correct to speak of the Chiefs as mediatized rulers in 1846, when, though deprived of their powers in matters of police and customs, they continued to exercise civil and fiscal powers. But when they were divested in 1849 of all their Governmental powers they (, eased to be rulers, "mediatized" or otherwise, and when the revenue settlements were made in 1852, they had no vestige of sovereignty left in them, and had become ordinary subjects of the British with some privileges. The true character of the revenue settlements made with the Cis Sutlej jagirdars is brought out correctly, in our opinion, in the following observations in Baden Powell 's "Land Systems of British India", Vol. 11 at p. 701: 362 "Under our Settlement arrangements, the jagirdar now receives the revenue, the original land holding communities or individuals being settled with and retaining full proprietary rights. He in fact is a mere assignee of the revenue, taking.part of what otherwise would go to the State. " Even more explicit is the statement of the position by Kensington in the Ambala Gazetteer, pp.27 28: "The final step necessitated by the march of events was taken in 1852 when the revenue settlement begun for British villages in 1847 was extended to the villages of the chiefs. Thereafter the chiefs have ceased to retain any relies of their former power except that they are still permitted to collect their revenues direct from their villages, the cash assignment of revenue. They have sunk to the position of jagirdare but as such retain a right to the revenue assigned to them in per petuity. " It was argued by the learned Advocate General who appeared for the respondent that subsequent to 1852 there has been a course of legislation relating to the jagirs which proceeds on the basis that their holders were subjects. The preamble to the Punjab Land Revenue Act, 1871 (Act 33 of 1871), under which land revenue was settled is as follows: "Whereas the Government of India is by law entitled to a proportion of the produce of the land of the Punjab to be from time to time fixed by itself and whereas it is expedient to consolidate and define the law relating to the settlement and collection thereof, and to the duties of the Revenue Officers in the Punjab. " It is under this Act that the revenue settlements for the jagir lands are also made. This shows that in exercising fiscal jurisdiction, the British Government 363 considered itself as acting in its sovereign capacity. Then there is Punjab Descent of Jagirs Act,, 1900 (Punjab Act IV of 1900), which introduced in the , as. 8 to 8C enacting rules of descent "in respect of succession to any assignment of land revenue" and providing for the recognition of successors to the deceased jagirdars by the Provincial Government on certain conditions specified therein. We have then the Punjab Jagire Act V of 1911 dealing with the same topic. The preamble to the Act states that "it is expedient to consolidate the law governing the assignments of land revenue and other grants hitherto known as jagirs, and to make more precise provisions regarding the manner in which such assignments are to be made or continued in the future. " Jagir is defined in section 2 in torms substantially the same as under the present Act. This Act repeals as. 8 to 80 of the , which were inserted by the Punjab Descent of Jagirs Act IV of 1900, and reproduces them in as. 7 to 10. Section 7(1)(b) provides for the acceptance by the jagirdars of the rules of descent framed by the Government by executing a written instrument, and it has been stated before us that the jagirdars have accepted the rules in the manner provided in the section. By way of sample, the copy of the acceptance executed by the petitioner in Writ Petition No. 82 of 1960 has been marked as part of the record. Oa these materials, the conclusion would appear to be irresistible that the right of the Jagirdars to raceive land revenue rests on implied grants by the British Government. It must be mentioned that in Abdul Ghafoor Khan vs Amar arji Singh, Regular Second Appeal No. 561 of 1946 in the Punjab High Court there are ob. servations of the learned Judges. Mahajan and Teja Singh, JJ., that there was no gift of the jagir lands or assignment of the land revenue by the British Government to the Cis Sutlej jagirdars, and they are relied on as authority for the contention that 364 there was no grant to them express or implied. But the point for decision in that case was whether these jagirdars could alienate their interests beyond their lifetime. It was held that they could not and the reason therefor was thus stated: "After the annexation of the Punjab they (Cis Sutlej jagirdars) were deprived of vestiges of sovereignty that still remained in them and they were transformed and given the status of jagirdars, but their possessions, holding and dominions whether in land or other properties like forts and buildings were not in any way disturbed or taken away. They held them in the same status and position as before. " The dispute in that appeal related to properties of the kind mentioned above and not to land revenue, and we are unable to regard the observations relied on for the jagirdars as authority for the position that no grant in respect of the assignments of the land revenue could be implied in their favour. In the resultwa must hold that the jagirs which are subject matter of these proceedings fall within section 2(1)(a) of the Act. It is next contended that even if an assignment of land revenue could be. implied in favour of the jagirdars, that could only be held to hive, been made by the British Government and not by the State Government as required by section 2(1)(a), and that, in consequence, the respondent had no right to resume the jagirs in question under the provisions of the Act. Whateverforce there might have been in this contention, if I hequestion had to to be decided only on the. terms of s.2(1)(a), we have in section 2(5) a definition or ' State Government which 365 is decisive of the question. According to that definition, "State Government" includes "the Government of the State of Punjab, and all predecessor Gevernments thereof, by what ever name called, the Governor General or the Governor Generalin Council as the case may be. " It is not disputed that these words are wide enough to include the British Government which made the grant, but it is contended that this definition was not in the Act as originally enacted and was inserted by the Punjab Resumption of Jagirs (Amendment) Act, 1959, and that the rights of the parties should be determined in accordance with the law as it stood prior to the amendment. There is no force in this contention, because under section 1(2) of the Amendment Act, retrospective operation is given to it as from November 14, 1957. But then it is urged that the amendment was not within the legislative competence of the Legislature of the State of Punjab and is null and void. The grounds therefor are thus stated in Petition No. 82 of 1960 : "This is nothing but a colourable legislation. The State legislature has no authority to convert Central Government into State Government and legislate on Central subject. The so called jagir being not a grant by the State Government, the impugned Act has no application and the amended definition of State Government is a fraud on the Constitu tion." (para 17). There is no substance in the contention that the Amendment Act is colourable and incompetent. The subject matter of the legislation is resumption of jagirs. Though the contention was raised. in the petitions that this was not a topic within the competence of the State Legislature, as there was no such entry in List II to the Seventh Schedule,no 366 argument was advanced in support, of it. And clearly it could not be, as legislation on resumption of jagirs in one relating to lands, and land revenue and would clearly fall under entries 18 and 45 of List II, which are as follows : Entry 18 , , 'Land, that is to say, rights in or over land, land tenure including the relation of landlord and tenant, and the collection of rents transfer and alienation of agricultural lands; land improvement and agri cultural loans; colonization. " Entry 45 : "Land revenue., including the assessment and collection of revenue,the maintenance of lands records, survey for revenue purposes and records of rights, and alienation of revenue. " If the principal legislation is intra vires, it is difficult to see how an amendment thereof with respect to matters properly pertaining to the subject matter covered by it could be ultra vires. It is immaterial for the purpose of resumption, whether the lands sought to be resumed were granted by the State of Punjab as it is now constituted or by any Government which preceded it. So long as the lands are within the, State of Punjab, the legislature has full competence to enact a law providing for their resumption under entries 18 and 45. Indeed if the words "made by or on behalf of the State Government" in 3. 2 (1)(a) had been omitted in the, principal Act and jagir defined simply as "any assignment of land revenue" the legislation would have been intra vires, and in that case the State could have resumed the jagirs by whomsoever they might have been granted. But it chose to add the words "made by or on behalf of the State Government", and that gave occasion for the contention that the legislation did not in fact reach jagirs granted by the British Government. Then, with a view to clarify the position, 367 and set the controversy at rest,, the legislature intervened and enacted the Amendment Act of 1959, inserting the impugned definition of "State Government". We are unable to see what the lack of vires is under which this amendment suffers. We must reject this contention also. This disposes of all the points raised on the merits in the Writ Petitions and Civil Appeals. In Civil Appeal No. 453 of 1961 preferred by one of the jagirdars, Umrao Singh, his son Satinder Singh intervened, and he asks that suitable directions might be given for protecting his interests in. the compensation amount which is payable to the appellant Under the Act. He states that under the law the Cis Sutlej jagirdar is not an absolute owner of the jagir, that he has only a right to enjoy it without any power of alienation and that after his life time the next lineal descendant would take it free from all encumbrances created by the previous owner, that the rights of the jagirdar over the compensation amount due on resumption under the Act could only be the same as over the jagir, and that if that is paid to him, his reversionary rights would be Jeopardised and that therefore adequate provision should be made for protecting them. Our attention has been invited to the decision of this Courtin Satinder Singh vs Umrao Singh(1), where compensation awarded on the acquisition of jagir lands was apportioned equally between the jagirdar and his son. But there the lands had been acquired under the Land Acquisition Act, 1894, which contains provisions for deciding who is entitled to the compensation amount. But here we are hearing an appeal against an order dismissing a Writ retition under article 226, challenging ire vires and applicability of the Punjab Resumption of Jagirs Act, 1957, and adjudication of rival claims to the compensation amount will be wholly foreign to its scope. (1) A. I. R. 961) section C. 908 368 But it is pointed out for the intervener that on his application this Court has ordered stay of payment of a part of the compensation amount to the appellant pending the disposal of the, appeal, and that a similar direction might now be made in the Judgment, staying payment of a part of the amount for a specified period, so as to enable him to take steps to protect his rights. But that was an interim order made pending the appeal, and no such order could be passed in the appeal unless it follows on a decision of the rights of the parties, which is, an already stated, outside the scope of the present proceedings, vide the state of Orissa vs Madan Gopal Rungta 0). We do not therefore propose to say anything on the rights of the intervener or give any directions with reference to the payment of the compensation amount. It is open to the intervener to take other and appropriate proceedings to vindicate his rights. Before concluding, it has to be noted that in Writ Petition No. 148 of 1961 there, are as many as 72 Petitioners. some of whom are stated not to belong to the category of Cis Sutlej jagirdars. Their joinder is clearly improper. 'It is also said that three of them, Petitioners Nos. 66, 68 and 69, had filed Writ Petitions under article 226 of the Cons tituation in the Punjab High Court, raising the same contentions as in the present, that the said petitions had been dismissed on the merits, and no appeal had been preferred against the Orders of dismissal, and in consequence, the concerned petitioners cannot, on the decisions of this Court, maintain this petition. But as we are dismissing these petitions on the merits, no further notice need be taken of these points. In the result, the petitions are dismissed with costs, one hearing fee, and the appeals are dismissed with costs one set. Petitions and appeals dismissed. (1) [1952] S.C.R. 28.

The Punjab Resumption of jagirs Act, 1957, came into force on November 14, 1957, and the State of Punjab proceeded to take action thereunder for resuming the jagirs. The petitioners who were holders of certain jagirs in that State known as the Cis Sutlej jagirs claimed that they could not be resumed under the provisions of the Act because they did not fall within the definition of jagir contained in section 2(1) of the Act on tile grounds that there was at no time any grant of the Cis Sutlej jagirs to their holders much less any assignment of land revenue to them, and that even if there was such a grant, it was not one made by or on behalf of the State Government as required by section 2(1) (a) of the Act. The history or these jagirs showed that the jagirdars were originally rulers of the territories when they took possession of them by conquest in 1763, but in course of time after the British came on the scene, they were gradually stripped of all their powers as sovereigns, and in 1852 the British took over the collection of revenue of the jagir land , and out of the collections the jagirdars were paid their share. Subsequent to 1852 there was a course of legislation relating to the jagirs. The question was whether the assignment of land revenue to the Cis Sutlej jagirdars was made on the basis of an implied grant. The petitioners case was that as the Cis Sutlej Chiefs were never conquered, the payment of land revenue to them must be related to their status as sovereigns and that the collection of the land revenue was made only under all im plied arrangement with them. Held, that the status of the Cis Sutlej jagirdars was only that of subjects and that the payment of revenue to them by 347 the British Government was only on the basis of an implied grant to them. Though the Cis Sutlej Chief were not conquered by the British, since the latter were in fact exercising sovereign powers over the area it must be held that sovereignty had passed to them otherwise than by conquest. M/s. Dalmia Dadri Cement Co. Ltd. vs The Commissioner of Income tax, [1959] section C. R. 729, Thakur Amar Singji vs State of Rajasthan, and Vajesingji Jorawar Singji vs Secretary of State, [1924] L.R. 51 I.A. 357, relied on. Held, further that the British Government which had made the grant was the "State Government" within the meaning of section 2(5) of the Punjab Resumption of jagirs Act 1957, and that the jagirs in question were within the definition of "jagir" in s.2(1) of the Act. Held, also, that the Act was within the legislative com petence of the State of Punjab under entries 18 and 45 of List 11 of the Seventh Schedule to the Constitution of India.

Appeal No. 222 of 1956. 40 Appeal by special leave from the judgment and decree dated December 8, 1953, of the former Nagpur High Court in Misc. Civil Case No. 55 of 1950. C. K. Daphtary, Solicitor General of India, K. K. Rajagopala Sastri, R. H. Dhebar and D. Gupta, for the appellant. The respondent did not appear. October 3. The Judgment of the Court was delivered by SARKAR J. This is an appeal brought by special leave against the judgment of the High Court at Nagpur, delivered on a reference under section 66(1) of the Income tax Act. The appeal is by the Commissioner of Income tax, Madhya Pradesh and Bhopal. The respondents are the assessees Vyas & Dotiwala. The respondents have not appeared in this appeal. We shall presently set out the facts but before we do that, we wish to state that the assessment years concerned were 1945 46 and 1946 47. Though there were two separate assessment orders in respect of these years, ultimately when they came up before the Appellate Tribunal they were consolidated into one appeal. The appeal before us likewise concerns both these assessment years. It appears that in or about July 1943 when considerable difficulty was being felt about cloth, the Deputy Commissioner, Amraoti, evolved a scheme to solve that difficulty. Under that scheme Kisanlal Vyas and a firm called Edulji Framji Dotiwala who have in these proceedings been referred to as Dotiwala, undertook to finance the scheme without charging any interest or profit and were appointed as financiers and also distributors of a variety of cloth called standard cloth for the town and camp of Amraoti and certain areas in the interior It is not necessary to set out the various details of the scheme and it will be sufficient to state that Vyas and Dotiwala, who as an association of persons are the assessees concerned, agreed to open an account in the Imperial Bank of India to be operated by them out of which the purchases 41 of the cloth were to be financed. The orders for the cloth were to be placed by the Government with the mills and on the arrival of a consignment of cloth, the assessees were to pay to the Deputy Commissioner, Amraoti, the value of the consignment together with 6 1/4 per cent. of the ex mill price. The consignment was thereupon to be opened and its contents checked by the assessees and the officials and delivered to the assessees on their granting a receipt for the same. The Deputy Commissioner would pay 4 1/2 per cent. of the ex mill price to the assessees out of the amount paid by the latter as aforesaid for contingent expenses of working the scheme. The scheme provided that the contingent expenses were not to exceed 3 percent. of the ex mill price. The cloth coming to the hands of the assessees was to be distributed in Amraoti town and camp through a shop to be opened by the assessees and in the interiors of the area concerned through Tehsildars with Patils under them. The substance of the arrangement of distribution appears to have been that it would be entirely under the control of the Deputy Commissioner who made himself responsible to the assessees for the sale proceeds receivable from the Tehsildars. The Deputy Commissioner was to decide the price for which the cloth was to be sold to the consumers and also the persons entitled to buy the cloth. Out of the sale proceeds the Deputy Commissioner was to pay to the assessees whatever they had advanced on account of the cloth. The most important provision in this scheme is para. 14 which is set out below. Profits resulting from the scheme shall be utilised for such charitable purposes as may be decided on by the Deputy Commissioner in consultation with the advisory committee appointed to supervise the scheme. It appears that the books of the assessees showed Rs. 34,737/ for the assessment year 1945 46 and Rs. 17,682/ for the assessment year 1946 47 as profits earned in working the scheme. The Income tax Officer assessed the assessees to tax on the profits so earned. 6 42 The assessment orders made by this officer would appear to show that the only point urged by the assessees before him against the assessment was that the income was exempt from taxation under section 4(3)(i a) of the Indian Income tax Act, 1922. The officer rejected this contention. The assessees went up in appeal to the Appellate Assistant Commissioner, before whom the same contention appears to have been repeated. The Appellate Commissioner confirmed the order of the Income tax Officer. The assessees then appealed to the Appellate Tribunal. The Tribunal held that the assessees had objected to the assessment before the Income tax Officer on two grounds, namely, that the income was Dot the income of the assessees and that the income was exempt from taxation under section 4(3)(i a), as appeared from their letter dated January 22, 1947. One of these alone had been dealt with by that officer, as appears from his order earlier referred to. The Appellate Tribunal agreed with the conten tion of the assessees that they were not liable to be taxed on the profits because these did not form their income. The Tribunal was of the view that the scheme was the scheme of the Deputy Commissioner and completely under his control; that the assessees were merely the financiers and also managers under the Deputy Commissioner to carry out the scheme and that the assessees only helped to work the scheme. The Tribunal held that the profits that may have resulted from such working were not therefore theirs nor represented their income and the assessees could not be assessed to income tax thereon. In this view of the matter the Tribunal set aside the orders of assessment. Thereafter, on the application of the revenue authorities the Tribunal referred the following question to the High Court under section 66(1) of the Act: Whether on the facts of this case any income accrued to Messrs. Vyas and Dotiwala as the result of their associating themselves as financiers in the scheme for the distribution of standard cloth; and, if so whether such income was assessable in their hands. 43 On that reference the High Court held that under the charging section in the Indian Income tax Act, 1922, namely, section 4, it was necessary for the revenue authorities to prove that the assessees received or should be deemed to have received income or profit from the scheme during the relevant period. It held that the asseess had not actually received any such income and further that the expression " deemed to be received " in that section only meant deemed by the provision of the Act to be received, and no such provisions of the Act had been relied upon on behalf of the revenue authorities. In this view of the matter the High Court answered the question framed, in the negative. The learned Solicitor General contends that the High Court failed to appreciate the real question. He says that the question was not whether income was received or deemed to be received but whether income had accrued and the point for decision was, as appeared from the judgment of the Tribunal, whether the profits formed the income of the assesses. We agree with this criticism of the judgment of the High Court. On the point that arises from the question framed, we think that the Tribunal went wrong. It is not disputed that the assessees worked the scheme and such working produced the profits as found in the assessment orders. The Tribunal thought that since the scheme was completely under the control of the Deputy Commissioner, the assessees could not be said to have carried on business by working the scheme. We are unable to see that the fact of the control of the Deputy Commissioner can prevent the working of the scheme by the assessees from being a business carried on by them. In our view, it only comes to this that the assessees had agreed to do business in a certain manner. The fact that the Deputy Commissioner guaranteed the payment by the Tehsildars of the price due from them, to the assessees would indicate that the assessees were treated as the owners of the business. It would indicate that if there had been no such guarantee, the loss due to the failure of the Tehsildars to pay their dues would have to be borne 44 by the assessees. Again the claim, may be in the alternative, by the assessees for exemption under section 4(3)(i a) would not arise unless the assessees were carrying on a business. Lastly, para. 14 of the scheme which we, have earlier set out, clearly contemplates profits resulting from the scheme. The provision that the profits would be devoted to charity to be decided by the Deputy Commissioner, would indicate that without it the profits would have been utilisable by the assessees. The profits belonged to the assessees and hence the necessity for this agreement so that the assessees might be made to spend them on charity. If, as the Tribunal thought, the profits were of the Government, there was no necessity for the Government providing for the profits being expended on charity, for the Government if minded to do so, could have done it without such a provision. The fact remains that the working of the scheme produced profits and apart from para. 14 such profits undoubtedly belonged to the assessees. If they chose to agree by para. 14 to devote the profits to charity, that was their business; the profits made by them would not change their character and cease to be the assessees ' income because they agreed to devote their income to charity. We might also say that there is nothing in the scheme which shows that the assessees had undertaken not to make any profits on the distribution work under the scheme; they had only agreed to finance the scheme without receiving any interest or profit. Furthermore, since the assessees actually made the profits, they are liable to pay tax thereon whether they agreed not to make any profits or not. We wish also to point out that it is not the assessees ' case that they have been made to pay out the profits for any charity. For these reasons we think that the profits were the profits of the assessees and they are liable to pay tax on them. With regard to the assessees ' claim for exemption under section 4(3)(i a), they are clearly not entitled to any. That claim of the assessees has not been accepted by any of the Courts below. Section 4(3)(i a) applies to income derived from business carried on on behalf of a religious and charitable institution when the income 45 is applied solely to the purpose of the institution and the business is carried on in the manner provided. It is enough to say that the scheme, considered as a business, was not carried on on behalf of any religious or charitable institution. Once it is held that the assessees made the profit, how they use it would not matter. In the result, we would answer both parts of the question framed, in the affirmative. We hold that the profits were the income which accrued to the assessees and such income is assessable to income tax and is not exempt from taxation under section 4(3)(i a). The appeal is allowed with costs here and below. Appeal allowed.

The Deputy Commissioner of Amraoti, evolved a scheme for the distribution of standard cloth. The assessees agreed to finance the scheme without charging any interest and were appointed financiers and distributors. The orders for the cloth were placed by the Government with the mills and the cloth was delivered to the assessees upon their paying the value of the cloth together with 6 1/4% of the ex mill price. The Deputy Commissioner paid 4 1/2% of the ex mill price to the asses sees for contingent expenses of working the scheme. The assessees distributed the cloth at prices fixed by the Deputy Commissioner through the Tehsildars and the Deputy Commissioner was responsible to the assessees for the sale proceeds receivable from the Tehsildars. Out of the sale proceeds the Deputy Commissioner paid to the assessees whatever they had advanced on the cloth. The profits from the scheme were agreed to be utilised for such charitable purposes as might be decided by the Deputy Commissioner. The assessees contended that the income was not their income and that it was exempt from taxation under section 4(3) (i a) of the Income tax Act. Held, that the profits were income which accrued to the assessees. The assessees worked the scheme and such working produced the profits. The fact of the control of the Deputy Commissioner could not prevent the working of the scheme by the assessees from being a business carried on by them. The provisions in the agreement that the Deputy Commissioner guaranteed the payment by the Tehsildars of the price due from them, and that the profits would be devoted to charity decided by the Deputy Commissioner and the claim for exemption under section 4(3) (i a) all indicated that the assessees were the owners of the business. Held further, that the profits were not exempt from taxation under section 4(3) (i a), as the business was not carried on behalf of any religious or charitable institution.

Criminal Appeal Nos. 7 18 7 19/81 & 205 2 12, 2 13 2 17 & 204 of 1990. From the Judgments and Order dated 29.4.1981, 22.5.1981 & 29.4. 1981 of the Punjab and Haryana High Court in Crl. W.P. Nos. 38 & 46, 80 84, 86 88 & 40 of 1981. R.S. Suri, Mr. Mohan Pandey and R.P. Singh for the Appel lants. S.Srinivasan and C.L. Sahu Amicus Curiae for the Respond ents. The Judgment of the Court was delivered by AHMADI, J. Special leave granted in all the above matters. These appeals involve the interpretation of paragraphs 516 B and 631 of the Manual for the Superintendence and Management of 150 Jails in the Punjab. The preface to the Manual shows that those paragraphs of the Manual against which a black line appears are, in substance, either quotations from the law, or, from the Rules having the force of law, the authority having been indicted on the upper right hand margin of each paragraph whereas the paragraphs which have not been black lined are executive instructions issued from time to time by the Government of India, or the Local Government or the Inspector General with the sanction and approval of the Local Government. It may at once be mentioned that paragraph 5 16 B contained in Chapter XV entitled 'Release of Prison ers ' is not blacklined while paragraph 631 contained in Chapter XX entitled 'Remission System ' is blacklined. The note in the upper right hand margin of paragraph 516B refers to G of I Resolution No. 159 167 dated 6th September, 1905 and P.G. No. 18608 Jails dated 28th June, 1920. There is no dispute that this paragraph contains an executive instruc tion only. Paragraph 631 contains a note on the upper right hand margin referring to the G of I Resolution No. 161 172 of 2nd May, 1908 and P.G. Letter No. 1669 S (Home) of 31st July, 1908. At the foot of paragraph 631 is a 'Note ' in small type with a right hand marginal note See para 5 16B '. While there can be no controversy that paragraph 631 which is blacklined has statutory force, the question is whether the Note at the foot thereof, which is not blacklined, also has statutory force. Paragraph 5 16 B provides that the case of every con victed prisoner (except females and males below 20 years at the date of the commission of the crime) sentenced to im prisonment for life or imprisonment aggregating to over 14 years and who has undergone a period of detention in Jail amounting, together with remission earned, to 14 years, 'shall be ' submitted to the State Government, through the Inspector General of Prisons, for orders. In the case of female prisoners or prisoners who were below 20 years on the date of commission of the crime, reference is required to be similarly made to the State Government on their completing a detention period of 10 years inclusive of remissions. Clause (v), however, provides that notwithstanding anything con tained in the earlier part of the paragraph, a Superintend ent of jail 'may ', in his discretion, refer at any time, for the orders of the State Government, the case of any prisoner sentenced to imprisonment for life whose sentence might in the Superintendent 's opinion be suitably commuted to a term of imprisonment. It would appear from a plain reading of this paragraph that in the case of a prisoner who has com pleted 14 years of detention in jail. inclusive remissions earned, it is imperative on the part of the Superintendent of 151 the Jail to submit his case, through the I.G. of Prisons, to the State Government for consideration. The use of the words 'shall be submitted ' bring out this intention when we con trast them with the word 'may ' and the words 'in his discre tion ' used in clause (v) thereto which begins with a non obstante clause. Therefore, where the intention was to confer a mere discretion on the Superintendent of Jail, it was made manifest by the use of the expression 'may ' fol lowed by the words 'in his discretion ' and where the inten tion was to cast a duty to submit the case of the State Government, it was brought out by the word 'shall ' preceding the words 'be submitted . . for the orders of the State Government '. We have, therefore, no doubt in our minds that paragraph 5 16B, though an executive instruction, has been couched in language which clearly shows that in the former type of cases where the prisoner has completed 14 years of detention in jail, inclusive of remissions, his case must be referred to the State Government for consideration. Notwith standing this limitation of completion of 14 years, clause (v) confers a discretion on the Superintendent of the jail to refer or submit the case of a prisoner to the State Government even before he has completed 14 years if in his opinion the case is fit for commuting the sentence. Paragraph 631 is indisputably a statutory one as it is blacklined. But the blacklined portion of the paragraph merely defines certain expressions including the expression 'life convicts ' which means a person whose sentence amounts to 20 years imprisonment. Then appears the Note which reads as follows: "Note: The case of all life convicts and of all prisoners sentenced to more than 14 years imprisonment or to transpor tation and imprisonment for terms exceeding in the aggregate 14 years shall, when the term of imprisonment undergone, together with any remission earned under the rules amounts to 10 or 14 years, as the case may be, submitted for the orders of the Local Government in accordance with the in structions contained in the Home Department Resolution No. 159 167 (Jails), dated the 6th September, 1905." (See para 516B) It will be seen that the note merely reproduces the gist of paragraph 5 16 B. Even the right side marginal note says 'see para 5 16 B ' and is based on the same Resolution of 6th September, 1905 on which paragraph 5 16 B is based. The note is not blacklined as in the case of 152 the Note below paragraph 633. It was, therefore, urged that when paragraph 516 B is not blacklined, this note below. paragraph 63 1, which too is not blacklined, can not be construed to be statutory in character merely because para graph 631 incorporates a statutory rule. Since the source of paragraph 5 16 B and the Note at the foot of paragraph 631 is the same, namely, the Resolution of 6th September, 1905, counsel for the State of Punjab submit ted that the learned Judge in the High Court was not right in concluding that the Note being an integral part of the statutory rule incorporated in paragraph 631 must receive the same character and if there is a conflict between the two, the note which is statutory in character must prevail. The difficulty arises because the State Government has issued instructions in 1971 which has the effect of modify ing the executive instructions in paragraph 5 16 B, in that, it is now provided that a convict must have undergone 8 1/2 years of substantive sentence before his case for premature release can be submitted to the State Government for consid eration. A further change was made by an executive instruc tion issued in 1976 whereby it was provided that cases of convicts who were sentenced to death and whose sentences were subsequently commuted to life imprisonment will not be submitted to the State Government for consideration unless the convict has undergone atleast 14 years of substantive imprisonment. The High Court has taken the view that while paragraph 5 16 B would stand amended or modified by the subsequent executive instructions, the statutory rule con tained in the Note below paragraph 631 cannot be touched by mere executive instructions and hence it still holds the field and the Superintendent for the jail is bound to submit the case to the State Government ignoring the change brought about by the executive instructions of 1971 and 1976. In other words, according to the High Court the executive instructions of 1971 and 1976 being in conflict with the statutory Note must give way to the latter. Before we deal with the above question it may be advan tageous to refer to Sections 432,433 and 433A of the Crimi nal Procedure Code which have a bearing on the question of premature release. Section 432 confers on the appropriate Government the power to suspend the execution of the sen tence or remit the whole or part of the sentence with or without conditions. Section 433 confers power on the appro priate Government to commute (a) a sentence of death for any other punishment provided under the Penal Code, (b) a sen tence of imprisonment for life, for imprisonment for a term not exceeding 14 years or 153 fine (c) a sentence of rigorous imprisonment, for simple imprisonment or fine or (d) a sentence of simple imprison ment for fine. Section 433A provides that where an offender is visited with a sentence of imprisonment for life for an offence for which death is one of the punishments or where a sentence of death is commuted under Section 433 into one of punishment for life, such persons shall not be released from prison unless he has served atleast 14 years of imprison ment. It will thus seen that Section 432 and 433 confer powers of suspension, remission and commutation of sentences on the appropriate Government, an expression defined in Sub section (7) of Section 432 of the Code. In Gopal Vinayak Godse vs State of Maharashtra, ; , this Court held that a sentence of transportation for life or imprisonment for life must be treated as trans portation or imprisonment for the whole of the remaining period of the convict 's normal life, unless the said sen tence is commuted or remitted by the appropriate Government. Dealing with the Rules framed under the , this Court held that even though they were statutory in character they did not confer an indefeasible right on a prisoner sentenced to transportation for life an uncondi tional release on the expiry of a particular term including remissions. It held that the rules framed under the enabled a prisoner to earn remissions ordinary, special and State the said remissions were to be given credit to wards his term of imprisonment and for the purpose of work ing out the remissions the sentence of transportation for life was equated with a definite period, but it is only for the particular purpose and not for any other purpose. Lastly it observed that the question of remission was exclusively within the province of the appropriate Government. In Maru Ram vs Union of India, ; this Court repelled the challenge to Section 433A both on the question of competence of Parliament to enact the provision and its constitutional validity. While interpreting Sections 432,433 and 433A of the Code, this Court pointed out that wide powers or remission and commutation of sentences were conferred on the appropriate government but an exception was carved out for the extreme category of convicts who were sentenced to death but whose sentence had been commuted under Section 433 into one of imprisonment for life. Such a prisoner is not to be released unless he has served atleast 14 years of imprisonment. The Court refused to read down Section 433A to give overriding effect to the Remission Rules of the State. It categorically ruled that Remission Rules and like provisions stand excluded so far as 'lifers ' punished for capital offences are concerned. Remissions by way of 154 reward or otherwise cannot cut down the sentence awarded by the Court except under Section 432 of the Code or in exer cise of constitutional power under Article 72/161 of the Constitution. Remission cannot detract from the quantum and quality of the Judicial sentence except to the extent per mitted by Section 432 of the Code, subject of course to Section 433A, or where the clemency power under the Consti tution is invoked. But while exercising the Constitutional power under Article 72/161, the President or the Governor, as the case may be, must act on the advice of the Council of Ministers. The power under Article 72 and 161 of the Consti tution is absolute and cannot be lettered by any statutory provision such as Sections 432,433 and 433A of the Code. This power cannot be altered, modified or interfered with in any manner whatsoever by any statutory provisions or Prison Rules. Now, paragraph 5 16 B requires that the case of every convict sentenced to imprisonment for life or imprisonment aggregating to more than 14 years and who has undergone a period of detention in jail amounting, together with remis sion, to 14 years, shall be submitted to the State Govern ment for orders. The State Government 's instruction issued in 1971 provides that the convict must have undergone 8 1/2 years of substantive sentence before his case could be submitted to the Government. The other instruction issued in 1976 provides that the case of a convict who was sentenced to death and whose sentence was subsequently commuted to life imprisonment will not be submitted unless he has under gone atleast 14 years of substantive imprisonment. Remission schemes are introduced to ensure prison discipline and good behaviour and not to upset sentences; if the sentences is of imprisonment for life. ordinarily the convict has to pass the remainder of his life in prison but remissions and commutations are granted in exercise of power under Sections 432 and 433 carving out an exception in the category of those convicts who have already enjoyed the generosity of executive power on the commutation of death sentence to one of life imprisonment. Even in such cases Section 433A of the Code or the executive instruction of 1976 does not insist that the convict pass the remainder of his life in prison but merely insists that he shall have served time for at least 14 years. In the case of other 'lifers ' the insistence under the 1971 amendment is that he should have a period of atleast 81/2 years of incarceration before release. The 1976 amendment was possibly introduced to make the remission scheme consistent with Section 433A of the Code. Since Section 433A is prospective, so also would be the 1971 and 1976 amendments. 155 But the High Court has come to the conclusion that Paragraph 5 16 B, as amended by the executive instructions of 1971 and 1976, cannot override the statutory rule con tained in Paragraph 631 read with the note appended thereto. Counsel for the State argued that the Note at the foot of Paragraph 631 merely reproduces Paragraph 5 16 B; the mar ginal note thereto says to in no uncertain terms and, there fore, the Note cannot be ascribed a statutory character. We think there is considerable force in this submission. In the first place it must be realised that according to the pref ace only those paragraphs which are blacklined have statuto ry character. The Note in question is not so blacklined. Where the note is intended to be given statutory character it is blacklined, see the note at the foot of Paragraph 633. Secondly the source of paragraph 5 16 B and the Note is the very same Resolution No. 159 167 of the Government of India dated 6th September, 1905. It is difficult to believe that the same resolution was intended to be a mere executive instruction in one part of the Manual and was intended to be conferred a statutory character in another part of the same Manual. Thirdly the marginal note to the Note in question in terms refers to Paragraph 5 16 B which means it was merely a reproduction of the latter paragraph. In the circumstances if the Note was intended to be conferred a statutory charac ter, it would have been blacklined in keeping with the scheme of the Manual. These are clear indicators which support the submission of the learned counsel for the State. Lastly Paragraph 631 classifies prisoners and fixes the duration of their sentences e.g. 20 years for life convicts and class 3 prisoners and 25 years for class 1 and 2 prison ers. The Note at the foot of the paragraph is by way of a reminder that notwithstanding the duration fixed under the said rule, Paragraph 5 16 B requires that cases of such prisoners should be submitted on the expiry of the duration fixed under Paragraph 5 16 B. It, therefore, seems clear to us that the Note is neither an integral part of Paragraph 631 nor does it have statutory flavour as held by the High Court. We, therefore, find it difficult to uphold the view taken by the High Court in this behalf. We may make it clear that Paragraph 516B insofar as it stands amended or modified by the 1971 and 1976 executive orders is prospective in character. We allow these appeals and set aside the judgment and Order of the High Court in each of these appeals. G.N. Appeals allowed.

Paragraph 516 B of the Manual for the Superintendence and Management of Jails in Punjab provides for premature release of prisoners. The State Government had issued in structions in 1971 modifying the executive instructions in paragraph 516B, to the effect that a convict must have undergone 8 1/2 years of substantive sentence before his case could be submitted to the Government for consideration. Again there was another executive instruction in 1976 which provided that cases of convicts who were sentenced to death and whose sentences were subsequently commuted to life imprisonment would not be submitted to the State Government for consideration unless the convict has undergone atleast 14 years of substantive imprisonment. Paragraph 631 of the said Manual relates to remission of sentences. The note below paragraph 631 reproduces the gist of paragraph 516 B. Going by the preface of the Manual, paragraph 631 has statutory force whereas paragraph 5 16B being in the nature of executive instruction has no statutory force. The respondents filed Criminal Writ Petitions before the High Court praying for their premature release on the basis that the note under paragraph 631 has statutory force, the executive instructions issued in 1971 and 1976 have to be ignored and that the Jail Superintendent was bound to submit their cases to the Government for premature release. 148 The High Court allowed the claim of the respondents and held that the executive instructions issued in 1971 and 1976 being in conflict with the statutory note must give way to the latter. These appeals, by special leave, preferred by the State Government challenge the High Court 's decision on the ground that the source of paragraphs 516 and the note at the foot of paragraph 631 being the same, viz., resolution dated 6th September, 1905, it cannot be concluded that the note being an integral part of the statutory rule incorporated in paragraph 631 must receive the same character and in case of conflict between the two, the note which is statutory in character must prevail. Allowing the appeals, this Court, HELD: 1. Remissions by way of reward or otherwise cannot cut down the sentence awarded by the Court except under Section 432 of the Criminal Procedure Code or in exercise of constitutional power under Article 72/161 of the Constitu tion. Remission cannot detract from the quantum and quality of the judicial sentence except to the extent permitted by Section 432 of the Code, subject of course to Section 433A, or where the clemency power under the Constitution is in voked. The power under Articles 72 and 161 of the Constitu tion is absolute and cannot be lettered by any statutory provision such as Sections 432, 433 and 433A of the Code. This power cannot be altered, modified or interfered with in any manner whatsoever by any statutory provisions or Prison Rules. [153H; 154A C] 2. Remission schemes are introduced to ensure prison discipline and good behaviour and not to upset sentences. If the sentence is of imprisonment for life, ordinarily the convict has to pass the remainder of his life in prison but remissions and commutations are granted in exercise of power under Sections 432 and 433 Cr. P.C., carving out an exception in the category of those convicts who have already enjoyed the generosity of executive power on the commutation of death sentence to one of life imprisonment. Even in such cases Section 433A of the Code or the executive instruction of 1976 does not insist that the convict pass the remainder of his life in prison but merely insists that he shall have served time for at least 14 years. In the case of other 'lifers ' the insistence under the 1971 amendment is that he should have a period of atleast 8 1/2 years of incarceration before release. The 1976 amendment was possibly introduced to make the remission scheme consistent with Section 433A of the Code. Since Section 433A is prospective, so also 149 would be the 1971 and 1976 amendments. [154E H] Gopal Vinayak Godse vs State of Maharashtra, ; and Maru Ram vs Union of India, ; , relied on. According to the preface only those paragraphs which are blacklined have statutory character. The note in ques tion is not so blacklined. The source of paragraph 516B and the note is the very same Resolution No. 159 167 of the Government of India dated 6th September, 1905. It is diffi cult to believe that the same resolution was intended to be a mere executive instruction in one part of the Manual and was intended to be conferred a statutory character in anoth er. The marginal note to the Note in question in terms refers to paragraph 516 B which means it was merely a repro duction of the latter paragraph. In the circumstances, if the note was intended to be conferred a statutory character, it would have been blacklined in keeping with the scheme of the Manual. Paragraph 631 classifies prisoners and fixes the duration of their sentences e.g., 20 years for life convicts and class 3 prisoners and 25 years for class 1 and 2 prison ers. The note at the foot of the paragraph is by way of a reminder that notwithstanding the duration fixed under the said rule, paragraph 5 16B requires that cases of such prisoners should be submitted on the expiry of the duration fixed under paragraph 516B. It is, therefore, clear that the note is neither an integral part of paragraph 631; nor does it have statutory flavour as held by the High Court. [155B F]

ition No. 5019 of 1982. (Under Article 32 of the Constitution of India.) M.S. Ganesh for the Petitioner. V.K. Kanth, N.S. Das Behal and Ms. Sushma Relan for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This petition under Article 32 of the Constitution, in a representative capacity on behalf of the stenographers (Grade I) who are attached with officers in the pay scale of Rs.2500 2750 (Level I), seeks parity with the pay scale of the stenographers attached to the Joint Secretaries and officers above that rank. It is stated that the petitioners are in the pay scale of Rs.550 900. The petitioners claim that they should be placed in the pay scale of Rs.650 1040 with effect from 1st of January, 1973. It must, however, be mentioned that this petition was filed on or about 7th of May, 1982 and submissions on this petition were made in the end of November, 1986. Therefore, the position pertaining to the controversy in this case is prior to the report or the implementation of the Fourth Pay Commission. In short, the petitioners are personal assistants and stenographers attached to the heads of the departments in the Customs and Central Excise Departments of the Ministry of Finance. They assert that they have been and are discriminated vis a vis personal assistants and stenographers attached to the Joint Secretaries and officers above them in the Ministry. In brief, it is the case of the petitioners that between 28th of January, 1955 to 8th of November, 1957 the Ministry of Finance prescribed certain educational qualifications and technical proficiency qualifications for both Stenographers and Steno typists. On or about 26th of April, 1968, the Department of Revenue, Central Board of Excise and Customs made provisions for filling the posts of Stenographers by direct recruitment and prescribed qualifications etc. for the same. In July, 1969 the Government of India, Ministry of Home Affairs classified the posts of Stenographers sanctioned at different levels into four grades viz., Grade III, II, I and Selection Grade. Posts attached to Secrataries and Additional Secretaries were classi 1002 fied as Selection Grade originally and were given pay of Rs.350 (500)900 with effect from 1st of August, 1969; Stenographers Grade II (Rs.210 530) placed with Joint Secretaries and officers of equivalent rank were upgraded to Grade I in the pay scale of Rs.350(400) 770;Grade II stenographers were given Rs.210 530; Grade III stenographers were given Rs.130 280 and Grade III in petitioners ' offices were given Rs.130 300. It is the case of the petitioners that the counterparts of the petitioners (Grade II Stenographers) were in the pay scale of Rs.210 530 and petitioners in Rs.210 425. Criteria of pay scales/status/rank of officers for the scale of pay of stenographers were made out. In 1970 Ministry of Home Affairs set out the category of officers viz. Joint Secretaries to the Government of India and officers of equivalent rank are entitled to the sanction of scale of category of stenographers Grade I Sr.P.A. in the pay scale of Rs.350 770. Criteria of status/rank of an officer was again established for the pay scale of stenographers. Ministry of Home Affairs on or about 29th of June, 1972 pursuant to the decision taken on that date reached in the NCJCM relates to creation of posts of Stenographers Grade I and Grade II in subordinate offices and other offices of the Government of India and also identified/set out/clarified that the posts of Stenographers attached to officers whose status is higher than that of Deputy Secretary to the Government of India shall be in the scale of Rs.210 425. Criteria of status of an officer for scale of pay of Stenographers was again established. Thereafter there was the Third Pay Commission 's report which was accepted and recommendations were given effect to. As a result of the various Government notifications thereafter and Rules framed, it is the case of the petitioners that their counterparts, that is to say, Stenographers Grade I attached/sanctioned to the Joint Secretaries and equivalent officers were given the pay scale of Rs.650(710) 1040; whereas the petitioners whose posts were/are sanctioned and attached with the officers of the same Government Ministry of Finance and the Department of Revenue and the same administration and Grade Level I (Rs.2500 2750) Joint Secretaries and Level II (Rs.2250 2500) Directors, who are also Heads of Departments, and are at par in seniority/promotion with the counterparts officers in the Department of Revenue were given only Rs.425 700, whereas the Stenographers Grade I/Senior Grade, the petitioners discharged the same functions and indeed, have sometimes more onerous duties and responsibilities than their counterparts attached with Joint Secretaries and Level II Directors, according to the petitioners. From the affidavit filed on behalf of the petitioners in reply to the opposition by the respondents, it appears that the method of recruitment in respect of Grade I stenographers in the Department are as follows: 1003 (i) Petitioners ' counterparts in the so called Secretariat & participating attached offices CSSS. _______________________________________________________ Grade of Classi Designation/level/ Date of Stenographers fication. status/rank/grades sanction/ and scale of and pay scales of or up pay. officers for whom gradation. sanctioned/attached. _______________________________________________________ (1) (2) (3) (4) _______________________________________________________ Grade B Central (i) Joint Secretaries (Grade I) Civil & Equivalent. Rs.650 (710) Service Rs.2500 2750 1.1.1973 1040. Group 'B ' (Gazetted)(ii) Directors & Equivalent. Rs.2250 2500 12.11.1975 (iii) Directors & Equivalent. Rs.2000 2250 23.1.1984 _______________________________________________________ (ii) Petitioners ' Officers i.e. so called non participating attached and subordinate offices (Directorates & Collectorates of Customs & Central Excise): _______________________________________________________ (1) (2) (3) (4) _______________________________________________________ Grade I Central (i) Heads of the Departments Rs.550 900 Civil *Directors/ Service Collectors of Group 'B ' Customs & Central (non Excise Level I gazetted). Equivalent to Joint Secretaries Rs.2500 2750. 4.7.78 (ii) Directors/ Collectors of Customs & Central Excise Level II Equivalent to Directors (IRS IC & CE Service 1004 Rs.2250 2500 4.7.1978 (iii) Directors/ * * Generals/ Principal Collectors i.e. Level I Col lectors + Rs.250 S.P. Equivalent to pay scale of Addl. Secretary Rs.3000 i.e. Rs.2500 2750 + SP of Rs.250 */** All Heads of the Depart ments. x x x x x x x (iii) Comparative Position _______________________________________________________ Officers ' pay scales Pay scales of Petitioners in the two offices Stenographers pay scales with (Petitioners & their Gr. I in Sectt.these officers. counterparts) & Participating Offices (Petitioners counterparts) sanctioned with these officers. (1) (2) (3) _______________________________________________________ Rs.2500 2750 Rs.650(710) 1040 Rs.425 700 w.e.f.1.1.1973. w.e.f.1.1.73 Rs.550 900 w.e.f.4.7.78 Rs.2250 2500 Rs.650(710) 1040 Rs.425 700 w.e.f.12.11.75. w.e.f.1.1.73 Rs.550 900 w.e.f.4.7.78. Rs.2000 2250 Rs.650(710)/1040 Rs.425 700 w.e.f.23.1.1984. w.e.f.1.1.1973 Rs.2500 2750+ Rs.650(775) 1200 Rs.550 900 Spl Pay of Rs.250 w.e.f.1.1.73 i.e.Rs.3000 _______________________________________________________ 1005 In the rejoinder filed on behalf of the petitioners in this application by one Ved Bhardwaj, General Secretary of the Federation, it is stated that the correct position of recruitment and position vis a vis the petitioners counterparts in the so called secretariat and participating attached offices are as follows: "(i) The petitioners and their Secretariat counterparts are both members of the same Central Civil Service; (ii) They are both Stenographers Grade I belonging to Group 'B ' of the Service except that the Secretariat Stenographers are gazetted, whereas the petitioners are not. This exception is a purely fortuitous circumstances; (iii) The petitioners and their counterparts are both sanctioned, assigned to and attached with officers who are in the pay scales of Rs.2500 2750, Rs.2250 2500 and Rs.2000 2250; (iv) Majority of the petitioners ' posts are sanctioned/ attached with Heads of the Department. " The petitioners assert that the above facts reinforce the petitioners ' submissions that as between them and their Secretariat counterparts all things are equal i.e., all relevant considerations governing both are the same and they hold identical posts. According to the petitioners they discharge the same functions and, indeed, some times more onerous duties and responsibilities than their counterparts whether in the Ministry of Finance or other Ministeries in the Central Secretariat. In the very nature of their service and its concomitant duties and obligations, which concern the administration and execution of matters falling under the , the Central Excise and Salt Act, 1944, the Foreign Exchange Regulations Act, 1973 and other Acts. The petitioners have various duties to perform which according to them are as follows: "(a) long and arduous hours of work, generally extending late in the evening beyond normal office hours and sometimes throughout the night in cases of emergency that have become all too frequent owing to increased punitive and preventive detention cases arising under these Acts resulting in proceedings before all levels of Courts including this Honourable 1006 Court, and a spate of Parliament Questions affecting the Ministry of Finance, Department of Revenue, and the petitioners ' Department in particular in all its administrative aspects and ramifications. The petitioners have no option but to discharge these duties when called upon to do so and their willingness to forego overtime (in cases where the Stenographers are entitled) is not accepted by the officers as affording an excuse to relieve the petitioners of such duties and hours of work. (b) an excessively recurring volume of dictation and typing, day to day to cope with the normal and emergent exigencies, including written correspondence, recording and transcribing of notes on inspection tours and preparation of investigation and tour reports for the superior officers; of notes and memoranda for counsel in court proceedings, of briefs for official statements and conferences and replies to Parliament Questions and the Public Accounts Committee, Chambers of Commerce, Customs and Central Excise Advisory Councils and other bodies on fiscal policies like Commissions/Committees, detailed reports constituting background material with reference to cases or matters falling within the purview of any one or more of the aforesaid Acts, and so on. (c) observing the very stringent requirements of secrecy necessarily involved in such cases or matters, (d) the consequent constant exposure to security risks and to personal safety with accompanying mental tension and strain. " The petitioners assert that basic qualifications, method, manner and source of recruitment and grades of promotions are the same as their counterparts attached to the Joint Secretaries/Secretaries and other officers in the Secretariat. According to the petitioner even on the criteria adopted by the Third Pay Commission they seek herein to demonstrate that there was no basis for any differentiation between the petitioners and their counterparts. While the petitioners get a grade of Rs.550 900 their counterparts are in the pay scale of Rs.650 1040. The petitioners assert that this is discrimination. This differenti 1007 ation without any rational basis is discrimination violative of Article 14 and Article 16(1) of the Constitution of India. They clamour for equal pay for equal work. They also allege that their has been discrimination in the adoption of the recommendations of the Third Pay Commission as detailed in their petition. This petition has been disposed of on the basis of the position prevailing prior to the report of the Fourth Pay Commission and its acceptance or implementation. The respondents on the other hand deny that their is any discrimination, differentiation without basis. The respondents by their affidavit filed by one Shri S.P. Kundu, Under Secretary to the Government of India, Ministry of Finance assert that the Secretariat of the Ministries/Departments of the Government of India together constitute Headquarters Organisation. In the administrative hierarchy of the Central Government, the Secretariat occupy according to respondents a key position and the main role of the Secretariat is to help the Government in the tasks of formulation of policies, to prepare programmes in order to translate these policies, into co ordinated action and to ensure the effective execution of Government policies through periodical review. The Secretariat also helps Ministers to discharge their accountability to Parliament including the various Parliamentary Committees. According to the respondents detailed execution of Government 's policies specially in the field is left to the agencies outside the Secretariat which are called attached or subordinate offices of the Ministries, but they are always subject to supervision by the Secretariat. The respondents state that to man the various stenographic posts in the Headquarters, the Government constituted the Central Secretariat Stenographers Service (CSSS) which also cater to the needs of such posts in several attached offices which are known as participating offices. But none of the attached offices, assert the respondents, of the Department of Revenue are participating offices. Therefore, keeping in view the importance and the nature and the type of the work performed in the Ministries/Departments of the Government of India vis a vis those in the attached and subordinate offices and consequently the nature of stenographic assistance required, according to the respondents the Third Pay Commission recommended different scales of pay for Stenographers in CSSS and those in the non participating attached and subordinate offices. The respondents in this connection have drawn our attention to the Report of the Third Pay Commission in recommending different and lower scales of pay for the stenographers of the non participating attached and subordinate offices in comparison with those in the Central Secretariat as follows: 1008 "As a general statement, it is correct to say that the basic nature of a stenographer 's work remains by and large the same whether he is working with an officer in the secretariat or with an officer in the subordinate office. We feel, however, that the position needs to be examined a little more critically because the size of a stenographer 's job is very much dependent upon the nature of the work entrusted to that officer. It would not be correct therefore to go merely by status in these matters and disregard the functional requirements. By the very nature of Secretariat working the volume of dictation and typing work can be expected to be heavier than in a subordinate office. Also the requirement of secrecy even in the civil offices of the Secretariat can be very stringent. Considering the differences in the hierarchical structure and in the type of work transacted in the Secretariat and in the subordinate offices, we are not in favour of adopting a uniform pattern. Once the functional requirements are seen to be different for the Secretariat and the subordinate office, it will not be worth while to aim for absolute parity in the pay scale of Stenographers working on the two sides. " What was emphasised before us was that the difference in the functional requirements of the work done was one of the points. The respondents say that in devising any scales of various posts/categories, inter alia, the degree of skill, experience involved, training required, responsibility taken, strain, fatigue, risk and confidentiality undertaken, mental and physical requirements are factors to be borne in mind. It has been emphasised by the respondents that though the duties and works are identical between the petitioners and their counterparts attached to the Secretaries in the Secretariat, their functions are not identical with regard to their duties and responsibilities. The respondents state that the stenographers attached with the officers in the Secretariat formed a distinguishable class as they have to assist the officers in the discharge of their duties and high responsibilities which according to the respondents are of a much higher nature than in the attached and subordinate offices. According to the respondents the Joint Secretaries and Directors in the Central Secretariat performed functions and duties of higher responsibilities than those performed by the Heads of Departments although they are borne on identical scales of pay. It is in this background of the facts that the claims of the petitioner have to be judged. 1009 Equal pay for equal work is a fundamental right. But equal pay must depend upon the nature of the work done, it cannot be judged by the mere volume of work, there may be qualitative difference as regards reliability and responsibility. Functions may be the same but the responsibilities make a difference. One cannot deny that often the difference is a matter of degree and that there is an element of value judgment by those who are charged with the administration in fixing the scales of pay and other conditions of service. So long as such value judgment is made bona fide, reasonably on an intelligible criteria which has a rational nexus with the object of differentiation, such differentiation will not amount to discrimination. It is important to emphasise that equal pay for equal work is a concomitant of Article 14 of the Constitution. But it follows naturally that equal pay for unequal work will be a negation of that right. We may briefly note the principles evolved by this Court in this respect in the backdrop of varied set of facts. Differentiation in implementing the award or the recommendations of Pay Commission without rational basis may amount to discrimination. In Purshottam Lal & Others. vs Union of India & Anr., it was held that implementation of the revised pay scale in a particular category of servants from a date later than that recommended by the Pay Commission and thus non implementation of its report only in respect of those persons amounts to violation of Articles 14 and 16 of the Constitution, the Constitution Bench held. In Laljee Dubey and Others vs Union of India and Others, this principle was reiterated again. This Court in Randhir Singh vs Union of India & Ors., ; had to deal with the case of a driver constable in the Delhi Police Force under the Delhi Administration. The scale of pay in the Delhi Police Force was for non matriculate drivers Rs.210 70 and for matriculate drivers Rs.225 308. The scale of pay of a driver in the Railway Protection Force was Rs.260 400. The scale of pay of drivers in the non secretariat offices in Delhi was Rs.260 6 326 EB 8 350, while that of Secretariat offices in Delhi was Rs.260 6 290 EB 6 326 8 366 EB 8 8 8 390 10 400. The scale of pay of drivers in the office of the Language Commission was Rs.260 300 while the drivers of heavy vehicles in the Fire Brigade and the Department of Light House was Rs.330 480. The petitioner and other driver constables made a representation to the authorities that their case was omitted to be considered separately by the Third Pay Commission and that their pay scales should be the same as the drivers of heavy vehicles in other departments. As their claims for better scales of pay did not meet with success, the said application was filed by the petitioner for the issue of 1010 a write under Art.32 of the Constitution. It was allowed by the Court. Chinnappa Reddy, J. speaking for a Bench of three learned judges of this Court reiterated the following principles: "(a) 'Equal pay for equal work ' is not a mere demagogic slogan but a constitutional goal capable of attainment through constitutional remedies, by the enforcement of constitutional rights (under Article 32 of the Constitution of India). (b)The stand (of the Government of India) that the circumstance that persons belonging to different departments of the Government is itself a sufficient circumstance to justify different scales of pay irrespective of the identity of their powers, duties and responsibilities, is unacceptable and untenable. (c) While equation of posts and equation of pay are matters primarily for the Executive Government and expert bodies like the Pay Commission and not for the Courts, where all things are equal i.e. where all relevant considerations are the same, persons holding identical posts may not be treated differentially in the matter of their pay merely because they belong to different departments. (d) The principle of equal pay for equal work is not an abstract doctrine when applied to Government servants performing similar functions and having identical powers, duties and responsibilities. (e) As matter of interpretation, the Directive Principles, e.g. Article 39(d) of the Constitution, have to be and have been read into the Fundamental Rights, e.g. Articles 14 and 16 of the Constitution. So read, the principle of equal pay for equal work, though not expressly declared by our Constitution to be a fundamental right, is a constitutional goal. Construing Articles 14 and 16 in the light of the Preamble and Article 39(d), the principle of 'equal pay for equal work ' is deducible from those Articles and may be properly applied to cases of unequal scales of pay based on no classification or irrational classification though those drawing the different scales of pay do identical work under the same employer. " 1011 The Court further expressed the view that on the aforesaid interpretation in the facts of that case, it was proper to direct the Central Government to fix pay scales on par for persons doing identical work under the same employer. It is, however, to be borne in mind what has been emphasised by the respondents in the instant case on this aspect. That case related to the drivers who had been doing physical work, in the case of stenographers and personal assistants, there is an element of faith, reliability and responsibility and the functional responsibilities and the requirements of persons doing same amount of physical work may be different in some cases depending upon the officers with whom the stenographers and personal assistants are attached. On behalf of the petitioners, it is emphasised that Heads of Departments who are in the senior Administrative Grade Level I (Rs.2500 2750) which is equivalent to the pay scale of the Joint Secretaries in the Ministries and their nature of work is virtually the same. They have also to deal with sensitive matters. The basic principles on which differentiation would not amount to discrimination, violative of either Article 14 of Article 16(1) of the Constitution are well settled. Article 14 of the Constitution strikes at the arbitrariness in State action and ensures fairness and equality of treatment. It is attracted where equals are treated differently without any reasonable basis. The principle underlying the guarantee is that all persons similarly circumstanced shall be treated alike both in privileges conferred and liabilities imposed. Equal laws must be applied equally and there should be no discrimination between one person and another if as regards the subject matter of either administrative action or of legislation, their position is substantially the same. Article 14 forbids class legislation but permits reasonable classification for the purpose of legislation or administrative mandate. The classification must, however, be founded on an intelligible basis which distinguishes persons or things that are grouped together from those that are left out of the group and that differentia must have a rational nexus with the object to be achieved by the differentiation made in the statute or order in question. In other words, there ought to be causal connection between the basis of classification and the object of the classification. See in this connection the observations of the Constitution Bench of this Court in the case of D.S. Nakara & Others vs Union of India, ; See also P.K. Ramachandra Iyer & Others vs Union of India & others, [1984] 2 S.C.R. 200, where this Court at page 226 of the Report reiterated that the principle of 'equal pay for equal work ' is deducible from those Articles 14 and 16 in the light of the Preamble and Article 39(d) of the Constitution and might be applied properly in the cases of unequal scales of pay based on no classification or irrational classification 1012 though those drawing the different scales of pay do identical work under the same employer. In Delhi Veterinary Association vs Union of India & Others, ; , which was dealing with Veterinary Assistant Surgeons working in the Delhi Administration. It was observed dismissing the writ petition that the question of the fixation of pay scale for Veterinary Assistant Surgeons should be left to be decided by the Government on the basis of the recommendation of the Fourth Pay Commission. The question of discrimination cannot be decided in isolation. This Court reiterated that in addition to the principle of 'equal pay for equal work ', the pay structure of the employees of the Government should reflect many other social values. This Court also emphasised the need for evolution and implementation of a scientific national policy of incomes, wages and prices. In P. Savita vs Union of India & Ors., [1985] Suppl. 1 S.C.R.101 this Court was dealing with Senior Draughtsmen doing the same work and discharging the similar functions and duties. They were classified into two groups, on the basis of seniority with two different pay scales. The question was whether it was discriminatory. It was held that it was. This Court reiterated that a group of draughtsmen entitled to higher scale of pay was not selected by any process nor is it based on any merit cum seniority basis, but is based only on seniority cum fitness. Moreover, it was found that the senior draughtsmen divided into two groups were in the same department doing identical and same work. It was not a case of different grades created on the ground of higher qualification either academic or otherwise or an entitlement by any other criteria. Thus the classification between the two groups of senior draughtsmen was without any basis. In view of the total absence of any plea in that case on the side of the respondents that the Senior Draughtsmen who were placed in the advantageous group do not perform work and duties more onerous or different from the work performed by the appellants groups in that case, it was held that this grouping violated Article 14 of the Constitution. It reiterated that the principle of 'equal pay for equal work ' would be an abstract doctrine not attracting Article 14 if quality is made critarion for differentiation. See also Surinder Singh and Anr. vs Engineer in Chief, C.P.W.D. and Others, This Court in a different context had to decide this question in Frank Anthony Public School Employees ' Association vs Union of India and Others, [1986]4 SCC 707. It was held that there cannot be discrimination in pay and other conditions of service of school teachers merely on the basis of aided and unaided minority schools. As is evident the facts of the instant case are entirely different. 1013 Here the differentiation is sought to be justified on the similarity of the functional work but on the dissimilarity of the responsibility, confidentiality and the relationship with public etc. In Dhirendra Chamoli and another vs State of U.P., , this Court was concerned with the casual workers on daily wage basis engaged by the Government in different Nehru Yuvak Kendras in the country performing the same duties as performed by the regular Class IV employees against the sanctioned strength. The claim was allowed with certain directions on the basis of the facts found. See in this connection Union of India & Anr. vs R.G. Kashikar & Anr., AIR 1986 SC 431. In Writ Petition (Civil) Nos. 13097 13176 of 1984, M.P. Singh Deputy Superintendent of Police, C.B.I. and Others vs Union of India & Others, (Judgments Today , this Court on the facts of that case found that among the employees of the Central Bureau of Investigation, there are two classes of officials deputationists and non deputationists amongst Sub Inspectors, Inspectors and Deputy Superintendent of Police. There has been discrimination among two groups with regard to payment of special pay. Special pay related to arduous nature of duties to be performed. Whether they belong to the category of deputationists or non deputationists payment of different rates of Special pay, it was held in the facts of the case, did not pass the test of classification. This Court reiterated that it was well settled that in order to pass the test of permissible classification of persons belonging to the same class into groups for purposes of differential treatment two conditions must be fulfilled, namely, that the classification must be founded on an intelligible differentia which distinguishes persons who were grouped together from others left out of the group and that differentia must have a rational relation to the objects sought to be achieved by the law which brings about discrimination between the two groups. In M/s. Mackinnon Mackenzie & Co. Ltd. vs Audrey D 'Costa & Anr., (SLP (CIVIL) No. 1265/87 decided on March 26,1987), the question was the different treatment between male and female stenographers. But there differentiation was based on the ground of sex. It was struck down. It will clearly be violative of Article 14 and Article 16 of the Constitution. In this case the differentiation has been sought to be justified in view of the nature and the types of the work done, that is, on intelligible basis. The same amount of physical work may entail different quality of work, some more sensitive, some requiring more tact, some less it varies from nature and culture of employment. The problem about equal pay cannot always be translated into a mathematical formula. If it has a rational nexus with the object to be sought for, as 1014 reiterated before a certain amount of value judgment of the administrative authorities who are charged with fixing the pay scale has to be left with them and it cannot be interfered with by the Court unless it is demonstrated that either it is irrational or based on no basis or arrived mala fide either in law or in fact. In the light of the averments made and in the facts mentioned before, it is not possible to say that the differentiation is based on no rational nexus with the object sought for to be achieved. In that view of the matter this application must fail and it is accordingly dismissed without any order as to costs. We must, however, make it clear that this will not in any way prevent or prejudice the Government from reviewing the situation in the light of the report of the Fourth Pay Commission or any other appropriate body, if any, with such modification as the Government and the authorities concerned considered fit and proper. S.L. Petition dismissed.

By this writ petition, Personal Assistants and Stenographers (Grade I) in the pay scale of Rs. 550 900 attached with officers in the pay scale of Rs.2500 2750 (Level I) i.e. heads of the departments in the Customs and Central Excise Departments of the Finance Ministry, sought parity with the pay scale of the stenographers attached to the Joint Secretaries and the officers above. The petitioners asserted that they had been and were discriminated vis a vis the personal assistants and stenographers attached to the Joint Secretaries and the officers above in the Ministry, and claimed that they should be placed in the pay scale of Rs.650 1040 with effect from 1st January 1973. They contended that the basic qualifications, method, manner and source of recruitment and grades of promotion were the same as of their counterparts attached to the Joint Secretaries/Secretaries and other officers in the Secretariat. According to them, even on the criteria adopted by the Third Pay Commission there was no basis for any differentiation between the petitioners and their counterparts. While the petitioners got a grade of Rs.550 900, their counterparts were in the pay scale of Rs.650 1040. The petitioners asserted that this differentiation without any rational basis was discrimination violative of Articles 14 and 16(1) of the Constitution of India. They contended for equal pay for equal work, and alleged discrimination in the adoption of the recommendation of the Third Pay Commission. The respondents denied that there was any discrimination, differentiation without basis and referred to the Report of the Third Pay Commission, recommending different and low scales of pay for the 999 stenographers of the non participating attached and subordinate offices in comparison with those in the Central Secretariat. It was emphasised that the difference in the functional requirements of the work done was a point. In devising any scales of various posts/categories inter alia the degree of skill, experience involved, training required, responsibility taken, strain, fatigue, risk and confidentiality undertaken, mental and physical requirements were the factors to be borne in mind. Dismissing the petition with an observation, the Court, ^ HELD: The petition had to be disposed of on the basis of the position prevailing prior to the report of the Fourth Pay Commission and its acceptance/implementation. [1007B] Equal pay for equal work is a fundamental right. But equal pay must depend upon the nature of the work done. It cannot be judged by the mere volume of work; there may be qualitative difference as regards reliability and responsibility. Functions may be the same but the responsibilities make a difference. Often the difference is a matter of degree and there is an element of value judgment by those who are charged with the administration in fixing the scales of pay and other conditions of service. So long as such value judgment is made bonafide, reasonably on an intelligible criteria, having a rational nexus with the object of differentiation, such differentiation will not amount to discrimination. Equal pay for equal work is a concomitant of Article 14 of the Constitution. But it follows that equal pay for unequal work will be a negation of that right. [1009A C] Differentiation in implementing the award or the recommendations of Pay Commission without rational basis may amount to discrimination. However, in this case, there is an element of faith, reliability and responsibility and the functional responsibilities and the requirements of persons doing the same amount of physical work may be different in some cases, depending upon the officers with whom the stenographers and personal assistants are attached. The basic principles on which differentiation would not amount to discrimination, violative of Article 14 or Article 16(1) of the Constitution are well settled. Article 14 strikes at the arbitrariness in State action and ensures fairness and equality of treatment. It is attracted where equals are treated differently without any reasonable basis. Equal laws must be applied equally and there should be no discrimination between one person and another if as regards the subject matter of either administrative action or legislation, their position is substantially the same. Article 14 forbids 1000 class legislation but permits reasonable classification for the purpose of legislation or administrative mandate. The classification must, however, be founded on an intelligible basis which distinguishes persons or things grouped together from those left out of the group and that differentia must have a rational nexus with the object to be achieved by the differentiation made in the statute or order in question. There ought to be causal connection between the basis of classification and the object of classification. The observations of the Constitution Bench of this Court in D.S. Nakara & Ors. vs Union of India, ; may be seen in this connection. [1011B G] In this case, differentiation had been sought to be justified in view of the nature and the types of the work done, that is, on intelligible basis. The same amount of physical work may entail different quality of work, some more sensitive, some requiring more tact, some less it varies with nature and culture of employment. The problem about equal pay cannot always be translated into a mathematical formula. If it has a rational nexus with the object to be sought for a certain amount of value judgment of the administrative authorities charged with fixing the pay scale has to be left with them and it cannot be interfered with by the Court unless it is demonstrated that either it is irrational or based on no basis or arrived at mala fide either in law or fact. In the light of the averments made and in the facts of this case, it was not possible to say that the differentiation was based on no rational nexus with the object sought to be achieved. This application must fail and was dismissed. This, however, would not in any way prevent or prejudice the Government from reviewing the situation in the light of the report of the Fourth Pay Commission or any other appropriate body, if any, with such modification as the Government and the authorities concerned considered fit and proper. [1013G H;1014A D] Purshottam Lal & Ors. vs Union of India & Anr. , ; Laljee Dubey & Ors. vs Union of India & Ors. , ; Randhir Singh vs Union of India & Ors., ; ; D.S. Nakara & Ors. vs Union of India, ; ; P.K. Ramachandra Iyer & Ors. vs Union of India & Ors. , ; ; Delhi Vetrinary Association vs Union of India & Ors., ; ; P. Savita vs Union of India & Ors., [1985] Suppl. 1 SCR 101; Surinder Singh and Anr. vs Engineer in chief, C.P.W.D. & Ors. , ; Frank Anthony Public School Employees ' Association vs Union of India & Ors., ; ; Dhirendra Chamoli & Anr. vs State of U.P., ; Union of India & Anr. vs R.G. Kashikar & Anr., AIR 1986 SC 431; M.P. Singh Deputy Superintendent of Police, 1001 C.B.I. and Ors.v. Union of India & Ors., J.T. and M/s. Mackinnon Mackenzie & Co. Ltd. vs Audrey D 'Costa & Anr., SLP (Civil) No. 1265/87 decided on March 26, 1987, referred to.

Appeal No. 822 of 1963 Appeal by special leave from the judgment and decree dated April, 7, 1961 of the Punjab High Court in Regular First Appeal No. 32 of 1957. Bishan Narain and B. P. Maheshwari, for the appellants Nos. 1 3 and 5 10. M. V. Goswami, for appellant No. 4. Bhawani Lal, E C. Agarwala, Ganpat Rai and P.C. Agarwala, for respondent Nos. 1(i) 1(vi). 864 The Judgment of the Court was delivered by WANCHOO, J. This is an appeal by special leave from the decree of the Punjab High Court in a suit brought by the plaintiffs respondents for pre emption. The appellants are vendees to the sale which was preempted. The facts found by the courts below are these. The property in suit consisted of agricultural land as well as some baras in village Jalalpur. Punnu Singh and Mansha Singh who were also parties to the suit as defendants sold the property in suit on January 15,1955 to the appellants. Thereafter consolidation proceedings took place in this village and came to an end before the present suit was filed on January 14, 1956. Of the vendees, six had no share in the village from before while four already had some share in the village. As a result of the consolidation proceedings, six of the vendees who had no share in the village from before were allotted other land in place of the land which they had purchased under the sale deed. The other four vendees who had some share in the village from before were allotted land in two blocks in lieu of the land they had in the village from before as well as the land which they had purchased by the sale deed in question. The plaintiffs respondents instituted the suit on the basis of their being collaterals and co sharers and wanted that they should be given out of the land allotted to the vendees in consolidation proceedings such land as they would be entitled to after pre emption of the sale in question. The suit was resisted by the appellants on a number of grounds. The main ground of defence with which we are concerned in the present appeal was whether the suit was maintainable with respect to the land which had been obtained by the vendees during consolidation proceedings in lieu of the land which was the subject matter of the sale deed. The trial court held in favour of the plaintiffs respondents and granted a decree for pre emption. On ,appeal to the High Court by the vendees, the High Court held on the basis of section 24 of the Patiala and East Punjab States Union Holdings (Consolidation and Prevention of Fragmentation) Act, No. 5 of 2007 Bk. (hereinafter referred to as the Act), that it was open to the pre emptor to follow the land which had been given to the vendees in consolidation proceedings in lieu of the land which was the subject matter of the sale deed. Further in the High Court another point was raised on behalf of four of the appellants who had land from before in the village and it was urged that in their case it was not possible to distinguish which land had been allotted to them in place of the land sold and therefore no pre emption decree should be granted. This argument was also rejected by the High Court, and the appeal was dismissed. The High Court having refused the certificate, the appellants applied and obtained ,special leave from this Court; and that is how the matter has come before us. 86 5 The main question that has been argued before us is that the suit is not maintainable as it is not open to the pre emptor to follow the land which might have been obtained by the vendees in lieu of the land actually sold to them. The answer to this question depends upon the interpretation of section 24 of the Act in the background of the law of pre emption. In Shri Audh Behari Singh vs Gajadhar Jaipuria,(1) this Court held that "The correct legal position seems to be that the law of preemption imposes a limitation or disability upon the ownership of a property to the "extent that it restricts the owner 's unfettered right of sale and compels him to sell the property to his co sharer or neighbour as the case may be The crux of the whole thing is that the benefit as well as the burden of the right of preemption run with the land and can be enforced by or against the owner of the land for the time being although the right of the preemptor does not amount to an interest in the land itself The right of preemption is an incident of property and attaches to the land itself. . . . ." This Court had occasion to consider the matter again in Bishan Singh vs Khazan Singh(2) and pointed out that the right of preemption is not a right to the thing sold but a right to the offer of a thing about to be sold, this being the primary or inherent right, and that the preemptor has a secondary right or a remedial right to follow the thing sold. Reliance is placed on behalf of the appellants on this later decision and it is stressed that the preemptor 's remedial right is merely to follow the thing sold, namely, the very property which is the subject matter of the sale deed under preemption. The later decision on which reliance is placed does not in any manner affect the earlier decision where it was held that the right of preemption is an incident of property and attaches to the land. It is true, as held in the later decision, that ordinarily the right of the preemptor is to follow the property which is the subject matter of the sale deed. The question which, however arises in the present case is whether s.24 of the Act makes any difference to this ordinary position of the law of preemption. That section reads as follows: "A land owner or a tenant at will shall have the same right in the land allotted to him in pursuance of the scheme of consolidati on as he had in his original holding or tenancy as the case may be." Clearly the effect of this provision is to give to the land owner or a tenant at will the same right in the land which he acquires under the scheme of consolidation in lieu of that land which he had before the consolidation proceedings. He cannot get more (1) [1955]1 S.C.R 70, (2) ; 866 rights than he had before nor can be get any less rights. It is urged that section only preserves the rights and has nothing to do with obligations to which the land may be subject. We are of opinion that this is not so. When the section lays down that the land owner or a tenant at will shall have the same right in the land allotted to him in pursuance of the scheme of consolidation as he had in his original holding or tenancy, it clearly implies that obligations would also remain the same. If that were not so and if his obligations were to disappear he would acquire more right in the land allotted to him than he had in the original holding or tenancy. For example, if the land owner had only a life interest in the original holding he would get the same life interest in the land allotted to him and could not claim to be absolute owner of the land allotted in consolidation proceedings. Thus the obligation which attached to his ownership of his original holding (namely, that it was subject to all the disabilities of a limited owner) would also apply to the land allotted to him in consolidation proceedings. Therefore when section 24 speaks of the landowner or the tanant at will having the same right in the land allotted as he had in the original holding or tenancy, it brings in all the rights and obligations which were attached to his ownership or tenancy of the land originally held. It is in this background that the nature of the right of preemption as held in Audh Behari Singh 's case (1) assumes importance. In that case it was held that the law of pre emption imposes a limitation or disability upon the ownership of a property and that the benefit as well as the burden of the right of preemption run with the land. Therefore if the original holding of the landowner was subject to the disability of preemption the land allotted in lieu thereof will be equally subject to the same disability. This will however always be subject to the law of pre emption itself, and to the well settled principle of pre emption, namely, that the preemptor must have a right of preemption at the date of the sale, at the date of the suit and finally at the date of the decree. Section 24 when it says that the landowner or the tenant at will shall have the same right in the land allotted to him as he a in his original holding or tenancy, clearly preserves the obligation that may be on the land in the nature of a disability. The consequence therefore is that the ordinary law of preemption under which the preemptor has the right to follow the land which is the subject matter of the sale deed becomes expanded and the land allotted to the land owner or tenant at will in lieu of the land which may have been subject to preemption also becomes subject to preemption in the same way as the original holding or tenancy. So it follows that if the land allotted in lieu of the original holding or tenancy is preemptible under the law of pre emption and the right of preemption still exists on the three dates to which we have (1)[1955] 1 section C.R, 70. 867 already referred, the pre emptor would by virtue of s.24 be able to enforce his rights against land which may have been allotted to the vendee in lieu of the land which was actually the subject matter of sale. We are therefore of the opinion that the construction of section 24 by the High Court is correct and the plaintiffs respondents have a right by virtue of section 24 of the Act to preempt the land which was allotted to the appellants in lieu of the land which was the subject matter of the sale deed. It is however urged that section 25 of the Act specifically provides for rights with respect to a lease, mortgage or other encumbrance to attach to the land allotted in place of the original holdings, and that shows that no other rights were intended to survive. We are of opinion that there is no force in this argument. It was necessary to enact section 25 when dealing with leases, mortgages and encumbrances for without such a specific provision, a lease, mortgage or encumbrance which was on one piece of land could not in law attach to another piece of land. This however is very different from an incident of ownership of land e.g. liability to preemption which attaches to the land itself and continues to attach to the land allotted in lieu of the original holding or tenancy by section 24. The special provisions, therefore in section 25 do not negative the inference that obligations which attach to the right of ownership of the original holding or tenancy would continue to attach to the land allotted in lieu thereof in consolidation proceedings. This brings us to the subsidiary contention which was raised in the High Court, namely, that four of the vendees were allotted land in lieu both of what they owned from before and what they got under the sale deed in question. The High Court has held and we think rightly that there should be no difficulty in finding out how much of the land allotted pertains to the land which was the subject matter of the sale deed. Land is always valued for purposes of allotment during consolidation proceedings and it would not therefore be difficult to find out how much land was allotted Io these four vendees in place of the land which they got by the sale deed. Lastly it is urged that the form of the decree is incorrect. This submission is made on the basis of the following sentences in the judgment of the trial court: "It does not mean that the land is not distinguishable. It can be considered during execution at the time of delivering the possession of the land. " We have not permitted learned counsel to raise this point for the first time before us, as it was not raised in the High Court. We therefore reject this contention. The appeal fails and is hereby dismissed. Costs as per order dated 8 9 65. Appeal dismissed.

The appellants purchased certain lands in the State of Punjab and the respondents filed a suit claiming a right of preemption thereon. Under a scheme of consolidation, however, the appellants had before the filing of the suit, been allotted some other lands in lieu of the lands purchased by them, and they contended that the right of pre emption claimed by the respondents did not extend to these lands. The trial court and the High Court decreed the respondents ' suit holding on the oasis of section 24 of the Patiala and East Punjab States Union Holdings (Consolidation and Prevention of Fragmentation) Act 5 of 2007 BK that it was open to pre emptor to follow the land which had been given to the vendees in consolidation proceedings in lieu of the land which was the subject matter of the sale deed. The appellants came to this Court by special leave. HELD : Section 24 when it says that the landowner or the tenant at will shall have the same right in the land allotted to him as he bad in his original holding or tenancy clearly preserves the obligation that may be on the land in the nature of a disability. The consequence therefore is that the ordinary law of pre emption under which the pre emptor his the right to follow the land which is the subject matter of the sale deed becomes expanded and the land allotted to the landlord and tenant at will in lieu of the land which may have been subject to pre emption also becomes subject to pre emption in the same way as the original holding or the tenancy. This inference is not negatived by the special provisions of section 25 in respect of leases and mortgages or other encumbrances. [866 G; 867 D E] Shri Audh Behari Singh vs Gajadhar Jaipuria, [1955] 1 S.C.R. 70, Bishan Singh vs Khazan Singh, ; relied on.

vil Appeal Nos. 1467 69 of 1976. 295 Appeals by Certificate from the Judgment and Order dated 7.5. 1965 of the Calcutta High Court in Income Tax Reference No, 28 of 1954. B. Sen, N.B. Singh, Sanjay J. Khaitan, Darshan Singh, B.N. Dhar and Ms. Suman Khaitan for the Appellant. S.C. Manchanda, section Rajappa and Ms. A. Subhashini for the Respondent. The Judgment of the Court was delivered by THOMMEN, J. These appeals by the assessee arise from the judgment dated 7.5.1965 of the Calcutta High Court. The question relates to the assessment for the years 1945 46, 1946 47 and 1947 48 under the Indian Income Tax Act, 1922 (hereinafter referred to as "the Act"). The assessee was a company resident in British India during the relevant years. It had a cotton mill in British India. The cloth manufac tured by the mill was sold in British India as well as in the native States. In the assessment for 1944 45, it had been held that, for the sales effected in the native States, 1/3rd of the profit was, in terms of section 42(3) of the Act, deemed to have accrued to the assessee in British India. This profit was considered as the profit attributed to the manufacturing part of the business carried out in British India, although the sales were effected in the native States. On the same basis, assessment in terms of section 42(3) was made in respect of the assessment years 1945 46, 1946 47 and 1947 48. In addition to the deemed income in British India, the assessee was assessed under section 14(2)(c) of the Act in respect of certain sums remitted to British India from the native States. The assessee 's contention that 1/3rd of the income having been assessed under section 42(3) of the Act as income deemed to have accrued in British India, no further assessment should be made under section 14(2)(c) of the Act with respect to profits brought into British India, was rejected by the Income Tax Officer as well as the Appellate Assistant Commissioner. On further appeal, the Income Tax Appellate Tribunal also held that there was no substance in that contention. The Tribunal stated " . . the assessment of profits brought into British India from a Native State under Section 14(2)(c) is on a distinct and separate footing from the assessment of Native States 296 profits which are deemed to have accrued in British India under Section 42 . " The assessee raised an additional contention for the first time before the Tribunal. That contention was that the remittances made to British India had to be taken as having first come out of profits "deemed to have accrued in British India" and brought to tax under section 42(3), and only the excess remittances, if any, could be taken as having come out of the remainder profits exempted from tax under section 42. The assessee pointed out that I/3rd of the profits having been already charged under section 42(3), by reason of the legal fiction contained in that sub section, any amount brought into British India upto the extent of 1/3rd should be presumed to be that which was attributable to that 1/3rd which had already suffered tax, and the balance remit tance, if any, alone should be taxed under section 14(2)(c) of the Act. In other words, according to the assessee, if the remittances made to British India in any accounting year exceeded the amount taxed under section 42(3) of the Act, then it was only so much of that excess which could be taxed under section 14(2) of the Act. The Tribunal did not accept this contention. However, it stated: " . . it appears to us that the common sense point of view would be that the remittances to British India include both the assessed as well as the exempt profits in the same proportion in which those existed in the Native State . . It therefore appears to us that the correct view would be to apportion the remittances over the assessed and the exempt parts in the same proportion as these existed in the total profits made in the Native State. As such proportion was one third and two thirds, the remittances would be similarly split up. Thus 1/3rd of the remittances has come out of profits assessed under Section 42. On this basis, these additions made by the Income Tax Officer and confirmed by the Appellate Assistant Commissioner will have to be reduced by one third of such remittances. " On a reference under section 66(1) of the Act, the High Court by its judgment dated 22.7.1957, found that the facts stated were insufficient and that there was an error appar ent on the face of the question as framed. The High Court accordingly called for a supplementary statement of the case. In its supplementary statement, the Tribunal referred the following question: 297 "Whether on the facts and in the circumstances of the case, the sums of Rs.50,195 for 1945 46, Rs.76,155 for 1946 47 and Rs.6,00,909 for 1947 48 assessments have been rightly in cluded in the assessable income of the applicant under Section 14(2)(c) of the Indian Income tax Act as profits brought into British India from Indian States?" The High Court by its judgment dated 7.5,1965 rejected the assessee 's contention that, where there was a mixed fund composed of taxed and non taxed items and a neutral payment was made i.e. without specifying the exact source of the payment, the taxing authorities, in the absence of any evidence to the contrary, had to proceed on the basis that the payment was made out of that part of the mixed fund which had already borne tax. The High Court, however, ob served: " . in this case the assessee did not have two funds but only one fund composed of taxed and non taxed amounts and as one third of the entire amount of profits made by the assessee in the Indian States had been subjected to tax the income tax authorities took a reasonable view in excluding one third of the remitence to British India from taxation in each year. There were sufficient profits in each year out of which remittance could be made even after deduction of the portion which had been taxed . . ". In the result, the question referred was answered by the High Court against the assessee. Hence the present appeals. If there were two funds at the disposal of the assessee one upon which tax had been already levied and another which was liable to be brought to tax a presump tion, in the absence of evidence to the contrary, might arise that the remittance made by the assessee in the course of its business was made out of the fund that was already taxed and not out of the fund that remained to be taxed. See Meyyappa Chettiar vs The Commissioner of Income Tax, , 45. That was apparently not the case here, for, on the facts found, the assessee did not have two funds, but only one fund composed of taxed and non taxed amounts. As one third of this amount had already been taxed under sec tion 42(3) of the Act, 1/3rd of the remittances to British India in a particular year was held to be exempted from levy. Relying on the principle referred to in Paton (As Pen ton 's Trustee) vs CommissiOners of Inland Revenue, 21 Tax Cases 626, Dr. 298 B. Sen, on behalf of the assessee, however, submits that where there was a mixed fund, as in the present case, con sisting partly of taxed and partly of untaxed monies, any remittance made should be deemed to have been paid out of that part of the money which had suffered tax. It is a right of the tax payer to attribute the payment to the taxed money, so as to obtain the benefit allowed by the law. Lord Wright, M.R. in Paton (As Penton 's Trustee) vs Commissioners of Inland Revenue, 21 Fax Cases 626 at 639), referring to the right of the tax payer to attribute payment to taxed monies, stated: " . . in the ordinary course, a person paying interest does not generally appropriate the payment to income or to any particular piece of income or any specific asset: he has the general body of available funds, say his banking ac count, if he has only one, and he pays by drawings on that account. which may include income, borrowed money, capital and so forth. This is what is meant by payment out of a mixed fund, or payments made out of the general till, or payments made neutrally. The Revenue authorities have no right in such cases to appropriate those payments to non taxable rather than taxable moneys. Hence the taxpayer is given the right of attribution in the way most favourable to himself It is presumed, in the absence of evidence to the contrary, that payments are made out of income". This principle of attribution is no doubt applicable in certain circumstances, such as those narrated by Lord Wright in Paton (supra), although in that case, on the facts found, the principle was not applied. Whether that principle is applicable in a particular case depends upon the facts of that case and the provisions of the statute. The abstract principle of attribution, which is applicable in certain circumstances, can be adopted only to the extent that it is consistent with the law and facts. It is well to recall: " . . there is no room for any intendment; there is no equity about a tax: there is no presumption as to a tax; you read nothing in; you imply nothing, but you look fairly at what is said and at what is said clearly and that is the tax". [Per Rowlatt, J. The Cape Brandy Syndicate vs The Com 299 missioners of Inland Revenue, 12 Tax Cases 359,366]. The view taken by the Tribunal, with reference to the facts found and the provisions of the statute, was, in our opin ion, reasonable. It was so found by the High Court. In the circumstances, we hold that the Tribunal having excluded 1/3rd of the remittances to British India from taxation during a particular year, the High Court was justi fied in refusing to grant any further relief to the asses see. Accordingly, we see no merit in these appeals and they are dismissed with costs throughout. N.P.V. Appeals dis missed.

The appellant, a company resident in British India, had a cotton mill. The cloth manufactured in the mill was sold in British India as well as native States. For the assess ment years 194546, 194647 and 1947 48, the company was assessed under Section 14(2)(c) of the Income Tax Act, 1922, in respect of certain sums remitted to British India from native States, in addition to the assessment under Section 42(3), deeming 1/3rd of the profit from the sales effected in native States, as having accrued from the manufacturing part of business in British India. The assessee 's contention that 1/3rd of income having been assessed under Section 42(3), as income deemed to have accrued in British India, no further assessment should be made under Section 14(2)(c) was rejected by the Income Tax Officer, the Appellate Assistant Commissioner and the Income Tax Appellate Tribunal. The Tribunal also rejected the assessee 's additional contention that if the remittances made to British India in any year exceeded the amount taxed under Section 42(3), then it was only so much of the excess which could be taxed under Section 14(2)(c). However, it reduced the additions made by the Income Tax Officer and affirmed by the appellate authority, by 1/3rd of such remit tances. On a reference made under Section 66(1), the High Court confirmed the Tribunal 's decision. In the appeal before this Court, on behalf of the appel lantassessee R was contended that where there was a mixed fund, as in the instant case, consisting partly of taxed and partly of untaxed monies, any remittance made should he deemed to have been paid out of that 294 part of the money which had suffered tax and that it was the right of the tax payer to attribute the payment to the taxed money so as to obtain the benefit allowed by the law. Dismissing the appeals, this Court, HELD: 1.1 If there were two funds at the disposal of the assessee one upon which tax had been already levied and another which was liable to be brought to tax a presump tion, in the absence of evidence to the contrary might arise that the remittance made by the assessee in the course of its business was made out of the fund that was already taxed and not out of the fund that remained to be taxed. [297F] Meyyappa Chettiar vs The Commissioner of Income Tax, , 45, referred to. 1.2 The tax payer is given the right of attribution in the way most favourable to himself. In the absence of evi dence to the contrary, it is presumed that payments are made out of income. This abstract principle of attribution is applicable in certain circumstances. Whether it is applica ble in a particular case depends upon the facts of that case and the provisions of the statute. It can be adopted only to the extent that it is consistent with the law and facts. [298E F] Paton (As Penton 's Trustee) vs Commissioners of Inland Revenue, 21 Tax Cases 626 and The Cape Brandy Syndicate vs The Commissioners of Inland Revenue, 12 Tax Cases 359, 366, referred to. In the instant case, on the facts found the assessee did not have two funds, but only one fund composed of taxed and non taxed amounts. As one third of this amount had already been taxed under section 42(3) of the Act, 1/3rd of the remittances to British India in a particular year was held to be exempted from levy. The Tribunal having excluded 1/3rd of the remittances to British India from taxation during a particular year, the High Court was justified in refusing to grant any further relief to the assessee. [297G; 299B]

Appeals Nos. 173 to 175 of 1960. 134 Appeals from the judgment and orders dated March 11, 1958, of the Bombay High Court in I. T. R. No. 36 of 1957. of. A. V. ViSwanatha Sastri, section M. Dubash and G. Gopalakrishnan, for the appellants. K. N. Rajagopal Sastri and D. Gupta, for respondents. March 1. The Judgment of the Court was delivered by KAPUR, J. These are three appeals pursuant to a certificate under a. 66A(2) of the Indian Income tax Act, 1922 (hereinafter called the 'Act), against the judgment and orders of the High Court of Bombay in Income tax Reference No. 36 of 1957. The appeals though directed against the same order are three in number because each partner of the firm has brought a separate appeal. The firm was carrying on the business of wine merchants at Bombay and came into existence prior to April 1, 1939. The firm had been assessed to income tax under the provisions of the Income tax Act of 1918. The firm which was registered under the provisions of the Income tax Act of 1922 (hereinafter termed the Act) was dissolved on March 24, 1945, and from the day following that i.e. March 25, 1945, a Private limited company i.e. section section Miranda and Co. Ltd. succeeded to the business of the firm. A claim made under section 25(4) of the Act to the effect that no tax was payable on the profits of the registered firm for the period between April 1, 1944, to March 24, 1945, was allowed. In respect of the chargeable accounting period April 1, 1944, to March 24, 1945, the registered firm was taxed to excess profits tax under the Excess Profits Tax Act, 1940. It also deposited as required certain sums of money tinder section 10 of the Finance Act, 1942, read with section 2 of the Excess Profits Tax Ordinance, 1943. In accordance with those provisions the firm became entitled to repayment of a portion of the excess profits tax amounting to a sum of Rs. 2,35,704. The shares of the three partners who are respective appellants in 135 the three appeals were James Miranda Rs. 58,926, Donald Miranda Rs. 58,926 and Mrs. N. Q. Miranda Rs. 1,17,854. It was submitted that the amount refunded, was business profit and therefore exempt con from tax under section 25(4) of the Act. The Income tax Officer rejected that submission and the share of each of the appellants was assessed to income tax and super tax and the balance after deducting the same he repaid to each of the partners but he computed the rate applicable to the tax by including the appellants ' total business income which was exempt under s;. 25(4) of the Act. On appeal this assessment was confirmed but on further appeal the Income tax, Appellate Tribunal held that the sum which was refunded was income from business and was therefore, exempt from income tax under section 25(4) of the Act. At the instance of the Commissioner of Income tax, the Tribunal referred the following question of law for the opinion of the High Court: "Whether the repayment of excess profits tax made by the Central Government in pursuance of Section 10 of the Indian Finance Act, 1942, or Section 2 of the Excess Profits Tax Ordinance, 1943, is profits from business for the purposes of Section 25(4) of the Indian Income tax Act?" The High Court held that the amount so refunded was income from other sources taxable under section 12 of the Act and the appellants were therefore not entitled to the benefit of section 25(4) of the Act. In dealing with the nature of the tax the learned Chief Justice said: .lm15 "Clearly the view of the Legislature was that this income should be treated as a statutory income with the consequences that must necessarily follow by reason of its being a statutory income. " It was argued on behalf of the appellants that the amount refunded was income, profits and gains from business and fell under section 10 of the Act and was therefore exempt under section 25(4) of the Act. For the determination of this question it is necessary to refer to the relevant provisions of the Excess Profits Tax Act, 1940, and the Finance Act, 1946. Section 12(1) of the Excess Profits Tax Act was as follows: 136 .lm15 section 12(1) "The amount of the excess profits tax payable in respect of a business for any chargeable accounting period diminished by any amount allowable by way of relief under the provisions of section 11 or section 11 A shall, in computing for the purposes of income tax or super tax the profits and gains of that business, be allowed to be deducted as an expense incurred in that period.", The relevant part of section 11(11) of the Indian Finance Act, 1946, provided: "Any sum being excess profits tax repaid in respect of any chargeable accounting period under the provision; of section 10 of the Indian Finance Act, 1942, or of section 2 of the Excess Profits Tax Ordinance, 1943, shall be deemed to be income for the purposes of the Indian Income tax Act 192 2, and shall, notwithstanding the provisions of section 34 of that Act, be treated as income of the previous year which constitutes or includes the chargeable accounting period in respect of which the said sum is repayable: Provided that any such sum repaid in respect of any profits which are. also assessable to excess profits tax under the law in force in the United Kingdom shall be treated, for the purpose of assessment to income tax and super tax, as income of the previous year during. which the repayment is made. " It is not necessary to quote section 10(1) of the Finance Act, 1942, or the relevant provisions of the Excess Profits Tax Ordinance, 1943. Section 12(1) of the Excess Profits Tax Act shows that the amount of excess profits tax payable ,in respect of a business for any chargeable accounting period was an allowable expenditure. Under section ll(ll) of the Indian Finance Act, 1946, any excess profits refunded under the provisions of Indian Finance Act, 1942, or of section 2 of the Excess Profits Tax Ordinance, 1943, were deemed to be income and were to be treated as income of the previous year which constituted or which included the chargeable accounting period in respect of 'which the said sum was repayable. Thus the sum repaid was 137 to be treated as income for the purposes of the Act for the previous year, notwithstanding section 34 of the Act. The preamble of the Excess Profits Tax Act shows that the object of that Act was to impose a tax on profits arising out of certain businesses. Therefore when any portion of the tax collected on excess profits tax was refunded under the provisions of the Finance Act, 1942 or the Excess Profits Tail, Ordinance, '1943, it necessarily had the same quality which it had before the amount which was charged with the payment of tax had under the provisions of those Acts. In a, judgment of this Court, Mc Gregor. and Balfour Ltd. vs Commissioner of Income Tax, West Bengal (1), the amount received as a refund by the assessee was held to be income for the purpose of the Act and for assessment it was treated as income of the previous year. After reference in that case to R. 4(1) of the Rules applicable to oases I and II of Schedule 'D '. of the English Income Tax Act, 1918 (8 and 9 Geo. V, c. 40), it was observed "The object and purpose of the legislation in each case is the same, and though the two provisions are not ipsissima verba, they are substantially in the same words and also in pari materia. There can be no doubt that the intention underlying the two provisions is the same and the language is substantially similar. " Thus this Court was of the opinion that the intention of the legislature ins. 11(14), of the Indian Finance Act, 1946, which was the section applicable in that case and of R. 4(1) of the English Income Tax Act was the same. The operative words of section 11(11) of the Finance Act, 1946, and of section 11(14) of that Act are almost identical. It would, thus appear that the amount of excess profits tax was an allowable deduction for the purpose of computation of the business profits of an, assessee under section 12(1) of the Excess Profits Tax Act and when it or a portion of it wag refunded it had to be treated as income of the assessee. When it was deposited with 138 the Central Government it was a portion of the profits of the business of the assessee and when it was returned to the assessee it must be restored to its character of being a part of the profits of a business. It cannot be said that its nature changes merely because it is refunded as 'a consequence of some provisions in the Finance Act or the Excess Profits Tax Ordinance. Its nature remains the same. The effect of the deposit under the Acts above mentioned, was as if a slice of the business profit was taken and deposited with the Central Government Treasury and then when it was found that a larger amount had been deposited than was exigible a portion of it was returned. By being put in a Government Treasury it does not cease to be what it was before i.e. profits of a business. As we have said it is significantly clear from the very preamble of the Excess Profits Tax Act i.e., it was a tax imposed on profits arising out of certain businesses. An argument was raised on behalf of the Commissioner that the tax was not paid out of the profits of the business, but in respect of the profits. That is immaterial; it was charged, levied and paid on the amount by which the profits during any chargeable accounting period exceeded the standard profits. It would be mere quibbling with words if one were to say that it was not a slice taken out of the profits of a business. In the cage Mc Gregor and Balfour Ltd. vs Commissioner,of Income Tax (1) this Court quoted with approval the observation, of the Master of the Rolls in A. & W. Nesbitt Ltd. vs Mitchell (1) where it was said: "But in respect of what is that payment made? It is not a legacy, it is not a sum which has fallen from the skies; it is a sum which is repaid because there was too large a sum paid by the company to the revenue authorities over the whole period 'during which Excess Profits Duty was paid, and that sum, means and is intend to represent a repayment of a sum which was paid by them in respect of the duty charged upon the excess profits of their trading. It comes back,, therefore, not having lost its character but being still the repayment of a sum too much, it is true but a sum taken (1) (2) , 217, 218 139 out of the profits which were made by the company in the course of its trading, profit,; which at the time they were made were subject to income tax and subject to excess profits duty, and that is the character of the repayment that has been made. " The amount deposited comes back without losing its character. No doubt the words in the English Rule are "shall be treated as profits for the year in which the payment is received", and in B 11(11) of the Indian Finance Act, 1946, such sum has to be treated as income of the previous year but as pointed out by this Court in Balfour and Mc Gregor case (1), the intention underlying the two provisions is the same and even the language used in the two provisions is substantially the same. Counsel for the Commissioner drew our attention to Kirke 's Trustees vs Commissioners of Inland Revenue (2), and it was submitted that the Lord Chancellor held at p. 329 that for the amount so received the assessment falls to be made under Case VI of Schedule 'D '. Lord Shaw of Dunfermline at p. 332 said that the repayment was to be treated as trading profits for the year of repayment and therefore assessable as such under Schedule 'D '. He was also of the opinion that the charge was to be one under Case VI. Lord Sumner said that it became a minor matter to decide whether the charge was to be made under Case I or Case VI but this is little consolation to the respondent (the Commissioner of Income tax) because Case VI was also dealing with taxes in respect of annual profits and gains which do not fall in one of the other cases. In our opinion the amount refunded did not lose its character which it had before the deposit and therefore it is an erroneous view to take that the income was assessable under section 12 of the Act and not under B. 10. If it was income falling under section 10, as in our opinion it was, then the appellants were entitled to get the benefit of section 25(4) of the Act and the amount was not liable to taxation. The appeals are therefore allowed with costs. One hearing fee. Appeals allowed.

The appellants were partners in a registered firm which was dissolved on March 24, 1945. A private limited company succeeded to the business of the firm from March 25, 1945. For the accounting period April 1, 1944, to March 24, 1945, the firm was assessed to excess profits tax under the Excess Profits Tax Act, 1940. It had deposited certain sums of money as required under section 10 of the Indian Finance Act, 1942, read with section 2 Of the Excess Profits Tax Ordinance, 1943, and in accordance with those provisions became entitled to repayment of a portion of the excess profits tax. The appellant 's claim before the Income. tax Officer under section 25(4) of the 'Indian Income tax Act, 1922, that no tax was payable on the profits of the firm for the period between April 1, 1944, to March 24, 1945, was allowed, but their plea that the amount of refund of the excess profits tax was business profit and therefore similarly exempt from tax, was rejected. The High Court, on a reference, took the view that the amount refunded was income from other sources taxable under section 12 Of the Indian Income tax Act, 1922, and that, therefore, the appellants were not entitled to the benefit of section 25(4) Of that Act. Held, that in view of section 12(1) of the Excess Profits Tax Act, 1940, and section II(II) of the Indian Finance Act, 1946, the amount refunded was income from business for the purposes of the Indian Income tax Act, 1922, and did not lose its character which it had before the deposit. It fell under section 10 of the Indian Income tax Act and was, therefore, exempt under section 25(4) of that Act. Mc Gregor and Baljbur Ltd. vs Commissioner of Income tax, Bengal, and A. & W. Nesbitt Ltd. vs Mitchell, [1926] II T.C. 2II, relied on.

Civil Appeal No. 495 of 1979. Appeal by special leave from the judgment and order dated the 18th October, 1978 of the Delhi High Court in Civil Writ Petition No. 1292 of 1975. R.R. Garg, U.R. Lalit and Randhir Jain for the Appellant. M.C. Bhandare, S.A. Shroff, S.S. Shroff and Miss C.K Sachurita for Respondent No. 1. The Judgment of the Court was delivered by BAHARUL ISLAM J. This appeal by special leave is by the appellant, J.D. Jain. who was a workman and whose services have been terminated by the management of the State Bank of India (hereinafter called the respondent). 230 2. The material facts are these. The appellant was working as a cashier in the Meerut City Branch of the State Bank of India. On June 21, 1971, one Dishan Prakash Kansal ( 'Kansal ' for short) who had a Savings Bank account with the said branch of the State Bank came to the Bank to receive 3 his Pass Book. On receipt of the Pass Book from the counter clerk, Kansal complained to Wadhera who was the Ledger keeper, that on February 8, 1971, he had withdrawn only Rs. 500 but a debit entry of Rs. 1,500 had been shown in the Pass Book. Wadhera thereupon took Kansal to the the Supervisor, R.P. Gupta, before whom Kansal repeated his complaint. Necessary documents pertaining to the said withdrawal were then examined and it was found that Kansal had given a 'letter of authority ' (which expression means, we are told, the withdrawal application form) to the appellant on February 8, 1971 authorising him to withdraw the amount from his account. The letter of authority showed that it was for withdrawal of Rs. 1,500 though there appeared to be some interpolation suggesting that the figure of Rs. 500 had been altered to the figure of Rs. 1,500. The matter was then brought to the notice of M. Ramzan, the Agent of the State Bank, before whom also Kansal is said to have repeated his complaint. Eventually on September 18, 1972, a memorandum of charges was served on the appellant by the respondent stating, inter alia that in the letter of authority, the appellant altered in his own handwriting with different ink the amount of Rs. 500 to Rs. 1,500 and thus received Rs. 1,000 in excess, passing only Rs. 500 to the pass book holder, and that he subsequently, on June 24, 1971, deposited Rs 250 in the account of Kansal to liquidate a part or the amount misappropriated by him. The appellant replied to the charges. He denied the allegations. Thereupon the respondent appointed one Rajendra Prasad as an Enquiry officer and a formal disciplinary enquiry was held against the appellant. The Enquiry Officer submitted his report to the respondent on February 13, 1973. The findings of the Enquiry officer were that The appellant had fraudulently altered the amount in the letter of authority given to him by Kansal, withdrew Rs. 1,500 from Kansal 's account and paid Rs. 500 only to Kansal and misappropriated Rs. 1000. The disciplinary authority on receipt of the report of the Enquiry officer passed the following order (material portion only): 231 "2. Although, the charges against you are of a serious nature which would, in normal course, warrant your dismissal from the service of the Bank, yet keeping in view your past record, I am inclined to take a lenient view in the matter. Upon consideration of the matter, I have tentatively come to the decision that your misconduct be condoned and you be merely discharged of in terms of paragraphs 521 (5) (e) of the Sastry Award read with para graph 18.28 of the Desai Award and paragraph 1.1 of the Agreement dated the 31st March 1967 entered into between the Bank and the State Bank of India Staff Federation. Before, however, I take a final decision in the matter I would like to give you a hearing as to why the proposed punishment should not be imposed upon you. To enable you to do so, I enclose copies of the proceedings of the enquiry and findings of the Enquiry officer. You may ask for a hearing or if you so prefer show cause in writing within one week of receipt by you thereof. If you fail therein, I will conclude that you have no cause to show in this behalf. " The appellant then submitted a representation to Shri V.B. Chadha, the Regional Manager of the State Bank of India on June 15, 1973. Shri Chadha after perusing the representation of the appellant and hearing him in person, recommended that the proposed punishment should not be imposed upon the appellant, on the grounds that Kansal had not been examined as a witness and that there had been no written complaint against the appellant. The respondent, however, did not accept the recommendation, and, by its memorandum of December 7, 1973, discharged the appellant from service with effect from the close of the business on December 22, 1973. The appellant then having raised an industrial dispute, the Central Government, by its order dated January 17, 1975, referred the following issue to the Central Government Industrial Tribunal at Delhi for adjudication: "Is the management of State Bank of India justified in discharging from service Shri J.D. Jain, Cashier of Meerut Branch, with effect from 22nd December, 1973? If not to what relief is he entitled ?" 232 5. Before the Tribunal, the appellant denied the charges, He inter alia, pleaded that as Kansal was not examined in the enquiry, there was no legal evidence before the inquiry officer for a finding that he was guilty. The Tribunal framed the following two issues: "1. Whether a proper and valid domestic enquiry was held by the Bank and its effect ? 2. Is the management of State Bank of India justified in discharging from service Shri J.D. Jain, Cashier of Meerut Branch with effect from 22nd December, 1973 ? If not to what relief is he entitled ?" Before the Tribunal, the Management examined no witnesses but produced certain documents and relied on them. The appellant also did not adduce any evidence. On a perusal of the evidence recorded by the Enquiry officer, the Tribunal held that on the evidence before it, the appellant could not be held guilty as, according to it, in the absence of the evidence of Kansal, the evidence recorded was hearsay, with the result that it directed reinstatement of the appellant with full back wages from 22nd December, 1973. The respondent moved the High Court under Article 226 and 227 of the Constitution of India for quashing the award of the Tribunal. The High Court held that the charges against the appellant had been established and quashed the award of the Tribunal. It is against this judgment of the High Court that the present appeal by special leave is directed. Mr. R.K. Garg, learned counsel appearing for the appellant makes three submissions before us: (1) That the Tribunal exercised its powers under Section 11 A of the and the High , Court, exercising powers under Article 2261227 of the Constitution, had no jurisdiction to interfere with the award of the Tribunal; (2) The Tribunal in the perspective of the broad contours of the case rightly refused to rely on the evidence which was hearsay? Kansal not having been examined; 233 (3) Assuming the evidence could be relied on, the High Court committed error in not considering the receipt executed by Kansal showing payment of Rs. 1000 to Kansal and its judgment is vitiated. In an application for a Writ of Certiorari under Article 226 of the Constitution for quashing an award of an Industrial Tribunal, the jurisdiction of the High Court is limited. It can quash the award, inter alia, when the Tribunal has committed an error of law apparent on the face of the record or when the finding of facts of the Tribunal is perverse. In the case before us, according to the Tribunal, as Kansal was not examined, the evidence before it was hearsay and as such on the basis thereof the appellant could not be legally found guilty. Before the Enquiry officer, the respondent examined the following witnesses: Gupta (Witness 1), Wadhera, the Ledger Keeper (Witness 2), Mahesh Chander who was incharge of Savings Bank account on 8.2.1971 (Witness 3), M. Ramzan, Agent of the Bank (Witness 4), Sarkar (Witness 5), and Bhardwaj (Witness 6). Bhardwaj was a leader of the employees ' union of the respondent. He did not support the case of the respondent. The other witnesses supported the case of the respondent. Witnesses Nos. 1, 2, 4 and 5 depose that a verbal complaint was made by Kansal in their presence to the effect that he had authorised the appellant to withdraw Rs. 500 which sum was paid to him, but the entries showed that Kansal had withdrawn Rs. 1,500. Witnesses Vadhera, Ramzan and Sarkar also deposed that the appellant had confessed before them that he had made the alterations in the figure and in words of the sum. The Tribunal after having made detailed references to the evidence of the above witnesses in fact found, "All that this evidence thus, proves is that a complaint was made by Shri Kansal and that the workmen confessed that he had altered the debit authority. (emphasis added). Curiously, however, it held, "This evidence, by no means prove that the workman altered the debit authority to defraud or that he actually defrauded or that he mis. appropriated the amount of Rs. 1,000 after paying Rs. 500 only to Mr. Kansal from the amount of Rs. 1,500 withdrawn from the bank by him as it was not direct evidence but was in the nature of 234 hearsay evidence since it was learnt through the medium of a third person and that person was not available. " It further held, "There can be no hesitation, therefore, that the enquiry officer relied on hearsay evidence in arriving at his findings and it vitiated the enquiry. " It went on, "All this could be enough for raising a suspicion only. In order to be called 'proved ' it needed evidence which was not there. " It further observed, "But the question was whether it was done without the consent or knowledge of Mr. Kansal. There was no evidence on the record to prove it. The only person who could speak about it was Mr. Kansal. He did not appear before the inquiry officer, therefore, there was no direct evidence that the change that was admittedly made by the workman in the debit authority was without Mr. Kansal 's consent or knowledge or that it was designed to defraud " (emphasis added) The positive findings of the Tribunal are: (i) Kansal made the complaint as alleged by the management. (ii) The appellant confessed that he had made the alterations charged with, as alleged by the management, (iii) By implication it has also found that Rs. 1,000 in excess of the original amount of Rs. 500 was received by the appellant as a result of the alternations. But it has held that as Kansal was not examined, fraud and misappropriation on the part of the appellant cannot be held to be proved, as the evidence was 'hearsay '. The learned Tribunal, it appears, was obvious of the fact that it was examining the evidence in a domestic enquiry, and not the evidence in a criminal prosecution entailing conviction and sentence. In a case like the one before us, three kinds of proceedings against the delinquent are possible . (i) departmental proceedings and action, (ii) original prosecution for forgery and misappropriation, (iii) civil proceedings for, recovery of the amount alleged to be misappropriated. 235 The respondent herein adopted course (i) and instituted the domestic enquiry in which the principle applied by the Tribunal is not applicable; in such an enquiry guilt need not be established beyond reasonable doubt, proof of misconduct may be sufficient. The learned Tribunal has committed another error in holding that the finding of the domestic enquiry was based on "hearsay" evidence. The law is well settled that the strict rules of evidence are not applicable in a domestic enquiry. This Court in the case of State of Haryana & Anr. vs Rattan Singh held: "It is well settled that in a domestic enquiry the strict and sophisticated rules of evidence under the Indian Evidence Act may not apply. All materials which are logically probative for a prudent mind are permissible. There is no allergy to hearsay evidence provided it has reasonable nexus and credibility. The next question is, is the evidence in the domestic enquiry really hearsay, as held by the Tribunal ? The word 'hearsay ' is used in various senses. Some times it means whatever a person is heard to say; some times it means whatever a person declares on information given by someone else. (See Stephen on Law of Evidence). The Privy Council it the case of Subramaniam v/s. Public Prosecutor, observed: "Evidence of a statement made to a witness who is not himself called as a witness may or may not be hearsay. It is hearsay and inadmissible when the object of the evidence is to establish the truth of that is contained in the statement. lt is not hearsay and is admissible when it is proposed to establish by the evidence, not the truth of the statement but the fact that it was made. The fact that it was made quite apart from its truth, is frequently relevant in considering the mental state and conduct thereafter of the witness or some other persons in whose presence these statements are made." 236 11. In the instant case, the alleged misconduct of the appellant was that he forged documents, withdrew Rs. 1,500. 1,000 in excess of the amount he was authorised to do and misappropriated the excess amount of Rs. 1,000. With regard to the fact whether the appellant manipulated the documents, withdrew excess amount and misappropriated it, there is, of course, no direct evidence of any eye witness except the appellant 's 'confession ' referred to above. The evidence on which reliance has been taken by the respondent is the confession and circumstantial evidence, namely, the authority letter containing the admitted interpolations by the appellant in his own handwriting in different ink, and the addition of the digit "I" before 500. The evidence of Kansal would have been primary and material, if the fact in issue were whether Kansal authorised the appellant to make the alterations in the authority letter. But Kansal 's complaint was to the contrary. For the purpose of a departmental enquiry complaint certainly not frivolous, but substantiated by circumstantial evidence, is enough. What the respondent sought to establish in the domestic enquiry was that Kansal had made a verbal complaint with regard to 1) the withdrawal of excess money by the appellant in presence of the four witnesses, namely, Wadhera, Gupta, Ramzan and Sarkar, aforesaid, against his advice. On the complaint of Kansal, the evidence of these four witnesses is direct as the complaint is said to have been made by Kansal in their presence and hearing; it is therefore, not hearsay. As the respondent has succeeded in proving that a come plaint was made by Kansal on the evidence of the above named four witnesses, the respondent has succeeded. No rule of law enjoins that complaint has to be in writing as insisted by the Tribunal. The learned Tribunal has committed yet another grevious error, in failing to appreciate the confessions made by the appellant "in the presence of witnesses and to the higher officer who appeared as witness" (as found by itself) namely, Wadhera, Ramzan, Gupta and Sarkar, aforesaid. The confessions of the appellant before the said witnesses were to the effect that he had altered the amount in figure and words in his own hand. The award of the Tribunal, therefore, has been vitiated by misconception of the law involved in the case. The last submission of Mr. Garg that the judgment of the High Court had been vitiated as it had not taken into consideration the receipt executed by Kansal showing payment by the appellant of Rs. 1000 to the former is destructive of the appellant 's defence. In 237 Our opinion, this payment on the contrary, proves the respondent 's case and destroys the appellant 's defence which was that he had withdrawn Rs. 1,500 as advised by Kansal and paid the full amount to Kansal. In our opinion the High Court was fully in its jurisdiction in quashing the award of the Tribunal. This appeal has no merit and is dismissed. We, however, leave the parties to bear their own costs. N.V.K. Appeal dismissed.

The Appellant was working as a Cashier in a Bank. A depositor who had a Savings Bank Account with the Bank came to the Bank to receive his Pass Book. On receipt of his Pass Book from the Counter Clerk he complained to the ledger keeper that, on a certain date he had withdrawn only Rs. 500 but a debit entry of Rs, 1,500 had been shown in the Pass Book. The Ledger keeper took the depositor to the Supervisor and The Agent and his complaint was recorded. When the documents pertaining to the withdrawal were examined it was found that the depositor had given a letter of authority to the appellant authorising withdrawal from his account. The letter of authority showed that it was for withdrawal of Rs. 1500 though there appeared to be some interpolation suggesting that the figure of Rs. 500 had been altered lo the figure of Rs. 1500. A memorandum of charge was served on the appellant by the Management respondent No. I and a disciplinary enquiry was held. The Enquiry Officer submitted his report and his findings were that the appellant had fraudulently altered the amount in the letter of authority given by the depositor, withdrew Rs. 1500 from the depositor 's account and paid Rs. 500 only to the depositor and 228 misappropriated Rs. 1500. In pursuance of the enquiry the appellant was discharged from service. The appellant having raised an industrial dispute the matter was referred to the Industrial Tribunal. Before the Tribunal the appellant denied the charges and pleaded that as the depositor was not examined in the disciplinary enquiry there was no legal evidence before the Enquiry officer for finding that he was guilty. Before the Tribunal the Management examined no witnesses but produced documents and relied on them. The Tribunal held that on the evidence before it the appellant could not be held guilty as in the absence of the evidence of the depositor, the evidence recorded was 'hearsay ' and directed reinstatement to the appellant with full back wages. The respondent moved the High Court under Article 226 and 227 which held that the charge against the appellant had been established and quashed the award of the Tribunal. In the appeal to this Court it was contended on behalf of the appellant: (1) that the Tribunal exercised its powers under Section 11 A of the and the High Court exercising powers under Article 226/227 had no jurisdiction to interfere with the award; (2) the Tribunal rightly refused to rely on the evidence which was hearsay; the depositor not having been examined, and (3) the High Court committed an error in not considering the receipt executed by the depositor showing payment of Rs. 1000 to the depositor. Dismissing the appeal, ^ HELD: The award of the Tribunal is vitiated by misconception of the law involved. It erred in holding that as Kansal (depositor) was not examined, fraud and misappropriation on the part of appellant cannot be held to be proved and in failing to appreciate the confession made by the appellant to the higher officer that he had altered the amount in figures and words in his own hand. [236 G] 1. In an application for a writ of certiorari under Article 226 for quashing the award of an Industrial Tribunal the jurisdiction of the High Court is limited. It can quash the award when the Tribunal has committed an error of law apparent on the face of the record or when the finding of facts of the Tribunal is perverse. [233 B] In the instant case, three kinds of proceedings against the delinquent were possible: (i) departmental proceedings and action, (ii) Criminal prosecution for the alleged misappropriation of the amount, and (iii) civil proceedings for recovery of the amount alleged to be misappropriated. The respondent adopted the first course and instituted the domestic enquiry. In such an enquiry guilt need not be established beyond reasonable doubt; proof of misconduct may be sufficient. [234 G 235 A] State of Haryana & Anr. vs Rattan Singh , referred to 229 2. The word 'hearsay ' is used in various senses. Sometimes it means whatever a person declares on information given by someone else. [235 E] In the instant case, the Tribunal after having made a detailed reference to the evidence of the witnesses found that a complaint was made by Kansal and that the appellant confessed that he had altered the debit authority, but held That as Kansal was not examined, this was not direct evidence but was of the nature of 'hearsay ' evidence, with regard to the fact whether the appellant manipulated the documents, withdrew the excess amount and misappropriated it, there is no direct evidence of any of the witnesses except the appellant 's confession. The evidence on which reliance has been taken by the respondent is the confession and circumstantial evidence. The evidence of Kansal would have been primary and material. if the fact in issue were whether Kansal authorised the appellant to make the alterations in the authority letter. But Kansal 's complaint was to the contrary. No rule of law enjoins that a complaint has to be in writing as insisted by the Tribunal. For the purpose of a departmental enquiry, complaint substantiated by circumstantial evidence is enough. What the respondent sought to establish in the domestic enquiry was that Kansal had made a verbal complaint with regard to the withdrawal of excess money by the appellant. On the factum of complaint of Kansal the evidence of these four witnessess is direct as the complaint is said to have been made by Kansal in their presence and hearing. It is not therefore 'hearsay '. The respondent has succeeded in proving that a complaint was made by Kansal on the evidence of these four witnesses. [236 A E] Subramaniam v Public Prosecutor [1956]1 W.L.R. 965, referred to 3. The receipt executed by Kansal showing payment by the appellant of Rs. 1000 to the former is destructive of the appellant 's defence and on the contrary proves the respondent 's case. [236 H 237A]

N: Criminal Appeal No. 742 of 1979. From the Judgment and order dated 16.1.1979 of the Punjab and Haryana High Court in Crl. 656 of 1976. A.S. Sohal and P.N. Puri for the Appellant. Kiran Choudhri and T. Sridharan for the Respondent. The Judgment of the Court was delivered by 749 VENKATACHALIAH J. This appeal, by Special Leave, preferred against the Judgment dated April 26, 1976 of the High Court of Punjab & Haryana affirming the judgment dated 26 4 1976 of the Sessions Judge in S.C. No. S of 1976 convicting appellant for offences under Sections 302 and 120 B of the Indian Penal Code and sentencing her to imprisonment for life, raises certain questions as to the nature and extent of corroboration of an accomplice 's evidence; and as to the procedure for the trial of offences by a "child" under the East Punjab Children 's Act 1949. Appellant Balwant Kaur was said to be 15 1/2 years of age at the time of the commission of the offence alleged against her. From 14.11.1973 the whereabouts of appellant 's husband Pritam Singh, a police constable, were not known. His mother Mukhtiar Kaur (P.W. 19) reported this fact and expressed her apprehensions in the matter in her complaint to the Superintendent of Police. Appellant was arrested on 8.5.1975. Nand Singh and Ram Sarup were also arrested on 8.5. 1975. Ram Sarup became an approver. Appellant 's defence was one of total denial. The judgment of the High Court under appeal is common to Criminal Appeal No. 676 of 1976 preferred by Nand Singh who was convicted under Sections 302, 364, 201 and 120 B of I.P.C. and also sentenced to imprisonment for life. Appellant 's husband, Pritam Singh for whose murder appellant and the said Nand Singh had been arraigned, was, at the relevant time, a police constable at the Police Station West, Sector 11 Chandigarh. Nand Singh was another constable at the same Police Station. Nand Singh 's brother Bhag Singh and Pritam Singh were neighbours, residing in adjacent Government quarters in Sector 20 A, Chandigarh. Ram Sarup, who later turned approver, was another police constable on Guard duty at the Punjab Raj Bhavan, Chandigarh. The married life of Appellant and Pritam Singh, according to the prosecution, lacked connubial felicity and was marked by constant bickerings and quarrels, the cause for this discord being the addiction of Pritam Singh to liquor. It is the prosecution case that Pritam Singh was a dipsomaniac and was constantly subjecting appellant to corporeal intransigence. It was further alleged that appellant had developed illicit intimacy with Nand Singh. Ram Sarup, in the course of his visits 750 to Bhag Singh 's house met, and became friendly with Nand Singh and the two become accustomed to take liquor together. Ram Sarup also knew deceased Pritam Singh. It is alleged that on occasions Nand Singh, when he lost self control under the influence of liquor, used to confide in Ram Sarup of his illicit sexual exploits with appellant. This appears to have tempted Ram Sarup to ask Nand Singh to introduce Ram Sarup also to appellant for a similar intrigue. On November 13, 1973, in the afternoon when Ram Sarup was off duty, Nand Singh took Ram Sarup to his own quarters in Sector 20 A said to be at a short distance from the appellant 's residence and the two had liquor together. Thereafter, Nand Singh is stated to have taken Ram Sarup to the residence of, and introduced him to the appellant and persuaded her to gratify the desire of Ram Sarup also. Appellant and Ram Sarup are stated to have indulged in acts of illegal intimacy. Later, the same afternoon, the three met again at appellant 's home when, it would appear, appellant while narrating the privations and hardships endured by her at the hands of her husband broke down and implored Nand Singh and Ram Sarup to do away with Pritam Singh. She appears to have also offered that after Pritam singh 's death she would marry and live with Nand Singh, who was then unmarried. According to the prosecution, it was agreed amongst the three that the appellant should persuade her husband to reach Chandigarh bus stand the following day i.e. November 14, 1973 and that Nand Singh and Ram Sarup, who would be present three, would entice him away to Pinjore with the inducement of liquor and, do away with him there. Pursuant to this design and conspiracy, appellant is stated to have persuaded her husband to go to the bus stand at Chandigarh at 9.30 a.m. On 14.11.1973 where Nand Singh and Ram Sarup who were waiting for him as pre arranged took him to Pinjore by bus. There, all the three cumsumed liquor together. Nand Singh is also stated to have purchased "Ghotna" on the pretext that his sister in law had asked for the purchase of one. Thereafter, all the three agreed to go back Chandigarh on foot which took them along a 'dandi ' passing by the side of the Pinjore gardens. They reached the railway line near Surajpur Cement Factory and took the foot path towards Chandigarh. When the three reached a distance of almost 2 miles from Surajpur, Nand Singh suggested that they should climb up a hill on the way side to enjoy a panoramic view of Chandigarh. Accordingly, all the three started climbing. Ram Sarup (P.W. 2) was ahead; Pritam Singh was in 751 the middle with Nand Singh following behind him. Nand Singh is stated to have suddenly administered 2 3 Ghotna blows on the head of the unsuspecting Pritam Singh and told Ram Sarup (P.W. 2) to pin the tottering Pritam Singh down. Ram Sarup pulled Pritam Singh down whereupon Nand Singh gave 8 to 10 more blows with the Ghotna on the person of Pritam Singh. Then Nand Singh threw away the Ghotna and the two, namely, i.e. Nand Singh and Ram Sarup, hastened towards Chandigarh. However, after the two had gone 2 furlongs or so, Nand Singh urged Ram Sarup (P.W. 2) that they both go back to find out whether Pritam Singh was really dead or not. They, accordingly, returned and ensured that Pritam Singh had died. They removed the pants and Bush shirt of the deceased and concealed them in a bush. Then, the body of Pritam Singh was also concealed in the nearby hushes. The turban of the Pritam Singh had fallen down at the spot. Thereafter, the two returned to Chandigarh by night fall. Next day, i.e. On 15.11.1973, Nand Singh came to Raj Bhavan where Ram Sarup was on duty and told the latter that he had, in turn, informed Balwant Kaur of the death of Pritam Singh. This, in substance is the prosecution case as unfolded in the evidence of the Ram Sarup (P.W. 2) who turned approver. On 13. 12.1973, Mukhtiar Kaur (P.W. 19), the mother of deceased Pritam lodged a complaint about her missing son in writing with the Senior Superintendent of Police, Chandigarh. In that, it was stated that she had learnt from Pandit Sita Ram that a certain Naik Singh and his two sons of the village Lahor Khuda and Dev Singh, the Sarpanch of that village along with two other relatives of the Sarpanch had killed Pritam Singh, the alleged motive was that deceased Pritam Singh, when he was earlier serving in Lahorkhuda had developed illicit relations with Naik Singh 's daughter, Prito. At the trial Mukhtiar Kaur was examined to establish that this complaint was engineered by the appellant and Nand Singh to put the investigation on a wrong scent. Apparently, nothing was heard of the matter for along time till 3.4.1975, when Nand Singh was arrested by ASI Gulzara Singh (P.W. 24). On his information Exg. P. 8, a pair of shoes, a purse, 25 pieces of bones including an incomplete human skull were recovered. Dr. Inderjit Dewan (P.W. I) examined the bones and was of the opinion that they were the remains of a well built adult, but not old, male of a height of about S 9. According to P.W. 1, the person had died more than 4 months previously. The death was ascribed in all probability to the injuries to the skull administered by a blunt weapon. P.W. 1 could 752 not, however confirm whether the injuries were ante mortem or not. Appellant was arrested by ASI Subhash Chander (P.W. 23) on 8.5.1975 and Ram Sarup was also arrested the same day. After the completion of the investigation charges were brought against them for conspiracy and murder. The trial court on the basis of the approver 's testimony as corroborated by other evidence, held both Nand Singh , and the appellant guilty of the offences they were charged with and sentenced them to imprisonment for life. The High Court has dismissed their appeals and has confirmed the convictions and the sentences. Shri A.S. Sohai, Learned counsel appearing in support of the appeal urged that the evidence of the Approver in so far as the complicity of appellant is concerned, lacked corroboration on materials particulars and that no conviction could be sustained on such uncorroborated accomplice 's testimony. The development of the law touching the competency and credit of an accomplice as witness against others is not without its interesting antecedents. Historically, in the background of the political trials since the time of Henry VIII where 'King 's Evidence ' was the main dependence of the crown in its prosecutions, the question of the very admissibility of the evidence of the accomplice loomed large. In the 17th and the 18th centuries, it was ruled repeatedly by the English courts that an accomplice was a competent witness. His 'credit ' or the sufficiency of his evidence as a quantitative conception, however, remained in the background. Those were days when 'form ' pre dominated over the 'substance ' and the oath had a dead weight of its own. It was for this reason that struggle was made to keep out this evidence even at the threshold. On the further development in the law which slowly began to recognise the distinction between 'competency ' and 'credit ', Wigmore says: Wigmore on Evidence: 3rd Edition Vol. VII para 2054. G "As time went on, and the modern conception of testimony developed, the possibility of admitting a witness and yet discriminating as to the qualitative sufficiency of his testimony became more apparent; and the way was open for the consideration of this question. In a few instances, as the 1700s wore on, and even before then, judicial suggestions are found as to feasibility of such a discrimination. But not until the end of that century does any Court seem 753 to have acted upon such a suggestion in its directions to the jury. About that time there comes into acceptance a general practice to discourage a conviction founded solely upon the testimony of an accomplice uncorroborated. But was this practice founded on a rule of law? Never, in England, until modern times. It was recognised constantly that the judge 's instruction upon this point was a mere exercise of his common law function of advising the jury upon the weight of the evidence, and was not a statement of a rule of law binding upon the jury". An accomplice, by long legal tradition, is a notoriously infamous witness, one who being partipes criminis, purchases his immunity by accepting to accuse others. Section 114 Illus: (b) of the Evidence Act envisages the presumptive uncredit worthiness of an accomplice. But then, Section 133 provides that a conviction is not illegal merely because it rests upon an accomplice 's uncorroborated testimony. In indictments, particularly of serious crimes, the counsel of caution and the rule of prudence enjoin that it is unsafe to rest a conviction on the evidence of a guilty partner in a crime without independent corroboration on the material particulars. Judicial experience was, thus, elevated to a rule of law. "It is a practice" it is said "which deserves all the reverence of law. " The nature and extent of the corroboration must necessarily vary with the nature and circumstances of each case. Enunciation of any general rule, valid for all occasions is, at once, unwise and unpractical. The aspect as to the extent and content of independent corroboration is, again, an interesting area of study. One view was that independent evidence tending to verify any part of the testimony of the accomplice should suffice. The other view required that the corroborative evidence should not only show that part of the accomplice testimony is true; but should go further and also implicate the other accused. In R. vs Bhaskerville, the Court of Criminal appeal in England favoured and adopted the second view. Thirtyfive years ago, Bose J referring with approval to the principles in Bhaskerville said that this branch of the law in India is the same as in England and that the lucid exposition of it given by Lord Reading, cannot be bettered. 754 The felicitous formulation of the law on the matter by that great master of phrase, Bose J, which has now become classical, may be re called: " . But to this extent the rules are clear: (21) First, it is not necessary that there should be independent confirmation of every material circumstance in the sense that the independent evidence in the case, apart from the testimony of the complainant of the accomplice, should in itself be sufficient to sustain conviction. (22) Secondly, the independent evidence must not only make it safe to believe that the crime was committed but must in some way reasonably connect or tend to connect the accused with it by confirming in some material particular the testimony of the accomplice or complainant that the accused committed the crime. This does not mean that the corroboration as to identity must extend to all the circumstances necessary to identify the accused with the offence. (23) Thirdly, the corroboration must come from independent source and thus ordinarily the testimony of one accomplice would not be sufficient to corroborate that of another (24) Fourthly, the corroboration need not be direct evidence that the accused committed the crime. It is sufficient if it is merely circumstantial evidence of his connection with the crime . " (See Rameshwar Kalyan Singh vs State of Rajasthan, ; In Rex vs Bhaskerville, [ Lord Reading, CJ noticed the different views as to the extent and scope of reasonable corroboration: ". The difference of opinion has arisen in the main in reference to the question whether the corroborative evidence must connect the accused with the crime. The rule of practice as to corroborative evidence has arisen in consequence of the danger of convicting a person upon the unconfirmed testimony of one who is admittedly a criminal . " 755 Resolving the difference of opinion it was held: "We hold that evidence in corroboration must be independent testimony which affects the accused by connecting or tending to connect him with the crime. In other words, it must be evidence which implicates him, that is, which confirms is some material particular not only the evidence that the crime has been committed, but also that the prisoner committed it. The test applicable to determine the nature and extent of the corroboration is thus the same whether the case falls within the rule of practice at common law or within that class of offences for which corroboration is required by statute". In Halsbury 's (IV Edition Vol. II para 454) the following passage obtains: "Corroboration of a witness 's testimony must be afforded by independent evidence which affects the defendant by connecting or tending to connect him with the offence charged. It must be evidence which implicates him, that is which tends to confirm in some material particular not only that the offence was committed, but also that the defendant committed it". As to independent nature of the corroboration learned Chief Justice observed in Bhaskerville case: " . Again, the corroboration must be by some evidence other than that of an accomplice, and therefore one accomplice 's evidence is not corroboration of the testimony of another accomplice: Rex vs Noakes . " As to the extent of the requisite reassurance by way of corroboration, learned Chief Justice said: " . It is sufficient if there is confirmation as to a material circumstance of the crime and of the identity of the accused in relation to the crime. Parke B gave this opinion as a result of twenty five years ' practice; it was accepted by the other judges; and has been much relied upon in later cases . " 756 " . Indeed, if it were required that the accomplice A should be confirmed in every detail of the crime, his evidence would not be essential to the case it would be merely confirmatory of other and independent testimony . " (page 664 in Rex vs Bhaskerville) In Halsbury 's Laws of England IV Edn. Vol. II page 268 this proposition is stated thus: "The word 'corroboration ' is not a technical term of art; it means by itself no more than evidence tending to confirm, support or strengthen, other evidence . " " . The corroboration need not consist of direct evidence that the defendant committed the offence nor need it amount to confirmation of the whole account given by the witness, provided that it corroborates the evidence in some respects material to the charge under consideration. It is sufficient if it is circumstantial evidence of the defendant 's connection with the offence, but it must be independent evidence, and must not be vague However there were some observations in Director of Public Prosecutions vs Killbourne (1973) Appeal A.C. 729 which tended towards a departure from the rule in Rex vs Bhaskerville. In Killbourne case Lord Hailsham said and this is also the statement of the law in Halsbury IV Edition "Evidence which is admissible, relevant to the evidence requiring corroboration and (if believed) conformatory of that evidence in a material particular, is capable of being corroborative and, when believed, is corroboration". The above passage was not wholly in consonance with what Lord Reading had earlier said: ". For example confirmation does not mean that there should be independent evidence of that which the accomplice relates, or his testimony would be unnecessary Reg vs Mullins ( 1) per Maule J . " But, in R. vs Beck., [ , it was reiterated by way of clarification that corroborating evidence need not relate to 757 the particular evidence spoken to by a suspect witness, and that it was merely independent testimony which confirmed in some material particular not only the evidence that a crime had been committed but also that the accused person had committed it. Referring to the statement of Lord Hailsham in Killbourne case, All England law reports 1982(1) page 815(g) it was observed: "The learned editors of Archbold para 1416, after, in our judgment correctly, stating that the corroborative evidence need not relate to the particular incident or incidents spoken to by the "suspect witness", express the view that 'Lord Hailsham 's dictum that the corroborative evidence must be "relevant to the evidence requiring corroboration" may be misleading '. We agree. We do not think that Lord Hailsham LC was expressing any support for the proposition of counsel for the appellant. " The position of law in Rex vs Bhaskerville was, thus restored. 13. However, a marked tendency in England towards arresting the formalism in regard to the specific words to be used to caution the jury against the danger of accepting the testimony of the uncorroborated accomplice is now discernible. In R. vs Spencer [ ; the grievance of the convicted person was that the trial judge, in cautioning the jury, failed to use the word 'dangerous ' in describing the risks of injustice involved in convicting a person on the testimony of an uncorroborated accomplice. The Court of appeal and the House of Lords declined to set aside the verdict and said that the summing up did not involve some legalistic ritual to be incanted in the summing up. However, in regard to the quality and extent of corroboration, in R. vs Donat, [19861 , it was reiterated that to count as corroboration, it is not enough that a piece of evidence merely supports the accomplice 's credibility, however, convincingly and independently; but it must go a little further and implicate the accused. (See All England Reports: Annual Review 1986 page 158). In Sharvana Bhavan vs State of Madras, (AIR the corroboration was held to be of two kinds: the first belonging to the area of reassurance of the credit of the approver himself as a trustworthy witness; and the second which arises for conclusion after the court is satisfied about the credibility of the approver as to the corroboration in material particulars not only of the commission of the 758 crime but also of the complicity of other accused persons in the crime. If on the first area the court is not satisfied the second stage does not Arise. The position is attractively presented in Halsbury: (IV Edition Vol. II) Page 268. "Corroboration is required or afforded only if the witness requiring or giving it is,otherwise, credible; if testimony falls of its own inanition, the question of his needing or being capable of giving, corroboration does not arise. " However, the two areas of corroboration are not two separate, water tight compartments. The evidence as a whole will have to be examined to reach conclusions on both aspects. In Attorney General of Hongkong vs Wong Muko Ping, [ Lord Bridge of Harwich speaking for the Judicial Committee of the Privy council said: ". It is said that this two stage approach is implicitly indicated by passages from speeches in the House of Lords in two of the leading authorities". " . . The presence or absence of corroborated evidence may assist a jury to resolve, one way or the other, their doubts as to whether or not to believe the evidence of a suspect witness, it must, in their Lordship 's Judgment, be wrong to direct them to approach the question of credibility in two stages as suggested in the submission made on behalf of the defendant. The controversy in the present case in the ultimate analysis, belongs to the second area, whether the approver 's testimony as to appellant 's complicity in the conspiracy could safely be held to have been corroborated by independent evidence on the material particulars The facts that require sequentially to be established are that appellant 's married life was in a serious disarray: that she and Nand Singh were on terms of illicit intimacy; that she also submitted herself to Ram Sarup (P.W. 2) in an ex marital relation; that on 13.11.1973 she implored Nand Singh and Ram Sarup to free her from a cruel husband by doing away with him; that she agreed that she would, 759 thereafter, live with Nand Singh as his wife and that after coming to know of Pritam Singh 's death she deliberately missed her mother in law, Mukhtiar Kaur (P.W. 19) into making a report to the police containing false and misleading information in an attempt to draw a red herring across the trial. The evidence of P.Ws. 17 & 18 on the first two points has been discarded by the sessions court. It is not also suggested that after the murder of Pritam Singh, appellant began to live with Nand Singh. There was a considerable lapse of time between the death of Pritam Singh and their arrest. There is no evidence to show that, in the interregnum, there was any liasion between the two. 16. There is yet another impediment in accepting the evidence on an important area of the alleged conspiracy. The incriminating circumstances in the evidence of the approver appearing against the appellant had had to be put to the appellant in her examination under Section 313 Cr. The incriminating testimony of the approver pertaining to the case that on 13.11.1973 appellant wept and implored Nand Singh and Ram Sarup to do away with Pritam Singh and that appellant also agreed that she would, thereafter, live with Nand Singh has not been put to the appellant in the course of her examination under Section 313 Cr. P.C. Appellant was not afforded an opportunity to submit an explanation to it. That part of the evidence must for that reason, be excluded from consideration (See Harizan Mogha: 17. On a consideration of the entire matter, it appears to us that the approver 's evidence in regard to the complicity of the appellant in the conspiracy lacks corroboration on certain material particulars necessary to connect the appellant. A little more reassurance than is afforded by the State of evidence in the case is perhaps, necessary to convict appellant. Appellant, in the circumstances would be entitled to the benefit of doubt. At the time of the commission of the offence, the appellant, even on the basis of the observations, made by the session court, was about 15 xab years of age and was a "child" within the meaning of East Punjab Children 's Act 1949. The relevant date is the date of the commission of the offence. Section 27 of the Act provides: "27. Sentences that may not be passed on child Notwithstanding anything to the contrary contained in any law, 760 no person who as a child at the date of the commission of the offence shall be sentenced to death or transported or committed to prison for any offence or in default of payment of fine, damages or costs: Provided that a child who is fourteen years of age or upwards may be committed to prison where the court certifies that he is of so unruly or of so depraved a character that he is not fit person to be sent to a certified school and that none of the other methods in which the case may legally be dealt with is suitable". The sessions court has invoked the proviso and has held that appellant was so depraved a character that none of the other methods in which the case could legally be dealt with is suitable in her case. An examination of the legality or propriety of the procedure adopted in the case in the matter of the trial of a 'child ' under the East Punjab Children 's Act 1949 and as to the correctness of the view of the sessions court in appealing to the proviso to Section 27 and in sentencing appellant to imprisonment for life may not be necessary in this case, in view of our finding that appellant is entitled to the benefit of doubt. In the result, this appeal is allowed and while the conviction and sentence of the other non appealing accused is left undisturbed, the conviction and sentence of the appellant is set aside and appellant is directed to be set at liberty forthwith. N.P.V. Appeal allowed.

% The prosecution alleged that the married life of the appellant, who was said to be 151/2 years of age, was in a serious disarray, that she and the non appealing accused were on terms of illicit intimacy, that she also submitted herself to PW 2 in an extra marital relation, that on 13.11.73 she implored the non appealing accused and PW 2 to free her from a cruel husband by doing away with him, that she agreed that she would, thereafter live with the non appealing accused as his wife, that the three designed and conspired to do away with the deceased, in pursuance of which the appellant persuaded her husband to go to the bus stand at Chandigarh at 9.30 a.m. On 14th November, 1973, where the non appealing accused and PW 2 were waiting for him as pre arranged, and took him to Pinjore by bus, where they consumed liquor together and the non appealing accused purchased Ghotna, that while all the three were walking back to Chandigarh and climbed the way side hill the non appealing accused gave blows on the head of the unsuspecting deceased with the Ghotna, while PW 2 pinned him down, that they concealed the clothes and body of the deceased in the nearby bushes, that both of them returned to Chandigarh by night fall, and the nonappealing accused informed PW 2 that he, in turn, had informed the appellant of the death of her husband, that the mother of the deceased, PW 19, lodged a complaint on 13.12.73 about her missing son in writing with the Senior Superintendent of Police, Chandigarh, alleging that she had learnt that a certain person of the village Lahor Khoda with his two sons and the Sarpanch with his two other relatives had killed her son, the motive being that her son had developed illicit relations with the daughter of the person, that after coming to know of her husband 's death the appellant misled her mother in law PW 19. into making a H 746 report to the police containing false and misleading information in an attempt to draw a red herring across the trial. The non appealing accused was arrested on 3.4.75. On his information exhibit P8, a pair of shoes, purse, 25 pieces of bones including an incomplete human skull were recovered. The appellant and PW 2 were arrested on 8.5.75. After completing the investigation, charges were brought against the appellants and the two accused for conspiracy and murder. PW 2, who was one of the co accused, turned approver. The trial court on the basis of the approver 's testimony as corroborated by other evidence held the non appealing accused and the appellant guilty of the offences under sections 302 and 120 B of the I.P.C. and sentenced them to imprisonment for life. The High Court dismissed their appeals and confirmed the convictions and sentence. In the appeal to this Court, it was urged that the evidence of the approver insofar as the compicity of the appellant was concerned, lacked corroboration on material particulars and that no conviction could be sustained on such uncorroborated accomplice 's testimony. On the question as to: (1) the nature and extent of corroboration of an accomplice 's evidence; and (2) the procedure for the trial of offences by a 'child ' under the East Punjab Children 's Act, 1949, ^ HELD: 1.1 An accomplice, by long legal tradition, is a notoriously infamous witness, one who being partipes criminis, purchases his immunity by accepting to accuse others. Section 114, illustration (b) of the Evidence Act envisages the presumptive uncreditworthiness of an accomplice. But, then section 133 provides that a conviction is not illegal merely because it rests upon an accomplice 's uncorroborated testimony. [753C D] 1.2 In indictments, particularly of serious crimes, counsel of caution and the rule of prudence enjoin that it is unsafe to rest a conviction on the evidence of a guilty partner in a crime without independent corroboration on the material particulars. Judicial experience was, thus, elevated to a rule of law. lt is a practice which deserves all the reverence of law. [753D E] l.3 The nature and extent of the corroboration must necessarily 747 vary with the nature and circumstances of each case. Enunciation of any general rule, valid for all occasions is, at once, unwise and unpractical. [753F] 1.4 The corroboration has to be of two kinds; first belonging to the area of reassurance of the credit of the approver himself as a trustworthy witness; and the second which arises for conclusion after the court is satisfied about the creditibility of the approver as to the corroboration in material particulars not only of the commission of the crime but also of the complicity of other accused person in the crime. If on the first area the court is not satisfied, the second does not arise. However, the two areas of corroboration are not two separate, watertight compartments. The evidence as a whole will have to be examined to reach conclusions on both aspects. [757G H; 752C] Sharvana Bhavan vs State of Madras, AIR 1966 SC 1273 referred 1.5 The controversy in the present case in the ultimate analysis, belongs to the second area, whether the approver 's testimony as to appellant 's complicity in the conspiracy could safely be held to have been corroborated by independent evidence on the material particulars. [758F G] There was a considerable lapse of time between the death of decease and the arrest of the appellant and the non appealing accused. There is no evidence to show that, in the interregnum, there was any liasion between the two. The incriminating circumstances in the evidence of the approver appearing against the appellant that on 13.11.1973 appellant wept and implored the non appealing accused and PW 2 to do away with the deceased and that appellant also agreed that she would, thereafter, live with the non appealing accused had had to be put to the appellant m the course of her examination under section 313 Cr. P.C. but this has not been done. Appellant was not afforded an opportunity to submit an explanation to it. That part of the evidence must for that reason, be excluded from consideration. [759C E] Harijan Magha Jesha vs State of Gujarat, , referred to. On a consideration of the entire matter, the approver 's evidence in regard to the complicity of the appellant in the conspiracy lacks corroboration on certain material particulars necessary to connect the 748 appellant. A little more reassurance than is afforded by the state of evidence in the case is perhaps necessary to convict appellant. The appellant in the circumstances would be entitled to the benefit of doubt. [759F] At the time of the commission of the offence, the appellant, even on the basis of the observations made by the sessions court, was about 15 years of age and was a 'child ' within the meaning of East Punjab Children 's Act, 1949. The sessions court invoked the proviso to section 27 of the Act and held that the appellant was so depraved a character that none of the other methods mentioned in the section in which the case could legally be dealt with was suitable in her case. [759G; 760C] In view of the finding that the appellant is entitled to the benefit of doubt, any examination of the legality or propriety of the procedure adopted in the case in the matter of trial of a 'child ' under the East Punjab Children 's Act, 1949 and the correctness of the view of the sessions court in appealing to the proviso to section 27, and sentencing appellant to imprisonment for life is not necessary . [760 C D] Appeal allowed. Conviction and sentence of the appellant set aside and appellant directed to be set at liberty. However, conviction and sentence of the other non appearing accused left undisturbed. [760E] Wigmore on Evidence: 3rd Editition Vol. VII para 2054, Rex vs Bhaskerville, , Rameshwar Kalyan Singh vs State of Rajasthan ; , Director of Public Persecutions vs Kill bourne, [1973] Appeal A.C. 729/All England law reports 1982(1) page 815(g), R. vs Beck, , R. vs Spencer, ; , R. vs Donat, , Attorney General of Hongkong vs Wong Muko Ping and Halsbury 's Laws of England IV Ed. II p. 268, para 454 referred to.

Appeal No. 134 of 1951. Appeal from the Judgment and Order dated 20th November, 1950, of the Labour Appellate Tribunal, Lucknow, in Appeal No. 10 of 1950. Bakshi Tek Chand and Veda Vyasa (section B. Kapur, with them) for the appellants. Shaukat Hussain for the respondent. Bishen Singh for the intervener. December 17. The Judgment of the Court was delivered by DAS J. This appeal has been filed with the special leave granted by this Court on May 10, 1951. By the order granting such leave the appeal has been restricted to one point only, namely, " whether the Government of Uttar Pradesh had the power to extend the time for making the award ex post facto, i.e. after the time limit originally fixed therefore had expired. There is no dispute as to the facts. An industrial dispute having arisen between the appellant company and its employees, by Labour Department Notification No. 637 (ST)/XVIII 53 (ST)/50 dated February 18, 1950, the Governor of Uttar Pradesh was pleased, in exercise of the powers conferred by section 3 read with section 4 of the U. P. (U. P. Act No. XXVIII of 1947), to refer the said dispute to the Labour Commissioner. U. P., or a Conciliation Officer of the State Government nominated by him for adjudication on seven several issues specified therein and to direct the adjudicator to conclude the adjudication proceedings and submit his award to the Government not later than April 5, 1950. The Labour Commissioner by his letter No. I.M.R. 14 A nominated Shri M. P. Vidyarthi, Regional Conciliation Officer, U. P., as the adjudicator in the above dispute with a direction that be should submit his, award by March 25, 1950, and that if the proceeding, were not likely to be 441 completed within that time he should move the Government for extension of time at least a week before the specified date. By Notification No. 897 (ST)/XVIII 53 (ST)/50 dated March 20, 1950, the Governor was pleased to order that the adjudicator should also adjudicate on an additional issue formulated therein. By a further Notification No. 950 ' (ST)/XVIII 53 (ST)/60 dated March 24, 1950, the ,Governor was pleased to refer another additional issue for the decision of the adjudicator. The adjudicator did not make his award on or before April 55 1950, as directed by the first order of reference but made his award on April 13, 1950, that is to say, 8 days after the expiry of the time originally fixed for the making of the award. About thirteen days after. the I delivery of the award Labour Department Notification No. 1247 (ST)/XVIII 53 (ST)/50 was issued on April 26, 1950, whereby the Governor was pleased, in exercise of powers conferred by section 3 read with section 4 of the 'Act, to allow the adjudicator in the said dispute to submit his award by April 30, 1950. Thereafter by Notification No. 1447 (ST)/XVIII 53(ST)/50 dated August 1, 1950. , the Governor was pleased, in exercise of powers conferred by section 6 (2) read with sections 3 and 4 of the Act, to order that the award be enforced for a period of six months from the date of that order in the first instance and thereafter for such further period as might be prescribed. On August 17, 1950, the appellant company preferred an appeal against the award to the Labour Appellate Tribunal contending, inter alia, as follows: That the award dated April 13, 1950, is vitiated, having been given after the expiry of the time limit. (a) In its order dated February 18, 1950, para. (5), Government directed the adjudicator to conclude the proceedings and submit his award not later than the 5th April, 1950. The award is dated 13th April, 1950. The Government, however, tried to remedy 442 this defect by the issue of G.O. No. 1247 (ST) XVIII 53 (ST)/50 dated April 26, 1950, but under the law this is of no avail. To be a valid extension of date granted to the adjudicator, Government ,.,order should have been issued before the 5th April, 1950, to keep the authority of the adjudicator alive. "On the date the adjudicator made the award, i.e., 13th April, 1950, he had no power to make an award. " The Appellate Tribunal by its decision given on November 20, 1950, dismissed the appeal with the following observations on the point mentioned above. " With regard to the last point our view is that as the Government had the authority under section 6 of the Act to fix time limit for submitting an award it had also the necessary and incidental power to extend the time limit originally fixed, if it considered it necessary. The first proviso to section 3 empowers the Provincial Government to add more matters for adjudication. It is obvious that additions to the matters already referred to would or may take more time than what had been originally estimated, and so ,it may lead to an impossible position if the Government had no power to extend the time originally fixed by it, and it makes no difference, in our opinion, whether the time is extended before or after the expiry of the time originally limited. " The present appeal is against that decision of the Appellate Tribunal but limited to the question hareinbefore mentioned. Dr. Tek Chand appearing in support of this appeal urges that the adjudicator derived his authority under the order made by Notification No. 637, dated February 18, 1950. Section 6 (1) provides that the adjudicator " shall, within such time as may be specified, submit its award to the State Government. " The time specified by the order was " not later than April 5, 1950. " On the expiry of that time the adjudicator became functus officio and bad no power or authority to make the award. It is true that two 448 more issues were, by the two subsequent orders, added to the list of issues to be determined by the adjudicator but those issues, Dr. Tek Chand submits, did not involve any detailed investigation into facts necessitating any further time for making the award. Learned counsel contends that the U.P. Act under consideration has no provision empowering the State Government to enlarge the time for the making of ' the award by the adjudicator. 'In the circumstances, if the State Government took the view that the addition of those two issues would render the time ' specified in the original order inadequate for the purpose it should have cancelled the previous notification and issued a fresh notification referring all the issues to the adjudicator and specifying a fresh period of time within which he was to make his award. ' The State Government did not adopt that course. What it purported to do was to extend the time for making the award not only after the time originally fixed had expired but also after the award had, actually been submitted. The argument is that even assuming but not admitting that the State Government had the power to extend the time before the time had expired it certainly had no power to do so after the award had been made, for it was meaningless, urges Dr. Tek Chand, to extend the time to do an act which bad already been done. He refers us to the decision of the Judicial Committee in Baja Har Narain Singh vs Chaudhrain Bhagwant Kuar(1) where it was held that under the Code of Civil Procedure of 1882 the Court had no power to extend the time for making the award after the award had been filed. Section 514 of that Code enabled the Court to grant a further time and from time to time to enlarge the period for the delivery of the award but section 521 provided that no award shall be valid unless made within the period allowed by the Court. Their Lordships of the Privy Council took the view that it would not have been competent for the Court to extend the time after the award had been made, for once the award was made (1) L.R. 18 I.A. 55; 13 All. 300 444 and delivered the power of the Court under section 514 was spent and that although the Court had the fullest power to enlarge the time under that section as long as the award was not completed it no longer possessed any such power when once the award was made. in order to give full effect to section 521 the Judicial Committee had to confine the exercise of the power to extend the time given to the Court by section 514 to a point of time before the award had been made. This decision was relied upon by Mr. Justice Harring ton sitting singly on the Original Side of the Calcutta High Court in Shib Krishna Dawn & Co. vs Satish Chander Dutt(1) which was a case governed by the Code of 1908. The learned Judge overlooked the fact that paragraph 8 of the Second Schedule to the Code of 1908 which corresponded to section 514 of the Code of 1882 expressly conferred power on the Court to allow further time and from time to time, either before or after the expiration of the period fixed for the making of the award, to enlarge such period and that paragraph 15 which corresponded to section 521 of the Code of 1882 contained no provision that an award made out of time was ipso facto invalid and that consequently the reasoning underlying the decision of the Judicial Committee in the case of Raja Narain Singh vs Chaudhrain Bhagwant Kuar (2) had no application to the case before him, which was governed by the Code of 1908. Having regard to the difference in the language of the relevant provisions of the two Codes, the correctness of the decision of Harrington J. was doubted by Mr. Justice Chitty also sitting singly on the Original Side of the Calcutta High Court in Sri Lal vs Arjun Das(3). Eventually the, decision of Mr. Justice Harrington was dissented from by a Division Bench of the same High Court sitting in appeal from the Original Side in Jetha Lal Laxmi Chand Shah vs Amrita Lal Ojha(4), which held that the Court had power to enlarge the time for making the award even after the award had (1) I.L.R.38 Cal. (3) (2) 18 I.A. 55. (4) I.L R. ;42 C.W.N. 833. 445 actually been made. The learned Judges in the last mentioned case referred to and relied on the case of Lord vs Lee(1). Reference has also been made by learned counsel for the respondents to Dentron vs Strong (2) and toMay vs Harcourt (3). It will be noticed that all those English cases were decided under section 15 of the Common Law Procedure Act, 1854 (17 & 18 Vic , c. 125). It is true that in that English statute there was no provision similar to section 521 of our Code of 1882 which was noticed by the Privy Council in the case cited by Dr. Tek Chand; nevertheless section 15 of the English statute like section 514 of the Code of Civil Procedure of 1882 corresponding to paragraph 8 of the Second Schedule to the Civil Procedure Code of 1908 and like section 9 of the English Arbitration Act, 1889, corresponding to section 12 of the Indian Arbitration Act, 1899, empowered the Court, from time to time, to enlarge the time for making the award. There is a similar provision for enlargement of time in section 148 of our Civil Procedure Code of 1908. There is, however, no similar provision in the U. P. Section 6(1) of that Act peremptorily requires the adjudicator to submit his award to the State Government " within such time as may be specified " and not "within such time as may from time to time be specified. " It is significant that the only occasion when the State Government can, under the U. P. Act, specify a fresh period of time is when it remits the award for reconsideration under sub section (2) of section 6, for under subsection (3) the adjudicator is enjoined to submit his award, after reconsideration, within such period as may be specified by the State Government. Even in this case, under section 6(2) and (3) the State Government may in the order remitting the award specify a time within which the award, after reconsideration, must be filed. This gives power to the State Government to fix a fresh period of time to do a fresh (1) (2) (1874) L. R. 9 Q.B. 11 7, (3) I.P.R. 13 Q. B.D. 688, 446 act, namely, to reconsider and file the reconsidered award. It does not give the State Government any power to enlarge the time fixed originally for the initial making of the award. Therefore, except where ,the State Government under section 6 (2)remits the 'award for reconsideration it has no power even to specify a fresh period of time and much less a power to extend the time for the initial making of the award under section 6 (1). In exercise of the powers conferred by clauses (b), (c), (d) and (g) of section 3 and section 8 of the U. P. , the Governor was pleased to make an order embodied in Notification No. 615 (LL)/XVIII 7 (LL) 1951, dated March 15, 1951. The proviso to rule 16 of that order authorised the State Government to extend from time to time the period within which the Tribunal or the adjudicator was to pronounce the decision. These rules were, however, not in force at the time material to the case before us. Learned counsel appearing for the respondent and for the State of Uttar Pradesh have not referred us to any similar rule which, was in force in 1950. In view of the language of section 6 of the U. P. Act and in the absence of a rule like the proviso to rule 16 referred to above it must follow that the State Government had no authority whatever to extend the time and the adjudicator became functus officio on the expiry of the time specified in the original order of reference and, therefore, the award which had not been made within that time must be held to be without jurisdiction and a nullity as contended by Dr. Tek Chand. Learned counsel for the respondents refers us to the provisions of section 14 of the U. P. General Clauses Act, 1904, which provides that where by any Uttar Pradesh Act any power is conferred on the State Government then that power may be exercised from time to time as occasion requires. Sections 3 and 4 of the U. P. , certainly confer power on the State Government to refer disputes to an adjudicator for decision 447 and section 6 (1) may be read as empowering the State Government to specify the time within which the adjudicator to whom an industrial dispute is referred for adjudication is to submit his award. The combined effect of section 14 of the U. P. General Clauses Act and section 6(1) of the U. P. , it is contended, is that the adjudicator is enjoined to submit his report "within such time as may from time to time be specified " and that this being the position, the principles laid down in the English decisions referred to above must be held to be applicable to the present case. We are unable to accept this line of reasoning. Under section 14 of the U. P. General Clauses Act the State Government may exercise the power conferred on it by sections 3, 4 and 6, that is to say, it can from time to time make orders referring disputes to an adjudicator and, whenever such an order of reference is made, to specify the time within which the award is to be made. This power to specify the time does not and indeed cannot include a power to extend the time already specified in an earlier order. The legislative practice, as evidenced by the provisions of the different statutes referred to above, is to expressly confer the power of extension of time, if and when the legislature thinks fit to do so. There is no question of any inherent power of the Court and much less of the Executive Government in this behalf. Section 14 of the U. P. General Clauses Act does not in terms, or by necessary implication, give any such power of extension of time to the State Government and, therefore, the Respondents can derive no support from that section. Learned advocate for the Intervener, the State of Uttar Pradesh, draws our attention to section 21 of the U. P. General Clauses Act, 1904, and contends that the order of April 26, 1950, should be taken as an amendment or modification, within the meaning of that section, of the first order of February 18, 1950. It is true that the order of April 26, 1950, does ex facie purport to rectify, the order of 448 February 18, 1950, but, in view of the absence of any distinct provision in section 21 that the power of amendment and modification conferred on the Government may be so exercised as to have retrospective operation the order of April 26, 1950, viewed merely as an order of amendment or modification, cannot, by virtue of section 21, have that effect. If, therefore, the amending order operates prospectively, i.e., only as from the date of the order, it cannot validate the award which bad been made after the expiry of the time specified in the original order and before the date, of the amending order, during which period the adjudicator was functus officio and had no jurisdiction to act at all. We do not think the respondents can derive any support from section 21 of the U. P. General Clauses Act. The result, therefore is that this appeal must be allowed and the award must be declared to be null .and void and we order accordingly. In the circumstances of this case we make no order as to costs. Appeal allowed. Agent for the intervener: C. P. Lal.

On February 18,1950, the Governor of Uttar Pradesh referred an industrial dispute to the Labour Commissioner or a person nominated by him with the direction that the award should be submitted not later than April 5, 1950. The award, however, was made on April 13, and on April 26, the Governor issued a notification extending the time for making the award up to April 30: Held, (i) in view of the language of section 6 of the U. P. , and in the absence of a provision like that contained in the proviso to r. 16 of the Governor 's notification dated in March 15, 1951, the State Government had no authority whatever to extend the time, and the adjudicator became functus officio on the expiry of the time fixed in the original order of reference and the award was therefore one made without jurisdiction and a nullity. (ii)Section 14 of the U. P. General Clauses Act, 1904, did not in terms or by necessary implication give any such power of extension of time to the State Government. (iii)Though the order of April 26 did exfacie purport to modify the order of February 18, in view of the absence of any distinct provision in section 21 of the U. P. General Clauses Act, 1904, that the power of amendment and modification conferred on the State Government may be so exercised as to have retrospective operation, the order of April 26, viewed merely as an order of amendment or modification, cannot, by virtue of section 21, have retrospective effect. Raja Har Narain Singh vs Chaudhrain Bhagwant Kuar (L.R. 18 I.A. 55) applied. Jetha Lal Lakshmi Chand Shah vs Amrita Lal Ojha (I.L.R. , Lord vs Lee (L.R. 3 Q.B. 404), Dentron vs Strong (L.R. 9 Q.B. 117), May vs Harcourt (L.R. 13 Q.B.D, 688) distinguished. 57 440

iminal Appeal No. 39 of 1955. Appeal by special leave from the judgment and order dated January 28, 1954, of the Patna High Court in Criminal Revision No. 69 of 1954 arising out of the judgment and order dated November 23, 1953, of the Sessions Judge, Patna, in Criminal Appeal No. 288 of 1953 against the judgment and order dated August 27, 1953, of the Munsif Magistrate of Patna Sadar. Murtaza Fazl Ali and R. C. Prasad, for the appellant. section P. Varma, for respondent No. 1. 1957. April 25. The Judgment of the Court was delivered by IMAM J. The appellant was removed from his position as mutawalli of Gholam Yahia Waqf Estate on September 1, 1951, by an order passed by the Majlis constituted under the Bihar Waqfs Act, 1947 (Bihar Act 8 of 1948) (hereinafter referred to as the Act). He appealed to the District Judge of Monghyr, as he was entitled to do under the provisions of the Act, and the operation of the order of removal passed by the Majlis was stayed by the District Judge pending the hearing of his appeal. A complaint against him was filed in the Court of the Sadar Sub Divisional Magistrate, Patna, on July 1, 1952, by Mahommad Sual, Nazir of the Majlis, on the order of its Sadar. It was alleged in the complaint that it was the duty of the appellant ' to prepare a budget of the waqf estate of which he was a mutawalli, under section 58(1) of the Act, for the year 133 1034 1952 53 and to send a copy of it to the Majlis before January 15, 1952. The appellant had deliberately failed to comply with the aforesaid provisions and therefore had committed an offence punishable under section 65(1) of the Act. The office of the Majlis where the budget had to be filed was situated at Patna within the local jurisdiction of the Magistrate in whose Court the complaint was filed. The appellant was subsequently tried at Patna by a Munsif Magistrate with First Class powers and convicted under section 65(1) of the Act and sentenced to pay a fine of Rs. 100, in default to undergo fifteen days simple imprisonment. He appealed to the Sessions Judge of Patna who dismissed his appeal. An application filed by the appellant in the Patna High Court in its criminal revisional jurisdiction was rejected. The appellant obtained special leave to appeal against the order of the High Court. It has been found as a fact that the appellant failed to prepare a budget of the estimated income and expenditure of the waqf estate and to send a copy of it to the Majlis before January 15, 1952. The only question for consideration is whether the appellant 's failure to comply with the provisions of section 58(1) of the Act makes him liable to be punished under section 65(1). At this stage, it is necessary to set out the provisions of a. 58 of the Act which are as follows: " 58 (1) The mutawalli of every waqf shall, before the fifteenth day of January in each year, prepare a budget of the estimated income and expenditure of such waqf for the next succeeding financial year and shall forthwith send a copy thereof to the Majlis. (2)The Majlis may, within six weeks from the date on which it receives such copy, alter or modify the budget in such manner and to such extent as it thinks fit. (3)If the Majlis alters or modifies any budget under sub section (2), it, shall forthwith send a copy of the budget as so altered or modified to the mutawalli of the waqf concerned, and the budget as so altered or modified shall be deemed to be the budget of the waqf. (4)If within the period mentioned in subsection (2) and for two weeks thereafter the Majlis does 1035 not send to the mutawalli of the waqf concerned a copy of the budget altered or modified as aforesaid, the Majlis shall be deemed to have approved the budget without any alteration or modification. (5)If the mutawalli fails to prepare and send a copy of the budget as required by sub section (1), the Majlis shall prepare a budget for the waqf concerned and such budget shall be deemed to be the budget of that waqf for the year in question. (6)Nothing contained in this section shall be deemed to authorise the Majlis to alter or modify any budget in a manner or to an extent inconsistent with the wishes of the waqif, so far as such wishes can be ascertained, or the provisions of this Act. " Section 65 provides that a mutawalli may be punished if he fails to comply with certain matters mentioned therein including his failure to comply with sub section (1) of section 58. Sub section (1) of section 65 reads as follows: " 65 (1) If a mutawalli fails without reasonable cause, the burden of proving which shall be upon him, to comply with any order or direction made or issued under clauses (i), (o) or (q) of sub section (2) of section 27 or under section 56, to comply with the provisions of sub section (1) of section 57, sub section (1) of section 58, section 59 or section 60, or to furnish any statement, annual account, estimate, explanation or other document or information relating to the waqf of which he is mutawalli, which he is required or called upon to furnish under any of the other provisions of this Act, he shall be punishable with fine which may extend, in the case of the first offence, to two hundred rupees and, in the case of second or any subsequent offence, to five hundred rupees. " It is clear from the provisions of section 58(1) that before January 15, each year, the mutawalli of each waqf shall prepare a budget for the next succeeding financial year and shall forthwith send a copy thereof to the Majlis. Under section 65 (1), if he fails to comply with the above, he is liable to be punished with fine. It was contended by the learned Advocate for the appellant that section 58 of the Act was an invalid provision because it gave unrestricted power to the Majlis to alter 1036 or modify the budget prepared by the mutawalli without a right of appeal against the action of the Majlis altering or modifying the budget. The provisions of section 58 imposed an unreasonable restriction on the mutawalli in carrying on his occupation as such. Accordingly, the provisions of section 58 offended article 19(1) (g) of the Constitution. The Act was enacted for the purpose of providing for the better administration of waqfs in the State of Bihar as its preamble states. Section 5 provides for the establishment of two bodies corporate known as Majlis to discharge respectively the functions assigned to them by the Act with reference to Sunni waqfs and Shia waqfs. Section 27 provides that the general superintendence of all waqfs in the State shall be vested in the Majlis, which will do all things reasonable and necessary to ensure that waqfs are properly supervised and administered and that the income thereof is duly appropriated and applied to the objects of such waqfs and in accordance with the purposes for which such waqfs were founded or for which they exist so far as such objects and purposes can be ascertained. Sub section (2) of this section enumerates, inter alia,. the various powers and duties of the Majlis including the removal of a mutawalli from his office under certain conditions. The various powers set out in this subsection clearly indicate that the mutawalli is subordinate to and under the control of the Majlis. The Majlis under section 47 may also make an application to the District Judge for an order, amongst other things, for the removal of the mutawalli. Chapter X deals with mutawallis and their duties and under section 56 it is specifically enjoined that every mutawalli shall carry out all directions which may from time to time be issued to him by the Majlis under any of the provisions of the Act. Previous to the passing of the Act, the Mussalman Wakf Act (Central Act XLII of 1923) was enacted to make provisions for the better management of waqf property and for ensuring the keeping and publication of proper accounts in respect of such properties. It applied to all waqfs, except those to which section 3 of the Mussalman Wakf Validating Act, 1037 1913, applied. Reference to some of the provisions of the Mussalman Wakf Act may now be made. Section 3 provides for the furnishing of particulars relating to a waqf to the Court, that is to say, a District Judge or within the limits of ordinary original civil jurisdiction, to such Court subordinate to the High Court as the State Government may by notification in the Official Gazette designate. Section 5 provides that within three months after the thirty first day of March next following the date on which the statement referred to in section 3 had been furnished, and thereafter within three months of the thirty first day of March in every year, the mutawalli shall prepare and furnish to the Court a full and true statement of accounts of all moneys received or expended by him on behalf of the waqf of which he was the mutawalli during the period of twelve months ending on such thirty first day of March. Section 10 provides for punishment for failure to comply with the provisions of section 3 or section 4 by a mutawalli, who becomes liable to be fined a sum which may extend to five hundred rupees, or, in the case of a second or subsequent offence which may extend to two thousand rupees. It is clear that the purpose of the Act and that of the Mussalman Wakf Act was to ensure that the waqfs were properly administered and that the income of the waqf was duly appropriated for the purposes for which the waqf had been founded. Having regard to the fact that the mutawalli occupied the position of a manager or a custodian and that some kind of control or supervision over him by the Majlis with respect to due administration of the waqf property and due appropriation of funds was certainly necessary, we are of the opinion that the provisions of section 58 of the Act are reasonable restrictions on the exercise of his duties as a mutawalli and it cannot be said that the provisions of section 58 offend any of the provisions of the Constitution. As was said in the case of The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt(1) a budget is indispensable in all public institutions and that it is not per se (1) ; , 1037. 1038 unreasonable to provide for the budget of a religious institution being prepared under the supervision of the Commissioner or the Area Committee. Under section 58 of the Act, the mutawalli has to prepare a budget and send a copy of it to the Majlis within a specified time and the Majlis, which has the powers of supervision over him, is authorized to alter or modify the budget. This power of alteration or modification is inherent in the power of supervision and such a provision in section 58 cannot be said to be unreasonable. Reliance, however, was placed on a passage in the judgment of this Court in the case cited above to the effect that if an Area Committee under cl. 3 of section 70 of the Madras Hindu Religious and Charitable Endowments Act, 1951, makes any addition or alteration in the budget, an appeal against it lay to the Deputy Commissioner. The passage upon which reliance is placed is no authority for the proposition that the provisions of section 58 of the Act become unreasonable because there is no provision for an appeal against the orders of the Majlis. The powers of the Majlis to alter or modify the budget prepared by the mutawalli are not unrestricted. Sub section (6) of section 58 expressly provides that nothing contained in the section shall be deemed to authorize the Majlis to alter or modify any budget in a manner or to an extent inconsistent with the wishes of the waqif, so far as such wishes can be ascertained, or the provisions of the Act. In our opinion, nothing contained in sub sections (2), (3) and (4) of section 58 amount to unreasonable restrictions on the exercise of the duties of the mutawalli as a person administering a waqf. Even if it were to be assumed that the said provisions amounted to an unreasonable restriction, sub sections (2), (3) and (4) are clearly severable from sub sections (1), (5) and (6) of section 58. Even if sub sections (2), (3) and 4 were struck down, the mutawalli would still be under a legal obligation under sub section (1) to prepare a budget and submit a copy thereof to the Majlis within a specified time and his failure to do so would make him liable to punishment under section 65(1). It was urged that the Sessions Judge erred in placing the onus on the appellant under section 65(1) to prove that he had submitted the copy of the budget within time. 1039 This objection, however, does not require a detailed consideration because the Sessions Judge clearly stated in his judgment that apart from the onus, he was satisfied that the prosecution had fully established on the evidence that the appellant had failed to send a copy of the budget as required by law. It was also pointed out that section 65 does not provide for any imprisonment in default of payment of fine, but the appellant was sentenced to 15 days simple imprisonment in default of payment of fine. Section 33 of the Code of Criminal Procedure read with sections 40 and 67 of the Indian Penal Code appears to us to be a clear answer to this contention. It was also pointed out that under section 65 of the Act a sentence of fine extending upto five hundred rupees could be imposed for a second or for a subsequent offence. We need not, however, consider that matter in the present appeal as it was conceded on behalf of the appellant that the sentence of fine imposed upon him in the present case was for a first offence. The appeal is accordingly dismissed. Appeal dismissed.

The appellant failed to prepare a budget of the Waqf Estate of which he was the mutawalli, for the year 1952 53 and send a copy of it to the Majlis before January 15, 1952, as he was bound to do under section 58(1) of the Bihar Waqfs Act, 1947, and was convicted by the 'Magistrate under section 65(1) of the Act and sentenced to pay a fine of Rs. 100, in default to undergo fifteen days simple imprisonment. It was contended for him that the conviction and sentence were not valid because (1) section 58 of the Act contravened article 19(1) (g) of the Constitution of India, as it gave unrestricted power to the Majlis to alter or modify the budget prepared by the mutawalli without a right of appeal against the action of the Majlis and so imposed an unreasonable restriction on the mutawalli in carrying on his occupation as such, and (2) section 65 Of the Act did not provide for any imprisonment in default of payment of fine. Held, that having regard to the fact that a mutawalli occupies the position of a manager or custodian and the supervision over him by the Majlis with respect to due administration of the waqf property is necessary and that the powers of the Majlis to alter or modify the budget prepared by the mutawalli are controlled by sub section (6) Of section 58 of the Act, the restrictions imposed by section 58 Of the Act on the exercise of his powers 1033 by a mutawalli are reasonable. Accordingly, the provisions Of section 58 'of the Act do not offend article 19 (i) (g) of the Constitution. Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindya Thirtha Swamiar of Sri Shirur Mutt, ; , relied on. The order of the Magistrate providing for imprisonment in default of payment of fine is not invalid in view Of section 33 of the Code of Criminal Procedure read with sections 4o and 67 of the Indian Penal Code.

Appeal Nos. 735 and 736 of 1966. Appeals by special leave from the judgment and decree dated March 26, 1965 of the Allahabad High Court, Lucknow Bench in Second Execution Decree Appeals Nos. 3 and 4 of 1961. J. P. Goyal and section P, Singh, for the appellant (in both the, appeals). 233 C. B. Agarwala and K. B. Gupta, for the respondent (in both the appeals). The Judgment of the Court was delivered by Bachawat, J. The appellant filed suit nos. 87 of 1948 and 2/12 of 1948 in the court of the Assistant Collector, 1st Class, Pratapgarh, (a revenue court) against the respondent and 8 others persons under sections 60, 61 and 180 of the U.P. Tenancy Act (U.P. Act XVII of 1939) claiming a declaration that the defendants had no right to the suit lands and a decree for possession in case the defendants were found to be in possession thereof. The suits were decreed in 1948. The appellant took symbolical possession of the lands in execution of the decrees. Appeals against the decrees filed by the respondent and other defendants were dismissed by the Additional Commissioner, Faizabad. The defendants filed second appeals against the decrees. During the pendency of the appeals rules 4 and 5 of the Uttar Pradesh Zamindari Abolition and Land Reforms Rules 1952 came into force. The Board of Revenue held that in view of rules 4 and 5 the pending appeals as also the suits had abated. In 1955 the respondent filed applications for restitution of the lands under section 144 of the Code of Civil Procedure in court of the Assistant Collector, 1st Class, Pratapgarh. The appellant con. tested the application. One of the issues arising on the application was whether the appellant had acquired Bhumidari rights. The Assistant Collector referred this issue to the Civil Court for decision. He refused to recall the order of reference in spite of the respondent 's plea that he had no power to pass the order as no question of proprietary title had arisen. On May 7, 1958 the civil court answered the issue in the negative. On February 18, 1958 the Assistant Collector allowed the application for restitution and directed that the respondent be put in possession of the lands. The appellant filed appeals against the orders dated February 18, 1958 As he was not certain about the proper forum of the appeals he took the precaution of filing the appeals in the revenue court as also in the civil court. On October 23, 1959 the Additional Commissioner, Faizabad Division, held that the Revenue Court had no jurisdiction to entertain the appeals and that the appeals lay to the civil court under sections 286(4) and 265(3) of U.P. Tenancy Act. Accordingly he returned the memoranda of appeals for presentation to the proper court. The appellant filed revision petitions against the orders before the Board of Revenue, In the meantime the appeals filed before the civil court came up for hearing. The respondent submitted to the jurisdiction of the civil court. He did not raise the contention that the, civil court had no jurisdiction to entertain the, appeals. On 234 November 12, 1960 the Additional Civil Judge,, Pratapgarh, allowed the appeals and dismissed the applications for restitution. He held that (1) the appellant was in possession of the lands on the dates of the institution of the suits; (2) the board of revenue had no power to abate the suits or to set aside the decree passed therein, and (3) the application for restitution was not maintainable as the appellant had not obtained possession of the lands in execution of any decree which had been reversed or set aside. In view of this decision, the appellant did not proceed with the pending revision petitions before the board of revenue and on November 18, 1960 the revision petitions were dismissed. On February 1, 1961 the respondent filed second appeals in the High Court against the appellate orders of the civil court dated November 12, 1960. In the original memorandum of appeal, he did not take the plea that the civil court had no jurisdiction to entertain the appeals. For the first time on January 24, 1964, he took this plea by adding a new ground in his memorandum of appeal. The High Court held that (1) the appellant was in possession of the lands before the passing of the decree; (2) the suits had not abated and the Board of Revenue had no jurisdiction to set aside the proceedings, in the suits ' and (3) the applications for restitution were not maintainable. The High Court, however, held that (1) appeals against the orders for restitution lay to the revenue court, (2) the civil court had no jurisdiction to entertain the appeals and (3) the respondent was not estopped from raising the contention. Accordingly on March 26, 1965 the High Court allowed the second appeals, set aside the order of the Additional Civil Judge and returned the memoranda of appeals for presentation to the proper court. The appellant has filed the present appeals after obtaining special leave. On behalf of the appellant it is argued that (1) the appeal from the order of the Assistant Collector dated February 18, 1959 lay to the civil court and not to the revenue court (2) in the circumstances of the case, and in view of section 289(2) of the U.P. Tenancy Act, the respondent was precluded from raising the objection that the appeals did not lie to the civil court. It is common case that suits nos. 87 of 1948 and 2/12 of 1948 Were of the nature specified in Group B of the fourth schedule to the U.P. Tenency Act. In view of section 265(2) read with section 271(2) appeals from orders in proceedings under section 14 4 of the Code of Civil Procedure arising out of, the two suits lay to the revenue court. The appeals did not lie to the civil court under sections 265(3) and 286(4) read with section 271(2) as no question of jurisdiction was decided by the Assistant Collector nor was any question of proprietary title referred to or decided by the civil court. But the more important question is whether having regard to the 235 scheme of the U.P. Tenancy Act and the circumstances of the case, the objection as to the lack of competence of the civil court to entertain the appeals could be raised in the High Court. The U.P. Tenancy Act 1939 consolidates and amends the law relating to agricultural tenancies and other matters connected therewith in Agra and Oudh. It repealed the Agra Tenancy Act, 1926 and the Oudh Rent Act 1886. Chapter XIV of the Act deals with the procedure and jurisdiction of courts. Section 242 provides that certain suits and applications are cognizable by the revenue courts only. The chapter provides for appeals and revisions. No appeal lies from any decree or order passed by any court under the Act except as provided in the Act (section 263). In some cases an appeal lies to a revenue court; in other cases the appeal lies to the civil court. The High Court has no revisional power under section 276 in a case in which no appeal lies to the civil court. It is often a question of extreme nicety whether a suit, application or appeal is cognizable by the revenue court or by the civil court. Sections 289, 290 and 291 deal with objections regarding the proper forum. Section 290 provides that where in a suit instituted in a civil or revenue court, an appeal lies to the district judge or to the High Court, an objection that the suit was instituted in the wrong court shall not be entertained by the appellate court unless such objection was taken in the court of the first instance; and the appellate court shall dispose of the appeal as if the suit has been instituted in the right court. The section closely resembles section 21 of the Code of Civil Procedure and is a recognition of the princi ple that an objection as to the proper forum for the trial of a suit may be waived. Section 291 treats the objection as technical and provides that even where the objection was taken in the court of the first instance, the appellate court may dispose of the appeal as if the suit had been instituted in the right court. It may declare any court to be competent to try the suit and may remand the suit for fresh trial, and the competence of the trial cannot be ques tioned later. With a view to avoid conflicts of jurisdiction section 289 provides for reference to the High Court. Section 289 is as follows : "289(1) Where either a civil or revenue court is in doubt whether it is competent to entertain any suit, application or appeal, or whether it should direct the plaintiff, applicant or appellant to file the same in a court of the other description, the court may submit the record with a statement of the reasons for its doubt to the High Court; (2) Where any suit, application or appeal, having been rejected either by a civil court or by a revenue 236 court on the ground of want of jurisdiction, is subsequently filed in a court of the other description, the latter court, if it disagrees with the finding of the former, shall submit the record, with a statement of the reasons for its disagreement to the High Court; (3) In cases falling under subsection (1) or subsection (2) if the court is a revenue court subordinate to the collector, no reference shall be made under the foregoing provisions of this section except with the previous sanction of the collector; (4) On any such reference being made , the High Court may order the court either to proceed with the case, or to return the plaint, ' application or appeal for presentation of such other court as it may declare to be competent to try the same; (5) The order of the High Court shall be final and binding on all courts, subordinate to it or the Board. " Section 289 vests in the High Court a special jurisdiction. The decision of the High Court given ' on a reference to it under section 289 is binding on all courts. A reference can be made under section 289(1)if any court doubts its own competence to entertain any proceeding. The reference under section 289(1) is optional. Without making any reference the court may refuse to entertain the proceeding on the ground of want of jurisdiction. But the court of the other description in which the proceeding is subsequently instituted is not bound by this finding, see Nathan vs Harbans Singh(1). Before the enactment of section 289(2) if it disagreed with the finding, it could reject the proceeding on the ground that the matter was cognizable by the other court, As neither court was bound by the finding of the other, the litigant could not get relief in any forum. Section 289(2) has been specially enacted to avoid such a deadlock. In such a situation, section 289(2) compels the court to refer the matter to the High Court and to obtain a Provisions corresponding to sections 290, 291 and 289(1) were contained in sections 124 A, 124B, 124C and 124D of the Oudh Rent Act 1886 and sections 268, 269 and 267(1) of the Agra Tenancy Act, 1926. It seems that Oudh Rent Act, 1886 did not contain any provision corresponding to section 289(2). The absence of such a provision seriously hampered the administration of justice. In numerous cases under the Oudh Rent Act, after a suit, application or appeal was rejected by a civil court or revenue court on the ground of want of jurisdiction, the court of the other descrip (1) A.I.R. 1930 All. 264, decision which will bind all the courts. 237 tion where the proceeding was subsequently filed came to the opposite conclusion and held that the matter was within the cognizance of the former court. The decision of the court of one description including the decision of the High Court exercising appellate or revisional power over that Court was not binding upon the court of the other description. Such a situation led to great injustice. The litigant was bandied about from court to court and he could not get any relief anywhere. The Oudh Chief Court mitigated the evil by applying the doctrine that a party litigant could not approbate and reprobate in respect of tile same matter. A party litigant may not be allowed to take inconsistent positions in court to the detriment of his opponent at successive stages of the same proceeding or in a subsequent litigation growing out of the judgment in the former proceeding, see Bigelow on Estoppel, 6th Ed. 783, 789, Mohammad Mehdi Khan V Mussammat Sharatunnissa(1). On this principle it was held in Mahadeo Singh vs Pudai Singh(2) that where a revenue court upheld the plea that it had no jurisdiction to entertain a suit, the party putting forward the plea would be precluded from contending that the civil court could not entertain the suit. Likewise in Saira Bibi vs Chandrapal Singh (8) it was held that when an appeal was originally instituted properly in the revenue court but on objection being raised by a party was dismissed on the ground that the appeal did not lie to that court, it was not open to the party to raise the objection that the appeal could not be entertained by the civil court. This form of estoppel arises when the litigant takes in consistent pleas as to jurisdiction in different courts. It cannot be pressed into service, where, as in the present case, the court in which the proceeding was originally filed suo motu raised the objection as to jurisdiction. In the present case it does not appear that the respondent raised before the revenue court the objection that it was not competent to entertain the appeals. The doctrine of approbate and reprobate cannot be invoked to, preclude the respondent, from raising the objection that the appeals did not lie to the civil court. But the effect of upholding his objection is that the appellant is deprived of his right of appeal altogether. His appeals cannot be entertained either by the civil court or by the revenue court. Section 289(2) is intended to prevent such grave miscarriage of justice. Section 289(2) reenacts the provision of section 267(2) of the Agra Tenancy Act 1926. The object of section 289(2) is to avoid a deadlock between the civil and the revenue courts on the question of jurisdiction, and its provisions should receive a liberal construction. Section 289(2) applies whenever any suit, application or appeal having been rejected either by the civil court or revenue (1) 3 Oudh Cases, 32, Luck, 159,166. (3) A.I.R. 1931 Oudh 123. 238 court on account of want of jurisdiction is subsequently filed in the court of the other description and the latter court disagrees with the finding of the former. In such a case, a reference to the High Court is compulsory and the conflict of opinion is resolved by a decision of the High Court which is binding on all courts. A court subordinate to the collector cannot make the reference without the previous sanction of the collector under section 289(3). It is implicit in section 289(3) that if the collector refuses to give the sanction, the case will proceed as if there is no dis agreement with the finding of the former court. In a case falling within section 289(2), only the court in which the proceeding is subsequently instituted can disagree with the finding of the former court on the question of jurisdiction. If it so disagrees, it must refer the matter to the High Court; and only the High Court on such a reference can override the finding. No other court can disagree with the finding and make the reference. In our opinion, if no such reference is made, the finding of the former court on the question of jurisdiction becomes final and conclusive; and the objection that it is erroneous cannot be entertained by the appellate or revisional court or any other court. In the present case the respondent did not raise any objection before the Additional Civil Judge that the civil court was not competent to entertain the appeals. The Additional Civil Judge did not make any reference to the High Court under section 289(2). He decided the appeal on the merits and did not disagree with the finding of the revenue court on the question of jurisdiction. Having regard to this decision the appellant did not proceed with the revision petitions filed by him against the orders of the revenue court on the question of jurisdiction In these circumstances, it was not open to the respondent to raise the objection in the High Court that the civil court was not competent to hear the appeals. In view of the fact that no reference. under section 289(2) was made, the finding of the revenue court that the civil court was competent, to entertain the appeals could not be challenged in the High Court. The case must be decided on the footing that the Additional Civil Judge, Pratapgarh, was competent to enter tain the appeals. On the merits the respondent has no case. The Additional Civil Judge found that the appellant was in possession of the lands on the dates of the institution of the suits. The High Court agreed with this finding. We see no reason for setting aside this concurrent finding of fact. The appellant did not obtain possession of the lands by executing the decrees passed in the two suits. Even assuming that the suits had abated and the decrees 239 ed therein had been set aside or reversed, no case for restitution. of the lands under section 144 of the Code of Civil Procedure is made out. The Additional Civil Judge rightly dismissed the applications under, section 144. In the result, the appeals are allowed with costs, the orders of the High Court are set aside and the orders passed by the: Additional Civil Judge, Pratapgarh, are restored.

The appellant instituted two suits in the Court of Assistant Collector (a Revenue, Court) against the respondent under sections 60, 61 and 180 of the U.P. Tenancy Act, 1939. The suits were decreed, and the appellant took symbolical possession of the lands. The Assistant Commissioner. affirmed the decrees, and during the pendency of the respondent 's second appeals in the High Court, the Uttar Pradesh Zamindari Abolition & Land Reforms Rules, 1952 came into force. The Board of Revenue held that in view of the Rules. the pending appeals as also the suits had a ate. The respondent filed applications for 'restitution of the lands under section 114 C.P.C. in the Court of Assistant Collector. The Assistant Collector referred the issue whether the appellant had acquired Bhumidari rights to the civil court. He refused to recall the 'reference in spite of the respondent 's Plea that he had no power to pass the order as no question of pro prietary title bad arisen. The civil court answered the issue in the negative, and the Asstt. Collector allowed the applications for restitution. As the appellant was not certain about the proper forum of appeals against these orders of the Assistant Collector, he filed anneals in the revenue court as also in the civil court. The Assistant Commissioner held that the revenue court had no Jurisdiction to entertain appeals and the appeals lay to the civil court under sections 286(4) and 265(3) off the U.P. Tenancy Act. The appellant filed revision petitions against the orders before the Board of Revenue. In the meantime the appeals filed before the civil court came up for hearing:. The respondent submitted to the jurisdiction of the civil court, and did not contend that the civil court had no Jurisdiction to entertain the appeals. The Civil Judge allowed the anneals and dismissed the application for restitution. Because of this decision. the appellant did not proceed with the pending revision petitions 'before the Board of Revenue and there the petitions were dismissed. The respondent filed second appeals in the High Court against the appellate orders of the civil court, without taking the plea that the civil court 'had no Jurisdiction to entertain the anneals. but later on he took the plea by adding a new ground. The High Court held that the appeals lay to the revenue court and the respondent was not estopped from raising the contention. In appeals to this Court the appellant contended that the anneals lay to the civil court and not for the revenue court and in the circumstances of this case, and in view of section 289(2) of the U.P. Tenancy Act. the respondent was precluded from raising the objection that the appeals did not lie to the civil court. Allowing the appeals this Court. HELD : In this case the doctrine of approbate and reprobate could not be pressed into service to preclude the respondent from raising the objection that the appeals did not lie to the civil court as the court in which the proceeding were originally filed suo motu raised the objection. 232 But the effect of upholding his objection would be that the, appellant would be deprived of his right of appeal altogether, and section 289(2) of the U.P, Tenancy Act is intended to prevent such grave miscarriage of justice. [237 F] Section 289(2) applies whenever any suit, application or appeal having been rejected either by the civil court or revenue court on account of want of jurisdiction is subsequently filed in the court of the other description and the latter court disagrees with the finding of the former. In such a case,, a reference to the High Court is compulsory and the conflict of opinion is resolved by a decision of the High Court which is binding on all courts. A court subordinate to the Collector cannot make the reference without the previous sanction of the Collector under section 289(3). It is implicit in section 289(3) that if the Collector refuses to give the sanction, the case will proceed as if there is no disagreement with the finding of the former court. [237 H] In a case falling within section 289(2), only the court in which the proceeding is subsequently instituted can disagree with the finding of the former court on the question of jurisdiction. If it so disagrees, it must refer the matter to the High Court; and only the High Court on such a reference can override the finding. No other court can disagree with the finding and make the reference. If no such reference is made, the finding of the former court on the question of jurisdiction becomes final and conclusive; and the objection that it is erroneous cannot be entertained by the appellate or revisional court or any other court. [238 D] Having regard to the circumstances of this case, it was not open to the respondent to raise the objection in the High Court that the civil court was not competent to hear the appeals. In view of the fact that no reference under section 289(2) was made, the finding of the revenue court that the civil court was competent to entertain the appeals could not be challenged in the High Court. The case must be decided on the footing that the Civil Judge was competent to entertain the appeals. [238 F] On the merits the respondent had no case. The Civil Judge found that the appellant was in possession of the lands on the dates of the institution of the suits. The High Court agreed with this finding. No ground has been made for setting aside this concurrent finding of fact. The appel lant did not obtain possession of the lands by executing the decrees passed in the two suits. Even assuming that the suits had abated and the decrees passed therein had been set aside or reversed, no case for restitution of the lands under section 144 of the Code of Civil Procedure was made out. The applications under section 144 C.P.C., were rightly rejected. Nathan vs Harbans Singh, A.I.R. 1930 All. 264, Mohammad Mehdi Khan vs Mussammat Sharatunnissa, 3 Oudh Cases 32, 35 37, Mahadeo Singh vs Pudal Singh, A.I.R. 1931 Oudh 123 and Saira Bibi vs Chandrapal Singh, I.L.R. 4 Luck. 150, 166, referred to.

ivil Appeal No. 2589 of 1979. From the Judgement and Order dated 8.8.1977 of the Bombay High Court in Special Civil Application No. 983 of 1972. V.M. Tarkunde, Ms. section Janani and Mrs. Urmila Kapoor for the Appellant. S.B. Bhasme, U.R. Lalit, D.N. Misra, R.A. Gupta and Ms. Shefali Khanna for the Respondents. The Judgement of the Court was delivered by THOMMEN. This appeal arises from the judgement of the Bombay High Court in Special Civil Application No. 983 of 1972 setting 834 aside the order made by the appellate officer, (the Principal Judge of the City Civil Court, Bombay) under section 105F of the Bombay Municipal Corporation Act, 1888 ( 'The Act ' whereby he allowed the appellant 's appeal against the order of eviction made against it under section 105B of the Act by the enquiry officer, acting in terms of section 68 of the Act as a delegate of the Commissioner of the Municipal Corporation of Greater Bombay, the first respondent, ("the Corporation"). By the impugned judgement, the High Court has confirmed the order of eviction made against the appellant, the principal occupant of two godowns belonging to the Corporation. the original occupant of the godowns, Glenfield & Co., had on 1.10.1963 granted to the appellant a licence in respect of these premises and subsequently by a deed of assignment dated 13.8.1966 assigned all its rights, title and interest in the premises in favour of the appellant. The appellant thereafter requested the Corporation on the ground that Ghatge & Patil (Transport) Pvt. Ltd., the second respondent, had been already in occupation of the premises, and after satisfying itself as to those terms, the Corporation transferred the occupancy right from Glenfield & Co. to the appellant on the appellant executing a formal agreement dated 17.6.1967. The Corporation was thus fully aware of the terms and conditions of occupation of the premises by the second respondent, and, with the full knowledge of those terms, the appellant was recorded in the Corporation 's book as the principal occupant in the place of Glenfield & Co. the second respondent was thus understood and accepted by the Corporation to be in occupation of the premises under the appellant. All this was in 1967. A notice dated 25.7.1969 terminating tenancy purporatedly in terms of the agreement dated 17.6.1967 was served on the appellant. This was followed by an enquiry under the Act which commenced in 1970 and resulted in the order of eviction dated 6.1.1971. The order of eviction refers to the appellant as the principal tenant and the second respondent as a sub tenant. The enquiry officer, acting as a delegate in terms of section 68 and exercising the power of Commissioner 835 under section 105B, ordered eviction of the appellant on the ground of sub letting the premises. She held that the appellant had sub let the premises contrary to the terms or conditions of occupation and had thus become an unauthorised occupant liable be evicted from the premises. The enquiry officer, on inspection, found that that the second respondent was in occupation of the premises as sub lessee. She noticed the terms and conditions of the agreement dated 27.3.1964 under which the premises had been allowed to be occupied by the second respondent. She concluded that the appellant had, by reason of sub letting contrary to the terms or conditions of occupation, become liable to be evicted in terms of section 105B. Accordingly, she passed an order of eviction against the appellant. This order was, on appeal, set aside by the appellate officer. On appreciation of the evidence on record, including the terms of the relevant agreements, the appellate officer held that the agreement dated 27.3.1964, under which the second respondent occupied the premises, had been well known to the Corporation, and the Corporation, having satisfied itself as to the full implication and significance of that occupation, approved and recorded the assignment and transfer of the right, title and interest of Glenfied & Co. to the appellant, and recognised the appellant as the principal occupant. The Corporation was thus at all material times aware of the appellant 's relationship with the second respondent and the occupation of the premises by the second respondent under the appellant. Accordingly the appellate officer held that, in the absence of any material to show that the relationship between the appellant and the second respondent had so altered since the appellant 's agreement with the Corporation as to violate the terms or conditions of occupation, the eviction of the appellant solely on the ground of sub letting was unwarranted. The reasoning of the appellate officer thus appears to be that the Corporation having allowed the transfer of the occupancy right of Glenfield & Co. to the appellant with the full knowledge of the terms and conditions under which the second respondent was already let into the premises by the appellant, whatever be the nature of their relationship whether it be a lease or licence the Corporation was estopped from now contending that the alleged sub letting was contrary to the terms or conditions of the appellant 's occupation of the premises and that the appellant had for that reason become liable to be evicted. 836 This is what the appellate officer stated on the point: ". There is no allegation that after the tenancy was transferred in the name of the applicant,with the full knowledge and consent of the Municipal Corporation as to the terms and conditions on which the premises were occupied by the 2nd respondent, there has been any change in the nature of the 2nd respondent 's occupation of the part of the premises and also in the terms and conditions of the occupation. Although the subsequent agreement was entered into between the appellants and the 2nd respondent, it was on the same terms and conditions as the first agreement which was produced before the ward officer before the transfer of tenancy in favour of the appellants . . In this case, therefore, even if the agreement between the appellants and the 2nd respondent is interpreted as a sub tenancy agreement and under the said agreement the appellants are said to have sublet the premises to the 2nd respondent, the said subletting was prior to the transfer to tenancy in favour of the appellants and was with the full knowledge and consent of the Municipal Corporation: and, therefore, that cannot be considered to be subletting in breach of the agreement of tenancy so as to enable the Municipal Corporation to evict the appellants on that ground. " This is essentially a finding of fact. The order of the appellate officer is final and is not ordinarily liable to be called in question (see section 105G). Nevertheless, this finding was set aside by the High Court by the impugned judgment in exercise of its jurisdiction under Article 227 of the Constitution. The High Court held: ". Even otherwise, in our view, respondent No.1 was liable to be evicted under section 105B(1) clause (a) subclause (ii). We are unable to agree with the finding given by the learned Principal Judge that no change in the circumstances under which the tenancy had been transferred in the name of respondent No. 1 has taken place after the grant of the lease and, therefore, the Corporation would be stopped from alleging that respondent No. 1 had sublet the premises. " The High Court thus held that the appellate officer was wrong in 837 saying that the circumstances had not altered so as to warrant an order of eviction on the ground or sub lease. The High Court also held that the lease in favour of the appellant had been duly determined by the Corporation in terms of the contract, and the appellant having thus become an "unauthorised" occupant was as such liable to be evicted under clause (b) of sub section (1) of section 105B. The High Court stated: ". . if a tenancy is terminated in accordance with terms of the tenancy agreement, it must be held to be duly terminated. Such a person was liable to be evicted under the provisions of section 105B(1) of the Act. " The Corporation has indeed the power to order eviction on the ground of sub letting which is contrary to the terms or conditions of occupation. But it cannot be gainsaid that, when by specific agreement dated 17.6.1967 the Corporation recognised the assignment of all rights, title and interest made by Glenfield & Co. on 13.8.1966 in favour of the appellant in respect of the premises in question, and thus treated the appellant as the principal occupant, the Corporation was fully aware of the terms and conditions of the agreement dated 27.3.1964 under which the second respondent was already in occupation of the premises. Nevertheless, the Corporation entered into the agreement dated 17.6.1967 accepting the appellant as the principal occupant in the place of Glenfield & Co. In the absence of any evidence to show that the relationship between the appellant and the second respondent has since altered so as to violate the terms of the agreement of occupation dated 17.6.1967. It is not open to the Corporation to order eviction of the appellant on the ground of sub letting which is alleged to be contrary to the terms or conditions of occupation. The High Court, in our view, wrongly reversed the finding of fact on that question by the appellate officer. Whether the circumstances had changed or not was a question then is, whether, as found by the High Court,it is open to the Corporation to have recourse to clause (b) of sub section (1) of section 105B to order eviction of the appellant as an unauthorised occupant. Is clause (b) attracted where eviction is sought to be made by determination of authority otherwise than in terms of the statute? Mr. V.M. Tarkunde, appearing for the appellant, submits that the appellate officer having found that the Corporation was, when it 838 entered into an agreement of occupation with the appellant on 17.6.1967, fully aware of the terms and conditions under which the second respondent was in occupation of the premises in question under the appellant, the High Court was not justified in upholding the eviction of the appellant on the very same ground. The application of clause (b) of sub section (1) of section 105B, counsel says, is confined to persons in unauthorised occupation. Persons in occupation of premises under authority are not liable to be evicted otherwise than on any one of the statutorily specified grounds. Mr. S.B. Bhasme, appearing for the Corporation, submits that in view of the finding that the sub lease granted or renewed by the appellant was contrary to clause (6) of its agreement dated 17.6.1967 which provided. ". .I agree that this godown will not be assigned or sub let or allowed to be occupied by any person and if it or any part of it is assigned or sub let to any other party, I will be liable to be ejected immediately". and also in view of clause (2) of the said agreement which reads: "Each party may terminate the tenancy at the end of any English Calendar month by giving to the other party one month 's notice in writing". the appellant has, after the expiry of the period stipulated in the notice dated 25.7.1969, become an unauthorised occupant, and is liable to be evicted in terms of clause (b) of sub section (1) of section 105B of the Act. According to Mr. Bhasme, the agreement under which the appellant occupied the premises has expired or has been duly determined by order of the competent authority. Further continuance by the appellant is an unauthorised occupation so as to attract the provisions of section 105B. Apart from the grounds mentioned in sub clauses (i), (ii), (iii) and (iv) of clause (a) of sub section (1) of section 105B, the Corporation is also empowered under clause (b) of sub section (1) of that section to evict any person whose authority to occupy has expired or has been duly determined and who thereafter remains in occupation of the premises. The authority to occupy, he says, is duly determined even if the determination is sought to be founded on the ground of sub letting contrary to the terms and 839 conditions of occupation, or on any other ground specified in clause (a) or clause (c) of sub section (1) 105B, and that ground is subsequently held to be not proved and the order of eviction on that ground is accordingly found to be invalid. This invalidity, according to counsel, is only as far as it related to the alleged ground. Nevertheless, he says, such order determining authority to occupy is sufficiently efficacious to make further occupation 'unauthorised ', so as to attract clause (b) of sub section (1), provided the determination of authority can otherwise be justified in terms of the agreement of occupation. In such circumstances, he says, clause (b) of sub section (1) is a potent weapon in the hands of the Corporation. We shall now examine the relevant provisions. Section 105A to section 105H of chapter VA were inserted in the Act in 1961 so as to provide for speedy eviction of persons in 'unauthorised occupation of Corporation premises. Section 105A (d) defines 'unauthorised occupation ' in the following words: "(d) 'unauthorised occupation in relation to any corporation premises; means the occupation by any person of corporation premises without authority for such occupation; and includes the continuance in occupation by any person of the premises after the authority under which he was allowed to occupy the premises has expired, or has been duly determined. " The definition shows that occupation of Corporation premises without authority for such occupation is an unauthorised occupation. Such occupation includes continuance in occupation by a person after the authority under which he occupied the premises has "expired" or it has been "duly determined". The definition thus includes not only a trespasser whose initial and continued occupation has never been under any valid authority, but it also includes in equal measure a person whose occupation at its commencement was under authority, but such authority has since expired, or, has been duly determined Which means validly determined. The expiry of authority to occupy occurs by reason of the terms or conditions of occupation. On the other hand, the determination of authority to occupy to be due or valid must be founded on one of the grounds specified by the statute. Any order of eviction on the ground of either "expiry" or "due determination" has to be made in accordance with the procedure prescribed by the statute. 840 Section 105B, in so far as it is material, reads: "section 105B (1) Where the Commissioner is satisfied (a) that the person authorised to occupy any corporation premises has, whether before or after the commencement of the Bombay Municipal Corporation (Amendment) Act, 1960, (i) not paid for a period of more than two months, the rent or taxes lawfully due from him in respect of such premises; or (ii) sub let, contrary to the terms or conditions of his occupation, the whole or any part of such premises; or (iii) committed, or is committing, such acts of waste as are likely to diminish materially the value, or impair substantially the utility, of the premises; or (iv) otherwise acted in contravention of any of the terms, expreses or implied, under which he is authorised to occupy such premises; (b) that any person is in authorised occupation of any corporation premises; (c) that any corporation premises in the occupation of any person are required by the corporation in the public interest. the Commissioner may notwithstanding anything contained in any law for the time being in force, by notice (served by post, or by affixing a copy of it on the outer door or some other conspicuous part of such premises, or in such other manner as may be provided for by regulations), order that that person, as well as any other person who may be in occupation of the whole or any part of the premises, shall vacate them within one month of the date of the service of the notice. (2) before an order under sub section (1) is made against 841 any person, the Commissioner shall issue, in the manner hereinafter provided, notice in writing calling upon all persons concerned to show cause why an order of eviction should not be made. The notice shall, (a) specify the grounds on which the order of eviction is proposed to be made, and (b) require all persons concerned that is to say, all persons who are or may be in occupation of, or claim interest in, the corporation premises, to show cause against the proposed order, on or before such date as is specified in the notice. . . . . (3) If any person refuses or fails to comply with an order made under sub section (1), the Commissioner may evict that person and any other person who obstructs him and take possession of the premises; and may for that purpose use such force as may be necessary." (emphasis supplied) Clause (a) of sub section (1) of this section contains various grounds upon which a person is liable to be evicted. Clause (b) says that unauthorised occupation itself is a ground for eviction. Clause (c) provides that requirement in the public interest is a ground for eviction. Sub section (2) speaks of show cause notice before an order of eviction by notice is made under sub section (1). Sub section (3) has conferred sufficient power on the Commissioner to enforce an order of eviction made by him under sub section (1). For the purpose of holding an enquiry under the Act, the commissioner is invested with all the powers of a Civil Court (section 105E). An appeal lies from every order of the Commissioner under section 105B or section 105C to the appellate officer, namely, the Principal Judge of the City Civil Court of Bombay (section 105F), whose orders are final and not liable to be "called in question in any original suit, application or execution proceeding" (section 105G). The satisfaction of the Commissioner, which is the condition precedent to the exercise of power of eviction by the summary procedure 842 prescribed by the Act, may be in respect of any of the circumstances falling under clauses (a), (b) or (c) of sub section (1) of section 105B. Clause (a) contemplates eviction of any person on any one of the grounds mentioned in sub clauses (i) to (iv) thereof. These grounds relate only to a person in authorised occupation of Corporation premises. They have no application to a trespasser. This is clear from the grounds themselves as well as from the wording of clause (a) which reads "that the person authorised to occupy. ". Likewise, clause (c) presumably applied to authorised occupation of Corporation premises, which the Commissioner is empowered to terminate by ordering eviction of the occupant otherwise than on any of the grounds specified under clause (a), provided the Commissioner is satisfied that the premises in question are required by the Corporation in the public interest. All that the Commissioner has to satisfy himself in a case falling under clause (c) is as regards the public interest requiring eviction. Construction of parks, playgrounds, hospitals, colleges, markets, destitute homes and the like will indeed qualify for invoking the Commissioner 's power under clause (c), Clause (b), on the other hand, is a powerful weapon for eviction of an unauthorised occupant. This clause is applicable equally to a trespasser as it is to a person whose occupation has ceased to be an authorised occupation by reason of expiry of authority in terms thereof or due determination of authority under clause (a) or clause (c) of sub section (1) of section 105B. If a person is in occupation without authority, as in the case of a trespasser, or if the authority under which a person has been in occupation has expired in terms thereof and he continues to remain in occupation of the premises, he will be liable to be evicted on the ground mentioned in clause (b) of sub section (1) of section 105B, but in accordance with the procedure laid down in that section and on the satisfaction of the Commissioner, expressed by an order, as to the lack or expiry of authority. It must however, be remembered that, except in the case of a trespasser or a person remaining in occupation even after the expiry of the period of authority, clause (b) can be invoked only where the Commissioner is satisfied and has so found be an order that any one of the grounds falling under clause (a) or clause (c) of sub section (i) for determination of authority has been established. In the absence of such a valid order invoking clause (a) or clause (c), a person in occupation under authority, which has not expired, is not liable to be evicted under section 105B. We do not accept Mr. Bhasme 's argument to the contrary on this point. It is not the case of the Corporation that the authority under 843 which the appellant has been in occupation has expired in terms thereof. That was not the basis upon which the enquiry was conducted and the order of eviction was made. If that was the ground and that ground was rightly invoked, the position might well be different. The specific ground upon which eviction was sought, as seen in the order of the enquiry officer and as categorically found by the High Court, was one of sub letting contrary to the terms or conditions of occupation. No other ground, as the High Court says, was relied upon by the Corporation. In the circumstances, the Commissioner (or his delegate) must be understood to have restricted the scope of the enquiry to the ground falling under clause (a) (ii) of sub section (1) of section 105B for the purpose of invoking the summary power of eviction vested in him under the statute. Sub letting as such, without more, is not a ground for eviction under clause (a) (ii). What attracts eviction in terms of that provision is sub letting which is contrary to the terms or conditions or occupation. The appellate officer has found that the occupation of the premises by the second respondent under the appellant was well known to the Corporation; the terms and conditions of that occupation were closely scrutinised by the Corporation before recognising the transfer of rights and interest from the previous principal occupant to the appellant; and, it was on that basis and with that knowledge that the Corporation authorised the occupation of the premises by the appellant in terms of the agreement dated 17.6.1967. In such circumstances, whatever right of occupation which the second respondent enjoyed under the appellant must be deemed to have been incorporated as a term of the authority granted by the Corporation in favour of the appellant. The appellate officer has categorically found that there was no evidence whatsoever to indicate that the circumstances in which the premises had been occupied by the second respondent had in any manner, or at any time, altered so as to affect the terms or conditions under which the appellant was recognised as the principal occupant. The Corporation is, accordingly on the facts found, stopped from having recourse to the ground falling under clause (a) (ii) of sub section (1) of section 105B. As stated by the High Court, this was the only ground on which eviction was sought, and that ground, as found by the appellate officer, has not been established. In proceedings under Article 227 of the Constitution, the High Court was not, in our view, justified in interfering with the finding of 844 fact rendered against the Corporation by the appellate officer. Accordingly, we set aside the impugned judgement of the High Court and restore the order of the appellate officer. This appeal is allowed in terms of what is stated above. The parties shall, however, bear their respective costs. N.V.K. Appeal allowed.

The original occupant of the suit godowns had on 1.10.1963 granted to the appellant a licence in respect of the premises and subsequently by a deed of assignment dated 13.8.1966 assigned all its rights, title and interest in the premises in favour of the appellant. The appellant had in the meantime by agreement dated 27.3.1964 permitted the second respondent to store goods in the premises. The appellant thereafter requested the Corporation to recognise it as the principal occupant of the premises by means of a formal agreement. This request was at first rejected by the Corporation on the ground that the second respondent, had been already in occupation of the premises. Subsequently the Corporation examined the terms and conditions of the agreement dated 27.3.1964 and after satisfying itself the Corporation transferred the occupancy right to the appellant on the appellant executing a formal agreement dated 17.6.1967. A notice dated 25.7.1969 terminating tenancy in terms of the agreement dated 17.6.1969 was served on the appellant. This was followed by an enquiry under the Bombay Municipal Corporation Act 1888 which resulted in the order of eviction dated 6.1.1971, the appellant being the principal tenant and the second respondent as a sub tenant. The enquiry officer, acting as a delegate in terms of section 68 and exercising the power of Commissioner of the Municipal Corporation of Greater Bombay, the first respondent under section 195B, ordered eviction of the appellant on the ground of sub letting the premises. The enquiry officer, on inspection, found that the second respondent was in occupation of the premises as a sub lessee that the appellant 830 had sub let the premises contrary to the terms of the conditions of occupation and had thus become an unauthorised occupant liable to be evicted from the premises in terms of section 105B, and passed an order of eviction against the appellant. This order was, on appeal, set aside by the appellate officer, on appreciation of the evidence and the terms of the agreements, the appellate officer held that the agreement dated 27.3.1964, approved and recorded the assignment and transfer of the right, title and interest of the original occupant to the appellant, and recognised the appellant as the principal occupant, and that the Corporation was at all material times aware of the appellant 's relationship with the second respondent and the occupation of the premises by the second respondent under the appellant. The eviction of the appellant solely on the ground of sub letting was therefore unwarranted. The High Court in exercise of its jurisdiction under Article 227 of the Constitution held that the appellate officer was wrong in saying that the circumstances had not altered so as to warrant an order of eviction on the ground of sub lease, and that the lease in favour of the appellant had been duly determined by the Corporation in terms of the contract, and the appellant having thus become an "unauthorised" occupant was as such liable to be evicted under clause (b) of sub section (1) of section 105B. The High Court accordingly set aside the order made by the appellate officer under section 105B and restored the order of eviction made under section 105B by the Enquiry Officer. In the appeal to this Court it was submitted on behalf of the appellant that persons in occupation of premises under authority are not liable to be evicted otherwise than on any one of the statutorily specified grounds, and that the application of clause (b) of sub section (1) of section 105B, is confined to persons in unauthorised occupation, and that the appellate officer having found that the Corporation when it entered into an agreement of occupation with the appellant on 17.6.1967 fully aware of the terms and conditions under which the second respondent was in occupation of the premises under the appellant, the High Court was not justified in upholding the eviction of the appellant on the very same ground. On behalf of the respondent No. 1 Corporation it was submitted that in view of the finding that the sub lease granted or renewed by the appellant was contrary to clauses (6) and (2) of the agreement dated 17.6.1967 the appellant has, after the expiry of the period stipulated in 831 the notice dated 25.7.1969, become an unauthorised occupant, and is liable to be evicted in terms of clause (b) of sub section (1) of section 105B. On the question: whether it is open to the Corporation to have recourse to clause (b) of sub section (1) of section 105B to order eviction of the appellant as an unauthorised occupant, and whether clause (b) is attracted where eviction is sought to be made by determination of authority otherwise than in terms of the statute. Allowing the appeal, the Court, HELD: 1. Section 105A to section 105H of Chapter VA were inserted in the Act in 1961 to provide for speedy eviction of persons in unauthorised occupation of Corporation premises. (839C) Section 105A(d) defines 'unauthorised occupation '. This definition shows that occupation of Corporation premises without authority for such occupation is an unauthorised occupation. Such occupation includes continuance in occupation by a person after the authority under which he occupied the premises has "expired" or it has been "duly determined". the definition thus includes not only a trespasser whose initial and continued occupation has never been under any valid authority, but it also includes in equal measure a person whose occupation at its commencement was under authority, but such authority has since expired, or, has been duly determined Which means validly determined. The expiry of authority to occupy occurs by reason of the terms or conditions of occupation. On the other hand, the determination of authority to occupy to be due or valid must be founded on one of the grounds specified by the statute. Any order of eviction on the ground of either "expiry" or due determination" has to be made in accordance with the procedure prescribed by the statute. [839D H] 3. Clause (a) of sub section (1) of section 105B contains various grounds upon which a person is liable to be evicted. Clause (b) says that unauthorised occupation itself is a ground for eviction. Sub section (2) speaks of show cause notice before an order of eviction by notice is made under sub section (1). Sub section (3) has conferred sufficient power on the Commissioner to enforce an order of eviction made by him under sub section (1). For the purpose of holding an enquiry under the Act, the Commissioner is invested with all the powers of a Civil Court (Section 105E) An appeal lies from every order of the Commissioner 832 under section 105B or section 105C to the appellate officer, namely the Principal Judge of the City Civil Court of Bombay (section 105F), whose orders are final and not liable to be "called in question in any original suit, application or execution proceeding" (Section 105G). [841E G] 4. The satisfaction of the Commissioner, which is the condition precedent to the exercise of power of eviction by the summary procedure prescribed by the Act, may be in respect of any of the circumstances falling under clauses (a), (b) or (c) of sub section (1) of section 105B. Clause (a) contemplates eviction of any person on any one of the grounds mentioned in sub clauses (i) to (iv) thereof. These grounds relate only to a person in authorised occupation of Corporation premises. They have no application to a trespasser. [841H 842B] 5. Likewise, clause (c) presumably applies to authorised occupation of Corporation premises, which the Commissioner is empowered to terminate by ordering eviction of the occupant otherwise than on any of the grounds specified under clause (a), provided the Commissioner is satisfied that the premises in question are required by the Corporation in the public interest. All that the Commissioner has to satisfy himself in a case falling under clause (c) is as regards the public interest requiring eviction. Construction of parks, playgrounds, hospitals, colleges, markets, destitute homes and the like will indeed qualify for invoking the Commissioner 's power under clause (c). [842C] 6. Clause (b) is a powerful weapon for eviction of an unauthorised occupant. This clause is applicable equally to a trespasser as it is to a person whose occupation has ceased to be an authorised occupation by reason of expiry of authority in terms thereof or due determination of authority under clause (a) or clause (c) of sub section (1) of section 105B. [842D] 7. If a person is in occupation without authority, as in the case of a trespasser, or if the authority under which a person has been in occupation has expired in terms thereof and he continues to remain in occupation of the premises, he will be liable to be evicted on the ground mentioned in clause (b) of sub section (1) of section 105B, but in accordance with the procedure laid down in that section and on the satisfaction of the Commissioner, expressed by an order, as to the lack or expiry of authority. [842E F] 8. Sub letting as such, without more, is not a ground for eviction 833 under clause (a) (ii). What attracts eviction in terms of that provision is sub letting which is contrary to the terms or conditions of occupation. [843C] In the instant case, the appellate officer has found that the occupation of the premises by the second respondent under the appellant was well known to the Corporation; the terms and conditions of that occupation were closely scrutinised by the Corporation before recognising the transfer of rights and interest from the previous principal occupant to the appellant; and, it was on that basis and with that knowledge that the Corporation authorised the occupation of the premises by the appellant in terms of the agreement dated 17.6.1967. In such circumstances, whatever right of occupation which the second respondent enjoyed under the appellant must be deemed to have been incorporated as a term of the authority granted by the Corporation in favour of the appellant. The appellate officer has categorically found that there was no evidence whatsoever to indicate that the circumstances in which the premises had been occupied by the second respondent had in any manner, or at any time, altered so as to affect the terms or conditions under which the appellant was recognised as the principal occupant. The Corporation is, accordingly on the facts found, estopped from having recourse to the ground falling under clause (a) (ii) of sub section (1) of section 105B. [843D G] 9. In proceedings under Article 227 of the Constitution, the high Court was not justified in interfering with the findings of fact rendered against the Corporation by the appellate officer. [843H 844A]

172 of 1956. Under Article 32 of the Constitution for a writ in the nature of Habeas Corpus. section N. Andely, amicus curiae, for the petitioner. Porus A. Mehta, T. M. Sen and R. H. Dhebar, for the respondent. November 1. The Judgment of the Court was delivered by JAGANNADHADAS J. This is an application under article 32 of the Constitution for the issue of a writ in the nature of habeas corpus against the State of, Jammu and Kashmir by the petitioner who was under detention by virtue of an order dated the 5th September, 1956, issued by the Government of the State of Jammu and Kashmir under sub section (2) of sec tion 3 taken with sub section (1) of section 12 of Jammu and Kashmir Preventive Detention Act, 2011 (hereinafter referred to as the Act). The petitioner was first placed under detention by virtue of an order passed by the District Magistrate, Jammu, under subsection (2) of section 3 of the Act on the 1st May, 1956, and that order was confirmed and continued on the 5th September, 1956, under sub section (1) of section 12 of the Act by the Government after taking the opinion of the Advisory Board. The two orders of detention, one of the District Magistrate dated the 1st May, 1956, and the other of the Government dated the 5th September, 1956, recited that the petitioner is directed to be detained because it was, necessary to make such an order "with a view to preventing him 950 from acting in a manner prejudicial to the maintenance of supplies and services essential to the community". The grounds of detention as communicated to the petitioner on the 31st May, 1956, by the District Magistrate, Jammu, are as follows: "1. That you carried on smuggling of essential goods to Pakistan through the Ferozpur and Amritsar border, but since the tightening of said borders you have recently shifted your smuggling activities to Ranbirsinghpura Pakistan borders in the State of Jammu and Kashmir and are carrying on illicit smuggling of essential goods such as cloth, zari and mercury to Pakistan through this border (thus affecting the economic condition of the public in Kashmir State adversely). That for the said purpose of smuggling of goods to Pakistan you went to village Darsoopura on 7th April, 1956, and contacted Ghulam Ahmed son of Suraj bin resident of Darsoopura Tehsil Ranbirsinghpura and one Ram Lal son of Frangi resident of Miran Sahib Tehsil Ranbirsinghpura and others who I similarly are addicted to carrying on such a smuggling business and with their aid made arrangements for export of Shaffon cloth worth Rs. 2,500 to Pakistan through Ranbirsinghpura Pakistan border. That on 11 4 1956, you booked 3 bales of silk cloth through Messrs Jaigopal Rajkumar Shegal of Amritsar to Jammu Tawi and got these bales on address of yourself, and on the same day you got one package of Tila booked through section Kanti Lal Zarianwalla of Amritsar and got this package also addressed "To self" for Jammu Tawi. That after booking these packages as aforesaid you came over to Jammu and waited for their arrival and contacted Ghulam Ahmed and Ram Lal the above mentioned persons. That on the 15th April, 1956, you tried to get the transport receipt from the Punjab National. Bank but did not succeed in doing so as it was a public holiday. Meanwhile your activities leaked out and the goods 951 were seized by the Central Customs and Excise Department of India. 2.There are other facts also but those cannot be given as I consider their disclosure would be against the public interest. That by resorting to the above activities you have been and are acting in a manner prejudicial to the maintenance of the supplies and services essential to the community". It will be seen from the above grounds that the reason for the detention is the alleged "illicit smuggling of essential goods such as cloth, zari and mercury to Pakistan through the border, thereby affecting the economic condition of the public, in Kashmir State adversely". From the particulars set out in paragraph 2 of the grounds, it appears that the cloth referred to in paragraph I is Shaffon cloth. The High Court of Jammu and Kashmir, to whom a similar application was filed by this petitioner along with a number of others similarly detained for illicit smuggling of goods, has in its judgment dated the 21st June, 1956" held that Shaffon cloth is not within the category of an essential commodity as defined in the Essential Supplies (Temporary Powers) Ordinance of Jammu and Kashmir. There is no indication in the High Court judgment whether zari is or is not an essential commodity in the same sense. But in answer to a query from this Court, Shri Porus Mehta who appeared before us on behalf of the State of Jammu and Kashmir has stated, on instructions, that zari which is obviously a luxury article is not one of the commodities declared essential under the above Ordinance. The High Court, when it dealt with the batch of applications, of which the application of the petitioner before us was one, set aside the detention of number of others on the ground that the smuggling attributed to the individuals concerned in those cases was not of essential goods. So far as this petitioner is concerned the High Court held as follows: "The case of Dwarika Das Bhatia stands on s 952 different footing altogether. The allegation against him is that he smuggled into Pakistan some goods such as cloth and zari along with a certain quantity of mercury. Mercury is a non ferrous metal and according to the definition of an essential commodity given in the Essential Supplies (Temporary Powers) Ordinance, mercury is an essential commodity. This being so, Dwarika Das Bhatia 's detention cannot be challenged". The point raised before us is that since the detention is based on the assumption that Shaffon cloth and zari as well as mercury are all essential goods and since two out of the three categories of the goods with reference to the smuggling of which the detention has been directed, are found not to be essential goods, the entire order is illegal, although one of the items, viz., mercury is an essential commodity. In support of this contention, the cases of this Court in Dr. Ram Krishan Bhardwaj vs The,, State of Delhi(1), and Shibban Lal Saksena vs The State of U. P. (2) are relied upon. Learned counsel for the State of Jammu and Kashmir contends that the principle of these decisions has no application to the present case, and attempts to distinguish the same. In order to understand the principle underlying these two cases, it is necessary to examine them in some detail. In Dr. Ram Krishan Bhardwaj 's case (supra) the two points that were raised were (1) whether an order of detention is invalid if the grounds supplied in support thereof are vague, and (2) whether the vagueness of one or some of the various grounds vitiates the entire order. The argument advanced in that case was based on the view adopted by this Court in the decision in Atma Ram Sridhar Vaidya 's case(3), viz., that the obligation cast on the detaining authority to supply grounds is for the purpose of enabling a detenue to make a fair representation to the authority concerned and to the Advisory Board, against the order of detention. The argument was that in a (1) ; (2) ; (3)[1951] S C.R. 167. 953 case where one or more of the grounds are vague, the petitioner is handicapped in making an adequate representation as regards that ground and his representation even if effective in respect of the other grounds, may fail to carry conviction as regards the ground which is vague and that this might result in the detention being confirmed. The Court stated that that argument was not without force and held as follows: "The question however is not whether the petitioner will in fact be prejudicially affected in the matter of securing his release by his representation, but whether his constitutional safeguard has been infringed. Preventive detention is a serious invasion of personal liberty and such meager safeguards as the Constitution has provided against the improper exercise of the power must be jealously watched and enforced by the Court. . We are Of opinion that this constitutional requirement must be satisfied with respect to each of the grounds communicated to the person detained, subject of course to a claim of the privilege under clause (6) of article 22. That not having been done in regard to the ground mentioned. . the petitioner 's detention cannot be held to be in accordance with the procedure established by law within the meaning of article 21". Shibban Lal Saksena vs The State of U. P. (supra) is a case where the question arose in a different form. The grounds of detention communicated to the detenue were of two fold character, i.e., fell under two different categories, viz., (1) prejudicial to maintenance of supplies essential to community, and (2) injurious to maintenance of public order. When the matter was referred to the Advisory Board, it held that the first of the above grounds was not made out as a fact but upheld the order on the second ground. The question before the court was whether this confirmation of the original order of detention, when one of the two grounds was found to be non existent by the Advisory Board, could be maintained. Their Lordships dealt with the matter as follows: 124 954 "It has been repeatedly held by this court that the power to issue a detention order under section 3 of the Preventive Detention Act depends entirely upon the satisfaction of the appropriate authority specified in that section. The sufficiency Of the grounds upon which such satisfaction purports to be based, provided they have a rational probative value and are not extraneous to the scope or purpose of the legislative provision cannot be challenged in a court of law, except on the ground of mala fides. A Court of law is not even competent to enquire into the truth or otherwise of the facts which are mentioned as grounds of detention in the communication to the detenue under section 7 of the Act." Posing the situation which arises in such cases where one of the grounds is found to be irrelevant or un.substantiated, the Court stated as follows: "The question is, whether in such circumstances the original order made under section 3(1) (a) of the Act can be allowed to stand. The answer, in our opinion, can only be in the negative. The detaining authority gave here two grounds for detaining the petitioner. We can neither decide whether these grounds are good or bad nor can we attempt to assess in what manner and to what extent each of these grounds operated on the mind of the appropriate authority and contributed to the creation of the satisfaction on the basis of which the detention order was made. To say that the other ground, which still remains, is quite sufficient to sustain the order, would be to substitute an objective judicial test for the subjective decision of the executive authority which is against the legislative policy underlying the statute. In such cases, we think, the position would be the same as if one of these two grounds was irrelevant for the purpose of the Act or was wholly illusory and this would vitiate the detention order as a whole. This principle, which was recognised by the Federal Court in the case of Keshav Talpade vs The King Emperor(1), seems to us to be quite sound and applicable to the facts of this case". (1) 955 In Keshav Talpade 's case(1) the learned Judges stated as follows: "If a detaining authority gives four reasons for detaining a man, without distinguishing between them, and any two or three of the reasons are held to be bad, it can never be certain to what extent the bad reasons operated on the mind of the authority or whether the detention order would have been made at all if only one or two good reasons bad been before them". The principle underlying all these decisions is this power is vested in a statutory authority to deprive the liberty of a subject on its subjective satisfaction with reference to specified matters, if that satisfaction is stated to be based on a Dumber of grounds or for a variety of reasons all taken together, and if some out of them are found to be non existent or irrelevant, the very exercise of that power is bad. That is so, because the matter being one for subjec tive satisfaction, it must be properly based. on all the reasons on which it purports to be based. If some ,out of them are found to be non existent or irrelevant, the Court cannot predicate what the subjective satisfaction of the said authority would have been on the exclusion of those grounds or reasons. To uphold the validity of such an order in spite of the invalidity of some of the reasons or grounds would be to substitute the objective standards of the Court for the subjective satisfaction of the statutory authority. In applying these principles, however, the Court must be satisfied that the vague or irrelevant grounds are such as , if excluded, might reasonably have affected the subjective satisfaction of the appropriate authority. It is not merely because some ground or reason of a comparatively unessential nature is defective that such an order based on subjective satisfaction can be held to be invalid. The Court while anxious to safeguard the personal liberty of the individual will not lightly interfere with such orders. It is in the light of these principles that the validity of the impugned order has to be judged. (1) 956 In this case, the order of detention is based on the ground that the petitioner was engaged in unlawful smuggling activities relating to three commodities, cloth, zari and mercury of which two are found not to be essential articles. No material is placed before us enabling us to say that the smuggling attributed to the petitioner was substantially only of mercury and that the smuggling as regards the other two commodities was of an inconsequential nature. On the other hand the fact that the particulars furnished to the detenue on the 31st May, 1956, relate only to cloth and zari (we understand that tila referred to in paragraph 3 is zari) indicates that probably the smuggling of these two items was not of an inconsequential nature. We are, therefore, clearly of the opinion that the order of detention in this case is bad and must be quashed. We have accordingly quashed the order and directed the release forthwith of the detenue on the conclusion of the hearing on the 29th October, 1956. Petition allowed.

The petitioner was detained by virtue of an order of detention passed by the District Magistrate, Jammu, under section 3(2) of the Jammu and Kashmir Preventive Detention Act, 2011 and that order was confirmed and continued by an order passed by the Government of the State of Jammu and Kashmir under section 12(1) of the Act after taking the opinion of the Advisory Board. The order recited that it was necessary to detain the petitioner with a view to preventing him from acting in a manner prejudicial to the maintenance of supplies and services essential to the community and was based on the ground of alleged illicit smuggling by the petitioner of essential goods such as shaff on cloth, zari and mercury to Pakistan. It was found that shaffon cloth and zari were not essential goods. It was not established that the smuggling attributed to the petitioner was substantially only of. mercury or that the smuggling as regards shaffon cloth and zari was of an inconsequential nature. Held, that the order was bad and must be quashed. The sub jective satisfaction of the detaining authority must be properly based on all the reasons on which it purports to be based. If some out of those reasons are found to be non existent or irrelevant, the Court cannot predicate what the subjective satisfaction of the authority would have been on the exclusion of those reasons. To 949 uphold the order on the remaining reasons would be to substitute the objective standards of the Court for the subjective satisfaction of the authority. The Court must, however, be satisfied that the vague or irrelevant grounds are such as, if excluded, might reasonably have affected the subjective satisfaction of the authority. Keshav Talpade vs The King Emperor ([1943] F.C.R. 88), Atma Ram Sridhar Vaidya 's case ([1951] S.C.R. 167), Dr. Ram Krishan Bhardwaj vs The State of Delhi ([1953] S.C.R. 708) and Shibban Lal Saksena vs The State of U.P. ([1954] S.C.R. 418), relied on.

Civil Appeal No. 2456 of 1987. From the Order dated 27.5.1987 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. E 2312/85 C. K.K. Venugopal, R. Narain, section Ganesh, R. Shah, R.K. Ram and D.N. Mishra for the Appellant. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. In this appeal under section 35L of the Central Excise and Salt Act, 1944 (hereinafter called 'the Act '), the question involved is whether "Decoplast" manufactured by the Asian Paints India Ltd., the appellant herein, is plastic emulsion paint 341 and, therefore, classifiable under Tariff Item 14(I)(3)(iv) of the First Schedule of the Act as plastic emulsion paint or it should be classifiable under Tariff Item No. 14(I)(v) that is as "paints not otherwise specified". The Customs Excise and Gold (Control) Appellate Tribunal (hereinafter called 'the CEGAT '), by the impugned order challenged in this appeal held that Decoplast is plastic emulsion paint. The appellant felt aggrieved thereby. In so holding the Technical Member of the Tribunal observed that in view of its composition, characteristics and uses, Decoplast should be considered as emulsion paint. The Judicial Member of the Tribunal was of the view that the Revenue had not adduced any evidence of rebuttal of the evidence adduced by the appellant as the commercial understanding but the evidence adduced by the appellant was intrinsically untrustworthy. Therefore, inspite of the affidavits and absence of evidence in rebuttal, he agreed with the other member that Decoplast is plastic emulsion paint and the appeal before the Tribunal should be dismissed. It appears that the appellants had filed revision application before the Government of India against the order of the Revenue authorities. Ultimately, the same was rejected by the Government of India. It is not necessary to set out in detail all the events. The appellant had moved the High Court of Bombay against the order of the Government of India and the High Court by its order directed as follows: "The order dated 17th December, 1979 passed by the Govt. Of India in revision in the Petitioners ' case is set aside inasmuch as the Revision Authorities have not controverted or rebutted the evidence in the form of affidavits relied on by the Petitioners to show that their product could not be regarded as a plastic emulsion paint amongst persons dealing in such products. The Revision order thus failed to follow the well established rule of interpreting entries in the Excise Tariff namely to classify products by their common parlance and trade understanding and not by their scientific or technical meaning. It is necessary that the matter be remanded to the Revision Authorities to decide the same afresh according to law. However, as the Revision Authority under the demanded Central Excise and Salt Act has been replaced by the Customs Excise and Gold (Control) Appellate Tribunal, the said Tribunal is directed to 342 hear the Petitioners ' Revision Petition and to determine the same as an appeal before it. The Tribunal shall give an opportunity to both the petitioners and the Excise Authorities to rely on any evidence and material either on record or otherwise which they may lead or produce in support of their case. The parties will be given full opportunity of affidavits if any during the hearing". In pursuance to the said order, the matter came before the Tribunal. Before the Tribunal it was contended on behalf of the appellant that the manufacture was water thinable paint but the same could not be held to be plastic emulsion paint for the product was not known in the trade as plastic emulsion paint nor was it bought and sold so. According to the appellant, the paint essentially comprised of pigment and a binder or a vehicle and that while the binder and the vehicle were interchangeable, it was stated that the binder generally referred to solid part which in this case was synthetic resin and the solvent could be water or some other diluent. There was elaborate evidence adduced before the Tribunal on behalf of the appellant. Reference was made to the specifications of plastic emulsion paint as given by ISI. It was contended on behalf of the appellant that Decoplast could not be considered as plastic emulsion paint for reasons, inter alia, as follow: i) Plastic emulsion paint comprises of one emulsion as against two contained in Decoplast; ii) In the case of plastic emulsion drying takes place by evap oration of water whereas in the case of decoplast by oxidation of alkyd; iii) Trade did not recognise decoplast as plastic emulsion paint; iv) In the literature published by them, decoplast was not described as plastic emulsion paint; v) Decoplast was substitute for cement paint; vi) Even though decoplast could be used both for interior and exterior use, it was a product inferior to plastic emulsion paint; vii) In case of plastic emulsion paint, primer had to be applied to The surface to be pained while in the case of Decoplast on 343 coating on Decoplast itself serves as a primer. A In support of appellant 's contention, affidavits had been filed by them and the same were considered in extenso by the Tribunal. Reference has also been made to the Book "Outlines of Paint Technology" by W.M. Morgan. On the other hand, on behalf of the Revenue, it was stated that it was not disputed that Decoplast is a water soluble paint and that it had got two resins in emulsion form, namely, Polymer Vinyle Acetate and copolymer alkyds. Attention was drawn to the Indian Standard Specification for plastic emulsion paint, which is as follow: "The material shall consist of pigments with suitable extenders in suitable proportions, in a medium consisting of any state synthetic polymer emulsion in water with other suitable ingredients as may be necessary to produce a material so also satisfy the requirements of this standard. " Our attention was also drawn to the definition given by ISI, which is as under: "Generally, a paint in which the medium is an 'emulsion ' or an emulsion like dispersion of an organic binder in water. Industrially the same is mainly restricted to those paints in which the medium is an 'emulsion ' of a synthetic resin. The medium may also be called a latex by analogy with a natural rubber latex, polyvinyl acetat emulsion paint is a typical example". The Tribunal addressed itself to the question whether Decoplast could be considered as plastic emulsion paint in view of (i) its composition; (ii) its characteristics; (iii) its uses; and (iv) its reputation in trade parlance. It is well settled that the commercial meaning has to be given to the expressions in Tariff items. Where definition of a word has not been given, it must be construed in its popular sense. Popular sense means that sense which people conversant with the subject matter with which the Statute is dealing, would attribute to it. See C.I.T., Andhra Pradesh vs M/s. Taj Mahal Hotel, Secunderabad, This Court observed in Indo International Industries vs Commissioner of Sales Tax, U.P., ; that in interpreting items in statutes like the Excise Act or Sales Tax Acts, whose primary object 344 was to raise revenue and for which purpose to classify diverse products, articles and substances, resort should be had, not to the scientific and technical meaning of the terms or expressions used but to their popular meaning, that is to say, the meaning attached to them by those dealing in them. Justice Cameron of the Canadian Exchequer Court in King vs Planter 's Co., [1951] CLR (exhibit) 122 and the decision of the United States Supreme Court in 'Two Hundred Chests of Tea '; , emphasised that commercial understanding in respect of the tariff items should be preferred. It was observed that the legislature does not suppose our merchants to be naturalists or geologists, or botanists. In this case the use of these two items and their composition when analysed, revealed that in essence they performed the same functions as plastic emulsion paint does, though there was some difference in them. Affidavits of traders and others had been filed. These were examined and accepted by the Technical Member and these were not rejected by the Judicial Member. The Revenue did not adduce any evidence in rebuttal. Therefore, in view of the composition, characteristics, user and how it is known in the trade, the Tribunal came to the conclusion that Decoplast was plastic emulsion paint. This is a finding of fact arrived at on relevant and valid materials. There was no misdirection in law. Therefore, there is no ground for interference with the said order. In the aforesaid view of the matter, we decline to entertain the appeal under section 35L of the Act. The appeal is, therefore, dismissed. G.N. Appeal dismissed.

% The question as to whether "Decoplast" manufactured by the appellant is plastic emulsion paint or not had been determined in the affirmative by the Revenue, and revision application before the Government of India was rejected. Thereafter the appellant moved the Bombay High Court, which directed the Customs Excise and Gold (Control) Appellate Tribunal to hear the petition and to decide the same as an appeal before it. On behalf of the appellant, elaborate evidence had been adduced before the Tribunal. Reference was made to the specifications of plastic emulsion paint and the definition as given by ISI. The Tribunal addressed itself to the question whether "Decoplast" could be considered as plastic emulsion paint having regard to (i) its composition; (ii) its characteristics; (iii) its uses and (iv) its reputation in trade parlance, and held that "Decoplast" is a plastic emulsion paint. Aggrieved by the order the appellant appealed under Section 35L of the Central Excise and Salt Act, 1944 to this Court, which. Dismissing the appeal, ^ HELD: 1.1 The commercial meaning has to be given to the expressions in Tariff items. Where definition of a word has not been given, it 340 must be construed in its popular sense. Popular sense means that sense which people conversant with the subject matter with which the statute is dealing, would attribute to it. [343G] 1.2 In the instant case the use of these two items and their composition, when analysed, revealed that in essence they performed the same functions as plastic emulsion paint does, though there was some difference in them. The affidavits of traders and others were examined by the Tribunal. The Revenue did not adduce evidence in rebuttal. Therefore, in view of the composition, characteristics, uses and how it is known in the trade, the Tribunal came to the conclusion that "Decoplast" was plastic emulsion paint. This is a finding of fact arrived at on relevant and valid materials. There was no misdirection in law. [344C E] 2. In interpreting items in statutes like the Excise Act or Sales Tax Act, resort should be had, not to the scientific and technical meaning of the terms or expressions used, but to the popular meaning, that is to say, the meaning attached to them by those dealing in them. [343H; 344A B] C.l. T., Andhra Pradesh vs M/s. Taj Mahal Hotel, Secunderabad and Indo International Industries vs Commissioner of Sales Tax, U.P., ; ,referred to. King vs Planter 's Co. [1951] CLR (exhibit) 122 and 'Two Hundred Chests of Tea ', [1824]6 L.Ed. 128, referred to.

Appeal No. 1336 of 1967. Appeal by special leave from the judgment and order dated October 7, 1966 of the Andhra Pradesh High Court in Writ Petition No. 1268 of 1966. P. Ram Reddy and A. V. V. Nair, for the appellants. K.Narayana Rao and G. Narayana Rao, for the intervener. The Judgment of the Court was delivered by Shah, J. Against the order passed by the High Court of Andhra Pradesh declaring invalid the "reservation for backward classes under Rule 4A and 5A respectively of the Telangana and the Andhra Rules, and the directions in respect of the President 's Scouts and. Guides", under Government orders Nos. 1135 & 1136 Health, Housing & Municipal Administration Department dated June 16, 1966, as modified by G.O. M.S. 1880 dated July 29, 1966 for the Telangana region, and by G.O.M.S. 1786 dated August 2, 1966 for the Andhra Region, the State of Andhra Pradesh has appealed to this Court with special leave. The State of Andhra Pradesh is divided into two areas Telan gana and Andhra areas. In the Telangana area there are two Medical Colleges having in the aggregate 270 seats for entrants to the medical degree course. In Andhra area there are four Medical Colleges having in the aggregate 550 seats for new entrants. In admitting candidates for the medical degree course by Government orders Nos. 1135 & 1136 Health, Housing and Municipal Administration Department dated June 16, 1966, seats were reserved for Central Government nominees, for N.C.C., A.C.C President 's Scouts & Guides, for candidates with sports and extracurricular proficiency, for children of ex Service army personnel, for children of displaced goldsmiths, for candidates from Scheduled Castes and Tribes, for women candidates, for candidates appearing from H.S.C. Multipurpose I.S.C. & P.U.C. Examinations, 597 and for candidates who had secured the M.Sc. & B.Sc. de grees. By Government order No. 1880 dated July 29, 1966, twenty per cent. of the total number of seats were reserved for backward classes in each area, and pursuant thereto the Telangana Rules were amended by G.O. M.S. No. 1784 Health and the Andhra Rules were amended by G.O. M.S. No. 1783 Health dated August 2, 1966. The Validity of the Government orders Nos. 1135 & 1136 was challenged on the ground that they infringed the fundamental freedoms guaranteed under articles 15(4), 16(4) and 29(2) of the Constitution. The High Court held that in reserving seats for nominees of the Central Government and from other States, for cultural scholars, for women, for graduates and for students from H.S.C. & P.U.C. Courses, no fundamental rights were infringed, but the reservations for members of the backward classes described in the list prepared by the Government of Andhra Pradesh were invalid. By article 15 of the Constitution, as originally enacted, it was provided that "(1) The State shall not discriminate against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them. (2). . . . . . (3)Nothing in this article shall prevent the State from making my special provisions for women and children. " Article 29(2) provided that "No citizen shall be denied admission into any educational institution maintained by the State or receiving aid out of State funds on grounds only of religion, race, caste, language or any of them. By article 46, which occurs in Ch. IV relating to Directive Principles of State Policy, the State was enjoined to promote the educational and economic interests of the weaker sections of the people, but articles ' 15 and 29 as originally framed prohibited the making of,any discrimination against any citizen on grounds only of religion,, race, caste, sex, place, of birth or any of them. In the State of Madras vs Shrimati Champakam Dorairajan(1) an order issued by the Government of the State of Madras fixing the number of seats for particular communities for selection of candidates for admission to the Engineering and Medical Colleges in the State was challenged on the ground that it violated the guarantee against d crimination under article 25(2) of the"Constitution. This Court held that the Government order constituted a violation of the (1) ; 598 fundamental right guaranteed to the citizens of India by article 29(2) of the Constitution, notwithstanding the directive principles of State policy laid down in Part IV of the Constitution. The Part thereafter added cl. (4) in article 15, by the Constitution (First Amendment) Act, 1951, providing that: "Nothing in this article or in clause (2) of article 29 shall prevent the State from making any special provision for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and the Scheduled Tribes. " On July 31, 1962, the State of Mysore, in supersession of all previous orders made under article I 5(4) divided backward classes into two categories : backward classes and more backward classes, and reserved 68% of the seats in the Engineering and Medical Colleges and other technical institutions for the educationally and socially backward classes and the Scheduled Castes and Scheduled Tribes, and left 32% seats for the merit pool. That order was challenged by a group of writ petitions under article 32 of the Constitution before this Court. This Court in M. R. Balaji & others vs State of 'Mysore(1) held that the order passed by the State of Mysore "was a fraud on the constitutional power conferred on the State by article 15(4)" and was liable to be quashed, because the order categorised, contrary to the plain intendment of article 15(4), the backward classes on the sole basis of caste. A similar order G.O. M.S. No. 1880 Health issued by the State of Andhra Pradesh on June 21, 1963, notifying a list of castes for the purpose of selecting candidates from the backward classes in the Medical Colleges in the State of Andhra Pradesh was declared invalid by the High Court of Andhra Pradesh on the ground that the order which classified the backward classes solely on the basis of caste subverted the object of article 15(4) of the Constitution : see P. Sukhadev and others vs The Government of Andhra Pradesh (2). On February 3, 1964, the. previous order issued by the State of Andhra Pradesh was cancelled. Thereafter it is claimed by the ' State of Andhra Pradesh that it took steps to prepare a fresh list of backward classes consistently with the provisions of the Constitution. The Chief Secretary of the Government of Andhra Pradesh has sworn in his affidavit that the Council of Ministers appointed a Sub Committee to draw up a list of backward classes, inter alia, for the purpose of admission of students to professional Colleges. The Committee invited the Law Secretary and the Director of Social Welfare to attend the meetings of the Sub Committe, and letters were written to the other States calling for information about the criteria adopted by those States for determining backward classes for purposes of Am. 15(4) and 16(4) of the (1) [1963] Supp. 1 S.C.R. 439. (2) (1966) 1 Andbra W.R. 294. 599 Constitution, that after considering the replies received from the Chief Secretaries of the various States it was resolved 'that the existing list of backward classes pertaining to Andhra and Telangana areas he scrutinised with a view to selecting from that list those castes or communities which are "considered backward on account of the low standard of living, education, poverty, places of habitation, inferiority of occupations followed etc "; that at another meeting it was resolved that the, list of 146 backward communities prepared by the Director be rearranged in "the order of priority in consultation with the Law Secretary, taking into consideration the criteria given by Law Secretary in his note to the Cabinet Sub Committee and that in doing so such of the criteria as capable of being practically possible for consideration may be taken into account", and accordingly the Law Secretary and the Director of Social Welfare considered the representations made by certain communities to the Government from time to time and "drew up a list of the order of priority as called for by the Cabinet Sub Committee", that thereafter the Cabinet Sub Committee made its recommendations which were considered by the Council of Ministers on July 4, 1966, and that the Council of Ministers considered the social, educational and economic conditions of the backward classes named in the lists submitted to them, and dealt with each individual class and deleted certain items or classes in the lists, changed the denomination of certain classes "for the more premise effectuation of concessions to those classes only who really need them", and consolidated the backward classes into one list, ruling out the priorities suggested by the Director of Social Welfare in accordance with the opinion of the Cabinet Sub Committee, and thereafter published resolution No. G.O. 1880 pursuant to which the rules were amended reserving 20% of the seats for the backward classes mentioned in the list prepared by the Cabinet of the State. The list prepared on the basis of reservations for socially and educationally backward classes is indisputably a list community wise. On behalf of the petitioners it was contended in the High Court that the Government of Andhra Pradesh had adopted the same list of backward classes which was struck down by the High Court in P. Sukhadev 's caw() with some slight modifications and the new list also having made a reservation in favour of castes and not classes, it infringed the guarantee Under article 15(1). On behalf of the State it was urged that caste is one of the relevant tests in determining backwardness, and cannot be ignored in determining the socially and educationally backward classes: if a group has been classified as backward on other relevant considerations, the classification is not liable to be changed as invalid on the ground that for the purpose of classifying,the designation of caste 'is given. The High Court held that the earlier G.O. was struck down (1) (1966) 1 Andhra W.R. 294. 600 in P. Cukhadev 's case( ') on the ground that it was based on caste alone, and since the G.O. under challenge was again prepared on the same basis it could not be sustained as falling within,the exception provided in article 15(4). Counsel for the State contends that the High Court erred in holding that the impugned rules reserving seats for backward classes made caste the determining factor. In the context in which it occurs the expression "class" means a homogeneous section of the people grouped together because of certain likenesses or common traits and who are identifiable by some common attributes such as status, rank, occupation, residence .in a locality, race, religion and the like. In determining whether a particular section forms a class, caste cannot be excluded altogether. But in the determination of a class a test solely based upon the caste or community cannot also be accepted. By cl. (1), article 15 prohibits the State from discriminating against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them. By cl. (3) of article, 15 the State is, notwithstanding the provision contained in cl. (1), permitted to make special pro,vision for women and children. By cl. (4) a special provision for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and Scheduled Tribes is outside the purview of cl. But cl. (4) is an exception to cl. Being an exception, it cannot be extended so as in effect to destroy the Guarantee of cl. The Parliament has by enacting cl. (4) attempted to balance as against the right of equality of citizens the special necessities of the weaker sections of the people by allowing a provision to be made for their advancement. In order that effect may be given to cl. (4), it must a pear that the beneficiaries of the special provision are classes which are backward socially and educationally and they are other than the Sche duled Castes and Scheduled Tribes, and that the provision made .is for their advancement. Reservation may be adopted to advance the interests of weaker sections of society, but in doing so, care must be taken to see that deserving and qualified candidates are not excluded from admission, to higher educational institutions. The criterion for determining the backwardness Must not be based solely on religion, race, caste, sex, or place of birth, and, the backwardness being social, and educational must be similar to the backwardness from which the Scheduled Castes and the Scheduled Tribes suffer. These are the principles which have been enunciated in the decision of this Court in. M. R. Balaji 's case(3) and R. Chitralekha & Another vs State of Mysore.and. others(2). In R. Chitralekha 's case (2), Subba Rao, J., speaking for the majority of the Court observed at p. 388 (1) (1963) Supp.1 S.C.R.439. (2) (1964) 6 S.C.R.368 601 .lm15 "The important factor to be noticed in article 15(4) is that it does not speak of castes, but only speaks of classes. If the makers of the Constitution intended to take castes also as units of social and educational backwardness, they would have said so as they have said in the case of the Scheduled Castes and the Scheduled Tribes. Though it may be suggested that the wider expression "cLasses" is used in cl. (4) of article 15 as there are communities without castes, if the intention was to equate classes with castes, nothing prevented the makers of the constitution from using the expression "backward classes or castes '. The juxtaposition of the expression "backward classes" and "Scheduled Castes" in article 15(4) also leads to a reasonable inference that the expression "classes" is not synonymous with castes. It may be that for ascertaining whether a particular citizen or a group of citizens belong to a backward class or not, his or their caste may have some relevance, but it cannot be either the sole or the dominant criterion for ascertaining the class to which he or they belong. " In a recent judgment of this Court P. Rajendran & Ors. vs The State of Madras and others( '), Wanchoo, C.J., speaking for the Court observed : ". if the reservation in question had been based only on caste and had not taken into account the social and educational backwardness of the caste in question, it would be violative of article 15(1). But it must not be forgotten that a caste is also a class of citizens and if the caste as a whole is socially and educationally backward reservation can be made in favour of such a caste on the ground that it is a socially and educationally backward class of citizens within, the meaning of article 15(4). It is true that in the present cases the list of socially and educationally backward classes has been specified by caste. But that does not necessarily mean that caste was the sole consideration and that persons belonging to these castes are also not a class of socially and educationally backward citizens. " That case makes no departure from the rule enunciated in the earlier cases. The list dated June 21, 1963, of castes prepared by the Andhra Pradesh Government to determine backward classes for the purpose of article 15(4) was declared invalid by the High Court of ' Andhra Pradesh in P. Sukhadev 's case( '). A fresh list was published under the amended rules with some modifications, but the (1) ; (2) [1966] 1 Andhra W.R. 294. 602 basic scheme of the list was apparently not altered. It is true that the affidavits filed by the Chief Secretary in the High Court and the Director of Social Welfare in this Court have set out the steps taken for preparing the Est of backward classes. It is also stated in the affidavit of the Director of Social Welfare that he considered the representations made to him, consulted the Law Secretary and certain publications relating to the study of backward classes e.g. Thurston 's "Caste and Tribes" and Sirajul Hasan 's "Castes and Tribes", and made his recommendations which were modified by the Sub Committee appointed by the Council of Ministers and ultimately the Council of Ministers prepared a final list of backward classes. But before the High Court the materials which the Cabinet Sub Committee or the Council of Ministers considered were not placed, nor was any evidence led about the criteria adopted by them for the purpose of determining the backward classes. The High Court observed : "A perusal of this affidavit (Chief Secretary 's affidavit) as well as that of the Director of Social Welfare,. .which are filed on behalf of the Government do not say what was the material placed before the Cabinet Sub Committee or the Council of Ministers, from which we could conclude that the criteria laid down by their Lordships of the Supreme Court have been applied in preparing the list of backward classes. After referring to the opinion of the Law Secretary and the views ,of the Director of Social Welfare they observed: ". We are not able to ascertain whether any material, and if so, what material was placed before the Cabinet Sub Committee, upon which the list of backward classes was drawn. On the other hand, it is stated that the Law Secretary and the Director of Social Welfare sat together and drew up a list, the former specifying the legal requirements and the latter as an expert advising on the social and educational backwardness of class or classes. " It was urged before the High Court that expert knowledge of the Director of Social Welfare and of the Law Secretary was brought to bear upon the consideration of the relevant materials in the preparation of the list and they were satisfied that the correct tests were applied in the determination of backward classes and on that account the list should be accepted by the High Court. The High Court in dealing with the argument observed: ". the impugned backward classes list cannot be and has not been sustained by the Government as 603 coming within the exception provided in article 15(4) on any material placed before this Court. In fact, there is a total absence of any material, from which we can say that the Government applied the criteria enunciated by their Lordships of the Supreme Court in the above referred cases, in preparing the list of backward classes. We cannot accept the contention of the learned Advocate General that "once there is proof that the Government bona fide considered the matter it is sufficient". Acceptance of this argument would make for arbitrariness, absolving the party on whom the burden of proof to bring it within the exception rests, from proving it. The mere fact that the act is bona fide and that there was total absence of mala fides, is not relevant. " Article 15 guarantees by the first clause a fundamental right of far reaching importance to the public generally. Within certain defined limits an exception has been engrafted upon the guarantee of the freedom in cl. (1), but being in the nature of an exception, the conditions which justify departure must be strictly shown to exist. When a dispute is raised before a Court that a particular law which is inconsistent with the Guarantee against discrimination is valid on the plea that it is permitted under cl. (4) of article 15, the assertion by the State that the officers of the State had taken into consideration the criteria which had been adopted by the Courts for determining who the socially and educationally backward classes of the Society are, or that the authorities had acted in good faith in, determining the socially and educationally, backward classes of citizens, would not be sufficient to sustain the validity of the claim. The Courts of the country are invested with the power to determine the validity of the law which infringes the fundamental rights of citizens and others and when a question arises whether a law which prima facie infringes a guaranteed fundamental right is within an exception, the validity of that law has to be determined by the Courts on materials placed before them. By merely asserting that the law was made after full consideration of the relevant evidence and criteria which have a bearing thereon, and was within the exception, the jurisdiction of the .Courts to determine whether by making the law a fundamental right has been infringed is not excluded. The High Court has repeatedly observed in the course of their judgment that no materials at all were placed on the record to enable them to decide whether the criteria laid down by this Court for determining that the list prepared by the Government conformed to the requirements of cl. (4) of article 15 were followed. On behalf of the State it was merely asserted that an enquiry was in fact made with the aid of expert officers and the Law Secretary and the question was examined from all points of view by the L7Sup. C.I/68 14 604 officers of the State, by the Cabinet Sub Committee and by the Cabinet. But whether in that examination the correct criteria were applied is not a matter on which any assumption could be made especially when the list prepared is exfacie based on castes or communities and in substantially the list which was struck down by the High Court in P. Sukhadev 's case(1) Honesty of purpose of those who prepared and published the list was not and is not challenged, but the validity of a law which apparently infringes the fundamental rights of citizens cannot be upheld merely because the law maker was satisfied that what he did was right or that he believes that he acted in manner consistent with the constitutional guarantees of the citizen. The test of the validity of a law alleged to infringe the fundamental rights of a citizen or any. act done in execution of that law lies not in the belief of the maker of the law or of the person executing the law, but in the demonstration by evidence and argument before the Courts that the guaranteed right is not infringed. The appeal therefore fails and is dismissed. , R.K.P.S. Appeal dismissed. (1) [1966] 1 Andhra W.R. 294.

By an order of the State Government, Andhra Pradesh, issued on July 29, 1966, 20% of the total number of seats for admission to medical colleges in the State were reserved, for members of the backward classes described in a list prepared by the Government. This order and the list were challenged in writ petitions before the High Court on the, ground that another list published by the State Government on June 21, 1963 determining backward classes for the purpose of article 15(4) of the Constitution had been declared invalid by the High Court in an earlier case as being violative of article 15(1); it was contended that the State Government had adopted substantially the same list of backward classes with slight modifications and as the new list also made the reservation in favour of castes and not classes, it infringed the guarantee under article 15(1). On behalf of the State Government it was urged that caste is one of the relevant tests in determining backwardness, and cannot be ignored in determining socially and educationally backward classes and if a group has been classified as backward on other relevent considerations, the classification is not liable to be challenged as invalid on the ground that for the purpose of classifying, the designation of caste is given. It was stated in an affidavit on behalf of the State that the new list had been prepared by a Cabinet sub committee and 'approved by the Cabinet after a detailed enquiry of the conditions of the castes in question and on expert advice of the Director of Social Welfare as well as under the guidance of the Law Secretary; and that they were both satisfied that the correct tests were applied in the determination of the backward classes. The High Court held that the reservations of seats for the members of the backward classes described in the list prepared by the Government were in , Aid. The State appealed to this Court by special leave. HELD:dismissing the appeal, The impugned list prepared by the State was ex facie based on castes or communities and wag substantially the same list which bad been struck down by the High Court as invalid in the earlier case. No materials were placed on the record to enable the Court to decide whether the criteria laid down for determining that the list prepared by the Government conformed to the requirements of cf. (4) or article 15 were followed. Article 15 guarantees by the first clause a fundamental right of farreaching importance. Clause (4) is an exception engrafted upon the guarantee in cl. (1), but being id the nature of an exemption conditions which justify departure must be strictly shown to exist. When a dispute is raised before a Court that a particular. law which is inconsistent with the guarantee against discrimination is valid on the plea that it is permitted 596 under cl. (4) of article 15, the mere assertion by the State that the officers of the State had taken into consideration the criteria which had been adopted by the courts for determining who the socially and educationally backward classes of the Society are, or that the authorities had acted in good faith in determining the socially and educationally backward classes of citizens, would not be sufficient to sustain the validity of the claim. If a question arises whether a law which prima facie infringes a fundamental right is within an exception, the validity of that law has to he determined by the courts on materials placed before them. By merely asserting that the law was made after full consideration of the relevant evidence and criteria which have a bearing thereon, and was within the exception, the jurisdiction of the courts to determine whether by makinig the law a fundamental right has been infringed is not excluded. [603 C G]. Case law referred to.

Civil Appeal Nos. 761 & 762. of 1971. (Appeals by Special Leave from the Judgment and order dated the 14 3 1969 of the Patna High Court in M.J.C. Nos. 182 and 183 of 1962). B. Sen, T. A. Ramachandran and section P. Nayar, for the appellant. Hardayal Hardy, and Bishamber Lal, for respondent. The Judgment of the Court was delivered by GOSWAMI, J. These two appeals by special leave are directed against the common judgment of March 14, 1969, of the Patna High Court in the matter of two references under section 66(1) of the Indian Income tax Act, 1922, relating to assessment years 1953 54 and 1954 55 of the respondent (hereinafter to be referred to as the company) . The case has a rather chequered history as will appear from the facts narrated below: The company at the material time was a private limited company and at the end of the relevant previous years, namely, August 31, 1952 and August 31, 1953, the shareholding was as follows: Number of shares on: 31 8 1952 31 8 1953. Sri Ashok Kumar Jain, 10,000 10,000 Managing Director. Sri R. Sharma Director 10 10 3. Sri N. C. Jain Director 10 10 4. Sri section P. Jain 10,000 10,000 5. RamaJain 10,000 10,000 6. Sri Alok Prakash Jain 10,000 10,000 7. Sri Rishabh Investment Ltd 5,000 5,000 8. Dalmia Jain Co. Ltd. 2,000 2,000 9. Universal Bank of India Ltd 980 980 10.Ashoka Agencies Ltd. 2,000 2,000 50,000 50,000 401 Of these shareholders Rama Jain is the wife of section P. Jain and Alok Prakash Jain and Ashok Kumar Jain are the sons of section P. Jain and Rama Jain. Ashok Kumar Jain (briefly A. K. Jain), the Managing Director, attained majority on March 5, 1952, while Alok Prakash Jain was a minor during both the accounting years. The three companies, namely, Rishabh Investment Ltd., Dalmia Jain Co. Ltd. and Universal Bank of India Ltd., are companies to which the provisions of action 23A of the Income tax Act, 1922 (briefly the Act) prior to its amendment by the Finance Act 1955, applied. section P. Jain was the principal shareholder of the Universal Bank of India Ltd. holding 980 shares. Ashoka Agencies Ltd. with 2000 shares was a company to which admittedly section 23A did not apply. R. Sharma and N. C. Jain holding 10 shares each were employees, N. C. Jain being the Secretary of section P. Jain. The Income tax officer by his orders of September 25, 1957 and October 30, 1957, held that section 23A was attracted in the case of the company for both the years. On appeal, the Appellate Assistant Commissioner remanded the matter back to the Income tax officer for a finding on certain additional facts. The Income tax officer in his remand report submitted certain additional facts to the Appellate Assistant Commissioner who in due course affirmed the orders of the Income tax officer. The company appealed to the Income tax Appellate Tribunal, Bihar, at Patna. The Tribunal allowed the appeal by its order of January 26, 1961 (7) and held that section 23A was not applicable to the company in respect of both the assessment years. At the instance of the Commissioner Income tax, Bihar, the following question was referred by the Tribunal to the High Court: "Whether on the facts and circumstances of the case the Tribunal was justified in holding that the provisions of section 23A of the Income tax Act were not applicable to the assessee company for the assessment years 1953 54 and 1954 55" ? The High Court by its order of December 9, 1965, in view of two decisions of this Court, namely, Raghuvanshi Mills Ltd. vs Commissioner of Income tax, Bombay,(l) decided on December 7, 1960 and Commissioner of Income tax Bombay vs Jubilee Mills Ltd.(2) Bombay, decided on September 1, 1962, directed the Tribunal to submit a supplementary statement of case to it: "Whether bearing in mind the principles laid down by the Supreme Court in Raghuvanshi Mills Ltd. vs Commissioner of Income tax (41 Income Tax Reports 613) and Commissioner of Income tax, Bombay City vs Jubilee Mills Ltd. (48 Income Tax Reports 9) Shrimati Rama Jain and Sri Ashok Kumar Jain, or either of them could be safely taken to have acted in concert with Sri section P. Jain during the years in question, in respect of the affairs of the assessee company" ? (1) ; (2) [1963] Supp. 1 S.C.R. 83. 402 The High Court also directed that "the Tribunal may take additional evidence, if it considers it necessary to enable it to state the supplementary case as directed above". The Tribunal thereafter, after hearing the parties, submitted a supplementary statement of case to the High Court on September 30, 1966. A controversy arose before the Tribunal with regard to entertainment of additional evidence which the Revenue wanted to adduce before it, particularly in view of the direction of the High Court, but the Tribunal did not accede to the request and additional evidence was not received. The matter then came up before the High Court resulting in the impugned order against the Revenue. Hence these two appeals by special leave. The Revenue reiterated its grievance before the High Court about the Tribunal 's refusal to entertain additional evidence without success and the matter is no longer in controversy in view of a decision of seven Judges of this Court in The Keshav Mills Co. Ltd. vs Commissioner of Income tax, Bombay North,(1) affirming the earlier decisions of this Court in the case of the New Jehangir Vakil Mills Ltd. vs The Commissioner of Income tax, Bombay North( ') and The Petlad Turkey Red Dye Works Co. Ltd. Petlad vs The Commissioner of Income tax, Bombay, Ahmedabad(3). It is now well settled that when the Tribunal has disposed of the matter and is preparing a statement of the case either under Section 66(1) or under section 66(2), there is no scope for any further or additional evidence and the power of the High Court under section 66(c) can be exercised only in respect of material and evidence which has already been brought on the record. It was contended on behalf of the Revenue before the High Court that the finding of the Tribunal was perverse. Mr. Sen appearing on behalf of the Revenue before us has fairly and, in our opinion, rightly not pressed this submission before us. Similarly on behalf of the company also it was contended before the High Court that there was no principle of law involved in drawing any inference in the cases answer to the plea of the Revenue that the finding whether section 23A was not attracted was a mixed question of law and fact. It is not possible to hold that the question referred to the High Court is not a question of law as undoubtedly on the statement of case an important question of law does arise and the composite reference was competent. The question that arises for consideration is whether on the facts and circumstances that are established before the Tribunal the company in the two assessment years can escape the reach of section 23A of the Act. (1) ; (2) ; (3) [19631 Supp. 1 S.C.R. 871. 403 Section 23A prior to its amendment in 1956 and so far as it is material read as follows: "23A (1) . Power to assess individual members of certain companies. Where the Income tax officer is satisfied that in respect of any previous year the profits and gains distributed as dividends by any company up to the end of the sixth month after its accounts for that previous year are laid before the company in general meeting are less than sixty per cent, of the assessable income of the company of that previous year, as reduced by the amount of income tax and super tax payable by the company in respect thereof he shall, unless he is satisfied that having regard to losses incurred by the company in earlier years or to the smallness of the profit made, the payment of a dividend or a larger dividend than that declared would be unreasonable, make with the previous approval of the Inspecting Assistant Commissioner an order in writing that the undistributed portion of the assessable income of the company of that previous year as computed for income tax purposes and reduced by the amount of income tax and super tax payable by the company in respect thereof shall be deemed to have been distributed as dividends amongst the share holders as at the date of the general meeting aforesaid, 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: * * * * Provided further that this sub section shall not apply to any company in which the public are substantially interested Explanation. 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 . 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 . and if any such shares have in the course of such previous year been the subject of dealings in any stock exchange or are in fact freely transferable by the holders to other members of the public '`. In this case the company did not declare any dividend for the assessment year 1953 54. In the next assessment year 1954 55, only a sum of Rs. 50,000/ was distributed as dividend. It is not in dispute that the company had sufficient requisite assessable income out of which sufficient or larger dividend could have been paid. There is no dispute that the payment of an adequate dividend for the first year and larger dividend for the next year would have been 404 at all unreasonable in respect of these two assessment years. The only controversy between the parties is with regard to the exclusion of the company from the application of section 33A in view of the third proviso read with the Explanation. In other words, is the company one in which the public are substantially interested ? It could be so in terms of the Explanation if 25 per cent shares of the company or more had been allotted unconditionally to, or acquired unconditionally by, and are at the end of the previous year beneficially held by the public and if any such shares in the course of such previous year were in fact freely transferable by the holders to other members of the public. It was not in dispute that the shares of the company were in fact freely transferable by the holders to other members of the public. The controversy, therefore, is within a very narrow compass, namely, whether, as stated earlier, the company is one in which the public has 25 per cent or more shares allotted unconditionally to, or acquired unconditionally by it and are at the end of the previous year beneficially held by it. It may be mentioned that section 23A(l), as it stood before the amendment by the Finance Act 1956, did not authorise amalgamation of the shares held by "relatives" as if they represented a single shareholder. It will, therefore, be a question of fact and a matter of inference in each case whether any "relatives" forming themselves into a company acted as a group or block in concert in controlling the affairs of the company. Relationship would not, per se, lead to such a conclusion. The Tribunal in its order observed: "Sri A. K. Jain became major on 5 3 1952. Therefore, as at the end of the two previous years, his holding of 10,000 shares cannot ipso facto be amalgamated with the shareholding of Sri section P. Jain as if he was the nominee of his father The shareholding of 10,000 shares by Mrs. Rama Jain has also to be left out of account since, as already observed, there is no finding that Sri section P. Jain provided the consideration for the acquisition of 10,000 shares held by her. Assuming, therefore, that Sri section P. Jain was controlling shareholder, the shares held by the members of the 'public ' which would include Sri A. K. Jain and Mrs. Rama Jain would be at least 22,000 shares". " G In the supplementary statement of case filed by the Tribunal enclosing various orders and other documents, it is shown that section P. Jain was Director of the company from August 3, 1950 to September 25, 1950. He was appointed Managing Director from June 6, 1953, subject to approval of the Government. A. K. Jain was Director of the company from August 3, 1950 even when he was a minor (his date of birth being March 5, 1934) and was appointed Deputy Managing Director from June 6, 1953, subject to approval of the Government. R. Sharma was Director from 3 8 1950 to 405 7 9 1956. He was Secretary of R. K. Dalmia and employee of Sahu Jain Limited. H. C. Jain was Director from 25 9 1950 to 25 3 1954. He was Secretary of section P. Jain and employee of Ashoka Agencies Limited. From the above it appears that the Deputy Managing Director and the two other Directors held amongst themselves 10,000 shares and out of the balance 30,000 shares were held by the relations of the Managing Director, namely, by the father, the mother and the minor brother. It also appears that section P. Jain along with Ashok Kumar Jain, R. Sharma and N. C. Jain were the promoters and subscribed to the Memorandum of Association at the start of the company in July 1950. It also appears Ashok Kumar Jain, Director, was getting a remuneration of Rs. 6,000/ per month w.e.f. September 1951 in accordance with the resolution passed in an extra ordinary general meeting of the shareholders on October 1, 1951. At the meeting of the Board of Directors dated November 29, 1950, Ashok Kumar Jain and R. Sharma, Directors of the company, were authorised to execute managing agency agreements with different companies. Ashok Kumar Jain was generally presiding over the meetings from November 1950. The Tribunal further observed in its statement of case that "A perusal of the minutes or the proceedings of the general meetings does not lead to any inference that Sri section P. Jain, Smt. Rama Jain and Sri A. K. Jain were necessarily acting in concert. On the other hand, it appears that despite his young age, Sri A. K. Jain seems to have been taking active interest in the management of the affairs of the asses see company and the companies managed by it. Unless it is to be presumed that because of relationship, Sri section P. Jain, Smt. Rama Jain and Sri A. K. Jain should be regarded as acting in concert, there is no other material on record on the basis of which such a conclusion could be supported". The Tribunal also observed: "that in spite of opportunity afforded by the Appellate Assistant Commissioner, the Income tax officer had not brought on record materials to show that the voting rights of Mrs. Rama Jain or Sri A. K. Jain were controlled by Sri section P. G The Tribunal concluded by observing that " The revenue had failed to establish that Sri section P. Jain, his wife and his son Sri A. K. Jain were acting in concert". Section 23A again came up for consideration before this Court in Commissioner of Income tax, West Bengal vs East Coast Commercial 406 Co. Ltd.(l). This Court made a reference to the Raghuvanshi Mills ' case (supra) where it was observed: "The word 'public ' is used (in the Explanation) in contradistinction to one or more persons who act in unions and among whom the voting power constitutes a block. If such a block exists and possesses more than seventy five per cent of the voting power, then the company cannot be said to be one in which the public are substantially interested . the test is first to find out whether there is an individual or . group which controls the voting power as a block. If there be such a block, the shares held by it cannot be said to be 'unconditionally ' and 'beneficially ' held by members of the public". This Court further observed: " The Tribunal had to decide in the first instance whether there was a group of persons acting in concert holding a sufficient number of shares which may control the voting as a block. But the existence of a block is not decisive. If there be a group of persons holding control over voting, the Company would still be a Company in which the public are substantially interested, if twenty five per cent or more of the voting power has been allotted unconditionally to and beneficially held by the public and the shares were in the previous years subject of dealings in any stock exchange in the taxable territories or were in fact freely transferable by the holders to other members of the public. The two enquiries are distinct". This Court further referred to Jubilee Mills ' case (supra) and Raghuvanshi Mills ' case (supra) and observed as follows: "But in Commissioner of Income tax, Bombay City l vs Jubilee Mills Ltd. (supra) this Court held that no direct evidence of overt act or concert between the members of the group having control over voting was necessary to prove that the Company was not one in which the public were substantially interested. It was observed in Raghuvanshi Mills ' case (supra) that 'in deciding if there is such a controlling interest, there is no formula applicable to all cases. Relationship and position as director are not by themselves decisive. If relative act, not freely, but with others, they cannot be said to belong to that body, which is described as 'public ' in the Explanation '. In Jubilee Mills ' case (supra) this Court elaborated those observations and stated: The test is not whether they have actually acted in concert but whether circumstances are such that human experience tells us that it can safely be taken that they must (1)[1967] I S.C.R. 821. 407 be acting together. It is not necessary to state the kind of evidence that will prove such concerted actings. Each case A must necessarily be decided on its own facts". This Court finally in the above East Coast Commercial Company 's case concluded as follows: "On an analysis of the reasons recorded by the Tribunal and the High Court, it is clear that the Tribunal held that the Kedias did not form a controlling group because there was no evidence that they actually controlled the voting, even though they held more than seventy five per cent of the shares issued by the Company: the High Court observed that the members of the Kedia family held 4,016 shares of the Company and were in a position to control the affairs of the Company, but there was no evidence to show that they did in fact act in concert and controlled the affairs of the Company as a block. But, as already observed, if the members of the Kedia family formed a block and held more than seventy five per cent of the voting power, it was not necessary to prove that they actually exercised controlling interest. It is the holding in the aggregate of a majority of the shares issued by a person or persons acting in concert in relation to the affairs of the Company which establishes the existence of a block. It is sufficient, if having regard to their relation etc., their conduct, and their common interest, that it may be inferred that they must be acting together; evidence of actual concerted acting is normally difficult to obtain, and is not insisted upon". We may also observe in passing that it does not appear that the East Coast Commercial Company 's case (supra) was referred to during the hearing in, nor was lt noticed by, the High Court. The Tribunal in the supplementary statement observed as follows: " Unless it is to be presumed that because of relationship, P Sri section P. Jain, Smt. Rama Jain and Sri A. K. Jain should be regarded as acting in concert, there is no other material on record on the basis of which such a conclusion could be supported". The High Court also observed to the same effect: " It may be that in view of the relationship of the parties as to a group consisting of the father, two minor sons and their mother, a possible inference was that the relationship was such that they could reasonably be taken to be acting as a group in concert. " but "the assessee could not be placed in the category of such a company accordingly because of close relationship". Keeping in the forefront the test laid down by this Court in East Coast Commercial Company 's case (supra), Mr. Sen on behalf of the 408 Revenue submitted for our consideration the following facts and circumstances from which, according to counsel, an inference can be reasonably drawn about the controlling power in a block confined to a family group holding more than 75 per cent shares: (1) 80 per cent of the share capital (40,000 out of 50,000) is held by section P. Jain, his wife and two sons, one of whom was a minor throughout the period of the two accounting years and the other son, A. K. Jain, for a portion of the period upto March 1952. The remaining 20 per cent of the shares was held by the companies which were under the control by section P. Jain and out of which 20 shares were held by two employees under the control of section P. Jain. (2) A. K. Jain was appointed as Director in the company in August 1950 when he was a minor, aged 16 years, and he became the Managing Director on 1 2 1954 at a salary of Rs. 6,000/ per month. According to counsel this could not have been possible if he was not the son of the controlling shareholder, section P. Jain. (3) section P. Jain who was a Director resigned making room for his Private Secretary N. C. Jain for appointment as Director. (4) During the assessment year 1953 54 the assessee company claimed Rs. 2,02,500/ as loss in a transaction in hessian through Messrs Kabra & Co. in settlement of August 18, 1952, and the same amount was shown as profit in hessian through the same broker by Smt. Rama Jain wife of section P. Jain in the settlement. (5) section P. Jain, A.K. Jain, R. Sharma and N. C. Jain were the promoters of the company and were the signatories to the Memorandum of Association. Mr. Hardy, the learned counsel for the respondent, on the other hand, replied to the submissions as follows: (1) Rama Jain and A. K. Jain are independent assessees. The minutes of the Board 's meetings clearly show A. K. Jain as a competent Director taking independent decisions. Mere relationship, therefore, would not lead to the conclusion that these two shareholders acted with section P. Jain in concert. He, however, admits that section P. Jain may be said to control the voting power of the minor son, Alok Prakash Jain, as his natural guardian. According to Mr. Hardy if Rama Jain and A. K. Jain are holding 20,000 shares out of 50,000, they cannot be held to be acting in concert with section P. Jain and section 23A will not be attracted. (2) With regard tn the second submission of Mr. Sen, Mr. Hardy submits that there is sufficient evidence 409 in the record, which is even referred to in the further A statement of the case, that A. K. Jain was an in dependent shareholder and was not under the control of section P. Jain or any other Director or shareholder. He further submits that there is no evidence whatsoever that the money for purchasing the shares of A. K. Jain or even of Rama Jain was advanced by S P Jain. (3) With regard to the third submission of Mr. Sen, Mr. Hardy had to admit that N. C. Jain was Director from 1950 to 1954 and section P. Jain was Director from August 3, 1950 to September 25, 1950 and section P. Jain became Managing Director of the company on June 6, 1953, subject to the approval of the Government on a remuneration of Rs. 8,000/ per month and A. K. Jain was appointed as Deputy Managing Director on a remuneration of Rs. 6,000/ per month subject to the approval of the Central Government (vide minutes of Board 's meeting of June 6, 1953). According to Mr. Hardy, appointment of Directors or even Managing Director is a regular matter of the company and no particular significance should be attached to these appointments. (4) With regard to the fourth. submission Mr. Hardy submits that such transactions are common with brokers and even the purchaser is not known in most of the cases. Hence no undue importance should be attach ed to the hessain transaction so as to influence the conclusion. It is also pointed out that there was no controversy about the genuineness of the hessian transaction. We are of the view that the genuineness of the aforesaid transaction is, however, irrelevant for the purpose of considering its effect in acting in concert by the shareholders. (5) With regard to the fifth submission Mr. Hardy submits that it is true that section P. Jain, A. K. Jain R. Sharma and N. C. Jain were the promoters of The company but admittedly two of them, namely, R. Sharma and N. C. Jain were outsiders. That they were employees would not affect their character as shareholders of the company or even as Directors. It is clear that this company was a family concern with only 20 shares out of 50,000 shares allotted to two outsiders who again happened to be paid employees. The presence of these two outsiders is of the least significance in the matter of management of the affairs of the company. It is true that most of the meetings of the Board of Directors were presided over by A. K. Jain with either of the two employees or one of them attending the same. It must, how ever, be noted that A. K. Jain became a Director even when he was a minor aged 16 years. He would not ordinarily be able to play the role he is supposed to have done in the Board 's meetings unless section P. 410 Jain was confident that the Board was carrying out his mandates with regard to the affairs of the company. It is also true that A. K. Jain and the other Directors were authorised to sign agreements on behalf of the company, but this is not of great significance since this was in pursuance of a decision of the Board 's meeting which could not have been passed but for the concurrence of section P. Jain. There is no evidence whatsoever to show that Rama Jain, wife of section P. Jain, was at all independently acting. When a company is composed mostly of family members owning lion 's share in the entire share capital of the company the onus to keep clear of the reach of section 23A(l) will be on the shareholders by adducing some positive evidence about the absence of control by the controlling shareholders. So far as Rama Jain is concerned it is not possible to hold that section P. Jain would not be able to control his wife 's voting power along with that of his minor son, Alok Prakash Jain. It is true that mere relationship or being a Director is not decisive. As a matter of fact no single factor can be decisive but having regard to the totality of the circumstances revealed in the case and the conduct of the transactions of the company taken with the relationship which, in the circumstances of the case is not a negligible element, we are clearly of the opinion that it is a case in which it cannot be said that the 'public ' is substantially interested in 25 per cent or more shares of the company. Even if we allow A. K. Jain to be a member of the 'public ', he only holds 10,000 shares and taken with 2,000 shares of Ashoka Agencies Ltd., the total shareholding comes only to 12,000 shares, that is to say, 500 less than the minimum shareholding requisite to earn the benefit of the third proviso to section 23A read with the Explanation. Further, between August 1], 1951 and May 1, 1952, A. K. Jails and two employee Directors, the latter having a modicum of 10 shares each, apparently took all decisions for the company in the Board 's meetings. This is not ordinarily possible but for collaboration with the major shareholders. This is a case where more is meant than meets the eye. We are unable to hold in this case, in absence of any reliable evidence to the contrary, that the voting power of the three Directors was free and uninhibited and not within the orbit of control of the other major shareholders, section P.` Jain and Rama Jain acting in concert. It is a clear case of all the shareholders acting in concert and in unions and the two employee Directors were merely dummies. There is not the slightest inkling of 'public ' being interested, far less substantially interested, in this company. There was no one who could come within the term 'public ' outside the ring of the shareholders acting in concert for their own ends with a common purpose. There is no evidence whatsoever in this case that the shareholders did not cohere together in the matter of transaction of the company 's affairs. When the reality is manifest some reliable evidence within the special knowledge of the assessee must be forthcoming from its side to contradict the obvious in order to be covered by the exception. This has not happened in this case. 411 Unless the two employees were nominees of the major shareholders it is ordinarily absurd to suppose that they could aspire to be and become Directors of the company. The Appellate Assistant Commissioner in his order, which is annexed with the statement of the case, mentions that "In fact Shri section P. Jain as a controlling shareholder had brought himself in as a Director of the company right from the inception of the company and was the first Director of the company from 3 8 SO to 25 9 50. From September 'SO to March '54, however, he temporarily gave up the directorship by putting in an employee as a nominee director, Sri N. C. Jain, for the intervening period so that there may be no hitch in the appellant company being appointed as Managing Agent of certain other companies under his control on which also Sri section P. Jain was a Director, such as the Rohtas Industries Ltd., Bharat Collieries Ltd., section K. G. Sugar Ltd., Dehri Rohtas Light Railway Co. Ltd. and New Central Jute Mills Ltd. As soon as this objective was achieved, Sri section P. Jain staged a come back as a Director of the appellant company on 25 3 54 when the nominee director Sri N. C. Jain re signed his directorship to make room for his master Sri section p Jain". The factual position, not the opinion, revealed in the above extract is more than eloquent with regard to the core of the company. Having regard to the intimate relationship of the shareholders, with not the least evidence of any disconcert amongst them, the ordinary expectation for individual profit in commercial undertakings, natural reluctance to forego the same, the history of the company and its continued smooth working in a manner which is normally inconsistent with anything other than full unison amongst the shareholders in decisions about the conduct of company 's affairs in common inter est of all, this was a company of one paramount mind operating with out the least doubt. The Board 's meetings are evidence of a well organised, well knit close unity of views in all affairs and which in ordinary course of human conduct would not have been at all possible but for a single or concerted action in the company 's management by a controlling group. When all the above conditions are present in a company, the onus would be on the assessee to satisfy by some reliable evidence that what appears on the surface is that which is real. That is not to say that the Revenue has no burden to bring the case within the mischief of section 23A. Application of law cannot be bereft of commonsense. The object of section 23A being to prevent avoidance of super tax by the share holders by piling up the profits of the company in its own hands, the facts and circumstances revealed in this case clearly bring the company within the reach of that section. We are unable to accede to the submission of Mr. Hardy in this case that because A. K. Jain and Rama Jain were independent assessees and A. K. Jain was pre siding in the Board 's meetings and as such was taking independent 412 decisions and was also doing extra work for the company in Calcutta on salary basis, they should be held to be members of the 'public ' who were substantially interested in the company with the requisite shareholding for the purpose of the Explanation read with the third proviso. The High Court was therefore, not right in answering the question in favour of the assessee and against the Revenue. We, therefore, answer the original question in the negative and the revised question in the affirmative both in favour of the Revenue. The appeals are allowed but we leave the parties to pay and bear their respective costs. P.H.P. Appeals allowed.

Sahu Jain was a private limited company during the assessment years l952 53 and 1953 54. All the shareholders of the company are the family member J of Mr. section P. Jain except two employees who held 20 out of 50,000 shares and excepting the three Companies which were also sister concerns. Under section 23A of the Income Tax Act, 1922, prior to its amendment in the year 1955, where the Income Tax officer is satisfied that in respect of any previous year the profits and gains distributed as dividends by any Company are less than 60 per cent of the assessable income of the company as reduced by the Income Tax and Super Tax payable by the company in respect there of, he shall unless he is satisfied that having regard to the loss incurred by the company in earlier years or to the smallness of the profit made, the payment of a dividend or a larger dividend than declared would be unreasonable, make an order in writing that the undistributed portion of the income of the company of that previous year as computed for income tax purposes and reduced by the amount of income tax and supertax payable by the company in respect thereof shall be deemed to have been distributed as dividends amongst the shareholders. The proviso to the said section provides that the provisions of the section would not apply to any company in which the public are substantially interested if shares of the company carrying not less than 25 per cent of the voting power have been allotted unconditionally to or acquired unconditionally by the public or beneficially held by public. The Income Tax officer held that the provisions of section 23A were attracted in the case of the company for both the years. The Appellate Assistant Commissioner confirmed the order of the Income Tax officer. The Tribunal held that section 23A was not applicable to the company in respect of both the assessment years. The Tribunal held that unless. it is presumed that because of relationship Shri section P. Jain, Smt. Rama Jain and Shri A. K. Jain should be regarded as acting in concert there is no other material on record on the basis of which such a conclusion could be supported. On a reference made by the Tribunal, The High Court answered the question in favour of the assessee and against the Revenue. In an appeal by special leave the appellant contended: 1. 80 per cent of the share capital was held by section P. Jain and his wife and two sons. One of whom was a minor throughout the period and another for a portion of the period and that the remaining shares were held by tho company which were under the control of section P. Jain and that only 20 share out of 50,000 shares were held by two employees under the control of section P Jain. A. K. Jain was appointed as a Director when he was a minor and he became a Managing Director on a salary of Rs. 6,000/ per month when he was 20 years old. 3. section P. Jain who was a Director resigned making room for his Private Secretary for appointment as Director. The Company showed a loss of Rs. 2 lacs and odd in a transaction in hessian and the same was shown as profit by Smt. Rama Jain wife of section P. Jain. section P. Jain, A. K. Jain. R. Sharma and N. C. Jain were the promoters of the company ant were signatories to the Memorandum of Association. 399 The respondent contended: 1. Smt. Rama Jain and A. K. Jain were independent assessees. A. K. Jain was taking independent decisions as a competent Director. Mere relationship would not lead to the conclusion that the said two shareholders acted in concert with section P. Jain. A. K. Jain was an independent shareholder and was not under the control of section P. Jain or any other Director or shareholder. N. C. Jain was Director from 1950 to 1954 and section P. Jain became Managing Director subject to the approval of the Government. A. K Jain was appointed as Deputy Managing Director on a remuneration of Rs. 6,000/ per month subject to the approval of the Central Government. The transactions like one of hessian are common transactions and no undue importance can be attached to it. Merely because some persons are promoters or employees of a Company that would not affect their character as shareholders of the Company. Allowing the appeals by special leave, ^ HELD: 1. The controversy is whether the company is one in which the public has 25 per cent or more shares. [404C] 2. This Court held in the case of Commissioner of Income Tax West Bengal vs East Coast Commercial Co. Ltd., that the word 'public ' is used in the explanation to section 23A in contra distinction to one or more persons who act in unison and amongst whom the voting power constitute s a block. This Court also held that the Tribunal had to decide in the first instance wreathe there was a group of persons acting in concert holding a sufficient number of shares which may control the voting as a block. But the existence of block is not decisive. The company would still be a company in which public are substantially interested if 25 per cent or more of the voting power has been allotted unconditionally to and beneficially held by the public. This Court also held that the relationship and position as Director are not by themselves decisive. But if the relatives act not freely but with others they cannot be said to belong to the public. The test is not whether they have actually acted in concert but whether the circumstances are such that human experience tells us that it can safely be taken that they must be acting together. [406A, C D, H, 407A] 3. It is clear that this company was a family concern with only 20 shares out of 50,000 shares allotted to the two outsiders who again happened to be paid employees. The presence of these two outsiders is of the least significance in the matter of management of the affairs of the company. A. K. Jain became a Director even when he was a. minor. He would not ordinarily be able to play the role he is supposed to have done in the Board meetings unless section P. Jain was confident that the Board was carrying out its mandates with regard to the affairs of the Company. The fact that A. K. Jain and others were authorised to sign agreements on behalf of the Company is not of great significance. There is no evidence whatsoever to show that Rama Jain wife of section P. Jain was at all independently acting. [409G, H, 410] 4. When a company is composed mostly of family member owning lion 's share in the entire share capital of the company the onus to keep clear of the reach of section 23A will be on the shareholders by adducing some positive evidence about the absence of control by the controlling shareholders. [410 B] 5. No single factor can be decisive but having regard to the totality of the circumstances revealed in the case and the conduct of the transactions of the company taken with the relationship which in the circumstances of this case is not a negligible element this Court is dearly of the opinion that it is a case in which it cannot be said that the public is substantially interested in 25 per cent or more shares of the company. [410D E] 6. Even if A. K. Jain is said to be a member of the public, his shares together with the shares of Ashoka Agencies Limited is 500 less than the r minimum shareholding requisite to earn the benefit of the third proviso to section 23A read with the explanation. [410 E] 400 7. Between August 11, 1951 and May 1, 1952, A. K. Jain and 2 employee Directors apparently took all decisions for the company in the Board 's meetings. This is not ordinarily possible but for collaboration with the major shareholders. This is a case where more is meant than meets the eye. [410E F] 8. It is A clear case of all the shareholders acting in concert and in unison and the two employee Directors were merely dummies. There is not the slightest inkling of the public being interested far less substantially interested in this company. [410G] 9. The intimate relationship of the shareholders, with not the least evidence of disconcert amongst them, the ordinary expectation for individual profit in commercial undertaking, the history of the company and its continued smooth working is inconsistent with anything but full unison amongst the shareholders. The Board 's meetings are evidence of well organised, well knit, close unity of vie vs in all affairs which in ordinary course of human conduct would not have been at all possible but for a single or concerted action in the company management by a controlling group. [410D F]

tition (Crl) No. 1792 of 1981. (Under article 32 of the Constitution of India) V.M. Tarkunde, G. C. Patel and K. Prasad for the Petitioner. M. K. Banerjee, Additional Solicitter General and Miss A, Subhashini for the Respondent. 984 The Judgment of the Court was delivered by SEN, J. This petition under article 32 of the Constitution raises a question of some nicety. The question is whether the 'right to be defended by a legal practitioner of his choice ' under article 22(1) of the Constitution comprehends the right of an accused to be supplied with a lawyer by the State. The petitioner is an advocate on record practising in this Court and has been arraigned along with four others to stand his trial for the commission of an alleged offence of murder in furtherance of criminal conspiracy punishable under section 302 read section 120 B of the Indian Penal Penal Code in what is known as the Samastipur Bomb Blast case in the Court of the Additional Sessions Judge, Delhi. Bawa Gurcharan Singh engaged by the main accused Santoshanand and Sudevanand as senior counsel was also appearing for the petitioner as a matter of professional courtesy to a fellow member of the Bar. The evidence of the first approver P.W. 1 Madan Mohan Srivastava @ Visheshwaranand was concluded on March 25, 1981 and he was cross examined by Bawa Gurcharan Singh on behalf of the main accused as well as the petitioner, and by P. P. Grover appearing on behalf of the other two accused Arteshanand and Gopalji. On the same day, Bawa Gurcharan Singh withdrew his appearance for the petitioner and thereafter the petitioner himself has been conducting the case. The recording of the evidence of the second approver P.W. 2 Jaldhar Dass @ Vikram has already commenced. The petitioner contends that although he is not an indigent person he as a struggling lawyer has neither the capacity nor the means to engage a competent lawyer for his defence. He com plains that under the rules framed by the Delhi High Court, a princely sum of Rs. 24 per day is fixed as fee payable to a lawyer a appearing in the Court of Sessions as amicus curiae, and as the sessions trial in which he is involved lasts three days on an average in a week, no lawyer of sufficient standing will find it possible to appear as counsel for his defence. He alleges that the prosecution is being conducted by a special public prosecutor assisted by a galaxy of lawyers specially engaged by the State and large amounts are being paid as their fees. As a matter of processual fair play it is incumbent on the State to provide him with a counsel for his defence on a basis of equal opportunity as guaranteed under Art, 985 39A of the Constitution. Upon this basis, he seeks the issuance of a writ in the nature of Mandamus and other appropriate writs, directions and orders to ordain the Union of India to give financial assistance to him to engage a counsel of his choice on a scale equivalent to, or commensurate with, the fees that are being paid to the counsel appearing for the State. During the pendency of the writ petition, the Court by its interim order dated June 4, 1981 having regard to the fact that the petitioner is a practising lawyer and is involved in a long drawn sessions trial, directed that the State should undertake to help him in the matter of his defence so far as the payment of fees to his counsel to defend him in the trial was concerned. It directed that the petitioner will inform the Court of Sessions the name of the counsel who would be appearing for him with a direction that the State would make necessary arrangement to pay the amount required to be expended on his fees subject to final accounting to be made depending on the result of the writ petition. By the subsequent order dated August 18, 1981 the Court in modification of the earlier order quantified that a sum of Rs. 500 per day will be paid by the State to the senior counsel and Rs. 250 per day to the junior for representing the petitioner. At the hearing it was urged by learned counsel for the petitioner that suitable directions be made in conformity with the interim orders passed by the Court for payment of a reasonable amount as fees to the amicus curiae who appears for the petitioner at the trial. The learned Additional Solicitor General on the other hand takes serious exception to the directions made by the Court and contends that the petitioner has no legal right to be supplied with a lawyer by the State nor is there any corresponding obligation cast on the State to give financial assistance to him to engage a counsel of his choice. According to him, the remedy of the petitioner is to make an application before the learned Additional Sessions Judge under sub section (1) section 304 of the Code of Criminal Procedure, 1973 to provide him with free legal aid and it is for the learned Additional Sessions Judge to be satisfied on material placed before him that the petitioner is not possessed of sufficient means to engage a counsel. The submission is that it is upon the fulfillment of this condition that a direction can be made to provide a counsel for his defence at the expense of the State. He accordingly contends that no petition under article 32 of the Constitution is maintainable. 986 The petition is virtually for the enforcement of the Directive Principle of State Policy enshrined in article 39A of the Constitution which reads: "39A. The State shall secure that the operation of the legal system promotes justice, on a basis of equal opportunity, and shall, in particular, provide free legal aid, by suitable legislation or schemes or in any other way, to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities. " There can be no doubt that the petitioner is not entitled to the grant of a writ of Mandamus for the enforcement of the Directive Principle enshrined in article 39A by ordaining the Union of India to give financial assistance to him to engage a counsel of his choice on a scale equivalent to, or commensurate with, the fees that are being paid to the counsel appearing for the State. As is clear from the terms of article 39A, the social objective of equal justice and free legal aid has to be implemented by suitable legislation or by formulating schemes for free legal aid. The remedy of the petitioner, if any, lies by way of making an application before the learned Additional Sessions Judge under sub section (1) of section 304 of the Code of Criminal Procedure, 1973, and not by a petition under article 32 of the Constitution. The traditional view expressed by this Court on the interpretation of article 22(1) of the Constitution in Janardan Reddy & Ors. vs The State of Hyderabad & Ors.(1) that 'the right to be defended by a legal practitioner of his choice ' could only mean a right of the accused to have the opportunity to engage a lawyer and does not guarantee an absolute right to be supplied with a lawyer by the State, has now undergone a change by the introduction of the Directive Principle of State Policy embodied in article 39A by the Constitution (Forty Second) Amendment Act, 1976, and the enactment of sub section (1) of section 304 of the Code of Criminal Procedure. It was in this case that the Court observed that the American rule enunciated in the case of Powell. vs Aalbama(2) founded on the doc trine of 'due process ' was not applicable to India and that under article 22(1) there was no absolute right to an accused to be supplied 987 with a lawyer by the State. There has been a definite shift in the stance adopted by the Court by its decisions in Maneka Gandhi vs Union of India(1), E. P. Royappa vs State of Tamil Nudu(2) R.D. Shetty vs The International Airport Authority of India & Ors.(3) In Maneka Gandhi 's case, supra, the Court observed that the requirement of compliance with natural justice was implicit in article 21 and that if any penal law did not lay down the requirement of hearing before effecting him, that requirement would be implied by the Court so that the procedure prescribed by law would be reasonable and not arbitrary procedure. The procedure which was 'arbitrary ' oppressive or fanciful, was no 'procedure ' at all. A procedure which was unreasonable could not be said to be in conformity with article 14 because the concept of reasonableness permeated that Article and arbitrariness is the antithesis of equality guaranteed under article 14. It is difficult to hold in view of these decisions that the substance of the American doctrine of 'due process ' has not still been infused into the conservative text of Art 21. Although in the earlier decisions the Court paid scant regard to the Directives on the ground that the Courts had little to do with them since they were not justiciable or enforceable, like the Fundamental Rights, the duty of the Court in relation to the Directives came to be emphasized in the later decisions which reached its culmination in Keshavanand Bharti vs Union of India(4) laying down certain broad propositions. One of these is that there is no disharmony between the Directives and the Fundamental Rights because they supplement each other in aiming at the same goal of bringing about a social revolution and the establishment of a welfare State, which is envisaged in the Preamble. The Courts therefore have a responsibility in so interpreting the Constitution as to ensure implementation of the Directives and to harmonize the social objective Underlying the Directives with the individual rights. Primarily, the mandate in article 39A is addressed to the Legislature and the Executive but insofar as the Courts of Justice can indulge in some judicial law making within the interstices of the Constitution or any statute before them for construction, the Courts too are bound by this mandate. 988 Read with article 21, the Directive Principle in article 39A has been taken cognizance of by the Court in M. H. Hoskot vs The State of Maharashtra(1), State of Haryana vs Darshana Devi & Ors.(2) and Hussainara Khatoon & Ors. vs Home Secretary, State of Bihar, Patna(3) to lead to certain guidelines in the administration of justice. One of these is that when the accused is unable to engage a counsel owing to poverty or similar circumstances, the trial would be vitiated unless the State offers free legal aid for his defence to engage a lawyer whose engagement the accused does not object. This more or less echoes the moving words of Sutherland, J. in Powell 's case, (supra). 'The right to the aid of counsel ', wrote Sutherland, J., 'is of a fundamental character '. In this country (i e. United States of America) 'historically and in practice ', a hearing has always included 'the right to the aid of counsel when desired and provided by the party asserting the right '. Sutherland, J. went on to indicate why this should be so: "The right to be heard would be, in many cases, of little avail if it did not comprehend the right to be heard by counsel. Even the intelligent and educated layman has small and sometimes no skill in the science of law. If charged with crime, he is incapable, generally, of determining for himself whether the indictment is good or bad. He is unfamiliar with the rules of evidence. Left without the aid of counsel he may be put on trial without a proper charge, and convicted upon incompetent evidence, or evidence irrelevant to the issue or otherwise inadmissible. He lacks both the skill and knowledge adequately to prepare his defence, even though he have a perfect one. He requires the guiding hand of counsel at every step in the proceedings against him. Without it, though he be not guilty, he faces the danger of conviction because he does not know how to establish his innocence." But he did not stop there. If the accused were unable to get counsel, even though opportunity were offered, then the 'due process ' clause in the Fourteenth Amendment required the trial court 'to make 989 effective appointment of counsel '. This was new law, and so it was natural that the Court would set careful limits for the new principle; "Whether this would be so in other criminal prosecutions, or under other circumstances, we need not deter mine. All that it is necessary now to decide, as we do decide, is that in a capital case, where the defendent is unable to employ counsel, and is incapable adequately of making his own defence because of ignorance, feeble mindedness, illiteracy, or the like, it is the duty of the Court, whether requested or not, to assign counsel for him as a necessary requisite of due process of law; and that duty is not discharged by an assignment at such a time or under such circumstances as to perclude the giving of effective aid in the preparation and trial of the case," It must be stated that Powell 's case involved a capital punishment where the accused was unable to employ counsel due to his indigence and therefore was incapable adequately of making his own defence, and according to the Supreme Court, the failure of the trial court to give reasonable time and opportunity to secure counsel was a clear denial of due process. There was a clear departure by the Supreme Court of the United States in Betts vs Brady(1) where the Court made an abrupt break and held that the 'due process ' clause of the Fourteenth Amendment did not impose upon the States, as the Sixth Amendment imposed upon the Federal Government, an absolute requirement to appoint counsel for all indigent accused in criminal cases. It required the State to provide a counsel only where the the particular circumstance of a case indicated that the absence of counsel would result in a trial lacking 'fundamental fairness '. Ever since the decision in Bett 's case, the problem of the constitutional right of an accused in a State Court became a continuing source of controversy until it was set at rest in the celebrated case of Guideon vs Wainright.(2) Under the rule laid down in Bett 's case, the Court had to consider the 'special circumstances ' in each case to determine whether the denial of counsel had amounted to a constitutional 990 defect in the trial and in an era of constantly expanding federal restrictions on State criminal processes, it was hardly startling that the Court in Gideon 's case explicitly rejected the rule laid down in Bett 's case and held that 'Sixth Amendment 's (unqualified) guarantee of counsel for all indigent accused ' was a "fundamental right made obligatory upon the State by the Fourteenth Amendment". We are however not in the United States of America and therefore not strictly governed by the 'due process ' clause in the Fourteenth Amendment. We therefore need not dilate on the subject any further. In recent years, it has increasingly been realized that there cannot be any real equality in criminal cases unless the accused gets a fair trial of defending himself against the charge laid down and unless he has competent professional assistance. The Law Commission in its Fourteenth Report Volume I on the subject "Reform of Judicial Administration" made certain recommendations for State aid. One of those was that "representation by a lawyer should be made available at Government expense to accused persons without means in all cases tried by a Court of Sessions". This recommendation has now been codified in sub section (1) of section 304 of the Code of Criminal Procedure which reads . Legal aid to accused at state expense in certain cases: (1) Where, in a trial before the Court of Session, the accused is not represented by a pleader, and where it appears to the Court that the accused has not sufficient means to engage a pleader, the Court shall assign a pleader for his defence at the expense of the State. " The Law Commission in its Forty Eighth Report suggested for making provision for free legal assistance by the State for all accused who are undefended by a lawyer for want of means. This recommendation still remains to be implemented. Many a time, it may be difficult for the accused to find sufficient means to engage a lawyer of competence. In such a case, the Court possesses the power to grant free legal aid if the interests of justice so require. The remedy of the petitioner therefore is to make an application before the Additional Sessions Judge making out a case for the grant of free 991 legal aid and if the learned Additional Sessions Judge is satisfied that the requirements of sub section (1) of section 304 of the Code are fulfilled, he may make necessary directions in that behalf. While fixing the fee of counsel appearing for the petitioner, the learned Additional Sessions Judge shall fix the amount of fee having regard to the interim orders passed by this Court. But if he feels that he is bound by the constraints of the rules framed by the Delhi High Court prescribing scales of remuneration for empanelled lawyers, he shall make a reference to the High Court for suitable directions. On such reference being made, the High Court shall consider in its undoubted jurisdiction under article 227 (3) of the Constitution whether the scales of remuneration prescribed for empanelled lawyers appearing in sessions trials are not grossly insufficient and call for a revision. That however is a matter which clearly rests with the High Court and we wish to say no more. We only wish to impress that the contention advanced before us has been that the existing rules are wholly antiquated and do not take into account the realities of the situation. It was urged that under the present scales of fee as prescribed by the Delhi High Court for empanelled lawyers appearing in sessions trials, it is impossible for a person facing a sessions trial on a capital charge to get competent professional assistance. Surely, the High Court has ample power to fix a reasonable amount as fee payable to counsel appearing for the petitioner In the facts and circumstances of the present case. We direct that in case the amount so fixed is lower than the scales of fee fixed by this Court by its interim orders, the excess amount paid to the petitioner in terms thereof shall not be recoverable. With these observations, the writ petition must fail and is dismissed with no order as to costs. H.L.C. Petition dismissed.

The petitioner, an Advocate facing trial under section 302 read with section 120 B, I.P.C. submitted that the prosecution case against him was being conducted by a galaxy of lawyers specially engaged by the State on large sums of fee but he did not have the means to engage a competent lawyer for his defence, that no lawyer of sufficient standing would find it possible to appear as amicus curiae on a fee of Rs. 24 per day fixed by the Delhi High Court; that while article 22(1) of the Constitution comprehends the right of an accused to be supplied with a lawyer by the State, under article 39 A, as a matter of processual fair play, it is incumbent on the State to provide him with a counsel on a basis of equal opportunity; and therefore, the respondent should be directed to give financial assistance to him to engage a counsel of his choice. Counsel for respondent contended that the petition under article 32 was not maintainable and that the remedy of the petitioner was to make an application under sub section (1) of section before the Court of Sessions. During the pendency of the petition the Court passed interim orders asking the petitioner to inform the Court of Sessions the name of the counsel who would be appearing for him and directing the State to make necessary arrangements for payment of the amount required to be expended on his fees. Dismissing the petition, ^ HELD (a) The petitioner is not entitled to the grant of writ of Mandamus for the enforcement of the Directive Principle enshrined in article 39 A by ordaining the respondent to give financial assistance to him to engage a counsel of his choice on a scale equivalent to, or commensurate with, the fees that are being paid to the counsel appearing for the State. As is clear from the terms of article 39 A, the social objective of equal justice and free legal aid has to be implemented by suitable legislation or by formulating schemes for free legal aid. [986 C E] (b) The traditional view expressed by this Court on the interpretation of article 22(1) that "the right to be defended by a legal Practitioner of his 983 choice" could only mean a right of the accused to have the opportunity to engage a lawyer and does not guarantee . an absolute right to be supplied with a lawyer by the State, has now undergone a change with the introduction of article 39 A in the Constitution, the enactment of sub section (1) of section and the later pronouncement of this Court. Read with article 21, the Directive Principle in article 39 A has been taken cognizance of by the Court to lead to certain guidelines in the administration of justice. One or these is that when the accused is unable to engage a counsel owing to poverty or similar circumstances, the trial would be vitiated unless the State offers free legal aid for his defence to engage a lawyer, whose engagement the accused does not object. [986 F H, 987 A C] Janardun Reddy & Ors. vs The State of Hyderabad & Ors. ; ; Powell vs Alabama, ; ; Maneka Gandhi vs Union of India, (1978) 2 S.C.R. 621; E.P. Royapa vs State of Tamil Nadu, ; ; R.D. Shetty vs The International Airport Authority of India & Ors., ; ; Keshavanand Bharti vs Union of India, (1973) 4 S.C.C. 225; M.H. Hoskot vs The State of Maharashtra, ; ; State of Haryana vs Darshana Devi & Ors. ; ; Hussainara Khatoon & Ors. vs Home Secretary, State of Bihar, Patna, ; ; Betts vs Brady, ; and Gideon vs Wainright, 9th L.Ed. 2D 799 referred to. In the instant case the remedy of the petitioner is to make an application before the Additional Sessions Judge for grant of free legal aid and if the latter is satisfied that the requirements of sub section (1) of section are fulfilled, he may make necessary directions in that behalf. The Additional Sessions Judge shall fix the amount of fee payable to Counsel appearing for the petitioner having regard to the interim orders passed by this Court. But if he feels that he is bound by the constraints of the rules framed by the Delhi High Court prescribing scales of remuneration for empanelled lawyers, he shall make a reference to the High Court and the High Court shall consider whether the scales of remuneration prescribed for empanelled lawyers appearing in Sessions trials are not grossly insufficient and call for a revision. The High Court has ample power to fix a reasonable amount as fee payable to counsel appearing for the petitioner in the facts and circumstances of the present case. In case the amount so fixed is lower than the scales of fee fixed by this Court by its interim orders, the excess amount paid to the petitioner in terms thereof shall not be recoverable. [990 A, 991 A F]

: Criminal Appeal No. 53 of 1974. From the Judgment and Order dated 2 11 1973 of the Orissa High Court in Govt. Appeal No. 10/1971. Y. section Chitle, and U. P. Singh for the Appellant. D. Mookherjee and B. P. Parthasarthi for the Respondent. The Judgment of the Court was delivered by FAZAL ALI J. This appeal under section 2(a) of the is directed against the judgment of the High Court of Orissa dated 2 11 1973 convicting the appellants section 302/149 of Indian Penal Code and sentencing them to imprisonment for life. The appellants along with other accused person were tried before the Sessions Judge under section 302/149 for causing murder of two persons namely Ghansham and his brother Antarjami. The Trial Court after considering the evidence acquitted all the accused of the charges framed against them. Thereafter the State of Orissa filed an appeal before the High Court against the order of acquittal passed by the Sessions Judge and in the said appeal the High Court reversed the judgment of the Sessions Judge so far as the appellants were concerned and convicted and sentenced them as indicated above. Hence this appeal before us. The facts of the case are detailed in the judgment of the High Court and it is not necessary for us to repeat them. It appears that shortly before the date of occurrence, there was a partition suit between the parties in respect of certain properties enjoyed by accused Banshi and Ghana. On 2 12 1968, according to the prosecution, the accused persons armed with lathis, Bhusas and valies came to the house of the deceased Ghansham and called him out. When Ghansham opened the door, the accused Banshi stabbed Ghansham on the chest as a result of which Ghansham fell down and died. On hearing the alarm, the other deceased Antarjami who was brother of Ghansham went to the spot and he was also assaulted by the accused persons. This occurrence had taken place near about 7.00 a.m. F. I. R. was sent to Bramhagiri Police Station where it was lodged and a case was registered. After the usual investigation, police submitted charge sheet against all the accused persons who were tried by the Sessions Judge with the result mentioned above. It appears that the Trial Court after considering the evidence of the eye witness examined before it came to a clear finding that none 804 of the eye witnesses were reliable and hence the accused could not be convicted on the basis of their testimony. One of the main considerations which swayed with the trial Court in coming to this conclusion was that in view of the dying declaration exhibit 9 made by Antarjami, the evidence of the eye witnesses becomes improbable, and is in fact falsified. The learned Sessions Judge also disbelieved the dying declaration as it was inconsistent with the oral evidence. We might mention here that the Sessions Judge committed an error of law in rejecting the dying declaration because if the evidence of the eye witnesses was to be rejected on the ground that it was inconsistent with the dying declaration then it would in the circumstances not necessarily follow that the dying declaration was also unreliable and unworthy of credence. The High Court while endorsing the findings of the Trial Court that no reliance could be placed on the eye witnesses appears to have founded the conviction of the appellants mainly on the basis of the dying declaration exhibit 9 recorded by Dr. Mohanty on 3 12 1968 at the hospital. The High Court has given cogent reasons for holding that the dying declaration is absolutely true and reliable and was sufficient to establish the prosecution case against the appellants. We have also gone through the entire dying declaration exhibit 9 very carefully and we find that the statement made by Antarjami is straight forward, rational, consistent and absolutely coherent. There appears to be a ring of truth in the statement made by Antarjami. Counsel for the appellant has fairly conceded that there is no evidence whatsoever to indicate that there was any possibility of prompting the deceased to make a tainted statement. The dying declaration was attacked by the counsel for the appellant on three grounds. In the first place, it was submitted that as the deceased Antarjami was in a state of shock, it was unsafe to rely on the dying declaration; secondly it was contended that as the dying declaration was incomplete, it should not be acted upon and thirdly it was pointed out that Antarjami had implicated some persons other than the accused also in the assault on him and his brother, therefore the dying declaration could not be said to be true. So far as the first contention is concerned; namely whether the deceased was in a state of shock, it is true that the doctor who had recorded the dying declaration had stated that the deceased was in a state of shock because he had received a serious injury in the abdomen which has to be stitched. The doctor was however not cross examined as to the fact whether or not despite the shock, the deceased had retained his mental faculties. On the other hand; a 805 bare perusal of the dying declaration and the coherent and consistent statement made by Antarjami clearly reveals the fact that the deceased was fully conscious and was not suffering from any confusion or hallucination. The deceased has clearly stated the motive for the occurrence namely dispute about the partition. He has also named the four appellants and stated that he and his brother were assaulted by valies and lathis and it is not disputed by the prosecution that the appellants were armed with these weapons. It is true that while naming the appellants, the deceased has also named some other persons but the mere fact that those persons were not challaned does not detract from the value of the dying declaration because it may well be that what the deceased was saying was true and the persons who were left out from the category of accused in the F.I.R. or the challan may be due to ulterior motives. Dr. Chitale however relied on a passage in Taylor 's 'Principles and Practice of Medical Jurisprudence ' Twelfth Edition particularly on the following passage: 'Assess very carefully the mental condition of the patient. When shock ensues upon violence, especially when severe loss of blood or some grievous head injury is leading to death, the intellect of the dying person becomes confused. If the doctor observes any wandering or want of clearness in the mind of the patient, he must mention it in connection with his evidence; but this does not absolve him from his duty, although it should make him particularly careful when interpreting his notes. " We are unable to place any reliance on these observations in absence of any question put to the doctor by the accused in his cross examination regarding the view expressed by the author regarding the state of mind of the deceased. It has been held by this Court in several cases that whenever a particular view taken by authors of medical jurisprudence is adumbrated, the same must be put to the doctor to assess how far the view taken by the experts apply to the facts of the particular case. On the other hand, the last certificate given by the doctor towards the end of the dying declaration that the patient became semi unconscious clearly shows that the deceased was, fully conscious when he started making the dying declaration before the doctor. For these reasons therefore, the first ground taken by the appellant fails and is not tenable. As to the second ground, namely that the dying declaration was incomplete, we are unable to accept this contention because we find that the deceased 806 Antarjami could not answer the last question which was "what more you want to say" because he became semi unconscious and was unable to answer any further question. A perusal of the entire dying declaration would clearly show that the doctor had asked all the necessary questions that could be asked from the deceased and the last question was merely in the nature of a formality. It is obvious that having narrated the full story there was nothing more that the deceased could add. We are therefore unable to hold that the present dying declaration is an incomplete one. Reliance was placed by the counsel for the appellant in the case of Cyril Waugh vs The King,(1)wherein it was held that no reliance could be placed where a dying declaration was incomplete. Reference to the facts of the case would show that the statement made by the deceased was really incomplete in as much as the deceased was unable to complete the main sentence where he was trying to describe the genesis and motive of the occurrence. The deceased in that case stated as "when he fired the short, he missed the other man. The man has an old grudge for me simply because. ". It is clear from the statement of the deceased in that case that the deceased wanted to give the motive for the occurrence and other relevant facts which he could not say before the dying declaration was closed. This case therefore would have no application to the facts of the case. As regards the last contention that the deceased had implicated some other persons also show that it was not true, we have already pointed out that merely because some other persons were named and not challaned would not by itself prove the falsity of the dying declaration. Finally on the question of law, it was argued that a dying declaration unless corroborated should not be acted upon. Reliance was placed on a decision of this Court in Ram Nath Madhoprasad & Ors. vs State of M.P.(2). This decision, no doubt, supports the contention of the appellant but since then this Court has departed from the view taken in the case referred to above and has held that if the dying declaration is believed, it can be relied upon for convicting the accused even if there is no corroboration. In Khushal Rao vs The State of Bombay,(3) it was pointed out that section 32(1) of the Evidence Act attaches special sanctity to a dying declaration and unless such a dying declaration can be shown to be unreliable, it will not affect its admissibility. It was further 807 held that although a dying declaration has to be closely scrutinised, once the Court comes to the conclusion that it is true, no question of corroboration arises. In this connection, the Court made the following observations: "The Legislature in its wisdom has enacted in section 32(1) of the Evidence Act that "When the statement is made by a person as to the cause of his death, or as to any of the circumstances of the transaction which resulted in his death, in cases in which the cause of that person 's death comes into question", such a statement written or verbal made by a person who is dead (omitting the unnecessary words) it self a relevant fact. This provision has been made by the Legislature, advisedly, as a matter of sheer necessity by way of an exception to the general rule that hearsay is no evidence and that evidence, which has not been tested by cross examination, is not admissible. The purpose of cross examination is to test the veracity of the statements made by a witness. In the view of the Legislature, that test is supplied by the solemn occasion when it was made, namely, at a time when the person making the statement was in danger of losing his life. At such a serious and solemn moment, that person is not expected to tell lies and secondly, the test of cross examination would not be available. In such a case, the necessity of oath also has been dispensed with for the same reasons. Thus, a statement made by a dying person as to the cause of death has been accorded by the Legislature a special sanctity which should, on first principles, be respected. . . But in our opinion, there is no absolute rule of law, or even a rule of prudence which has ripened into a rule of law, that a dying declaration unless corroborated by other independent evidence, is not fit to be acted upon, and made the basis of a conviction. " In this case this Court did not approve of the law laid down in the earlier decision which is reported in A.I.R. 1953, p. 420. To the same effect is a later decision of this Court in the case of Tarachand Damu Sutar vs The State of Maharashtra(1) which is a decision rendered by five Judges of this Court which has also taken the view that once a dying declaration is found to be true, it can be 808 acted upon without any corroboration. Thus, the view taken by this Court by the three judges in A.I.R. 1953, p. 420 stands overruled by this decision. Same view was taken by this Court in the case of Mannu Raja & Anr. vs State of M.P.(1) which has been relied upon by Mr. D. Mookherjee, counsel for the State. There are a number of later decision of this Court also to the same effect but it is unnecessary to multiply authorities. It is thus manifest that a person on the verge of death is most unlikely to make an untrue statement unless prompted or tutored by his friends or relatives. In fact the shadow of immediate death is the best guarantee of the truth of the statement made by a dying person regarding the causes or circumstances leading to his death which are absolutely fresh in his mind and is untainted or discoloured by any other consideration except speaking the truth. It is for these reasons that the Statute (The Evidence Act) attaches a special sanctity to a dying declaration. Thus, if the statement of a dying person passes the test of careful scrutiny applied by the Courts, it becomes a most reliable piece of evidence which does not require any corroboration. Suffice it to say that it is now well established by a long course of decisions of this Court that although a dying declaration should be carefully scrutinised but if after perusal of the same, the Court is satisfied that the dying declaration is true and is free from any effort to prompt the deceased to make a statement and is coherent and consistent, there is no legal impediment in founding the conviction on such a dying declaration even if there is no corroboration. For these reasons, therefore, we find ourselves in complete agreement with the opinion of the High Court that even excluding the evidence of the eye witnesses, the dying declaration is true and reliable and sufficient to found the conviction of the appellant. For these reasons therefore the appeal fails and is accordingly dismissed. N.V.K. Appeal dismissed.

The appellants along with other accused persons were tried under section 302/149 I.P.C. for causing murder of two persons. While one of the deceased died on the spot the other who was removed to hospital, gave a dying declaration to the doctor before dying. The Sessions Judge finding that none of the eye witnesses examined was reliable and as the accused could not be convicted on the basis of their testimony acquitted all the accused. He further held that the evidence of the eye witnesses was rendered improbable and was in fact falsified by the dying declaration exhibit 9. On appeal by the State, the High Court held that the dying declaration exhibit 9 was absolutely true and reliable and was sufficient to establish the prosecution case. It accordingly convicted and sentenced the appellants to imprisonment for life. In the appeal to this Court, it was contended on behalf of the appellants that (1) as the deceased was in a state of shock, it was unsafe to rely on the dying declaration, (2) as the dying declaration was incomplete it could not be acted upon, and (3) as the deceased had implicated some persons other than the accused, the dying declaration could not be said to be true. Dismissing the appeal, ^ HELD: 1. The High Court was right in holding that even excluding the evidence of the eye witnesses the dying declaration is true and reliable and sufficient to found the conviction of the appellants. [808 F] 2. The Sessions Judge committed an error in law in rejecting the dying declaration because if the evidence of the eye witnesses was to be rejected on the ground that it was inconsistent with the dying declaration, it would not necessarily follow that the dying declaration was also unreliable and unworthy of credence. [804 C] 802 3. (a) This Court has held that whenever a particular view taken by authors of Medical Jurisprudence, is adumbrated, the same must be put to the doctor to assess how far the view taken by the experts apply to the facts of the particular case. [805 G] In the instant case though the doctor who had recorded the dying declaration had stated that the deceased was in a state of shock because he had received a serious injury in the abdomen which had to be stitched, he was however not crossed examined as to the fact whether or not despite the shock, the deceased had retained his mental faculties. On the other hand, the last certificate given by the doctor towards the end of the dying declaration that the patient became semi conscious clearly shows that the deceased was fully conscious when he started making the dying declaration before the doctor. [804 H, 805 G] (b) A perusal of the entire dying declaration clearly shows that the doctor had asked all the necessary questions that could be asked from the deceased and the last question "what more you want to say" was merely in the nature of a formality. Having narrated the full story, there was nothing more that the deceased could add. The dying declaration was therefore not incomplete one. [806 B] Cyril Waugh vs The King, , distinguished. (c) Merely because some other persons named in the dying declaration were not challaned would not by itself prove the falsity of the dying declaration. It may be that these, persons were left out from the category of accused in the F.I.R. or the challan due to ulterior motives. [806 E, 805 C] 4. A person on the verge of death is most unlikely to make an untrue statement unless prompted or tutored by his friends or relatives. The shadow of immediate death is the best guarantee of the truth of the statement by a dying person regarding the causes or circumstances leading to his death which are absolutely fresh in his mind and is untainted or discoloured by any other consideration except speaking the truth. It is for these reasons that the Statute (The Evidence Act) attaches a special sanctity to a dying declaration. [808 B C] 5. It is well established that although a dying declaration should be carefully scrutinised if after perusal the Court is satisfied that the dying declaration is true and is free from any effort to prompt the deceased to make a statement and is coherent and consistent, there is no legal impediment in founding the conviction on such a dying declaration even if there is no corroboration. [808 D E] Khushal Rao vs The State of Bombay ; ,; Tarachand Damu Sutar vs The State of Maharashtra ; ; Mannu Raja & Anr. vs State of M.P. ; referred to. Ram Nath Madhoprasad & Ors. vs State of M.P. AIR 1953 SC 420, overruled.

ivil Appeals Nos. 1261 1264 of 1975. (From the Judgment and Order dated 1/2.7.1975 of the Karnataka High Court in Writ Petition Nos. 1607, 1608 and 2739/74 respectively). V.P. Raman, Addl. (in CA. 1261/75) and B.R.G.K. Achar (In CAs. 1261 1264/75) for the Appellants. D.V. Patel (In CA. 1261/75), S.S. Khanduja & S.K. Jain for Respondents 1 2 in CA. 1261/75 and Respondent No. 1 in CAs. 2263 1264/75. V.P. Raman, Addl. General and Girish Chandra for Intervener in CA 1261/75. The Judgment of the Court was delivered by GUPTA, J. These are four appeals brought on certifi cates of fitness granted by the High Court of Karnataka. The question which according to the High Court needs to be decided by this Court was framed as follows: "whether in the personality test of candi dates for selection to public appointments, the selecting authority should allot separate marks for each of the seven qualities required to be judged in a candidate or whether it is permissible for the selecting authority to allot marks in a lump in each personality test. " Considering the facts of these cases which we will presently state, the question seems to have been framed a little too broadly. The Karnataka Public Service Commission (called the Commission hereinafter) by its notification dated Sep tember 7, 1972 called for applications for the combined competitive examinations under the Karnataka Recruitment of Gazetted Probationers (Class I and II Post appointment by Competitive Examinations) Rules, 1966. In response to this notification, the respondents in these appeals along with others applied for selection. The Commission held a written examination followed by a personality test as pro vided by rule 9 of the rules and sent a list of 30 candi dates whom they selected for appointment as class I gazetted probationers, and another list of 88 candidates for appoint ment as class II gazetted probationers. The manner in which the personality test is to be held is laid down in Part IV of Schedule 11 to Rules, the relevant portion of which is as follows: "Personality test carrying a maximum marks of 200 for all Services. The candidates will be interviewed by the Commission who will have before them their particulars such as qualification, experience, age etc. They will be asked questions of general interest, the object of the viva voce is to assess the personal suitability of the candi dates for. the service or services for which they have applied. The 325 qualities to be judged at the time of viva voca are the mental alertness, critical powers of assimila tion, clear and logical exposition, balance of judgment, variety and depth of interest, ability for social cohesion and leadership and intellectual depth of the candidates. " Five of the respondents in the four different appeals who were not selected, M. Farida, P.V. Mohan, B.R. Kulkarni, L.V. Dharmayat and M.R. Devappa had applied for the posts of gazetted probationers, class II, two of them, Farida and Mobart, were also applicants for the class I post. They filed writ petitions in the Karnataka High Court, Farida and Mohan jointly, and each of the three others separately, challenging the selec tions made. Their common grievance was that the personality test held by the Commission was invalid as the selection committee did not award separate marks for each of the seven qualities which were required to be judged in the candidates at the test. Admittedly, the selection committee did not allot separate marks for each of the specified qualities, but awarded a block mark to each candi date in assessing his personality with reference to those qualities. The argument for the writ peti tioners in the High Court was that the personality test as required under the Rules was an objective test based upon seven factors or criteria, and, therefore, it was essential that separate marks were allotted in respect of each such factor or criterion. In support of this contention reliance was placed on a decision of the Mysore High Court, D.G. Viswanath vs Chief Secretary, Government of Mysore, (1) and the decision of this Court in ,A. Periakaruppan & ,Anr. vs State of Tamil Nadu & Ors. (2) which appears to affirm the view expressed in Viswanath 's case. On behalf of the State of Karna taka it was contended that the seven qualities referred to in Part IV of schedule II were merely different facets of the integrated personality of a candidate which could not easily be demarcated from one another, and, therefore, awarding a block mark on an appraisal of the personality of the candidate as a whole was the correct method. The High Court found that there was "considerable force in the contention of the learned Government advocate", but felt that in view of the decision in Periakatup pan 's case the writ petitions must succeed, and by a common judgment allowed the. petitions directing the State of Karnataka and the commission to hold a fresh personality test. These appeals arise out of these four writ petitions. In Periakaruppan 's case this Court was consid ering a case of admission to certain medical col leges in the State of Tamil Nadu. In that case the selection committees were authorised to give a maximum of 75 marks at the interview on the basis of the following tests: 1. Sports or National Cadet Corps activities; 2. Extra curricular special services; 3. General physical condition and endurance; 4. General ability; and 5. Aptitude. (1) [19631 2 Mysore L.J. 302. (2) [19711 2 S.C.R. 430. 326 periakaruppan 's case came up on a writ petition before this Court. The petitioners in that case challenged the selections, inter alia, on the ground that the selections were manipulated by the Government. This Court came to the conclusion that the allegations of malafide had not been estab lished, but by its judgment and order dated Septem ber 23, 1970 directed the State of Thamil Nadu to constitute a separate committee for selection on the view that as the previous selection committee had not divided the "interview" marks under the aforesaid five different heads but awarded marks in a lump, the interview was vitiated. This Court accordingly ordered that the Committee should allot separate marks under the five heads mentioned in the rule. periakaruppa 's case approved the decision of the Mysore High Court in Viswanath 's case. The Mysore High Court had held that it could not be said that the Government had conferred an unguided power on the selection committees and, therefore, "in the absence of specific allocation of marks for each head, it must be presumed that the Government considered that each of the heads should carryas being equal in importance to any other," and that it must be inferred that the intention of the Government was that each one of those heads should carry equal marks. It appears that periakaruppan came to this Court a second time challenging the selection made by the new selection Committee constituted pursuant to the order of this Court dated September 23, 1970; one of the grounds of challenge was that despite the direction in the earlier judgment, the selection committee did not distribute the "interview" marks equally among the five heads. The second writ petition made by periakaruppan also succeeded and this Court again quashed the impugned selection. (1) Mr. Raman, Additional Solicitor General of India, appearing for the appellants and the inter vener, Union Public Service Commission, sought to distinguish parliakaruppan 's case from the cases before us on the same ground on which the Government Advocate made a similar attempt in the High Court. Mr. Raman submitted that admission to technical or professional courses with which peria karuppan 's case was concerned stood on a different footing from selection of candidates for adminis trative services as in these cases. It was argued that the test in the former case may be regarded as an objective test but in the latter it has to be subjective because the qualities specified here are intangible qualities. We do not think it is possible to distinguish periakaruppan 's case on this ground. For, as pointed out in the judgment under appeal, some of the qualities for test in Viswanath 's case which periakaruppan approved, were also intangible, like aptitude and personali ty. Further, even where the qualities to be tested are intangible qualities, if the relevant rule required that separate marks should be allotted for each, the interviewers have to follow the rule and do the best under the circumstances. Whether a block mark should be given after the interview on a consideration of the qualities evinced by a candidate, or marks are to be allotted separately under each head depends, in our opinion, upon the rule regulating the examination. In periakaruppan 's case it was held that the inten tion of the Government was that each of the 327 specified qualities should carry equal marks. In these appeals we have not been called upon to decide whether the rule concerned in Periakarup pan 's case was correctly interpreted. We do not however think that it would be correct to assume as a general proposition that in every case where the interviewing body is asked to take into considera tion several specified qualities, they must be of equal value and separate marks should be allotted under each head; on the contrary, in our opinion, where the rules do not contain a clear direction, it would be reasonable in such cases to suppose that the intention is that there should be a block assessment on an integrated test. It was observed in Periakaruppan 's case that conceding to the selection committee the right to award block marks would enable the selection committee to act arbi trarily and allot marks "as it pleased". It is not clear how the position is altered if the committee has to allot marks separately under each head if it wished to proceed "as it pleased". On this point it may be relevant to refer t.? what this Court said in R. Chitralekha and Anr. vs State of Mysore & Ors. (1) "In the field of education there are diver gent views as regard the mode of testing the capacity and calibre of students in the matter of admissions to colleges. Orthodox educationists stand by the marks obtained by a student in the annual examination, The modern trend of opinion insists upon other additional tests, such as inter view, performance in extra curricular activities, personality test, psychiatric tests etc. Obviously we are not in a position to judge which method is preferable or which test is the correct one. If there can be manipulation or dishonesty in allot ting marks at interviews, there can equally be manipulation in the matter of ' awarding marks in the written examinations. In the ultimate analy sis, whatever method is adopted its success depends on the moral standards of the members constituting the selection committee and their sense of objec tivity and devotion to duty. This criticism is more a reflection on the examiners than on the system itself. The scheme of selection, however perfect it may be on paper, may be abused in practice. That it is capable of abuse is not a ground for quashing it. " We do not think that the total arrived at by adding up the separate marks awarded for the different qualities is always a true measure of a candidate 's suitability. An illustra tion from Periakaruppan 's case would serve to clarify the point. Of the five qualities mentioned there, suppose a candidate secures full 15 marks for extra curricular activi ties but fails to get any credit under any of the other four heads, and another candidate gets a few marks under each head aggregating, say, 14 marks, one mark less than the total marks secured by the first candidate. Which of the two should be considered more qualified for admission to medical profession ? It would take great courage, we think, to hold that the candidate who secured 15 marks was more suitable. (1) ; (p. 382). 5 104SCI/76 328 The question therefore is whether rule 9 read with Part IV of Schedule 11 of the Mysore Recruitment of Gazetted Probationers (Class I and II Posts Appointment by Competi tive Examinations) Rules, 1966 required the selection committee to award separate marks for the seven qualities mentioned in Part IV. Rule 9, so far as it is relevant for the present purpose, says that the Commission shall call for a personality test five times the number of candidates as there are vacancies in the services in the order of merit on the basis of the results of written papers. Personality is commonly understood as an aggregate of traits that identifies a person and distinguishes him from others. Quite often with some practical aim, like selecting the most promising students for admission to particular courses or picking out the suitable ones from a group of job applicants, emphasis is laid some of the attributes. The end result may not be an assessment of the whole per sonality, but attributes are abstracted for study in an attempt to evaluate the man for the purpose in view. Part IV of Schedule 11 which provides the details of the test calls it a personality test, the object of which is to assess the personal suitability of the candidates for the service or services for .which they have applied. The candidates will be asked questions of general interest, on the answers to which, it appears, the assessment would depend. It is further provided that the qualities to be Judged are: mental alertness, critical powers of assimila tion, clear and logical exposition, balance of judgment, variety and depth of interest, ability for social cohesion and leadership and intellectual depth. It seems to us in the context that the qualities are mentioned only as guide, as indicating the attributes to be kept in view, in assess ing the personality of the candidates. It seems hardly possible in the test contemplated to allocate separate marks for each of the various qualities specified, because most of them overlap one another and are so intermixed that they cannot be separated, Also, the test carries a maximum mark of 200; it seems a little absurd to suppose that the seven qualities to be judged at the interview are of equal value, each carrying 28 4/7 marks. This further confirms the view that Part IV of Schedule 11 never intended that separate marks should be allotted for the several qualities stated therein. Reading Rule 9 with Part IV of Schedule 11, we are of opinion that the interviewing body was required to award a block mark on a total impression of the personality of each candidate after giving due consideration to the seven qualities specified in Part IV. For these reasons we think that the appeals should succeed. We therefore allow the appeals and dismiss the writ petitions. There will be no order as to costs P.B.R. Appeals allowed.

Rule 9 of the Karnataka Recruitment of Gazetted Proba tioners (Class I and II Posts appointment by Competitive Examinations) Rules, 1966, Prescribes a written examination for selection of candidates for the service followed by a personality test. The qualities to be judged at the time of viva voce, stipulated in Part IV of Schedule II to the rules are mental alertness, critical powers of assimilation, clear and logical exposition etc. In their writ petitions before the High Court the re spondents, who were the unsuccessful candidates in the selections, impugned the personality test on the ground that the Selection Committee did not award separate marks for each of the _seven qualities required to be judged in the candidates at the test. Following the decision of this Court in A. Periakaruppan & Anr. vs State of Tamil Nadu & Ors. the High Court allowed the petitions and directed the Service Commission to hold a fresh personality test. On the question whether r. 9 read with Part IV of Sched ule 1I required the Selection Committee to award separate marks for the seven qualities: Allowing the States appeal, HELD: (1) It would not be correct to assume as a general proposition that in every case where the interviewing body is asked to take into consideration several specified quali ties. they must be of equal value and separate marks should be allotted under each head. Where the rules do not contain a clear direction, it would be reasonable to suppose that the intention is that there should be a block assessment on an integrated test. [327 B] In the instant case the interviewing body was required to award a block mark on a total impression of the personal ity of each candidate giving due consideration t0 the seven qualities specified in Part IV. Part IV of the Schedule never intended that separate marks should be allotted for the seven qualities stated therein. [328 F] (2) Personality is commonly understood as an aggregate of traits that identifies a person and distinguishes him from others. Quite often with some practical aim. emphasis is laid on some of the attributes. The end result may no be an assessment of the whole personality, but attributes are abstracted for study in an attempt to evaluate the man for the purpose in view. [328 C] In the instant case the qualities are mentioned only as guide, as indicating the attributes to be kept in view in assessing the personality of the candidates. It is hardly possible in the test contemplated to allocate separate marks for each of the various qualities specified because most of them overlap and are so intermixed that they cannot be separated. The test carries a maximum mark of 200; it is a little absurd to suppose that the seven qualities to be judged at the interview are of equal value each carrying 28 4/7 marks. [328 E] A. Periakaruppan & Am '. vs State of Tamil Nadu & Ors. [19711 2 SCR 430 distinguished and held inapplicable. 324 R. Chitralekha and Anr. vs State of Mysore & Ors. ; , 382 referred to.

ivil Appeal No. 10747 of 1983. From the Judgment and order dated 26.8.1983 of the Rajasthan High Court in S.B. Civil Second A. No. 153 of 1983. Shiv Dayal Srivastava, S.K. Bagga and Mrs. S.K. Bagga for the Appellants. Dr. Y.S. Chitale and Aruneshwar Gupta for the Respondents. The Judgment of the Court was delivered by OZA, J. This is an appeal filed by the tenant after obtaining leave from this Court against a decree for eviction granted by the trial court and ultimately affirmed in second appeal by the High Court of Rajasthan by its judgment dated 26.8.83. It appears that the appellants became tenants in 1947 but in 1958 the predecessors in 127 title of the respondents one Shri Bhonri Lal Surender Kumar and Rajinder Kumar purchased the property and thereafter in 1959 they became the tenants of Bhonri Lal and others. It is alleged that originally the rent was Rs.135 but later on was raised to Rs.145. The premises in question is a showroom and apparently is a business premises. In the year 1974, Bhonri Lal, Surendra Kumar and Rajinder Kumar filed a suit for eviction against the present appellant in respect of this show room which is situated at M.I. Road, Jaipur, on the ground of bona fide need, material alterations in the premises and default in payment of rent. During the pendency of this suit the present respondent purchased the property from Bhonri Lal and others in 1979. In substance the present respondent Harsh Wardhan Himanshu and Smt. Ritu Kasliwal purchased this property during the pendency of the suit and continued with the suit but the only ground on which eviction was granted and which was pressed before us and also before the High Court was the ground that the tenant present appellant without the permission of the landlord has made material alterations in the premises. The learned Judge of the High Court has maintained the finding of the construction of a balcony (Dochatti) and maintained the order of eviction on the ground that it is material alterations in the premises. The decree has been passed under Section 13(1)(c) of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950 which reads as under: "13(1)(c) that the tenant has without the permission of the landlord made or permitted to be made any such construction as, in the opinion of the court has materially altered the premises or is likely to diminish the value thereof. " It is only on this ground that the decree has been passed which has been challenged by the appellant before us. It is contended by learned counsel for the appellant that in the plaint what was alleged by the plaintiff was as stated in Para 5: "Para 5 That the defendants had constructed one Dochatti as balcony which is covering good area and is utilizing this Dochhati for his business. This work done by defendant is material alteration in the rented premises and this being without permission of plaintiffs is against the 128 law and on this Court the plaintiffs are entitled to get eviction decree for tenanted property. " In the written statement this Para 5 after amendment reads thus: "Firm oriental Engineering Co. constructed a storey like balcony over the disputed show room in 1958 with the permission of the plaintiff. " It was contended by learned counsel that what the courts below have tried to infer on the basis of some inspection note and some affidavit filed at the back of the appellant and on the basis of no other evidence that it is a structure permanent in nature and that it has been affixed in the wall and that it has also been affixed on the floor, this according to learned counsel, is all based on no evidence at all. It was contended by the learned counsel that the only pleading was that this wooden balcony (Dochhatti) has been raised by the tenant. It is significant that even this is not alleged in the plaint when this was done whereas in the written statement it was clearly stated that this Dochhatti was made in 1958. It was further contended that in fact there is no material or evidence to come to the conclusion that this was constructed at what time. It is significant, according to the learned counsel for the appellant, that the two notices which were given before filing of the suit by the predecessors in title of the respondent this was not alleged as one of the grounds of eviction and in his own statement in cross examination what was stated has significantly been omitted from consideration by the three courts, the trial court, the appellate court and the High Court of Rajasthan. Learned counsel referred to this part of the statement and contended that it is clear that in the notice this was not made as a ground. In his cross examination he stated that when the tenant assured that it will be removed when he will vacate, he gave up and that was not taken as a ground for eviction in the notice. Apart from it, it was contended that in fact in 1964 a window was opened just to give sufficient light and air to this Dochhatti or balcony which is alleged to have been constructed by the tenant and for this purpose the expenses were borne by the landlord which is admitted by the predecessors in title of the respondent in their own statement and which is not disputed in these proceedings. On the basis of this it was contended that in fact the finding reached by the three courts is not based on evidence. It is also contended that the material evidence has not been looked into at all and that the material which could not be said to be evidence in the case has been looked into to reach this conclusion. 129 It was further contended that apart from this the inference that this is a material alteration is contrary to the principles laid down by this court in number of decisions. According to the learned counsel, it could not be said to be a construction which materially altered the premises in question. On the basis of the statement of the respondents predecessor in title Bhonri Lal in cross examination, the absence of this being a ground of eviction in the two notices issued by the respondent Bhonri Lal before filing of the suit and the payment of the expenditure incurred for opening a window to provide light to this balcony by the landlord himself are circumstances, according to the learned counsel, which clearly go to show that this Dochhatti or balcony was constructed with the permission of Bhonri Lal and others who were the predecessors in title. It is also clear that for all these years this was present in the show room as is clear from the evidence that it is visible from outside. Therefore it could not be said that the landlord did not notice it and still no objection was raised. Learned counsel for the appellant further contended that the making of the balcony which is the wooden structure supported on wooden pillars and supported on wooden beams could not in any manner be said to be a material alteration of the building itself and in support of this contention the learned counsel placed reliance on the decision of this Court in Om Prakash vs Amar Singh and another, AIR 1987 SC 617. It was also contended that the landlord having seen the balcony constructed and not having raised any objection in so much so that even in the notice he did not raise an objection nor it is made a ground for eviction clearly goes to show that it was with the implied consent of the landlord that this Dochhatti or balcony was constructed. It is also clear from the circumstances that in order to provide light and air to this balcony in the upper portion a window was made in the show room and the cost of the construction of this window was paid by the landlord as is admitted by him. This also goes to show that this balcony or this wooden cabin was constructed or made with the implied consent of the landlord. The statement made by Bhonri Lal in cross examination clearly shows, according to the learned counsel, that even if any right accrued to him on the ground of this alteration he waived it and for this purpose learned counsel placed reliance on Dawsons Bank Ltd. vs Nippon Menkwa Kabushihi Kaish, AIR 1935 Privy Council P 79 (Japan Cotton Trading Co. Ltd.). On the question of waiver, learned counsel for the appellant also referred to certain observations in Maxwell on the Interpretation of Statutes and also to certain observations from the American Jurisprudence. 130 Learned counsel for the respondents, on the other hand, referred to the plaint paragraph 5 quoted above and also the written statement para 5 after amendment and contended that on these allegations the courts below came to a finding of fact. However it was not disputed that what construction has been made is a finding of fact but whether it amounts to material alteration or not is undoubtedly a question of law. It was further contended by the learned counsel that as all the three courts have concurrently came to the conclusion on question on fact, it is not open to this Court to reopen that question. It was also contended by learned counsel that the inspection note by the learned trial Judge, no doubt, has been relied upon but it is contended that as observed by the teamed Judge of the High Court it is relied upon only for purposes of appreciating evidence but unfortunately the learned counsel for the respondents himself could not refer to any other evidence except the statement of the tenant the appellant himself and apart from it even the allegations contained in para S of the plaint do not clearly make out that how this construction is such which was affixed on the wall and on the basis of which an attempt was made to contend that in fact it could not be removed unless the walls are demolished. This argument and the inferences drawn by the courts below apparently are not based on any evidence at all. The learned counsel contended that the balcony is strongly annexed lo the walls with the beams and the structure is 10`x25 ' to the entire breadth of the showroom and also contended that it could not be removed without damaging the walls and thereby damaging the property itself but unfortunately learned counsel could not refer to any evidence in the case which could suggest these facts which were alleged by the learned counsel during the course of his arguments. Counsel in support of his contentions placed reliance on the decision of this Court in Om Prakash 's case (supra) and also on Babu Manmohan Das Shah & Ors. vs Bishun Das, ; and it was also contended that question of waiver does not arise, according to the learned counsel, as if the landlord wants not to raise any objection, he could grant a permission to the tenant but in absence of that the question of waiver could not be raised. Learned counsel attempted to contend that Bhonri Lal who filed this suit in 1974 filed the suit on that ground and therefore it could not be said that he waived the right to file a suit on this ground. Learned counsel did not refer to the statement of Bhonri Lal himself in cross examination. It was contended that it was in 1972 that the landlord for the first time came to know about the construction of this balcony and in 1974 suit was filed. It was therefore contended that the appeal deserves to be rejected. 131 The first notice given on behalf of Bhonri Lal is through an advocate and in this notice it is clear that this objection about any construction or material alteration is not at all mentioned. Another notice which is given just a little before the filing of the suit is a notice dated 13.8.74 and in this notice also there is no mention of any material alteration or construction of the Dochhatti or balcony. Although in this there is a reference to some damage to the floor of show room which was also made as one of the grounds which later on was not pressed and given up. It is therefore plain that if this Dochhatti or balcony which is a wooden construction put on was a matter which was without the permission of the landlord and about which the landlord had not consented, he would have made it as a ground for termination of the lease or a ground of eviction in any one of these two notices if not in both. It is very clear that this fact has not at all been alleged in these notices given to the tenant appellant. In the cross examination of Bhonri Lal, it is clearly stated when he was asked as to why in the notices which he gave before the filing of the suit this was not made a ground for termination of the lease, he plainly stated "no notice was given for the reason that the defendant had said that when they would vacate the show room they would remove the balcony. On their saying so, I did not have any objection about the balcony. On the eastern side there is a window. I do not know its length and breadth. This is correct that this window was constructed in the year 1964. The cost of construction of the window amounting to Rs.199.85 p. has been paid by me to the defendant. The balcony gets light and air through this widow. " It is significant as referred to above that in the two notices this was not made as a ground. It is also significant that when this was brought to the notice of Bhonri Lal the landlord who filed this suit originally he gave the above explanation. The present respondent in fact purchased during the pendency of the suit this property and indirectly purchased this litigation. Statement which has been quoted above goes to show that he gave up his objection to the balcony, it is also clear from his evidence that a window which was opened to give light and air to this balcony, the cost of it was also borne by the landlord himself. In the context of this evidence it is significant that even in the plaint it was not clearly stated that this balcony was made in the year 1972 as is now alleged. It is also significant that what is now alleged that this balcony is supported on beams which have been fixed in the walls and pillars which have been fixed in the floor is also not alleged in the plaint at all. It is also not alleged in the plaint as to how this structure which is 132 a wooden structure easily removeable according to the defendant appellant could be said to be a material alteration or as to how it has impaired or damaged or lowered the value of the property of the appellant. It is no doubt true that the Section as it stands does not require that in addition to material alteration it should be to lower or reduce the value of the property as was clearly observed by the learned Judge of the High Court and on that count there appears to be not much controversy. It is significant that all the three courts neither considered the omission of this allegation in the notices nor the statement made by Bhonri Lal quoted above and descripancies in pleadings referred to above and have come to conclusions which could not be reached. The only possible conclusion from these facts could be that either this balcony was constructed with the implied consent of the landlord or that after seeing it and understanding and on assurance given by the tenant the landlord decide to waive his objection to it and therefore did not make it as a ground for termination of the lease in his notice before the suit and even in the earlier notice which was given by him if at all there is any doubt it is clear that the landlord waived his right to file a suit on this ground. Unfortunately all the three courts failed to look into these conclusions appearing in evidence and failed to appreciate the matter in this light. On the question of waiver, in Maxwell on the Interpretation of Statutes it is observed as under: "In Stylo Shoes, Ltd. vs Prices Tailors, Ltd., (75) a notice to determine an existing tenancy under the Landlord and Tenant Act, 1954 had not, it was argued. been served "by leaving it for the tenants at their last known place of abode in England" as required by section 23(1) of the Act. The tenants had in fact received the notice, had intimated to the landlords that they would not be willing to give up possession of the premises, and had issued an originating summons for a new tenancy. On the facts, Wynn Parry J. held that the notice had been properly served; but he added that, even if it had not been duly served, the tenants must in the circumstances be taken to have waived any invalidity in the service." (75) " It clearly goes to show that if a party gives up the advantage he could take of a position of law it is not open to him to change and say that he can avail of that ground. In Dawsons Bank, Ltd 's case, (supra) the Lordships were considering the question of waiver as a little 133 different from estoppel and they observed as under: "on the other hand, waiver is contractual, and may constitute a cause of action; it is an agreement to release or not to assert a right. If an agent, with authority to make such an agreement on behalf of his principal agrees to waive his principal 's rights then subject to any other question such as consideration the principal will be bound, but he will be bound by contract." But in the context of the conclusion that we have reached on the basis of circumstances indicated above that it could not be held that the tenant had constructed this Dochhatti or balcony a wooden piece without the consent express or implied of the landlord, in our opinion, it is not necessary for us to dialate on the question of waiver any further and in this view of the matter we are not referring to the other decisions on the question of waiver. It was contended on behalf of the respondents that the finding about the construction without the consent of the landlord is a finding of fact and therefore could not be gone into in this appeal on leave under article 136 of the Constitution but it is clear that if the Courts below while coming to a conclusion of fact has omitted to consider material pieces of evidence and have drawn inferences without looking into the material pieces of evidence which prove circumstances on the basis of which a contrary inference could be drawn, such findings are not binding on this Court and in this view of the matter therefore in our opinion the conclusions reached by the courts below could not be accepted. The next question which was debated at length by learned counel for parties is as to whether the said construction of the wooden Dochhatti or a balcony is a material alteration within the meaning of Sec. 13(1)(c) of the Act quoted above and in this regard it is undisputed that what has been constructed is a wooden structure which makes in the showroom a cabin and on the roof of the cabin a kind of balcony with a wooden staircase from inside the cabin to go to this balcony. Admittedly this all is a wooden structure built on beams and planks inside the showroom itself and in order to come to the conclusion whether such a wooden cabin made up inside the showroom could be said to be a material alteration or not, we can draw much from Om Prakash 's case (supra) where it was observed: 134 "The Act does not define either the word 'materially ' or the word 'altered '. In the absence of any legislative definition of the aforesaid words it would be useful to refer to the meaning given to these words in dictionaries. Concise oxford Dictionary defines the word 'alter ' as change in character, position ' "materially" as an adverb means important essentially concerned with matter not with form. In Words and Phrases (Permanent Edition) one of the meanings of the word 'alter ' is to make change, to modify, to change, change of a thing from one form and set to another. The expression 'alteration ' with reference to building means 'substantial ' change, varying, change the form or the nature of the building without destroying its identity". The meaning given to those two words show that the expression 'materially altered ' means "a substantial change in the character, form and the structure of the building without destroying its identity". It means that the nature and character of change or alteration of the building must be of essential and important nature. In Babu Manmohan Dos Shah vs Bishun Dos, ; 1967 SC 643), this Court considering the expression 'material alterations ' occuring in section 3(1)(c), U.P. (Temporary) Control of Rent and Eviction Act, 1947 observed; "Without attempting to lay down any general definition as to what material alterations mean, as such, the question would depend on the facts and circumstances of each case, the alterations in the present case must mean material alterations as the construction carried out by the respondent had the effect of altering the front and structure of the premises. " It is no doubt true that in the last part of this passage quoted above it has been clearly stated that no definition could be drawn of the material alteration but it will have to be decided on the basis of facts and circumstances appearing in each case but the material consideration would be whether the construction carried out by the tenant alters the front show or the structure of the premises and considering this aspect of the law it was further observed: "In determining the question the Court must address itself to the nature, character of the constructions and the extent 135 to which they make changes in the front and structure of the accommodation, having regard to the purpose for which the accommodation may have been let out to the tenant. The Legislature intended that only those constructions which bring about substantial change in the front and structure of the building should provided a ground for tenants ' eviction, it took care to use the word "materially altered the accommodation". The material alterations contemplate change of substantial nature affecting the form and character of the building. Many a time tenants make minor constructions and alterations for the convenient use of the tenanted accommodation. The Legislature does not provide for their eviction instead the construction so made would furnish ground for eviction only when they bring about substantial change in the front and structure of the building. Construction of a Chabutra, Almirah, opening a window or closing a verandah by temporary structure or replacing of a damaged roof which may be leaking or placing partition in a room or making similar minor alterations for the convenient use of the accommodation do not materially alter the building as in spite of such constructions the front and structure of the building may remain unaffected. The essential element which needs consideration is as to whether the constructions are substantial in nature and they alter the form, front and structure of the accommodation. " Here it has been observed that the essential element which needs consideration as to whether the construction are substantial in nature and they alter the front elevation or the front and the structure of the building itself and it is in the light of this that ultimately in this decision what was constructed has been held not to be material alteration as it was observed: "The partition wall was made without digging any foundation of the floor of the room nor it touched the ceiling instead; it converting a big hall into two portions for its convenient use, it could be removed at any time without causing any damage to the building. The partition wall did not make any structural change of substantial character either in the form or structure of the accommodation. " The question as to whether the construction is of a permanent nature 136 or a temporary nature also was considered by this Court in the decision quoted above and it was observed: "The High Court observed that the fact that a construction is pennanent or temporary in nature does not affect the question as to whether the constructions materially alter the accommodation or not. We do not agree with this view. The nature of constructions, whether they are permanent or temporary, is a relevant consideration in determining the question of 'material alteration '. A permanent construction tends to make changes in the accommodation on a permanent basis, while a temporary construction is on temporary basis which do not ordinarily affect the form or structure of the building, as it can easily be removed without causing any damage to the building. " It is thus clear that what is alleged to have been constructed in the present case, in the light of the test laid down by this Court in the decision referred to above, could not be said to be material alteration in the premises in question. In Venkatlal G. Pittie & Anr. vs M/s Bright Bros. (Pvt.) Ltd., (3) SC 139 the question was not about material alteration but the question was whether the construction carried out by the tenant were permanent in nature and were such which has diminished the value of the property and further that the construction have been made after encroaching on the land which was not the part of the lease and in that context the question as to whether the structures raised were permanent or temporary have been considered and the nature of the things as appeared in that case apparently is of no avail so far as the case in hand is concerned as it was observed in that case: "Two questions arise for consideration in these appeals (i) whether the structure constructed by the tenant in the premises in question amounted to permanent structure leading to the forfeiture of the tenancy of the tenant; (ii) what is the scope and extent of the jurisdiction of the High Court under Article 227 of the Constitution on questions of facts found by the appellate bench of Small Causes Court. " In Babu Manmohan Das Shah 's case, (supra) the question which was be fore this Court was not as tn whether the construction made was such which could be said to be a material alteration but the real question which was raised before the Court was whether it is necessary further to hold 137 that this construction diminishes the value of the accommodation although in the Section it was material alteration or such construction which diminishes the value of the accommodation used but it was contended that it will amount to and considering this aspect of the matter in this judgment it was observed: "As already stated, even if the alterations did not cause any damage to the premises or did not substantially diminish their value the alterations were material alterations and on that basis alone the appellants were entitled to evict the respondent. " It is thus clear that even this judgment is of no assistance so far as the present case is concerned. In the light of the discussions above and in the light of the test laid down by this Court in Om Prakash 's case. supra it is clear that this construction of the balcony or Dochhatti which is a wooden structure does not amount to material alteration which could give a cause of action to the respondent landlord for filing a suit of eviction. No other question was pressed. In the light of the discussions above therefore the appeal has to be allowed. It is therefore allowed. The judgment and decree passed by the courts below are set aside and the suit filed by the respondent is dismissed. In the circumstances of the case parties are directed to bear their own costs so far as this Court is concerned. S.L. Appeal allowed.

% In the year 1974, the then landlords of the property in dispute, Bhonri Lal and others, filed a suit for eviction against the tenants appellants on the ground of bona fide need, material alterations in the premises and default in payment of the rent. During the pendency of the suit, the present respondents purchased the property in 1979 and v continued with the suit for eviction. The trial Court passed a decree for eviction on the ground of material alterations construction of a wooden balcony (Dochhatti) made in the premises by the appellants under section 13(1)(c) of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950. The decree of the trial Court was affirmed in Second Appeal by the High Court. Aggrieved by the decision of the High Court, the appellants appealed to this Court by special leave. Allowing the Appeal, the Court, ^ HELD: The first notice in the case given to the tenants/appellants on behalf of the then landlord Bhonri Lal was through an Advocate and there was no mention of the objection about any construction or material alteration at all. Another notice dated 13.8.1974, given just a little before the filing of the suit for eviction, also did not contain any mention of any material alteration or construction of the balcony (Dochatti). There was a reference to some damage to the floor of the property in dispute in that notice, but the same was given up and not pressed. It was, therefore, plain that if the balcony/Dochatti, which was a wooden structure, was a construction without the permission and consent of the landlord, he would have made it a ground for termination of the lease or a ground of eviction mentioned in any one of the two notices above said, if not both. It was a significant factor that in the two notices, that construction was not mentioned as a ground. In his cross examination, Bhonri Lal admit 125 ted that no notice about the balcony had been given, and explained away the reasons therefor. [131A D] The present respondents purchased the property in dispute during the pendency of the suit. The statement of Bhonri Lal in cross examination, showed that he had given up his objection to the balcony, and it was also clear from his evidence that the cost of a window, constructed in the year 1964 to give light and air to the balcony, had been borne by the landlord himself. In the context of that evidence, it was significant that even in the plaint it had not been clearly stated that the balcony had been constructed in the year 1972 as was now alleged. It was also significant that what was now alleged that the balcony was supported on beams fixed in the walls and pillars fixed in the floor was also not alleged in the plaint at all. It was also not alleged in the plaint as to how the structure in question which was a wooden structure, easily removable according to the appellants, could be said to be a material alteration or how the same had impaired or damaged or lowered the value of the property involved. It is true that section 13(1)(c) of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950, as it stands, does not require that in addition to the material alteration being there, it should be to lower or reduce the value of the property, but it was significant that all the three Courts below had not considered the omission of that allegation in the notices and the statement of Bhonri Lal and other discrepancies in the pleadings, and had come to the conclusion which could not be reached. The only possible conclusion from these facts could be that either the balcony had been constructed with the implied consent of the landlord or that after seeing it the landlord had decided to waive his objection to it on an assurance given by the tenant, and, therefore, had not made it a ground for termination of the lease in his notices given before the suit; the landlord had waived his right to file a suit on that ground. All the three Courts had failed to look into these conclusions appearing in evidence and appreciate the matter in this light. If a party gives up the advantage he could take of a position of law, it is not open to him to change and say that he can avail of that position. [131F H; 132A D; H] In the context of the conclusion that the Court had reached in the facts and circumstances that it could not be held that the tenants had constructed the wooden balcony or Dochhatti without the consent express or implied of the landlord, it was not necessary for the Court to dilate on the question of waiver any further. [133C] 126 If the Courts below have, while coming to a conclusion of fact, omitted to consider material pieces of evidence and have drawn inferences without looking into that evidence which proves circumstances on the basis of which a contrary inference could be drawn, then, such findings are not binding on this Court and in this view of the matter, the conclusions reached by the Courts below could not be accepted. [133E] In the light of the test laid down by this Court in Om Prakash vs Amar Singh and another, A.I.R. 1987 S.C. 617, it was clear that the construction of the balcony (Dochhatti), which was a wooden structure, did not amount to a material alteration which could give a cause of action to the respondents landord for filing a suit for eviction. The judgments and decrees passed by the Courts below set aside and suit filed by the respondents dismissed. [137C E ] Om Prakash vs Amar Singh and another, A.I.R. 1987 S.C. 617; Dawsons Bank Ltd. vs Nippon Menkwa Kabushihi Kaish (Japan Cotton Trading Co. Ltd.) A.I.R. 1935 Privy Council 78 and Babu Manmohan Das Shah and Ors., vs Bishun Das, ; , relied upon. Venkatlal G. Pittle & Anr. vs M/s. Bright Bros. Pvt. Ltd., (3) S.C. 139, referred to.

minal Appeal No. 187 of 1956. Appeal by special leave from the judgment and order dated December 7, 1955, of the Patna High Court in Criminal Revision No. 875 of 1954, arising out of the judgment and order dated May 31, 1954, of the Court of the Additional Sessions Judge at Arrah in Criminal Appeal No. 293 of 1953. B. K. Saran and K. L. Mehta, for the appellants. B. H. Dhebar and T. M. Sen, for the respondent. November 14. The Judgment of the Court was delivered by GAJENDERAGADKAR, J. This criminal appeal raises a short question about the construction of the word " detains " occurring in a. 498 of the Indian Penal Code. It arises in ' this way. The two appellants were charged before the trial magistrate under section 498 of the Code in that on or about October 27, 1952, at the village Mohania they wrongfully detained Mst. 59 466 Rahmatia, the legally married wife of the complainant Saklu Mian, when they knew or had reason to believe that she was the wedded wife of the, complainant and was under his protection, with intent to have illicit intercourse with her. The prosecution case was that Mst. Rahmatia had disappeared from her husband 's house on October 21, 1952; the complainant made J. search for her for several days but was not able to trace her whereabouts. Ultimately he filed a complaint at the police station after he was informed by Shakoor Mian (P. W. 4) that he had seen the complainant 's wife at the house of the two appellants. The complainant then went to the house of the appellants along with Shakoor Mian (P. W. 4), Musa Mian (P. W. 2) and Suleman Mian (P. W. 3); they saw the woman in the house of the appellants whereupon the complainant asked appellant No. I Alamgir to let his wife go with him but appellant No. I told him that he had married her and appellant No. 2 warned him to get away and said that, if he persisted, he would be driven out. This story is corroborated by the three companions of the complainant. The appellants denied the charge. They pleaded that the complainant had not validly married the woman and that she had not been detained by them. According to them, the woman was tired of living with the complainant and that she had voluntarily and of her free will come to stay with the appellants. The learned trial magistrate believed the prosecution evidence, rejected the pleas raised by the defence, con victed the appellants of the charge framed and sentenced them to undergo simple imprisonment for two months each. This older of conviction and sentence was challenged by the appellants by their appeal before the court of sessions. The appellate court confirmed the conviction of the appellants but reduced their sentence from simple imprisonment for two months to a fine of Rs. 50 or in default simple imprisonment for one month each. The appellants then moved the High Court at Patna in its revisional jurisdiction. When the revisional application came to be heard before Choudhary, J., the learned judge thought 467 that the appellate court should not have reduced the sentence imposed on the appellants by the trial magistrate and so he issued a notice against the appellants calling upon them to show cause why their sentence should not be enhanced. This notice and the main revisional application were ultimately heard by Ramaswamy and Imam, JJ., who confirmed the order of conviction and enhanced the sentence against both the appellants by ordering that each of them should suffer six months ' rigorous imprisonment. An application made by the appellants to the High Court for a certificate to appeal to this Court was rejected. The appellants then applied for and obtained special leave to appeal to this Court. That is how this appeal has come before us for final disposal. On behalf of the appellants, Mr. B. K. Saran has urged that the evidence in the case clearly shows that the woman was dissatisfied with her husband and had left his house and protection voluntarily and of her free will. If having thus left the house she came to stay with the appellants and they allowed her to stay with them, it cannot be said that they have detained her within the meaning of section 498. According to him, the word " details " used in section 498 must necessarily imply that the woman detained is unwilling to stay with the accused and has been compelled so to stay with him against her will, and desire. It is difficult to imagine that, if a woman is willing to stay with a person, it can be said that the person has detained her. That is not the plain grammatical meaning of the word " detains ". It is this argument which calls for our consideration in the present appeal. At the outset it would be relevant to remember that section 498 'occurs in Ch. XX of the Indian Penal Code which deals with offences. relating to marriage. The provisions of section 498, like those of section 497, are intended to protect the rights of the husband and not those of the wife. The gist of the offence under section 498 appears to be the deprivation of the husband of his custody and his proper control over his wife with the object of having illicit intercourse with her. In this connection it would be material to compare and contrast the 468 provisions of section 498 with those of section 366 of the Code. Section 366 deals with cases where the woman kidnapped or abducted is an unwilling party and does not respond to the criminal intention of the accused. In these cases the accused intends to compel the victim afterwards to marry any person against her will or to force or seduce her to illicit intercourse. In other words section 366 is intended to protect women from such abduction or kidnapping. If it is shown that the woman who is alleged to have been abducted or kidnapped is a major and gave her free consent to such abduction or kidnapping, it may prima facie be a good defence to a charge under section 366. On the other hand section 498 is intended to protect not the rights of the wife but those of her husband; and so prima facie the consent of the wife to deprive her husband of his proper control over her would not be material. It is the infringement of the rights of the husband coupled with the intention of illicit intercourse that is the essential ingredient of the offence under a. 498. Incidentally it may be pointed out that the offence under section 498 is a minor offence as compared with the offence under section 366. The policy underlying the provisions of section 498 may no doubt sound inconsistent with the modern notions of the status of women and of the mutual rights and obligations under marriage. Indeed Mr. Saran vehemently argued before us that it was time that sections 497 and 498 were deleted from the Penal Code. That, however, is a question of policy with which courts are not concerned. It is no doubt true that if the words used in a criminal statute are reasonably capable of two constructions, the construction which is favourable to the accused should be preferred; but in construing the relevant words, it is obviously necessary to have due regard to the context in which they have been used; and, as we will presently point out, it is the context in which the word" detains " has been used in section 498 that is substantially against the construction for which the appellant contends. Section 498 provides: 469 " Whoever takes or entices away any woman who is and whom he knows or has reason to believe to be the wife of any other man, from that man, or from any person having the care of her on behalf of that man, with intent that she may have illicit intercourse with any person, or conceals or detains with that intent any such woman, shall be punished with imprisonment, of either description for a term which may extend to ' two years, or with fine, or with both. It would be noticed that there are three ingredients of the section. The offender must take or entice away or conceal or detain the wife of another person from such person or from any other person having the care of her on behalf of the said person. He must know or has reason to believe that the woman is the wife of another person; and the taking, enticing, concealing or detaining of the woman must be with intent that she may have illicit intercourse with any person. It is clear that if the intention of illicit intercourse is not proved the presence of the first two ingredients would not be enough to sustain the charge tinder section 498. It is only if the said intention is proved that it becomes necessary to consider whether the two other ingredients are proved or not. It is plain that four different kinds of cases are con templated by the section. A woman may be taken away or enticed away or concealed or detained. There is no doubt that when the latter part of the section refers to any such woman, it does not mean any woman who is taken or enticed away as described in the first part, but it refers to any woman who is and whom the offender knows or has reason to believe to be the wife of any other man. It is not seriously disputed that in the first three classes of cases the consent of the woman would not matter if it is shown that the said consent is induced or encouraged by the offender by words or acts or otherwise. Whether or not any influence proceeding from the offender has operated on the mind of the woman or has co operated with or encouraged her inclimations would always be a question of fact. If, on evidence, the court is satisfied that the act of the woman in 470 leaving her husband was caused either by the influence of allurement or blandishments proceeding from the offender, that may be enough to bring his case within either of the three classes of cases mentioned by section 498. In this connection, when the consent or the free will of the woman is relied upon in defence, it is necessary to examine whether such alleged consent or free will was not due to allurement or blandishments or encouragement proceeding from the offender. It is, however, urged that, when the latter part of the section speaks of detention, it must prima facie refer to the detention of a woman against her will. It may be conceded that the word " detains" may denote detention of a person against his or her will ; but in the context of the section it is impossible to give this meaning to the said word. If the object of the section had been to protect the wife such a construction would obviously have been appropriate; but, since the object of the section is to protect the rights of the husband, it cannot be any defence to the charge to say that, though the husband has been deprived of his rights, the wife is willing to injure the said rights and so the person who is responsible for her willingness has not detained her. Detention in the context must mean keeping back a wife from her husband or any other person having the care of her on behalf of her husband with the requisite intention. Such keeping back may be by force; but it need not be by force. It can be the result of persuasion, allurement or blandishments which may either leave caused the willingness of the woman, or may have encouraged, or co operated with, her initial inclination, to leave her husband. It seems to us that if the willingness of the wife is immaterial and it cannot be a defence in cases falling tinder the first three categories mentioned in section 498, it cannot be treated as material factor in dealing with the last category of case of detention mentioned in the said section. Therefore, we are satisfied that the High Court was right in holding that the charge of detention has been proved against appellant No. I inasmuch as both the courts of facts have found that 471 he had offered to marry Mst. Rahmatia and thereby either persuaded or encouraged her to leave her husband 's house. It may be that Rahmatia was dissatisfied with her husband and wanted voluntarily to leave her husband; but, on the evidence, it has been held that she must have been encouraged or induced not to go back to her husband because she knew that she would find ready shelter and protection with appellant No. 1 and she must have looked forward to marry him. In fact appellant No. 1 claims to have married her. Thus there can be no doubt that he intended to have illicit sexual intercourse with her. That is the effect of concurrent findings of fact recorded against appellant No. I ; and it would not be open to him to challenge their correctness or propriety in the present appeal. This section has been the subject matter of several judicial decisions and it appears that, except for a few notes of dissent, there is a fair amount of unanimity of judicial opinion in favour of the construction which we feel inclined to place on the word " detains " in section 498. It is, however, true that the relevant decisions, to some of which we would presently refer disclose a striking difference of approach in dealing with questions of fact. It would appear that though the relevant portion of the section has received the same construction in dealing with same or similar facts, the learned judges have differed in their conclusion as to whether the accused person had been guilty of conduct which would bring his case within section 498. This, however, is a difference in the method of approaching evidence and assessing its effects. It would be futile and even improper to consider whether a particular conclusion drawn from the specific evidence adduced in the case was right or not. What is important in such cases is to see how the section has been construed and, as we have just indicated, in the matter of construction there appears a fair amount of unanimity. Let us now refer to some of the decisions cited before us. In 1868, the Madras High Court held in Sundara Dass Tevan (1) that depriving the husband of his (1) (1868) IV Mad. H.C.R. 20. 472 proper control of his wife for the purpose of illicit inter course is the gist of the offence just as it is the offence of taking away a wife under the same section; and a detention occasioning such deprivation may be brought about simply by the influence of allurement and blandishment. On the facts of the case, however, the court was not satisfied that the accused bad offered any such allurement or blandishment and so the order of conviction passed against the appellant was quashed. It appears that the construction put by the Madras High Court on section 498 in this case has been generally accepted in the said High Court (Vide: Ramaswamy Udayar vs Raju Udayar (1) ). The Bombay High Court has taken the same view in Emperor vs Jan Mahomed (2). It was held by the High Court that the offence contemplated by & 498 is complete if it appears that the accused went away with the woman in such a manner as to deprive her husband of the control of his wife; the fact that the woman accompanied the accused of her own free will does not diminish the criminality of the act. Even in this case, the court was unable to discover any evidence, direct or indirect, about the intention of the accused or any allurement or blandishment offered by him and so the order of conviction passed against the accused was set aside. This question came to be considered by the said High Court again in Emperor vs Mahiji Fula (3). Mr. Justice Broomfield who delivered the main judgment of the Bench has expressed the view that " the word I detains ' means, by deprivation, and according to the ordinary use of the language I keeps back" '; and he adds that ,there may be various ways of keeping back. It need not necessarily be by physical force. It may be by persuasion or, as the Court " (Madras High Court) " has observed in this particular case" (Sundara Dass Thevan (4)) " by allurement or blandishment ". On the facts, however, it appeared to the trial court that the conduct of the accused did not bring his case within the mischief of section 498. The wife of the complainant had been taken (1) A.I.R. (1953) Mad. 333. (3) Bom. 88, 92. (2) (1902) IV Bom. L. R. 435. (4) (1868) IV Mad. H. C. R. 20. 473 away by her brother and she was subsequently married by natra marriage to the accused. The complainant learnt about this incident and went to the accused to ask him to allow his wife to go back to him. On seeing the complainant and his friends the accused came out with a dharia and threatened the complainant and his companions who then re turned to their village. The conduct of the accused ' when the complainant approached him, it was said, cannot necessarily indicate that the accused had detained the woman. This was the ' view taken by the trial court who acquitted the accused ; on appeal the High Court saw no reason to differ and so the order of acquittal was confirmed by it. Divatia, J., who delivered the concurring judgment apparently differed from Broomfield, J., in regard to the construction of the word " detains ". He agreed that the scheme of section 498 showed that though the woman may be perfectly willing to go with the man the offence of taking or enticing away would occur because it simply consists of taking or enticing away a woman without anything more; but according to him, in the latter part of the section, which speaks of concealing or detaining the woman, the woman would be detained only if she is prevented from going in any quarter where she wants to go. In our opinion, this construction is not sound. It is not easy to see how the act of concealing the woman would necessarily import any considerations of the consent of the woman ; besides, according to Divatia, J., himself, the woman 's Consent would be irrelevant in the cases of taking or enticing her away. If that be so, it is difficult to make her consent relevant and decisive in dealing with the cases of detention. Unfortunately the learned judge does not appear to have appreciated the fact that the primary and the sole object of section 498 is to protect the husband 's rights and not the rights of the wife. If it is shown that the woman 's inclination to stay away from her husband was either instigated or encouraged by the offender, she can be said to have been detained or kept away from her husband within the meaning of the section 60 474 though at the time of the detention she may be willing to say with the offender. The same view has been expressed by Broomfield and Sen, JJ., in Emperor vs Ram Narayan Baburao Kapur (1) and by Beaumont C.J., and Sen, J., in Mahadeo Rama vs Emperor (2). We may point out that in both these cases the court was have detained the woman. The Calcutta High Court appears to have put a similar construction on the word "detention". In Prithi Missir vs Harak Nath Singh (3) it has been held by the said High Court that " the word ' detention ' is ejusdem generis with enticement and concealment. It does not imply that the woman is being kept against her will but there must be evidence to show that the accused did something which had the effect of preventing the woman from returning to her husband ". On the merits, however, the court held that the learned trial magistrate had not come to any definite finding of fact. In fact it did not appear that the accused was keeping the complainant 's wife as his mistress; and on the whole, the court was not satisfied that the accused was responsible for the conduct of the complainant 's wife for leaving her husband 's house and so detention was held not proved against the accused. In Mabarak Sheikh vs Ahmed Newaz (4) the same High Court held that there can be no detention of a woman within the meaning of section 498, second part, if the woman is an absolutely free agent to go away from the person charged whenever she likes. It appears that the learned judges were inclined to hold that there could be no detention if the woman was an absolutely free agent to go away from the person charged whenever she likes to do so; and in support of this view they have referred to some of the decisions which we have already considered. With respect, it appears that the effect of the earlier decisions has not been properly considered and the findings of fact recorded in the said decisions are assumed to lend colour to, and modify, the construction of the section (1) (3) I.L.R. (2) A.I.R. (1943) Bom. 179. (4) 475 adopted by them. Besides, the relevant observations appear to be obiter because, on the facts, it was found in this case that the woman was not a free agent and so the charge against the accused under section 498 was held established. In Bipad Bhanjan Sarkar vs Emperor (1), Henderson and Khundkar, JJ., have considered the word " detains " in the same manner as we have done. However, as in many other cases, in this case also, the court found that there was absolutely nothing to show that the accused had done anything which could bring his case within the mischief of section 498. The Patna High Court, in Banarsi Raut vs Emperor (2), has held that providing shelter to a married woman is such an inducement as to amount to detention within the meaning of section 498. This case shows that where a married woman was found living in the house of the accused for some time and sexual intercourse between them had been established, the court was inclined to draw the inference that there was per suasion or inducement of the woman as would come within the meaning of the word " detention ". This is a case on the other side of the line where on facts the inference was drawn against the accused. The Lahore High Court has taken a similar view as early as 1913 in Bansi Lal vs The Crown (3 ). The court has held that where the accused had provided a house for the woman where she stayed after deserting her husband under the protection of the accused as his mistress, it was active conduct on his part which was sufficient to bring him within the terms of section 498. In 1939, however, a Division Bench of the Lahore High Court has taken a contrary view in Harnam Singh vs Emperor (4). In this case the revisional application filed by Harnam Singh against his conviction under section 498 was first argued before Din Muhammad, J., who referred it to a Division Bench because he thought that the question of law raised was of some importance. In his referring judgment the learned judge mentioned some of the relevant decisions to which his attention was drawn and indicated his own view that (1) I.L.R. (3) (1913) XlV Punjab L. R. 1066. (2) A.I.R. (1938) Pat. (4) A.I.R. (1939) Lah. 476 the word " detains " would naturally imply some overt act on the part of the person who detains in relation to the person detained. He thought that mere blandishment would not constitute any relevant factor in the matter of detention. The matter was then placed before a Division Bench consisting of Young, C. J., and Blacker, J. Unfortunately the judgment of the Division Bench does not discuss the question of the construction of section 498 ; it merely records the conclusion of the court in these words: " In our opinion, the word " detains " clearly implies some act on the part of the accused by which the woman 's movements are restrained and this again implies unwillingness on her part. Detention cannot include persuasion by means of blandishments or similar inducements which would leave the woman free to go if she wished ". The learned judges also added that they were of the opinion that the word " detains " cannot be reasonably construed as having reference to the husband. In our opinion, these observations do not correctly represent the true purport and effect of the provisions of section 498. The position, therefore, is that, on the findings of fact made by the lower courts against appellant No. I it must be held that he has been rightly convicted under section 498. That takes us to the question of sentence imposed on him by the High Court in its revisional jurisdiction. We are satisfied that the High Court was not justified in directing appellant No. I to suffer rigorous imprisonment for six months by way of enhancement of the sentence. It is unnecessary to emphasise that the question of sentence is normally in the discretion of the trial judge. It is for the trial judge to take into account all relevant circumstances and decide what sentence would meet the ends of justice in a given case. The High Court undoubtedly has jurisdiction to enhance such sentence under section 439 of the Code of Criminal Procedure; but this jurisdiction can be properly exercised only if the High Court is satisfied that the sentence imposed by the trial judge is unduly lenient, or, that, in passing the order of sentence, the trial judge had manifestly failed to consider the 477 relevant facts. It may be that the High Court thought that the appellate order passed by the Sessions Judge modifying the original sentence was wrong, and in that sense, the issue of notice under section 439 of the Code of Criminal Procedure against appellant No. 1 to show cause why his sentence should not be enhanced may have been justified; but, in enhancing the sentence, the High Court should, we think, have restored the sentence passed by the trial judge himself. It is true that, in enhancing the sentence, the High Court has observed that " women in this country, whether chaste or unchaste, must be protected and that it is the duty of the court to see that they are given sufficient protection ". We are inclined to think that the considera tion set out in this observation is really not, very helpful and not decisive because, as we have already observed, section 498 does not purport to protect the rights of women but it safeguards the rights of husbands. Besides, in the present case, it is clear that Mst. Rahmatia, who is a woman of loose moral character, was dissatisfied with the complainant, who is her second husband, and was willing to marry appellant No. 1. In such a case, though appellant No. I is guilty under section 498, it is difficult to accept the view of the High Court that the sentence of two months ' simple imprisonment imposed on him, by the trial court was so unduly or manifestly lenient as not to meet the ends of justice. It would not be right for the appellate court to interfere with the order of sentence passed by the trial court merely on the ground that if it had tried the case it would have imposed a slightly higher or heavier sentence. We would accordingly modify the order of sentence passed against appellant No. 1 by reducing it to that of simple imprisonment for two months. The case of appellant No. 2 is clearly different from that of appellant No. 1. The findings of fact recorded by the courts below do not implicate appellant No. 2 in the act of persuasion or offering blandishments or inducements to Mst. Rahmatia. The only evidence against this appellant is that when the complainant went to take away his wife appellant No. 2 threatened 478 him. The record shows that appellant No. 2 is the brother of appellant No. 1; and, if knowing that Rahmatia had married his brother, appellant No. 2 told the complainant to walk away, that cannot legally justify the inference that he must have offered any inducement, blandishment or allurement to Rahmatia for leaving the protection of her husband and refusing to return to him. Indeed the courts below have not considered the case of this appellant separately on its own merits at all. In our opinion, the conviction of appellant No. 2 is not supported by any evidence on the record. The result is the appeal preferred by appellant No. 2 is allowed, the order of conviction and sentence passed against him is set aside and he is ordered to be acquitted and discharged. Appeal of appellant No. 1 dismissed. Appeal of appellant No. 2 allowed.

One R, the wife of S, disappeared from her husband 's house. She was traced to the house of the appellants, A and his brother B. When S went there and asked A to let his wife go with him A told him that he had married her and B threatened S and asked him to go away. The appellants were charged under section 498 Indian Penal Code for detaining R when they knew or had reason to believe that she was the wedded wife of S, with intent to have illict intercourse with her. The appellants pleaded that R was not validly married to S and that she had not been detained by them inasmuch as she was tired of living with S and had voluntarily and of her free will come to stay with them. The Magistrate found the appellants guilty, convicted them and sentenced them to undergo simple imprisonment for two months each. On appeal the Sessions Judge confirmed the conviction but reduced the sentence to a fine of Rs. 50/ each. The appellants filed a revision before the High Court. The High Court issued a notice of enhancement and after hearing the appellants dismissed the revision and enhanced the sentence to rigorous imprisonment for six months each. Held, that detention in section 498 means keeping back a wife from her husband or any other person having the care of her on behalf of her husband. Such keeping back may be by force; but it need not be by force. It can be the result of persuasion, allurement or blandishments which may have either caused the willingness of the woman, or may have encouraged, or co operated with, her initial inclination to leave her husband. The object of the section is to protect the rights of the husband and it cannot be any defence to the charge to say that, though the husband has been deprived of his rights, the wife is willing to injure the said rights and so the person who is responsible for the willingness has not detained her. A was rightly convicted as the charge of detention was proved against him on the findings of the Courts below that he had offered to marry R and had thereby either persuaded or encouraged her to leave her husband 's house. But the charge was not made out against B as it was not proved that he had offered any inducement, blandishment or allurement to R for leaving the protection of her husband and for refusing to return to him. 465 Sundara Dass Teva, (1868) IV Mad. H. C. R. 20; Ramaswamy Udayar vs Raju Udayar, A. 1. R. ; Emperor vs Jan Mohomed, (1902) IV Bom. L.R. 435; Broomfield, J., in Emperor vs Mahiji Fula, Bom. 88, Emperor vs Ram Narayan Baburao Kapur, ; Mahadeo Rama vs Emperor, A.I.R. (1943) Bom. 179; Prithi Missir vs Harak Nath Singh, I.L.R. ; Bipad Bhanjan Sarkar vs Emperor, I.L.R. ; Banarsi Raut vs Emperor, A.I.R. (1938) Pat. 432 and Bansi Lal vs The Crown, (19I3) Punj. L.R. 1066, approved. Divatia, J., in Emperor vs Mahiji Fula, Bom. 88, Mabarak Sheikh vs Ahmed Newaz, and Harnam Singh vs Emperor, A.I.R. (1939) Lah. 295, disapproved. Held further, that the High Court was not justified in en hancing the sentence to six months rigorous imprisonment, and it should have only restored the sentence passed by the trial Court. The question of sentence is normally in the discretion of the trial Court and the High Court can enhance the sentence only if it is satisfied that the sentence imposed by the trial Court is unduly lenient, or, that in passing the order of sentence, the trial Court had manifestly failed to consider the relevant facts. The sentence of two months simple imprisonment imposed by the trial Court was not so unduly or manifestly lenient as not to meet the ends of justice.

Appeal No. 1801 of 1967. Appeal under section 116 A of the Representation of the People Act, 1951 from the judgment and order dated October 10, 1967 of the Rajasthan High Court in Election Petition No. 13 of 1967. R.M. Hazarnavis and B.R.Agarwala, for the appellant. S.V. Gupte, Sardar Bahadur Saharya, Vishnu Bahadur Saharya and Yogindra Khusalani, for respondent No. 1. H.K. Puri, for respondent No. 2. The Judgment of the Court was delivered by Hidayatullah, C.J. This is an appeal by the unsuccessful election petitioner against the judgment of the High Court of Rajasthan dated October 10, 1967. The election petition was filed to challenge the election of the first respondent at the Pali Parliamentary Constituency in the Fourth General Elections. At that election seven nomination papers were filed. Two of the candidates withdrew. Amongst them was one R.D. Periwal. There were thus only five contesting candidates. of these, the first respondent obtained 1,47,509 votes. His closest rival respondent No. 2 (now deceased) obtained 1,21,438 votes. The remaining candidates got a little over thirty thousand votes between them. The election petitioner (appellant here) is an elector of Pali. In his petition he joined the returned candidate and the other four contesting candidates. Many grounds were urged in the petition. The first ground was that the returned candidate or his election agent prompted hatred against the Congress, appealed to religion and sent persons dressed as Sadhus preaching that if Congress was returned to power there would be go hatya and took pledges or oaths from the voters. The second was that the returned candidate and his election agent were guilty of suppression of true expenses and filed false returns. The third ground was that the candidate or his election agent obtained the services of Government servants in furthering the election of the returned candidate. 6 3 2 The last ground was that the returned candidate and his election agent and other persons with the consent of the returned candidate paid and offered bribes between January 13, 1967 to February 14, 1967 to induce the electors directly or indirectly to vote for the returned candidate. The petition was scrutinised and was found to be in order. The returned candidate entered appearance on May 15, 1967 and filed a written statement a month later. He took the objection that the allegations were vague and lacking in necessary particulars. The High Court thereupon ordered better and fuller particulars on July 2, 1967. The election petitioner was asked to file an application for amendment and a draft of the amended petition. This was done but there were objections. The objections were decided on August 1, 1967. Some of the allegations of corrupt practices were deleted for want of sufficient particulars. The other amendments were allowed. 16 of the petition in the amended form read as follows: "That the respondent No. 1 and his election agents Messrs. R.D. Penwal and Shri Lunia and other persons with the consent of the respondent No. 1 paid and offered bribes between 13 1 67 to 20 2 67 with the object of inducing directly or indirectly electors to vote for respondent No. 1. The following amongst other are some of the instances" (Instances were mentioned) On August 24, 1967 written statement was filed in which an objection was taken that as R.D. Periwal, against whom corrupt practices had been alleged, was not joined as a party, the petition was liable to be dismissed under section 86( 1) of the Representation of the People Act. This preliminary objection was heard by the Judge on August 29, 1967. Same day an application for amendment of the election petition was fled. It was stated in the election petition that the election petitioner had gathered the impression that Inder Kumar Lucia was the election agent, from a telegram sent by Lunia; that the name of R.D. Periwal in paragraph 16 crept in because of 'uncertainty and inadvertence ' and the reference to election agent 'came to be made in an omnibus manner '. What this statement means is not very clear. However, it was pointed out that there was no intention to make any allegation against R.D. Periwal but two or three allegations of corrupt practice were imputed to Lunia. A request was, therefore, made that the reference to 'election agent ' in all the paragraphs charging, corrupt practices should be deleted and it was specifically prayed that. the name of R.D. Periwal in paragraph 16 should also be 633 deleted. In short, it was intended to withdraw allegations against Periwal. This application was not separately considered by the High Court but the election petition itself was dismissed under section 86(1) since Periwal, who was a duly nominated candidate (who withdrew later), had to be compulsorily joined under section 82(b) if allegations of corrupt practice against him were made. It will be noticed, therefore, that in the original election petition allegations were made against the returned candidate or his election agent. Two of the allegations of corrupt practice were against the returned candidate and his election agent. They were charges of taking assistance of Government servants and bribing voters. In connection with the bribery charge, no names were mentioned. In his reply to the petition the returned candidate denied the charges in respect of himself and his election agents (using the plural). In the amended petition, in one place, the returned candidate and his, election agent were mentioned with Lunia as the election agent and in another,. which we have quoted earlier, two election agents,. Lunia and Periwal were mentioned by name. The returned candidate in reply denied that Lunia was the election agent. In the second application for amendment filed on August 29, 1967 attempt was made to withdraw allegations against the election agent and to delete all references to Periwal. This was resisted and it was stated that Periwal was the only election agent appointed by the returned. candidate. The question is whether the election petition was liable to be dismissed for not joining Periwal who was a duly nominated candidate and against whom charges of corrupt practice were made ? Mr. Hazarnavis contends that the amendments were made in answer to the order for better and fuller particulars. He submits that the original petition did not name Periwal although the amended petition did and the High Court need not have mixed up the two petitions to find out whether Periwal had to be joined or not According to him, the original petition could not be dismissed since it did not name Periwal and the amended petition only supplied particulars as required by the Judge. He submits that even in giving instances of bribery in paragraph 16, although the name of Periwal was mentioned in the opening part, no instance was cited with Periwal 's name although other names were mentioned. Therefore, he submits that Periwal was not in the mind of the election petitioner at all and the mention of Periwal was merely an error. In reply it is pointed out that all allegations were supported by affidavits and that all references to the election agent and allegations against him were affirmed on personal knowledge by the election petitioner. In the Original ' petition no names were given but when better particulars were ordered a categoric refer to the election agents was made by referring to Lunia and Periwal and this was again affirmed on personal knowledge by the 634 petitioner. It is pointed out that in the list of workers of time returned candidate Periwal was shown as 'the election agent and the returned candidate affirms that Periwal was the only election agent. It is shown by way of illustration that the return of election expenses was filed by Periwal as the election agent and the allegations of corrupt practice in respect of the election expenses related to Periwal. On examining the entire record with the assistance of counsel we are satisfied that Periwal was always meant when the reference was to an election agent and tiffs was more clearly specified when the amended petition was filed. Therefore, the attempt was first to name him and now to withdraw his name to save the petition. This, in our opinion, could not be done and the High Court last right in dismissing the election petition and disallowing the amendment by implication. We give our reasons briefly: It is necessary to read the Act backwards from section 86( 1 ). That section reads: "86. Trial of election petitions. ( 1 ) The High Court shall dismiss an election petition which does not comply with the provisions of section 81 or section 82 or section 117. This is a peremptory provision and admits of no exception. The Court must enforce it strictly if there is a non compliance with the requirements of section 82 among others. In this connection we have to read section 82(b) which reads as follows: "82. Parties to the petition. A petition shall join as respondents to his petition: (a) (b) any other candidate against whom allegations of any corrupt practice are made in the petition. " This makes it incumbent that any candidate against whom a charge of corrupt practice is made must be joined as a party. Who is a candidate is laid down in section 79(b). That provision reads as follows: "79. Definitions. In this Part and in Part VII unless the context otherwise requires. (a) (b) 'candidate ' means a person who has been or claims to have been duly nominated as a candidate at any election. and any such person shall 635 be deemed to have been a candidate as from the time when, with the election in prospect, he began to hold himself out as a prospective candidate." Since Periwal was a candidate who was duly nominated at an election he would be a candidate within the meaning assigned to that word by this definition. The question raised is that Periwal was a candidate at the election since he had withdrawn and, in any ease, this definition need not be read in section 82(b) which should be limited to contesting candidates. Under section 37 a candidate may withdraw and once the notice of withdrawal is given it is final. After the date of withdrawal passes a list of contesting candidates is drawn up under section 38. It is submitted that section 82(b) should be limited to the contesting candidates. It is also submitted that when sections 100 and 123 speak of a candidate they refer to a candidate whose candidature subsists to the time of the election, that is to say, after the time for withdrawal passes. The petition under section 83(1 )(b), it is said, can set out particulars of corrupt practices "against parties" and that would include contesting candidates, election and other agents and persons other than candidates and their agents. It is submitted that a candidate who has withdrawn is no longer a candidate and hence cannot be a party. The argument cannot be entertained. These questions have already been considered by 'this Court on more than one occasion. They were first considered in K. Kamaraja Nadar V. Kunju Thevar and Others(1) but that ruling may not strictly be appropriate since it was based on section 55A(2) which is now repealed. However, other cases (Amin Lal V. Hunna Mal(2) and Har Swarup & Anr. V. Brij Bhushan Saran & Ors.) (3) consider this point. It is there laid down that a candidate who is duly nominated continues to be a candidate for purposes of section 82(b) in spite of withdrawal. This really decides the question which has been mooted before us. A very detailed examination of the same question is to be found in Chaturbhuj V. Election Tribunal, Kanpur & Ant.(4). In that case our brother Bhargava (M. L. Chaturvedi, J. concurring) has examined in the Allahabad High Court these provisions from every angle which is presented to us and has adequately answered all the arguments. It is argued that the Civil Procedure Code applies and O. VI, r. 17 and O. 1, r. 10 enable the High Court respectively to order amendment of a petition and to strike out parties. It is submitted, therefore, that both these powers could be exercised in this case by ordering deletion of reference to Periwal. This argument cannot be accepted. No doubt the power of amendment is preserved (1) (2) [19651 1 S.C.R. 393. (3) ; (4) 636 to the court and O. 1, r. 10 enables the court to strike out parties but the court cannot use O. VI, r. 17 or O. 1, r. 10 to avoid the consequences of non joinder for which a special provision is to be found in the Act. The court can order an amendment and even strike out a party who is not necessary. But when the Act makes a person a necessary party and provides that the petition shall be dismissed if such a party is not joined, the power of amendment or to strike out parties cannot be used at all. The Civil Procedure Code applies subject to the provisions of the Representation of the People Act and any rules made thereunder (see section 87). When the Act enjoins the penalty of dismissal of the petition for non joinder of a party the provisions of the Civil Procedure ' Code cannot be used as curative means to save the petition. An attempt is made to distinguish the cases cited by us on the ground that now the provisions of sections 4 to 25 of the Indian Limitation Act are applicable to election petitions and the amendment of the petition and joining of parties can take place at any time. It is subtitled that now the cases must be decided under the amended law. We need not go into this matter. It is doubtful whether these provisions of the Limitation Act apply at all. The petitioner has not asked to join Periwal. He only wants an amendment to delete allegations of corrupt practice against him. This cannot be permitted since it will defeat the provisions of section 86(1 ). Every election petition can be saved by amendment in this way but that is not the policy of the law. The dismissal is peremptory and the law does not admit of any other approach. It is significant that in Amin Lal V. Hunna Mal(1), although the matter was not gone into from this angle it was said that the amendment for better particulars was not intended to enable the election petitioner to remove the defect in presentation or in the joinder of parties. Sheopat Singh V. Ram Pratap(2), since the facts were assumed, cannot be said to record any decision. Lastly, it is submitted that Periwal was being charged in character as an election agent and not as a candidate. This submission runs counter to the amendment petition which says that he was not an election agent and therefore he was really charged in his capacity as an individual and as he was a duly nominated candidate he had to be joined. The argument really contradicts the last amendment petition and cannot be entertained. For the reasons above stated it must be held that the decision of the High Court under appeal was correct. The appeal fails and will be dismissed with costs. V.P.S. Appeal dismissed.

Seven candidates were duly nominated for election from a Parliamentary constituency, but two of the candidates withdrew. The first respondent, who was one of the remaining five contesting candidates, was declared elected. His election was challenged on various grounds by the appellant who was an elector. To the petition, only the returned candidate (first respondent) and the other four contesting candidates were made parties. On the first respondent 's objection that the allegations were vague, the appellant amended his petition. In his amended petition, with respect to one of the grounds, namely, offering bribes to voters, the appellant gave instances of bribes having been offered or paid by the first respondent, his election agents, and others. Two persons were referred to as the election agents of the first respondent. One of them was one of the candidates who had withdrawn and who was not made a party to the election petition. The first respondent in his written statement contended that the petition should be dismissed under section 86(1) of the Representation of the People Act, 1951, as the candidate against whom corrupt practices were alleged and who was a necessary party under section 82(b) was not made a party to the election petition. The appellant then filed an application for amendment of his petition wherein he stated that by 'election agent ' he never meant the candidate who had withdrawn, that there was never any intention to make any allegations against that candidate and that his name may be deleted from the petition, as he was not the first respondent 's election agent and reference to him was. made by inadvertence. The High Court dismissed the election petition under section 86(1). In appeal to this Court, HELD: (1) A candidate who is duly nominated continues to be a candidate for purposes of section 82(b) in spite of withdrawal, and if he is not joined as a party when allegations of corrupt practice are made against him, the election petition shall be dismissed under section 86(1). F] Aminlal V. Hunna Mal, ; and Har Swarup V. Brij Bhushan Saran; , , followed. Chaturbhuj V. Election Tribunal, Kanpur, (1958) 15 E.L.R. 301, approved. (2) The record showed that allegations of corrupt practice were made against the candidate who had withdrawn. It could not be contended by the appellant that the allegations were made against him not as a candidate but in the character of an election agent, because, the appellant had himself stated in his application for amendment that the candidate who had withdrawn was not the election agent of the first respondent. Therefore, the 631 allegations were made against an individual who was a candidate within the meaning of section 82(b) and who had to be joined as a necessary party to the election petition. [634 B C; 636 F G] (3) The Court cannot use O. VI, r. 17 or O. I, r. 10 of the Civil procedure Code to avoid the consequences of non joinder for which a special provision, namely section 86, is found in the Act. The Civil procedure Code applies to the trial of election petitions only subject to the provision of the Representation of the People Act and the rules, made thereunder. When the Act makes a person a necessary party and provides that the petition shall be dismissed if he is not joined, the power in the Code, of amendment or to strike out parties. cannot be used at all. If the deletion prayed for by the appellant was granted, every election petition can be by amendment and the provisions of section 86(1) and the policy of frae law will be defeated. [636 A C, D E]

ivil Appeal No. 161 Of 1986. From the Judgment and Order dated 17.9.85 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. ED(SB) (T) 463/84 D. Soli J. Sorabjee, Ravinder Narain, Harish Salve, section Ganesh and P.K. Ram for the Appellant. B. Datta, Additional Solicitor General, Mrs. Indra Sawhney and Ms. section Relan for the Respondent. The Judgment of the Court was delivered by RANGANATH MISRA, J. The fate of this appeal under sec tion 35(L) of the , de pends upon the meaning and scope of the Explanation appear ing in section 11A of the Act. The High Court of Karnataka by its order dated 4.6.1976 in Writ Petition No. 2632 of 1976 gave the following direc tion: 311 "Pending disposal of the aforesaid writ Peti tion, it is ordered by this Court that collec tion of excise duty as a fabric be and the same is hereby stayed. It is further ordered that the petitioner shall however continue to pay exercise duty as yarn and shall further maintain an account in square metres for future clearance." The said Writ Petition was ultimately dismissed by the High Court on 16.2. The operative part of the Court 's final order ran thus: "For the reasons aforesaid, we make the fol lowing order: (i) Rule discharged; (ii) We decline to interfere at this stage leaving open to the petitioner to urge all the contentions in reply to the show cause notices. " On 20th May, 1982, a notice to show cause was issued to the appellant by the Assistant Collector, being Notice No. 913, and with this the Collector sought to raise a demand for the period from 20th June, 1976 to 28th February, 1981 apart from for the period between 1.4. 1975 to 18.8.1975 in respect of which an earlier show cause notice dated 29.1. 1976 had already been issued. It is not disputed by the Revenue that the appropriate period of limitation to apply to the facts of the case is six months as provided in section 11A of the Act and that the Notice issued on 20th of May, 1982 was beyond that period. Reliance was placed on the Explanation for obtaining extension of that period. The Explanation reads thus: "Where the service of the notice is stayed by an order of a Court, the period of such stay shall be excluded in computing the aforesaid period of six months or five years, as the case may be." The provision in the Explanation incorporates a well known principle of law. Section 15 of the Limitation Act of 1908 (also of Section 15 of the Limitation Act of 1963) incorpo rates the same principle. This Court in Sirajul Haq Khan & others vs The Sunni Central Board of Waqf, U.P. & others, dealt with the effect of an order of injuc tion in the matter of computation of limitation. At page 1302 of the Reports, Gajendragadkar, J. as he then was, spoke for the Court thus. 312 "It is plain that, for excluding the time under this section, it must be shown that the institution of the suit in question had been stayed by an injunction or order; in other words, the section requires an order or an injunction which stays the institution of the suit. And so in cases falling under Section 15, the party instituting the suit would by such institution be in contempt of court. But in our opinion, there would be no justifi cation for extending the application of section 15 on the ground that the institution of the subsequent suit would be inconsistent with the spirit or substance of the order passed in the previous litigation . . " In the instant case, the order of stay passed by the Karna taka High Court had only stayed the collection of the excise duty, which is a stage following levy under the scheme of the Act. Obviously there was no interim direction of the High Court in the matter of issue of notice for the purpose of levy of duty. The relevant portion of Section 11A provid ed. "(1) When any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, a Central Excise Officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short levied or short paid or to whom the refund has erro neously been made, requiring him to show cause why he should not pay the amount specified in the notice: (2) The Assistant Collector of Central Excise shall, after considering the representation, if any, made by the person on whom notice is served under sub section (1), determine the amount of duty of.excise due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined. ' ' Reference to Section 3 of the Act which contains the charg ing provision clearly shows that levy and collection are two distinct and separate 313 steps. This Court in N.B. Sanjana, Assistant Collector of Central Excise, Bombay & Ors. vs Elphinstone Spinning & Weaving Mills Co. Ltd., ; , at page 514 stat ed: " . The charging provision section 3(i) specifically says "there shall be levied and collected in such a manner as may be pre scribed the duty of excise . . "It is to be noted that sub section (i) uses both the expressions "levied and collected" and that clearly shows that the expression "levy" has not been used in the Act or the Rules as meaning actual collection." The High Court having directed stay of collection had, therefore, not given any interim direction in the matter of issue of notice or levy of the duty. The Explanation in clear terms refers to stay of service of notice. The order of the High Court did not at all refer to service of notice. Therefore, there is force in the submission of the appellant that the benefit of the Explanation is not available in the facts of the case. No notice seems to have been issued in this case in regard to the period in question. Instead thereof an out right demand had been served. The provisions of Section 11A (1) and (2) make it clear that the statutory scheme is that in the situations covered by the sub section (1), a notice of show cause has to be issued and sub section (2) requires that the cause shown by way of representation has to be considered by the prescribed authority and then only the mount has to be determined. The scheme is in consonance with the rules of natural justice. An opportunity to be heard is intended to be afforded to the person who is likely to be prejudiced when the order is made, before making the order thereof. Notice is thus a condition precedent to demand under sub section (2). In the instant case, compliance with this statutory requirement has not been made, and, there fore, the demand is in contravention of the statutory provi sion. Certain other authorities have been cited at the hearing by counsel for both sides. Reference to them, we consider, is not necessary. The appeal has to be allowed and the demand raised for the period 19.8.1975 to 23.2.1981 has to be set aside. There shall be no order for costs. The tax paid, if any, shall be refunded to the appellant. S.R. Appeal al lowed.

A show cause notice dated 29.1.1976 issued by the re spondent to the appellant calling upon him to explain as to why excise duty treating his product as "fabric" and not as "yarn" may not be levied, was challenged in the High Court of Karnataka in Writ Petition No. 2632/ 1976. Pending final disposal of the writ petition, an interim order staying the collection of excise duty as a "fabric" for the period 1.4.1975 to 18.8.75 alone was passed with a specific direc tion that the appellant should continue to pay excise duty as "yarn". Finally the writ petition was dismissed on 16.2.1981. On 20th May, 1982, another notice No. 913 to show cause was issued to the appellant simultaneously seeking to raise a demand for the period from 20.6.1976 to 28.2.1981 apart from for the period between 1.4.1975 to 18.8.1975 challenged in the earlier writ petition. The Karnataka High Court having rejected the plea of bar of limitation under section 11A of the raised in the writ petition challenging the said second show cause notice and demand, the appellant has come in appeal by way of special leave. Allowing the appeal, the Court, HELD: 1.1 Section 3 of the Act which contains the charg ing provision clearly shows that levy and collection are two distinct and separate steps. [312H] 1.2 The provision of section 11A(1) and (2) of the make it clear that the statutory scheme is that in the situations covered by the sub section(1), a notice of show cause has to be issued and sub section(2) requires that the cause shown by way of representation has to be considered by the prescribed au thority and then 310 only the amount has to be determined. The scheme is in consonance with the rules of natural justice. An opportunity to be heard is intended to be afforded to the person who is likely to be prejudiced when the order is made, before making the order thereof. Notice is thus a condition prece dent to a demand under sub section(2). In the instant case, compliance with this statutory requirement has not been made, and, therefore, the demand is In contravention of the statutory provision. [313E G] 2. Explanation to section 11A of the , which incorporates a well known principle of law, in clear terms refers to 'stay of service of notice '. The High Court order did not at all refer to service of notice. The High Court having directed stay of collection of duty as 'fabric ' has not issued any interim direction in the matter of issue of notice of levy of the duty. Therefore, the benefit of Explanation to section 11A of the Act is not available to the Respondent. [313C D] Sirajul Haq Khan & Ors. vs The Sunni Central Board of Waqf, U.P. & Ors. , ; and N.B. San jane As sistant Collector of Central Excise, Bombay & Ors. vs El phinstone Spinning & Weaving Mills Co. Ltd., ; , 514 referred to.

Appeal No. 626 of 1986 etc. From the Judgment and Order dated the 7th June, 1984 of the Kerala High Court in O.P. No. 6642 of 1982 Soli J. Sorabji, G.V. lyer, A.S. Nambiar, section Kumar, E.M.S. Anam and R.N. Keswani for the Appellants. T.S.K. Iyer, V.J. Francis and N.M. PopIi for the Respond ents. The Judgment of the Court was delivered by RANGANATH MISRA, J. All these appeals are by special leave and are directed against judgments rendered by the Kerala High Court in Writ Petitions filed before it. The High Court in each case refused to grant relief. 656 Two Notifications/Orders issued by the State Government are relevant. The first one is dated 11.4. 1979 and the second is. dated 29.9.1980 which was published in the State Gazette on 21.10.1980. For convenience, the texts of the two Notifications/Orders are extracted below: "Order dated 11.4.1979: The incentives now given to the industries in the State are too meagre and inadequate to attract industries to this State when compared to the incentives available for the industries in many other States. Further there are cer tain inherent disincentives. also peculiar to this State such as high wage rates, minimum wages for certain sections, lack of availabil ity of raw materials, etc. The question of offering some incentives by the State to attract new industries has been under consid eration of the Government. The question whether any additional incentive can be given to the industrial concern the State plans to consider in detail and it was felt that the question of strength ening the traditional industries which are labour intensive, rehabilitation of sick units and the promotional activities for the growth of new industries should be examined in depth for indentifying the problems and adoption of various measures necessary to promote indus trial growth in the State. A Committee con sisting of the following officers was there fore set up to study the various problems and submit report . . . . . . ." The Committee finalised its report on 20th March, 1979. The Government has considered the recommendations and sugges tions of the Committee in detail and they are pleased to approve the following package of measures for promoting industrial development in Kerala: SMALL SCALE INDUSTRIES: Sales Tax Concessions: New industrial Units under small scale industries set up after 1.4.1979 will be exempted from the payment of sales tax for a period of five years from the date of pro duction . . . . . 657 The relevant portion of the second notification reads thus: "In exercise of the power conferred by section 10 of the Kerala General Sales Tax Act ( 15 of 1963) the Government of Kerala have considered it necessary in the public interest so to do, hereby make an exemption in respect of the tax payable under the said Act on the turnover of the sale of goods produced and sold by the new industrial units under the small scale indus tries for a period of five years from the date of commencement of sale of such goods by the said units subject to the conditions that if the tax collected by any such units by way of tax on their sales shall be paid over to Government and that the sales tax, if any, already paid by such units to Government shall not be refunded. Provided that such units shall pro duce proceedings of the General Manager, District Industries Centre, declaring the eligibility of the units for claiming exemp tion from sales tax. Provided further that the cumulative sales tax concessions granted to a unit at any point of time within this period shall not exceed 90 per cent of the cumulative gross fixed capital investment of the unit. EXPLANATION: For the purpose of this notifi cation new industrial unit under the Small Scale Industries shall mean undertakings set up on or after1st April, 1979 and registered with the Department of Industries and Commerce as a small scale industrial unit. This notification shall be deemed to have come into force with effect from 1st April, 1979". Section 10 of the Kerala General Sales Tax Act at the time the two orders were made ran thus: "Power of Government to grant exemption and reduction in rate of tax: (1) The Government may, if they consider it necessary in the public interest, by noti fication in the Gazette, make an exemption or reduction in rate (either pros 658 pectively or retrospectively) in respect of any tax payable under this Act; (i) on the sale or purchase of, any specified goods or class of goods, at all points or at a specified point or points in the series of sales or purchases by successive dealers. or (ii) by any specified class of persons in regard to the whole or any part of their turnover. (2) Any exemption from tax, or reduction in the rate of tax, notified under sub section (1): (a) may extend to the whole State or to any specified area or areas therein; (b) may be subject to such restrictions and conditions as may be specified in the notifi cation; (3) The Government may, by notification in the Gazette, cancel or vary any notifica tion issued under sub section (1). " It may be possible to contend with plausibility that in the absence of an enabling provision in the statute the State Government would not have the power to give up a part of the tax due to the State and there can be no estoppel against statute. But that question does not arise here because we have Section 10 empowering the State Government to grant exemption from tax. During the heating of the appeals it has been contended that the notifications in question were not in exercise of the powers under section 10 of the Act. The High Court has proceeded ' on the footing that the first order dated 11.4. 1979 was not made in exercise of statutory powers while the second order was issued in exercise of powers under section 10. Having read the two orders and the contents, we are of the view that both the orders are covered by the provisions of section 10 of the Act though in the earlier order there is no reference to section 10. It is a well settled princi ple of law that where the authority making an order has power conferred upon it by statute to make an order made by it and an order is made without indicating the provision under which it is made, the order would be deemed to have been made under the provision enabling the making of it, We accordingly hold that both the orders are under section 10 of the Act. 659 Under the order dated 11.4.1979, new small scale units were invited to set up their industries in the State of Kerala and with a view to boosting of industrialisation, exemption from sales tax and purchase tax for a period of five years was extended as a concession and the five year period was to run from the date of commencement of produc tion. If in response to such an order and in consideration of the concession made available, promoters of any small scale concern have set up their industries within the State of Kerala, they would certainly be entitled to plead the rule of estoppel in their favour when the State of Kerala purports to act differently. Several decisions of this Court were cited in support of the stand of the appellants that in similar circumstances the plea of estoppel can be and has been applied and the leading authority on this point in the case of M.P. Sugar Mills vs State of U.P., ; On the other hand, reliance has been placed on behalf of the State on a judgment of this Court in Bakul Cashew Co. vs Sales Tax Officer, Quilon, [1986] 2 SCC 365. In Bakul Compa ny 's (supra) case this Court found: "That there was no clear material to show any definite or certain promise had been made by the Minister to the concerned persons and there was no clear material also in support of the stand that the parties had altered their position by acting upon the representations and suffered any prejudice. On facts, there fore, no case for raising the plea of estoppel has been made out." This Court proceeded on the footing that the notification granting exemption retrospectively was not in accordance with section 10 of the State Sales Tax Act as it then stood, as there was no power to grant exemption retrospectively. By an amendment that power has been subsequently conferred. In these appeals there is no question of retrospective exemp tion. We also find that no reference was made by the High Court to the decision in M.P. Sugar Mills ' case (Supra). In our view, to the facts of the present case, the ratio of M.P. Sugar Mills ' case directly applies and the plea of estoppel is unanswerable. It is not disputed that the first Order namely, the one dated 11.4. 1979 gave more of tax exemption than the second one. The second notification withdrew the exemption relating to purchase tax and confined the exemption from sales tax to the limit specified in the proviso of the Notification. All parties before us who in response to the Order of April 11, 1979 set up their industries prior to 21.10.1980 within the State of Kerala would thus be entitled to the exemption 660 extended and/or promised under that Order. Such exemption would continue for the full period of five years from the date they started production. New industries set up after 21.10. 1980 obviously would not be ,entitled to that benefit as they had noticed of the curtailment in the exemption before they came to set up their industries. In the course of hearing and in the written submissions furnished on behalf of the State it was contended that the question as to which of the appellants are entitled to the benefit should be left to the Sales Tax Authorities to decide. We are of the view that once the law is settled, that part of the decision may be left to the Departmental authorities and they may decide the question on merits in appropriate proceeding in accordance with the law laid down in this judgment. Each of the appeals is allowed. Parties are directed to bear their own costs throughout. P.S.S. Appeal allowed.

Section 10 of the Kerala General Sales Tax Act, 1963 empowers the Government in public interest to make an exemp tion or reduction in rates either prospectively or retro spectively in respect of any tax payable under the Act. The State Government with a view to boost industrialisa tion, by an order dated 11th April, 1979 offered incentive to Small Scale industries, to be set up thereafter, in form of exemption from sales tax and purchase tax for a period of five years from the date of commencement of production. By a second order dated 29th September, 1980, published in the Gazette on 21st October, 1980 purported to be made under section 10 of the Act, the Government withdrew the exemption relat ing to purchase tax and confined the exemption from sales tax to the limit specified. The appellants who set up their industries after April 11, 1979, including those who did it after 21st October, 1980, claimed benefit of exemption from purchase tax and sales tax in terms of the first order. They pleaded the rule of estoppel against the State Government in making the second order. The High Court in dismissing their Writ Peti tions proceeded on the footing that the first order was not made in exercise of statutory power while the second order was issued under I0 of the Act. Allowing the appeals by Special Leave, the Court, HELD: I. Where the authority making an order has power conferred upon it by statute to that effect, such an order if made without 655 indicating the section under which it is made, it would be deemed to have been made under the enabling provision. In the instant case, therefore, both the orders are covered by section 10, though in the earlier order there was no reference to the statutory provision. [658G H] 2. The appellants who in response to the first order dated April 11, 1979 set up their industries prior to 21st October, 1980 would be entitled to exemption extended and/or promised under that order. Such exemption would continue for the full period of five years from the date they started production. New industries set up after 21st October, 1980 would not be entitled to that benefit as they had noticed of the curtailment in the exemption before they came to set up their industries. They would be entitled to exemption from sales tax only to the limit specified in the second order. [659G 600A] 3. If in response to an order made by the Government and in consideration of the concession made available therein the promoters of any small scale concern set up their indus tries within the State, they would certainly be entitled to plead the rule of estoppel in their favour when the State purports to act differently. In the facts of the present case, however, the plea of estoppel is unanswerable. [659B. F] Motilal Padampat Sugar Mills Co. Ltd. vs State of U.P. ; , Bakul Cashew Co. vs Sales Tax Officer, Quilon, [1986] 2 SCC 365, referred to.

ION: Civil Appeal No.1014 of 1988. From the Judgment and Order dated 25.1.1988 of the Madras High Court in C.P.P. No. 215 of 1986. Mrs. Nalini Chidambaram, Ms. Setia Vaidalingam, N. Thiagarajan and Ms. Radha for the Appellant. section Srinivasan for the Respondent. The Judgment of the Court was delivered by VENKATARAMIAH, J. The question which arises for consideration in this case is whether a landlord who seeks eviction of a tenant from a non residential building (other than a non residential building which is used for keeping a vehicle or adapted for such use) under section 10(3)(a)(iii) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 (hereinafter referred to as 'the Act ') is required to prove that he requires the said building for his own use or for the use of any member of his family bona fide in the proceedings instituted before the Controller. The appellant is a partnership firm represented by its partner, 5. Peer Mohammed. The respondent 's brother was carrying on business in hardware in the front portion of the ground floor of the premises bearing No. 157, Kutcheri Road, Mylapore, Madras 4. The appellant purchased the said running business from the brother of the respon dent on 5.7.1974. The said building, however, belonged to the father 389 of the respondent. After purchasing the business, the appellant became a tenant under the father of the respondent by paying an advance of Rs.1,500 and agreeing to pay a rent at the rate of Rs.450 per month for the portion in which it commenced to carry on the business. In the rear portion of the ground floor of the premises one Mrs. Janaki Ammal was residing as a tenant. Mrs. Janaki Ammal vacated the said residential portion in October, 1974. With effect from 5.10.1974 the appellant took the portion vacated by Mrs. Janaki Ammal also on rent from the father of the respondent by paying Rs.525 as advance and agreeing to pay a monthly rent of Rs.175. The rent of this portion was increased subsequently to Rs.315 per month. On 25.11.1980 the appellant received a notice from an advocate, who was acting on behalf of the father of the respondent terminating the tenancy of the appellant in respect of both the portions with effect from 31.12.1980 and requiring the appellant to deliver possession of the two portions of the ground floor of the premises in question to the father of the respondent on the ground that he needed the premises for the occupation of his son. The appellant sent a reply denying the right of the respondent 's father to evict the appellant from the premises. Thereafter it is stated that the ownership of the premises in question was transferred in favour of the respondent by his father. Thereafter the respondent asked the appellant to increase the rent payable for the premises. In order to avoid litigation, the appellant agreed to pay a consolidated amount of Rs.1,000 per month by way of rent for both the portions in the year 1981 and also paid a sum of Rs.7,500 as advance. On 9.6.1982 an agreement was entered into in respect of both the portions specifying that the lease should remain in force till 8.5.1983. After the expiry of the said period, it is stated, the respondent again demanded enhanced rent. On the appellant not complying with the said demand the respondent instituted a petition for eviction of the appellant in the Court of the Controller at Madras under section 10(3)(a)(iii) of the Act on the ground that the premises in question were needed by his wife for carrying on pawn broker business which she was carrying on elsewhere. The appellant resisted the petition. It was inter alia contended by the appellant that the requirement of the wife of the respondent was not bona fide and the petition was liable to be dismissed. After trial, the Controller dismissed the petition holding that the tenancy in question was in respect of both the residential and non residential portions and that the respondent could not seek eviction of the appellant as the major portion of the demised premises was of residential character. Aggrieved by the decision of the Controller the respondent preferred an appeal before the Appellate Authority. The Appellate Authority dismissed the appeal. Thereupon the respon 390 dent preferred a revision petition before the High Court of Madras inCivil Revision Petition No. 215 of 1986. That petition was allowed by the High Court holding that it was not necessary for the respondent to establish that his requirement was bona fide as the question of bona fides of a landlord 's requirement did not arise for consideration at all in case falling under secti10 10(3)(a)(iii) of the Act. It, however, held that the claim of the respondent was bona fide. Accordingly, the High Court allowed the revision petition and directed the appellant to quit and deliver vacant possession of the premises in question to the respondent. This appeal by special leave is filed against the judgment of the High Court of Madras. The crucial question which arises for consideration in this case is whether it is necessary for a landlord, who institutes a petition under section 10(3)(a)(iii) of the Act, to establish that his requirement is bona fide or not. As can be seen from the long title of the Act it was enacted by the State Legislature to amend and consolidate the law relating to the regulation of the letting of residential and non residential buildings and the control of rents of such buildings and the prevention of unreasonable eviction of tenants therefrom in the State of Tamil Nadu. Section 10 of the Act provides that a tenant shall not be evicted whether in execution of a decree or otherwise except in accordance with the provisions of section 10 or sections 14 to 16 of the Act. The material portion of sub section 3(a) of section 10 of the Act, which is relevant for purposes of this case reads thus: "10(3)(a). A landlord may, subject to the provisions of clause (d), apply to the Controller for an order directing the tenant to put the landlord in possession of the building. (i) in case it is a residential building, if the landlord required it for his own occupation or for the occupation of any member of his family and if he or any member of his family is not occupying a residential building of his own in the city, town or village concerned; (ii) in case it is a non residential building which is used for the purpose of keeping a vehicle or adapted for such use, if the landlord required it for his own use or for the use of any member of his family and if he or any member of his family is not occupying any such building in the city, town or village concerned which is his own; 391 (iii) in case it is any other non residential building, if the landlord or any member of his family is not occupying for purposes of a business which he or any member of his family is carrying on, a non residential building in the city, town or village concerned which is his own; . . . . . . . . (e) The Controller shall, if he is satisfied that the claim of the landlord is bona fide, make an order directing the tenant to put the landlord in possession of the building on such date as may be specified by the Controller and if the Controller is not so satisfied he shall make an order rejecting the application. " For purposes of sub section (3) of section 10 of the Act the buildings are classified into two categories by the Act, namely, residential buildings and non residential buildings. Sub clause (i) of clause (a) of sub section (3) of section 10 of the Act provides that a landlord may subject to the provisions of clause (d) apply to the Controller for an order directing the tenant to put the landlord in possession of a residential building, if the landlord required it for his own occupation or for the occupation of any member of his family and if he or any member of his family is not occupying a residential building of his own in the city, town or village concerned. Sub clause (ii) of clause (a) of sub section (3) of section 10 of the Act relates to eviction from a non residential building which is used for the purpose of keeping a vehicle or adapted for such use. If the landlord required such a building for his own use or for the use of any member of his family and if he or any member of his family is not occupying any such building in the city, town or village concerned which is his own he can apply for the eviction of the tenant therefrom. Sub clause (iii) of clause (a) of sub section (3) of section 10 of the Act deals with other kinds of non residential buildings. If the landlord or any member of his family is not occupying for purposes of a business which he or any member of his family is carrying on, a non residential building in the city, town or village concerned which is his own, a landlord may, subject to the provisions of clause (d), apply to the Controller for an order directing the tenant to put the landlord in possession of such a building. It may be stated here that the words 'if the landlord required it for his own use or for the use of any member of his family ' are not to be found in sub clause (iii) of section 10(3)(a) of the Act. Clause (e) of section 10(3) of the Act, however, provides that the Controller shall, if he is 392 satisfied that the claim of the landlord is bona fide make an order directing the tenant to put the landlord in possession of the building on such date as may be specified by the Controller and if the Controller is not so satisfied he shall make an order rejecting the application. Clause (e) of section 10(3) applies to all cases of eviction falling under section 10(3) of the Act. The decision in this case depends upon the effect of the omission of the words 'if the landlord required it for his own use or for the use of any member of his family ' in sub clause (iii) of section 10(3)(a) of the Act. It is argued on behalf of the appellant that reading sub clause (ii) and (iii) of section 10(3)(a) of the Act together, which relate to the eviction from non residential buildings, the words 'if the landlord required it for his own use or for the use of any member of his family ' which are found in sub clause (ii) of section 10(3)(a) should be read into sub clause (iii) of section 10(3)(a) also and that a landlord should establish in order to succeed in a petition for eviction filed under section 10(3)(a)(iii) of the Act that his requirement or the requirement of a member of his family is bona fide. It is also argued in the alternative that the word 'claim ' in the words 'that the claim of the landlord is bona fide ' in clause (e) of section 10(3) of the Act refers only to the requirement of the landlord and to nothing else. On the other hand it is urged on behalf of the respondent relying upon three decisions of the High Court of Madras in (i) M/s. Mahalakshmi Metal Industries vs K. Suseeladevi, ; (ii) M. Abdul Rahman vs section Sadasivam, and (iii) A. Khan Mohammed vs P. Narayanan Nambiar & Others, 99 Law Weekly 966 that there was no need for a landlord to establish the bona fides of his requirement or the requirement of a member of his family when a petition is filed under section 10(3)(a)(iii) of the Act and it is enough if his claim is proved to be bona fide. The High Court has upheld the said plea of the respondent relying upon the said three decisions. The correctness of these three decisions is questioned before us by the appellant. We have already noticed that the object of the Act was to prevent unreasonable evictions of tenants from buildings. The Act is an ameliorating piece of legislation. Similar acts are in force in almost all the States in India. The provision in question has to be construed against this background. The Act has been in force from 1960. In Moti Ram vs Suraj Bhan & Other, ; this Court was required to construe section 13(3)(a)(iii) of the East Punjab Urban Rent Restriction Act, 1949 which at the relevant time provided that a landlord might apply to the Controller for directing a tenant to 393 put the landlord in possession of the building in question if he required it for the re construction of that building or for its replacement by another building or for the erection of other buildings. In that case the Rent Controller and the Appellate Authority had rejected the claim of the landlord on the ground that the landlord had not established that the premises in question were required by him bona fide. The High Court while accepting that the requirement in question must be shown to be bona fide held that on the evidence the findings of the Courts below that the landlord 's requirement was not bona fide were not correct. The High Court accordingly directed the eviction of the tenant in question. This Court while affirming the decision of the High Court held that the landlord had, in fact, made out that he required the premises bona fide for purposes of re construction. Thus it is seen that in the context of a law enacted for preventing unreasonable evictions this Court read into a ground on which a landlord could seek the eviction of his tenant that the landlord should establish that his requirement was bona fide. A mere desire on the part of the landlord to re construct a building was not sufficient to evict a tenant from the premises. He had to establish that he needed the premises bona fide for re construction it. In a later case, i.e., Neta Ram vs Jiwan Lal, [1962] 2 Supp. S.C.R. 623 which arose under the provisions of the Patiala and East Punjab States Union Urban Rent Restriction Ordinance, one of the grounds on which the landlord sought the eviction of the tenants in occupation of the premises involved in that case was that the premises were in a state of disrepair and were dilapidated and, therefore, the landlord wished to rebuild on the premises after dismantling the structure. On the said issue the Rent Controller held that in deciding whether the tenant should be ordered to hand over the possession to the landlord the Courts must have regard to the bona fide requirement of the landlord which meant that the desire to rebuild the premises should be honestly held by the landlord but that the condition of the building also played an important part in determining whether the landlord had the intention genuinely and the landlord was not using the said excuse as a device to get rid of the tenants. In that connection the Rent Controller observed that the state of the building, the means of the landlord and the possibility of the better yield by way of rent should be kept in mind. The Controller, holding that the claim of the landlord was not bona fide, decided the said issue against him. On appeal the Appellate Authority held that the shops and chobaras were in good condition and that the landlord was not, in good faith, wanting to replace the building, when he had no means to build it. The High Court, however, allowed the revision petition filed before it holding that upon the evidence on record it had been established 394 beyond doubt that the landlord genuinely and bona fide required the premises for re building. On appeal by special leave to this Court, this Court observed that the very purpose of the Rent Restriction Act would be defeated if the landlords were to come forward and to get tenants turned out, on the bare plea that they wanted to reconstruct the house without first establishing, that the plea was bona fide with regard to all circumstances, viz. that the houses needed reconstruction or that they had means to reconstruct them. Accordingly, the judgment of the High Court was reversed and the petitions for eviction were dismissed. Following the observations made in the above decisions in Nathella Sampathu Chetty vs Sha Vajingjee Bapulal, a Division Bench of the High Court of Madras construed section 10(3)(a)(iii) of the Act thus: "Section 10 of the Madras Buildings (Lease and Rent Control) Act, 1960, provides for eviction of tenants in certain circumstances. Sub section 3(a)(iii) of the section allows a landlord to apply to the Controller for an order directing a tenant to put him in possession of the building if the landlord is not occupying for purposes of business which he is carrying on, a non residential building in the city, town or village concerned which is his own. The second proviso to this clause is to the effect that where a landlord has already obtained possession of a building under this provision, he shall not be entitled to apply again for possession of another non residential building of his own. If the conditions of these provisions are satisfied, the Controller may make an order as asked for by the landlord provided he is further satisfied that the claim of the landlord is bona fide. (underlining by us) In the Madras District Central Co operative Bank Limited, Mylapore Branch, Madras 4 vs A. Venkatesh, 99 Law weekly 714 a single Judge of the High Court disagreed with the views expressed by another single Judge in Abdul Rahman 's case (supra) and observed thus: "The question now is whether an order directing the tenant to put the landlord in possession should be made. It is pointed out by the learned counsel for the respondent landlord following a ruling of this Court in Abdul Rahman vs section Sadasivam, that there is no jurisdiction for the Rent Controller to go into the question of bona fide requirement 395 in a claim under section 10(3)(a)(iii) of the Act. Ramanujam, J. took the view that a distinction has to be made between the two sections, section 10(3)(a)(i) and section 10(3)(a)(iii) in view of the word 'require ', occurring in section 10(3)(a)(i) and in the absence of that word, in section 10(3)(a)(iii) in other words, what the learned Judge points out is that the Rent Controller has no jurisdiction to go into the question whether the requirement of the landlord is bona fide, as the Rent Controller has to pass an order of eviction in case the landlord is not occupying for the purpose of business which he is carrying on, any non residential building in the city which is his own. The learned Judge further pointed out that when the provisions of section 10(3)(a)(i) and section 10(3)(a)(iii) use different expressions, it should be taken that the Legislature intended these provisions to have different operations. With respect to the learned Judge, I may point out that the mere absence of the word 'require ' in section 10(3)(a)(iii) would not necessarily lead to the inference that the Legislature did not intend that the Rent Controller should go into the question of bona fides of the requirement of the landlord in respect of the requirement of a non residential premises under section 10(3)(a)(iii) of the Act. My reasons for holding so are as follows: section 10 enumerates certain grounds for the eviction of the tenant. In other words eviction under the Rent Control Act can be effected only on the grounds mentioned in section 10. The landlord may have a right to evict the tenant under the general law. section 10(3)(a) says that the landlord may, subject to the provisions of Cl. (d), apply to the Controller for an order directing the tenant to put the landlord in possession of the buildings. section 10(3)(a)(i) deals with residential buildings. section 10(3)(a)(ii) deals with non residential buildings used for purpose of keeping vehicles. section 10(3)(a)(iii) is in respect of non residential buildings. section 10(3)(b) gives a right to religious, charitable, educational or other public institutions, to institute proceedings before the Controller if the institution requires the building. section 10(3)(c) is for additional accommodation. section 10(3)(d) speaks of tenancy for specified period agreed between the landlord and the tenant and it prohibits the landlord from applying, before the expiry of such period. Now after these sections, section 10(3)(e) runs thus: 'The Controller shall, if he is satisfied that the claim 396 of the landlord is bona fide make an order directing the tenant to put the landlord in possession of the building on such date as may be specified by the Controller and if the Controller is not so satisfied he shall make an order rejecting the application. ' I find in the judgment of Ramanujam, J. this section 10(3)(e) has not been adverted to. section 10(3)(e) applies to Ss. 10(3)(a)(i), 10(3)(a)(ii) and 10(3)(a)(iii) and also to Ss. 10(3)(b) and 10(3)(c). If the Legislature intended that the provisions of section 10(3)(a)(i) and section 10(3)(a)(iii) to have different operations, the Legislature would not have stated in section 10(3)(e) that the Controller should be satisfied that the claim of the landlord is bona fide, before he makes an order directing the tenant to put the landlord in possession, and the further words 'if the Controller is not so satisfied, he shall make an order rejecting the application ' very clearly show that the Controller should, before passing an order for eviction, be satisfied with the bona fide of the claim, or else he should dismiss it. " The main ground on which the learned Judge who decided the above case disagreed with the decision in Abdul Rahman 's case (supra) is that in Abdul Rahman 's case (supra) section 10(3)(e) of the Act, which applied to all the three sub clauses, namely (i), (ii) and (iii) in section 10(3)(a) of the Act had not been adverted to. The learned Judge also held that the mere absence of the word 'require ' in section 10(3)(a)(iii) of the Act did not necessarily lead to the inference that the Legislature did not intend that the Controller should not go into the question of bona fides of the requirement of the landlord in a petition for eviction filed under that provision. Another learned Judge of the Madras High Court has taken the same view in M/s. Thilagaraj Match Works, through its partner section Chidambaram vs C. Sundaresan, [1985] 1 Mad. Law J. 106. It is observed in that case thus: "In the present case, the Appellate Authority has not adverted to these features at all and in one place he observes that the bona fide of the claim of the landlord is extraneous and it should not be tested too severely. This exposes his wrong approach to the question of bona fide which is a relevant one. The very ingredient of section 10(3)(e) of the Act requires that the question of bona fide has got to be tested and it has got a due place while 397 adjudicating a petition for eviction by the landlord under the concerned provisions. It is not the desire of the landlord, but there must be an element of need for the landlord before it could be stated that he requires the premises for his own occupation. The features referred to above, cannot be eschewed as irrelevant, for after all bona fide will have to be proved in an ordinary manner like any other fact in issue, and the entire gamut of facts and circumstances has to be adverted to on this question. As already stated, I am not expressing any opinion over these features on merits, and it is for the Appellate Authority to advert to them and adjudicate upon the question afresh one way or the other. The discussions above oblige me to interfere in revision and accordingly the revision is allowed and the matter stands remitted to the Appellate Authority for him to consider it afresh taking note of all the relevant features and factors of the case on the question of bona fides, and pass appropriate orders. Both the counsel represent that for the purpose of comprehensive adjudication of the matter, further evidence has to be adduced. I take note of the request of both the counsel and I direct that the Appellate Authority will permit the parties to place further evidence and he will decide the matter afresh after such evidence is placed, the Appellate Authority will do well to dispose of the matter expeditiously and in any event within a period of three months from the date of receipt of the copy of this order." In P. Thanneermalai Chettiar vs S.J. Dhanraj, another learned Judge of the High Court of Madras has construed section 10(3)(e) of the Act thus: "It is not disputed that section 10(3)(e) of Act 18 of 1960 is applicable to the case of residential building as well as non residential building and it is provided therein that if the Controller is satisfied that the claim of the landlord is bona fide, he shall make an order directing the tenant to put the landlord in possession of the building; otherwise, he has to reject the application. In the instant case, considering the various circumstances and also the fact that the petitioner was residing in a house of his own at Devakottai where he has got vast extent of properties and was carrying on business along with other members of his family, the 398 claim of the petitioner that he required the premises for his own use and occupation is not proved and in any event there is no bona fide in the same" The main ground on which the learned Judge who decided Abdul Rahman 's case (supra) held that it was not necessary to establish the bona fide equipment of the landlord when he made an application for eviction under section 13(3)(a)(iii) of the Act was that, the word 'require ' was not to be found in section 10(3)(a)(iii) of the Act. We are of the view that having regard to the pattern in which clause (a) of sub section (3) of section 10 of the Act is enacted and also the context, the words 'if the landlord required it for his own use or for the use of his any member of the family ' which are found in sub clause (ii) of section 10(3)(a) of the Act have to be read also into sub clause (iii) of section 10(3)(a) of the Act. Sub clause (ii) and (iii) both deal with the non residential buildings. They could have been enacted as one sub clause by adding a conjunction 'and ' between the said two sub clause, in which event the clause would have read thus: 'in case it is a non residential building which is used for the purpose of keeping a vehicle or adapted for such use, if the landlord required it for his own use or for the use of any member of his family and if he or any member of his family is not occupying any such building in the city, town or village concerned which is his own; and in case it is any other non residential building, if the landlord or any member of his family is not occupying for purposes of a business which he or any member of his family is carrying on, a non residential building in the city, town or village concerned which is his own. ' If the two sub clauses are not so read, it would lead to an absurd result. The non residential building referred to in sub clause (ii) is a building which is used for the purpose of keeping a vehicle or adapted for such use and all other non residential buildings fall under sub clause (iii). The State Legislature cannot be attributed with the intention that it required a more stringent proof by insisting upon proof of bona fides of his requirement or need also when a landlord is seeking eviction of a tenant from a garage than in the case of a non residential building which is occupied by large commercial house for carrying on business. The learned counsel for the respondent was not able to explain as to why the State Legislature gave greater protection to tenants occupying premises used for keeping vehicles or adapted for such use than to tenants occupying other types of non residential buildings. It is no doubt true that the Court while construing a provision should not easily read into it words which have not been expressly enacted but having regard to the context in which a provision appears and the object of the statute in which the said provision is 399 enacted the court should construe it in a harmoneous way to make it meaningful. In Seaford Court Estates Ltd. vs Asher, [1949] 2 All. E.R. 155 at 164. Lord Denning L.J. said: "When a defect appears, a judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament . . and then he must supplement the written word so as to give 'force and life ' to the intention of the legislature . . A judge should ask himself the question how, if the makers of the Act had themselves come across this ruck in the texture of it, they should have straightened it out? He must then do as they would have done. A judge must not alter the material of which the Act is woven but he can and should iron out the creases. " This rule of construction is quoted with approval by this Court in M. Pentiah and Ors. vs Muddala Veeramallappa and Ors., ; at 314 and it is also referred to by Beg, C.J. in Bangalore Water Supply & Sewerage Board, etc. vs R. Rajappa & Ors., ; In the present case by insisting on the proof of the bona fides of the requirement of the landlord, the Court is not doing any violence to the statute nor embarking upon any legislative action. The Court is only construing the words of the statute in a reasonable way having regard to the context. We are of the view that by merely proving that the premises in question is a non residential building and that the landlord or any member of his family is not occupying for the purpose of a business which he or any member of his family is carrying on any residential building in the city, town or village concerned which is his own, the landlord cannot in the context in which section 10(3)(a)(iii) appears get a tenant evicted. He must show in view of clause (e) of section 10(3) that his claim is bona fide. The word 'claim ' means "a demand for something as due" or "to seek or ask or for on the ground of right" etc. In the context of Rent Control Law which is enacted for the purpose of giving protection to tenants against unreasonable evictions and for the purpose of making equitable distribution of buildings amongst persons who are in need of them in order to prove that his claim is bona fide a landlord should establish that he deserves to be put in possession of the premises which is in the occupation of a tenant. Any decision on 400 the question whether a landlord deserves to be put in possession of a premises in the occupation of a tenant should naturally depend upon the bona fides of the landlord 's requirement or need. The word 'claim ' in clause (e) of section 10(3) of the Act should, therefore, he construed as 'the requirement ' of the landlord or his deservedness. 'Deserve ' means 'to have a rightful claim ' or 'a just claim '. Since clause (e) of section 10(3) of the Act is also applicable to a petition filed under sub clause (iii) of section 10(3)(a) of the Act it becomes necessary to examine whether the requirement of the landlord is bona fide. Otherwise a landlord will be able to evict a tenant to satisfy his whim by merely proving the ingredients mentioned in section 10(3)(a)(iii) of the Act. Take a case where a landlord for some oblique reason wishes to get rid of his tenant from a non residential building of the category mentioned in section 10(3)(a)(iii) and to achieve his aim fakes to start money lending business (for which indeed no specified separate portion in a building may be needed) in a building not belonging to him and to create evidence even actually lends money to some of his friends or relatives and a week thereafter applies for eviction of the tenant on the ground that he is carrying on business and has no non residential building of his own in his occupation in the city, town or village concerned. Apparently, the conditions prescribed in the aforesaid sub clause (iii) are fulfilled. If the requirement of "claim" being "bona fide" as contained in section 10(3)(e) is construed to mean that genuineness of the need of the landlord for the non residential building is not to be considered and the circumstances that the landlord on the date of making the application is factually carrying on business and has no non residential building of his own in his occupation in the city, town or village concerned is to be construed sufficient to make his claim bona fide, the tenancy of no non residential building will be secure. It will be preposterous to attribute such an intention to the legislature. Such a contingency should be avoided as it would be against the very object of the Act itself. The need of the landlord should be genuine. That is the object of enacting clause (e) of section 10(3) of the Act. When once we reach the above conclusion it is not enough that the landlord should merely desire to use or occupy the premises. What is necessary is that he should bona fide need them for his own use and occupation or for occupation by any of the members of his family as held by this Court in Phiroze Bamanji Desai vs Chandrakant M. Patel & Ors., ; and Mattulal vs Radhe Lal, ; The learned Judge who decided the case out of which this appeal arises was, therefore, in error in holding that the landlord need not prove that his requirement was bona fide but that his claim was bona fide as provided in clause (e) of section 10(3) of the 401 Act. The learned Judge has made a distinction between `requirement ' and `claim ' in the present case without there being a difference. In the circumstances we are of the view that M/s. Mahalakshmi 's case (supra), M. Abdul Rahman 's case (supra) and A. Khan Mohammed 's case (supra) have been wrongly decided. They are liable to be overruled. We accordingly overrule them. We hold that a landlord seeking eviction of a tenant from a non residential premises under section 10(3)(a)(iii) of the Act in order to succeed in his petition should establish that he bona fide requires the premises in addition to proving the other ingredients referred to therein. The judgment of the High Court which has proceeded on a wrong basis has, therefore, to be set aside. Since the High Court while allowing the revision petition has approached the case from a wrong angle, it is necessary to direct the High Court to decide it afresh in the light of what we have stated above. We, therefore, set aside the judgment of the High Court and remand it to the High Court again to decide it afresh. If the High Court finds that the case should be remanded to the Trial Court to enable any of the parties to lead evidence on the question of the bona fide requirement of the landlord it may remit the case to the Trial Court. The appeal is accordingly allowed. There shall be no order as to costs. S.L. Appeal allowed.

% The respondent 's brother was carrying on his business in the front portion of the ground floor of the premises in question, which belonged to the father of the respondent. The appellant purchased the said running business from the brother of the respondent. After purchasing the business, the appellant became a tenant under the father of the respondent. In the rear portion of the ground floor of the premises, one Mrs. Janaki Ammal was residing as a tenant. Mrs. Janaki Ammal vacated the said residential portion and the appellant took that portion also on rent from the father of the respondent. The ownership of the premises in question was transferred in favour of the respondent by his father. On 9.6.1982, an agreement was entered into in respect of both the portions specifying that the lease should remain in force till 8.5.1983. After the expiry of the said period, the respondent instituted a petition for eviction of the appellant in the Court of the Controller under section 10(3)(a)(iii) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, on the ground that the premises in question were needed by his wife for carrying on her business which she was carrying on somewhere else. The appellant contended inter alia that the requirement of the wife of the respondent was not bona fide. The Controller dismissed the petition, holding that the tenancy in question was in respect of both the residential and non residential portions and the respondents could not seek eviction of the appellant as the major portion of the demised premises was of residential character. Aggrieved by the decision of the Controller, the respondent preferred an appeal before the Appellate Authority. The Appellate Authority dismissed the appeal. The respondent filed a revision petition before the High Court. The High Court allowed the revision petition holding that it was not necessary for the respondent to establish that his requirement was bona fide as the question of the bona fides of a landlord 's requirement did not 385 arise in a case under section 10 (3)(a)(iii) of the Act. It, however, held the claim of the respondent to be bona fide. Aggrieved by the decision of the High Court, the appellant filed this appeal before this Court for relief by special leave. Allowing the appeal, the Court, ^ HELD: The crucial question which arose for consideration in this case was whether a landlord, who sought eviction of a tenant from a non residential building (other than a non residential building used for keeping a vehicle or adapted for such use) under section 10 (3)(a)(iii) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 (the Act) was required to prove that he required the said building for his own use or for the use of any member of his family bona fide. [390C D] The Act was enacted to amend and consolidate the law relating to the regulation of the letting of residential and non residential buildings and the control of the rents of such buildings and the prevention of unreasonable eviction of the tenants therefrom in the State of Tamil Nadu. The Act is an ameliorating piece of legislation. Similar Acts are in force in almost all the States in India. The provision in question section 10(3)(a)(iii) has to be examined against this background. [390D;392G] Having regard to the pattern in which clause (a) of sub section (3) of section 10 of the Act is enacted and also the context, the words "if the landlord required it for his own use or for the use of any member of his family", found in sub clause (ii) of section 10 (3)(a) of the Act, have to be read also into sub clause (iii) of section 10 (3)(a) of the Act. Subclauses (ii) and (iii) both deal with the non residential buildings. They could have been enacted as one sub clause by adding a conjunction 'and ' between the said two sub clauses, in which event the clause would have read thus: 'in case it is a non residential building which is used for the purpose of keeping a vehicle or adapted for such use, if the landlord required it for his own use or for the use of any member of his family and if he or any member of his family is not occupying any such building in the city, town or village concerned which is his own, and in case it is any other non residential building, if the landlord or any member of his family is not occupying for purposes of a business which he or any member of his family is carrying on, a non residential building in the city, town or village concerned which is his own. ' If the two sub clauses are not so read, it would lead to an absurd result. The non residential building referred to in sub clause (ii) is a building used for the purpose of keeping a vehicle or adapted for such use, and all other non 386 residential buildings fall under sub clause (iii). The State legislature cannot be attributed with the intention that it required a more stringent proof by insisting upon proof of bona fides of his requirement or need also when a landlord is seeking eviction of a tenant from a garage than in the case of a non residential building occupied by a large commercial house for carrying on business. It is no doubt true that the Court, while construing a provision should not easily read into it words not expressly enacted, but having regard to the context in which a provision appears and the object of the statute in which the said provision is enacted, the Court should construe it in a harmonious way to make it meaningful. [398C H; 399A] In the present case, by insisting on the proof of the bona fide of the requirement of the landlord, the Court is not doing any violence to the statute nor embarking upon any legislative action. The Court is only construing the words of the statute in a reasonable way having regard to the context. [399E] By merely proving that the premises in question is a non residential building and that the landlord or any member of his family is not occupying, for the purpose of a business which he or any member of his family is carrying on, any residential building in the city,town or village concerned which is his own, the landlord cannot in the context in which section 10 (3)(a)(iii) appears, get a tenant evicted. He must show in view of clause (e) of section 10 (3) that his claim is bona fide. The word 'claim ' means "a demand for something as due", or "to seek or ask for on the ground of right", etc. In the context of the Rent Control Law, which is enacted for the purpose of giving protection to the tenants against unreasonable evictions and for the purpose of making equitable distribution of buildings amongst persons who are in need of them, in order to prove that his claim is bona fide, a landlord should establish that he deserves to be put in possession of the premises which is in the occupation of a tenant. Any decision on the question whether a landlord deserves to be put in possession of a premises in the occupation of a tenant should naturally depend upon the bona fides of the landlord 's requirement or need. The word 'claim ' in clause (e) of section 10(3) of the Act should, therefore, be construed as 'the requirement ' of the landlord or his deservedness. Since clause (e) of section 10(3) of the Act is also applicable to a petition filed under sub clause (iii) of section 10(3)(a) of the Act, it becomes necessary to examine whether the requirement of the landlord is bona fide; otherwise, a landlord will be able to evict a tenant to satisfy his whim by merely proving the ingredients mentioned in section 10(3)(a)(iii) of the Act. If the requirement of "claim" being "bona fide" as contained in section 10(3)(e) is construed 387 to mean that genuineness of the need of the landlord for the non residential building is not to be considered and the circumstances that the landlord on the date of making the application is factually carrying on business and has no non residential building of his own in his occupation in the city, town or village concerned, is to be construed sufficient to make his claim bona fide, the tenancy of no non residential building will be secure. It will be preposterous to attribute such an intention to the legislature. The need of the landlord should be genuine. The landlord should bona fide need the premises for his own use and occupation or for the occupation by any of the members of his family, as held by this Court in Phiroze Bamanji Desai vs Chandra Kant M. Patel and Ors., ; and Mattulal vs Radhe Lal; , [399F H; 400A G] The High Court was in error in this case in holding that the landlord need not prove that his requirement was bona fide but that his claim was bona fide as provided in clause (e) of section 10(3) of the Act. The High Court made a distinction between 'requirement ' and 'claim ' without there being a difference. [400H; 401A] The Court was of the view that M/s. Mahalakshmi Metal Industries vs K. Suseeladevi, ; M. Abdul Rahman vs section Sadasivam, 'and A. Khan Mohammed vs P. Narayanan Nambiar & Ors., 99 Law Weekly 965, relied upon by the respondent, were wrongly decided and were liable to be over ruled. The Court overruled them. A landlord seeking eviction of a tenant from a non residential premises under section 10(3)(a)(iii) of the Act should in order to succeed in his petition, establish that he bona fide requires the premises in addition to proving the other ingredients referred to therein. The judgment of the High Court set aside. Since the High Court had approached the case from a wrong angle, the Court directed the High Court to decide the case afresh in the light of what the Court had said in this appeal. Case remanded to the High Court to decide it afresh. If the High Court found that the case should be remanded to the Trial Court to enable any of the parties to lead evidence on the question of bona fide requirement of the landlord, it might remit the case to the Trial Court. [401B D] Mahalakshmi Metal Industries vs K.Suseeladevi, ; M. Abdul Rahman vs section Sadasivam, , and A. Khan Mohammed vs P.Narayanan Nambiar and others, 99 Law Weekly 965, overruled. 388 Moti Ram vs Suraj Bhan and Others, ; ; Neta Ram vs Jiman Lal, [1962] 2 Supp. S.C.R. 623; Nathala Sampathu Chetty vs Sha Vajingjee Bapulal, [1967] 1 Mad. L.J. 289; Madras District Central Co operative Bank Limited, Mylapore Branch, Madras 4 vs A. Venkatesh, 99 Law Weekly 714; M/s. Thilagaraj Match Works, through its partner section Chidambaram vs C. Sundresan, [1985] 1 Mad, Law J. 106; P. Thanneer Malai Chettiar vs S.J. Dhanraj and another, ; Seaford Court Estates Ltd. vs Asher, at 164; M. Pentiah and Ors. vs Muddala Veeramallappa and Ors., at 314; Bangalore Water Supply & Sewerage Board, etc. vs R. Rajappa Chandrakant M. Patel & Ors., [1974] 3 S.C.R.267 and Mattulal vs Radhe Lal, [1975] 1 S.C.R.127,referred to.

Criminal Appeals Nos. 48 and 80 of 1960. Appeals by special leave from the judgment and orders dated December 11, 1959 and March 2, 1960 of the Bombay High Court Rajkot (Now Gujarat High Court) In criminal Revision Application No. 100 of 1959. 855 N.N. Keswani, for the appellants (in both the appeals). D.R. Prom and R.N. Sachthey, for the respondent (in both the appeals). The Judgment of the Court was delivered by Wanchoo, J. The two appeals by special leave arise out of the same criminal trial before a magistrate at Porbunder and will be dealt with together. The three appellants along with one more person, namely, Keshavlal Nagjibhai were prosecuted under section 167 (81) of the , No. 8 of 1878, (hereinafter referred to as the Act). The prosecution case briefly was that Vallabhdas Liladhar, who is now dead, came in contact with an Arab from whom he purchased smuggled gold weighing a little more than 84 tolas on December 1, 1956. Before this, Vallabhdas Liladhar had borrowed Rs. 3,600/ from the other two appellants and Keshavlal about November 28, 1956, in order to make the purchase. After making the purchase, Vallabhdas Liladhar came to Porbunder to the house of the other two appellants and Keshavlal and informed them of the purchase and wanted their help in the disposal of the gold. The other two appellants namely, Narandas Nagjibhai and Vallabhdas Nagjibhai are brothers. Keshavlal was also the brother of these two appellants. The prosecution case further was that Narandas Nagjibhai asked Vallabhdas Nagjibhai to take the gold to Bantwa and sell it at the rate of Rs. 103/ or so per tola. Vallabhdas Nagjibhai was also instructed that in case he could not sell the gold at that rate he should contact Vallabhdas Liladhar and Narandas Nagjibhai at Bantwa bus stand from where they were to go to Junagadh to dispose of the gold if no suitable buyer could be found in Bantwa. Consequently Vallabhdas Nagjibhai proceeded to Bantwa by bus on December 2, 1956 in the afternoon. In the meantime information was received by Mehta who was Inspector of Customs about the smuggling of this gold. He consequently followed the bus in which Vallabhdas Nagjibhai was travelling and intercepted him at Kutiyana bus stand at about 3 p.m. The Deputy Superintendent of Customs was also with Inspector Mehta and Vallabhdas Nagjibhai was taken down from the bus at Kutiyana. On search in the presence of witnesses, five bars of gold weighing about 84 tolas were recovered from his possession. All these five bars bore marks of foreign origin and were taken in possession by the customs authorities after preparing a recovery list. Further investigation was made in the matter and eventually on October 7, 1957, the Collector of Central Excise Baroda confiscated the gold bars under section 167 (8) of the Act read with section 23 of the Foreign Exchange Regulation Act, 1947 and also imposed a penalty of Rs. 1,000/ each on the three appellants and a penalty of Rs. 500/ on Keshavlal. Thereafter a complaint was filed by the Assistant Collector of Customs under section 167(81) of the Act before the magistrate at Porbunder on June 27. 856 The case of Vallabhdas Liladhar was that he had not purchased the gold from any Arab but had brought it with him from Karachi in the year 1946. Vallabhdas Nagjibhai admitted the recovery of gold from him but said that it belonged to Vallabhdas Liladhar and he was carrying it at the request of the latter and that he did not know that it was smuggled gold. Narandas Nagjibhai also, admitted that Vallabhdas Liladhar had come to their house with the gold but added that it was not smuggled gold and that Vallabhdas Liladhar had told him that it belonged to him and was for sale. Keshavlal, the fourth person, who has been acquitted, said that he did not know anything about the matter and had no connection with it. It may be added that the three appellants had made statements before the customs authorities and those statements were also put in evidence in support of the prosecution case. In those statements, they practically admitted the prosecution case that the gold was smuggled gold and they were trying to dispose it of. The magistrate convicted all the four persons under section 167 (81) of the Act and sentenced them to rigorous imprisonment for six months and a fine of Rs. 500/ He relied on the statements made by the appellants and Keshavlal before the customs authorities and also on the evidence produced before him, which was mainly about the recovery of gold. All the four convicted persons appealed to the Sessions Judge. The appeal was heard by the Additional Sessions Judge, Porbunder who acquitted Keshavlal. The appeal of the other three (namely, the three appellants now before us) was dismissed and their convictions and sentences Were upheld. The three appellants then went in revision to the High Court. The High Court rejected the revisions of Vallabhdas Liladhar and Vallabhdas Nagjibhai summarily. The revision application of Narandas Nagjibhai was admitted but was eventually dismissed. The three appellants then applied for leave to appeal to this Court which was refused. They then prayed for special leave from this Court, which was granted, and that is how the matter has come up before us. Vallabhdas Liladhar, one of the appellants in Cr. A 48 of 1960, is dead. So far therefore as he is concerned, his appeal abates. It only remains to consider the appeal of Vallabhdas Nagjibhai (Cr.A.48) and Narandas Nagjibhai (Cr.A.80). Before however we consider the points raised before us on behalf of the appellants we may refer to the circumstances which have been found established by all the courts and on the basis of which the conviction of the appellants has been upheld. These circumstances are (1) Though the price of gold at the relevant time was over Rs. 105/ per tola, the appellant were intending to sell these gold bars at a lower price of about Rs. 103/ per tola. 857 (2) The two appellants were working as goldsmiths at Porbunder and there was no reason why the gold had to be sent elsewhere for disposal. As Porbunder is a fairly large town, there was no reason why the gold could not be sold in the market at Porbunder. (3) The two appellants displayed undue haste in the disposal of gold. (4) The surreptitious manner in which the gold bars were kept by Vallabhdas Nagjibhai as shown at the time of recovery shows that the appellants knew that they were dealing with smuggled gold. (5) The amount of Rs. 3,600/ was advanced to Vallabhdas Liladhar but the entries in the account book of the appellants were made in the name of the brother of Vallabhdas Liladhar who is the brother in law of the two appellants. (6) The markings on the gold made it quite clear that it was of foreign origin and the two appellants could not be unaware of this, particularly as they work as goldsmiths. In addition to the above circumstances, all the courts relied on the statements made by the two appellants before the customs authorities and the presumption under section 178 A of the Act was raised and on that basis convicted the appellants, though the High Court held that even without the presumption under section 178 A the evidence was sufficient to convict the appellants. Learned counsel for the appellants has very properly not challenged the concurrent findings of fact by all the courts. He has raised four points for our consideration, which are these (1) The statements made to the customs authorities were inadmissible in evidence as they were not properly proved. (2) The statement made before the Collector of Customs were inadmissible in evidence under sections 24 and 25 of the Indian Evidence Act. (3) As the gold had already been confiscated and penalty had been imposed under section 167(8) of the Act, there could be no further trial in a criminal court in view of section 186 of the Act. (4) The ingredients of section 167(81) are not satisfied in this case. 858 Re. So far as the first point is concerned, the only argument is that the lawyer who signed the statements made before the customs authorities was not produced to prove them, and therefore the statements cannot be held to have been properly proved. It is however clear that the statements were not only signed by the lawyer of the appellants but also by the appellants. In their statements in court, the appellants admitted that they had signed the statements, though they said. that they did not know what the statements contained and they signed it on being asked by their lawyer. This part of the statements of the appellants has not been believed by the courts below and in our opinion rightly. As the statements bore the signature of the appellants which are admitted, they must be held to be proved by this admission and it was not further necessary to examine the lawyer who signed the statements along with the appellants. The contention on this head must there fore fail. As to the second point, we are of opinion that section 25 of the Indian Evidence Act has no application on the facts of the present case which are on all fours with the facts in The State of Punjab vs Barkat Ram(1). In similar circumstances it was held by this Court in that case that customs officers are not police officers and statements made to them were not inadmissible under section 25. Section 24 would however apply, for customs authorities must be taken to be persons in authority and statements would be inadmissible in a criminal trial if it is proved that they were caused by inducement, threat or promise. But the finding of all the courts is that the statements were not made on account of any inducement threat or promise as required by section 24 of the Indian Evidence Act. In the face of this finding, therefore, it cannot be said that the statements are inadmissible under section 24 of the Indian Evidence Act. Next the appellants rely on section 186 of the Act. which reads as follows: "The award of any confiscation, penalty or increased rate of duty under this Act by an officer of Customs shall not prevent the infliction of any punishment to which the person affected thereby is liable under any other law. " It is urged that when section 186 lays down that the award of any confiscation, penalty or increased rate of duty under the shall not prevent the infliction of any punishment to which the person affected thereby is liable under any other law, it necessarily forbids by implication infliction of any punishment to which (1) ; 859 the person affected thereby is liable under the itself. In this connection our attention is drawn to certain observations in Leo Roy Frey vs The Superintendent District Jail(1). It is true that in that case this Court referred to section 186 of the Act; but that case was not directly concerned with the question whether a prosecution under section 167(81) of the Act is permissible after the award of confiscation, penalty or increased rate of duty under section 167(8) of the Act in view of section 186. Clause (81) in section 167 was introduced by the Amending Act No. 21 of 1955. Before that there were 80 clauses in the section, and the scheme of those clauses was that a person could either be dealt with by the award of confiscation, penalty or increased rate of duty, or by a prosecution before a magistrate. It was in those circumstances that section 186 provided that the award of confiscation, penalty or increased rate of duty would not bar infliction of any other punishment under any other law. The intention of the legislature by this provision in section 186 was clearly to allow a prosecution under any other law even though there might be award of confiscation, penalty or increased rate of duty under the Act. Section 186 was thus meant for permitting prosecutions in addition to action under the Act in the shape of confiscation, penalty or increased rate of duty; it was never intended to act as a bar to any prosecution that might be permissible after the award of confiscation, penalty or increased rate of duty. It was merely an enabling section and not a barring section and seems to have been put in the Act ex abundanti cautela. When however, cl. (81) was introduced in section 167, it became possible in some cases where goods had been confiscated; and penalty inflicted under the Act by the customs authorities to prosecute persons also under cl. (81) of the Act. That however would not change the nature of the provision contained in section 186 which was an enabling provision and not a barring provision. If the intention was to bar prosecutions in consequence of the award confiscation, penalty or increased rate of duty, the words of section 186 would have been very different. We cannot therefore read in section 186 a bar by implication to a prosecution under the Act simply because section 186 enables prosecution under any other law. In this view of the matter, section 186 is no bar to the prosecution for an offence under the Act in connection with a matter in which the award of confiscation, penalty or increased rate of duty has been made. Next it is contended that the ingredients of cl. (81) of section 167 are not satisfied inasmuch as it is not proved that the intention of the appellants was to defraud the government of any duty payable on the gold which was the subject matter of the charge in this case or to evade any prohibition or restriction for the time (1) ; , 827. 860 being in force. It is true that before cl. (81) can apply it has to be proved inter alia that the person charged thereunder with possession of any dutiable or prohibited or restricted goods or concerned in carrying, removing, depositing, keeping or concealing such goods, has the intention of defrauding the government of any duty payable thereon or of evading any prohibition or restriction thereon for the time being in force. So it is said that the prosecution has failed to prove by positive evidence that the intention was to defraud the government of the duty payable on the gold in this case or to evade the prohibition or restriction on the import thereon for the time being in force. We have not been able to understand this argument at all. Once it is proved that the gold is smuggled gold, it follows that it was brought into the country without payment of duty or in violation of the prohibition or restriction in force. and whosoever brought it and whosoever dealt with it thereafter knowing it to be smuggled in the manner provided in the section must be held to have the intention of evading the payment of duty or violating the prohibition or restriction. There is no force in this contention also. Lastly it is urged that the substantive sentence of imprisonment in the case of the two appellants before us may be reduced to the period already undergone, particularly, as the appellants, have been on bail since March 1960 and it would not be in the interest of justice to send them back to jail for a short period after four years when about half the sentence has already been served out. We however see no reason to interfere with the sentence in cases of this nature. The appeals therefore fail and are hereby dismissed. Appeal dismissed.

Smuggled gold recovered from the appellants was confiscated and a penalty imposed on them. Thereafter the appellants were tried and convicted under section 167(81) of the Sea ' Customs Act. In their statements made to the customs authorities, the appellants had practically admitted the prosecution case and these statements were put in evidence. An appeal to the Sessions Judge and a revision to the High Court were dismissed. In appeal to this Court: HELD: (i).Since the statements made to the customs authorities bore the signature of the appellants which were admitted, they must be taken to be proved by such admission and no further evidence was necessary. [858C] (ii) Customs officers are not in the circumstances arising in this case police officers and statements mad.e to them were not inadmissible under section 25 of the Evidence Act. Section 24 would apply, as customs authorities are persons in authority; and such statements would be inadmissible if vitiated by inducement, threat or promise. [858E F] State of Punjab vs Barkat Ram, ; , followed. (iii) Section 186 of the , which is merely an enabling section, is no bar to a prosecution for an offence under the Act in connection with a matter in which the award of confiscation, penalty or increased rate of duty has been made. [859F, G] Leo Ray Frey vs Superintendent of District Jail ; , referred to. (iv) Once the gold recovered is proved to be smuggled whosoever is found to have brought it and dealt with it, thereafter, knowing it to be smuggled must be held to have had the intention of evading duty or violating the prohibition or restriction. [860C D]

vil Appeal Nos. 150 and 160 of 1964. Appeals by special leave from the award dated September 20, 1962, of the Industrial Tribunal, Ernakulam in Industrial Dispute Nos. 11 and 10 of 1962 respectively. 761 G.B. Pai, J.B. Dadachanji, O.C. Mathur and Ravinder Narain, for the appellant. M.R.K. Pillai, for the respondents. The Judgment of the Court was delivered by Gajendragadkar, C.J. The short question of law which these two appeals raise for our decision relates to the construction of sections 3 and 11 of the Kerala Industrial Establishments (National and Festival Holidays) Act, 1958 (No. 47 of 1958) (hereinafter called the Act. That question arises in this way. Two complaints were filed against the appellant, the Tam Oil Mills Company Ltd., by the two groups of respondents, its workmen, respectively under section 33A of the . These applications alleged that the management of the appellant had contravened the provisions of section 33 of the said Act inasmuch as it had denied its employees leave with wages on Founder 's Day and Good Friday in 1962. According to the respondents, they were entitled to have holidays with pay on the said two days under the terms and cOnditions of service, and so, they claimed that the Tribunal should direct the appellant to give its employees holidays under the said existing arrangement and should pass other appropriate order 's for the payment of wages for the two holidays in question. The appellant disputed the correctness of the respondents ' contention. The Tribunal has rejected the appellant 's plea and has declared that the respondents are entitled to the privilege 'of paid holidays on Founder 's Day and Good Friday in 1962. It has also ordered that the appellant should pay the wages to the respondents for those two days and the proportionate salary of the staff members as soon as the award comes into force. It is against these orders passed by the Tribunal on the two complaints preferred before it by the respective respondents that the appellant has come to this Court by special leave; and on its behalf, Mr. Pai has contended that in making the award ', the Tribunal has misconstrued the effect of sections 3 and 11 of the Act. Standing Order 30 of the Standing Orders of the appellant company makes provision for leave of all categories. S.O. 30 (vi) provides for holidays. It lays down that the factory will be closed on the following days which will be considered as Company Holidays with pay, and will not be counted against the casual or privilege leave of an employee: 1. New Year Day (1st January). Founder 's 'Day (Saturday nearest to 3rd March) 3. Good 3 Friday 4. Onam 5. Christmas Day (25th December) There is a note appended to this:proVision which makes it clear that in the event 'of the Company being compelled to observe a holiday or holidays for reasons of State such day or days shall not be counted as against 'the privilege or casual leave of the employees but shall 762 be treated as a Company holiday or holidays. Thus, it is clear that under the relevant Standing Order, the respondents are entitled to 5 paid holidays every year. After the Standing Orders were framed and certified, there was an agreement between the appellant and the respondents ' Union as a result of which the appellant agreed to grant a further holiday, and ' this agreement raised the number of total paid holidays in a year to 6. The additional holiday which the appellant thus agreed to give to the respondents was to be given on the day when the respondents ' Union would celebrate its Union Day. Apparently, this holiday was analogous to the Founder 's Day, the idea underlying the agreement being that just as the appellant gave a paid holiday on the Founder 's Day, the respondents should be given a paid holiday on the Union Day. It appears that even after this agreement was reached, the respondents began to claim additional holidays; but the appellant was not prepared to make any addition to the list of holidays. It was prepared to leave the choice of the agreed holidays to the employees provided they submitted to the Company an agreed list of such holidays. In 1958, the Act was passed and it came into force on the 29th December, 1958. Section 3 of the Act provides "Grant of National and Festival Holidays Every employee shall be allowed in each calendar year a holiday of one whole day on the 26th January, the 15th August and the 1st May and four other holidays each of one whole day for such festivals as the Inspector may, in consultation with the employer and the employees specify in respect of any industrial establishment". The result of this provision was that every employer to whom the Act applied had to declare holidays on the 26th January, the 15th August and the 1st May and had to give four other holidays according to the decision of the Inspector, the requirement of the section being that the Inspector had to consult the employer and the employees before fixing such other holidays. In other words, section 3 statutorily fixed the number of paid holidays at 7; fixed three out of them and left the decision of the remaining four to the Inspector who had to consult the employer and the employees. In pursuance of this provision, the Inspector declared certain holidays for the year 1959. Not satisfied with the decision of the Inspector, one of the appellant 's employees Mr. Baskara Menon filed a writ petition in the Kerala High Court under article 226 of the Constitution challenging the validity of the Inspector 's decision. In that writ petition, the question about the construction of section 3 of the 763 Act was agitated. In the result, the High Court held that the complaint made by the petitioner against the validity of the decision of the Inspector was not well founded, and so, the writ petition was dismissed. In 1962, the appellant followed the same procedure and got a decision as to the festival holidays from the Inspector and declared that the said holidays would be observed as paid holidays in the year. At this time, certain industrial disputes were pending between the appellant and its employees belonging both to monthly and daily rated categories before the Industrial Tribunal at Ernakulam. The respondents felt that the declaration of the holidays made by the appellant for the year 1962 amounted to a contravention of section 33 of the , and so, they filed the two present complaints before the Industrial Tribunal under 33A of the said Act. That, in brief, is the genesis of the present complaints. We have already noticed the provisions of section 3 of the Act. The contention raised by the respondents before the Tribunal was that the statutory provision as to 7 paid holidays prescribes the minimum number of holidays which the employer has to give to his employees. This provision, according to the respondents, does not over ride or abrogate the existing arrangement as to paid holidays. In regard to paid holidays which are common to section 3 and the present arrangement they would, of course, have to be treated as paid holidays, but the four other festival holidays which the Inspector decides from year to year would be in addition to the holidays which the appellant is bound to give to the respondents under the existing arrangement, and since the appellant has limited the number of paid holidays to 7 for the year 1962, it has acted contrary to the terms of employment evidenced by the existing arrangement as to paid holidays and that constitutes the violation of section 33 of the . This contention has been upheld by the Tribunal; and Mr. Pai argues that the view taken by the Tribunal is plainly inconsistent with the true scope and effect of section 3 read with section 11 of the Act. That takes us to section 11 of the Act, because this section has to be read along with section 3 in determining the validity of the conclusion recorded by the Tribunal on the main point of dispute between the parties. section 11 reads thus: "Rights and privileges under other laws, etc., not affected Nothing contained in this Act shall adversely affect any rights or privileges which any employee is entitled to with respect to national and. festival holidays on the. date on which this Act comes into force under any other law, contract, custom or usage, if such rights or privileges are more favourable to him than those to which he would be entitled under this Act". D)5 SCI 10 764 This section gives an option to the employees, they can choose to have the paid ' holidays either as prescribed by section 3 or as are available to them under any other law, contract, custom or usage exercising this choice, it must, however, be borne in mind by the employees that the 26th January, the 15th August and the 1st May have to be taken as three holidays. That is the direction of section 3. In regard to the remaining 4. the Inspector decides which days should be paid holidays. In other words, the. statutory requirement is 7 paid holidays. If under the existing arrangement the employees are entitled to 'have more ,,than7 paid holidays, that right will not be defeated by section 3, because section 11 expressly provides that if the rights or privileges in respect of paid holidays enjoyed by the employees are more favourable than are prescribed by section 3, their existing rights and privileges as to the total number of holidays will not be prejudiced by section 3. The scheme of section 11 thus clearly shows that section 3 is not intended to prescribe a minimum number of paid holidays in addition to the existing ones, so that the respondents should be entitled to claim the seven holidays prescribed by section 3 plus the six holidays to which they are entitled under the existing arrangement. If in addition to the three holidays which are compulsory under section 3, the employees are getting, say 3 ' other paid holidays, then section 3 would step in and would require the employer to give his employees one more paid holiday, so as to make the number of paid holidays 7. In our opinion, if sections 3 and 11 are read together, there can be no doubt that the respondents ' claim that they should have 7 holidays as prescribed by section 3 plus 6 holidays as are available to them under the present arrangement is cleary untenable. In the present case, the respondents were having six paid holidayS. The statute has fixed the minimum number at 7 paid holidays, and so, since the existing arrangement was less favourable to the employees, the statutory provision will come to their help and they will be entitled to claim 7 paid holidays in a year, and that means that section 3 will be operative. If that be so, the procedure followed by the employer in consulting the Inspector and in fixing the list of 4 paid holidays for 1962 in addition to the three holidays fixed by the statute is perfectly consistent with the provisions of section 3 of the Act. The Tribunal was, therefore, in error in holding that the appellant had contravened section 33 of the . In the result, the appeals must be allowed, the orders passed by the Tribunal in the two respective complaints set aside, and the two complaints dismissed. There would be no order as to costs. Appeals allowed.

Under the Standing Orders of the appellant company, its employees were entitled to five holidays with pay on specified dates during each year. Furthermore, by an agreement with the respondents ' union, the company had agreed to grant an additional day 's holiday with pay, thus raising the total number of paid annual holidays to six. In 1958 the Kerala Industrial Establishments (National and Festival Holidays) Act, 1958, was passed and section 3 of the Act required every employer to declare holidays on every 26th January, 15th August and 1st May, and to grant four additional festival holidays each year, on dates to be fixed by the Inspector after consulting the employer and the employees. The number of paid holidays was thus statutorily fixed at 7. In 1962, the company obtained the Inspector 's decision on the four festival holidays and declared the dates on which such holidays would be given. At that time, while an industrial dispute between the company and its employees was pending. the respondents filed applications under section 33A of the , before the Tribunal. It was contended in these applications that the statutory provision in section 3 for 7 paid holidays did not override or abrogate the existing arrangement as to paid holidays and that the holidays to be given under section 3 would be in addition, to the holidays which the appellant was bound to give the respondents under existing arrangements; and that the appellant 's attempt to limit the nUmber of paid holidays to 7 during 1962 was contrary to the terms of employment evidenced by the existing arrangement and therefore violative of section 33. This contention was upheld by the Tribunal. In appeal to this Court, HELD: Under section 3 the statutory requirement is 7 paid holidays each year. If under an existing arrangement the employees were entitled to more than 7 paid holidays, such more favourable right was protected by section 11. The scheme of section 11 clearly shows that section 3 is not intended to prescribe a minimum number of paid holidays in addition to the existing ones and, in the present case, would operate only to raise the total number of holidays from 6 under the existing arrangements to 7 paid holidays in accordance with section 3. [764 B E]

: Criminal Appeal Nos. 287 288 of 1978. From the Judgment and Order dated 14.10.1977 of the Allahabad High Court in Criminal Appeal Case No. 2242 of 1972. 966 Frank Anthony, Sushil Kumar and J.K. Das for the Appel lant in Crl. A.No. 287 of 1978. U.R. Lalit, S.K. Bisaria and A.D. Malhotra for the Appellant in Crl. 288 of 1978. Prithvi Raj, C.P. Mittal and Dalveer Bhandari for the Re spondent. The Judgment of the Court was delivered by NATARAJAN, J. These Appeals by Special Leave arise out of a common judgment rendered by the Allahabad High Court in three Criminal Appeals filed before it by the appellants and one Raj Kishore. Appellant Subash and appellant Shiv Shankar were convicted alongwith Raj Kishore by the 4th Additional Sessions Judge, Bareilly under Section 302 read with Section 34 Indian Penal Code and Section 324 read with Section 34 Indian Penal Code respectively for having committed the murder of one Ram Babu and for having caused hurt with a knife to witness Dinesh Shankar. For the said convictions they were awarded imprisonment for life and three year 's R.I., respectively and the sentences were ordered to run concurrently. One Om Kumar who was also sent up for Sessions trial under the two charges mentioned above was acquitted by the Sessions Judge. The three convicted persons preferred appeals to the High Court and the High Court has confirmed the convictions and sentences awarded to Subash and Shiv Shankar but acquitted Raj Kishore. The offences in question were committed on March 12, 1971 i.e., a day after Holi Festival at about 11 a.m. on the Bareilly Nainital Road in Bareilly. The prosecution case was that while Shiv Shankar caught hold of Ram Babu, Subash, Raj Kishore and Om Kumar repeatedly stabbed him with knives and caused fatal injuries to him. When Dinesh Shankar (P.W. 2) tried to intercede he was also stabbed by Subash and caused an injury. Besides, Dinesh Shankar (P.W. 2) the occurrence was witnessed by an uncle of Ram Babu viz. Budh Sen (P.W. 1) and Shyam Behari (P.W. 3) and some others. Ram Babu and Dinesh Shankar were taken to the hospital but Ram Babu was pronounced dead in the hospital. The motive for the occur rence was that about 15 or 20 days prior to the occurrence Ram Babu had given a machine part to Subash for being welded but Subash failed to carry out the work; nevertheless he refused to return the machine part without the repair charges being paid to him. Ram Babu refused to pay the charges and there was an altercation but the parties were pacified by 967 Dinesh Shankar and Ram Babu took away the machine part without paying any charges to Subash. The quarrel had taken place about 3 or 4 days before the occurrence. Bearing this grudge in mind, when Ram Babu, accompanied by Budh Sen and Dinesh Shankar was proceeding to Qutabkhana to witness the Holi celebrations, Subash assisted by his three companions attacked Ram Babu in the manner set out earlier and caused fatal injuries to him. There were as many as 14 injuries on Ram Babu among which 7 were punctured wounds. Among the punctured wounds, injury nos. 7 and 8 were deep injuries which had injured the pleura, left lung, pericardium and the heart. These injuries were certified to be sufficient in the ordinary course of nature to cause death. Dinesh Shankar (P.W. 2) also had sustained an incised wound on his left thigh. Budh Sen (P.W. 1) got a report Exhibit Kha 1 written by his son and presented it at the Police Station at 1.12 p.m. Therein he has stated that accused Subash was known to him but the other three assailants were not known to him but another witness Bhuvan Chand examined as C.W. 1, had in formed him that one Raja Ram was one of the assailants of Ram Babu. It would appear that subsequently Bhuvan Chand refused to testify out of fear of the accused and hence he was not cited as a witness in the charge sheet. Even so, having regard to the averments in Exhibit Kha 1, the Ses sions Judge examined Bhuvan Chand as a court witness. He, however, failed to corroborate Budh Sen and stated that he did not know anything about the occurrence. Subash was absconding and he surrendered before the court on 12.3.71. He was subsequently questioned by the Investigating Officer and he gave information regarding the names and addresses of the other three assailants. Raj Kishore was arrested on 23.5.1971 and Shiv Shankar was arrested on 14.6.71 from the office of the Central Excise, Bareilly where he was employed. Om Kumar surrendered himself in Court on 15.7.71. Test identification parades were held for Raj Kishore and Shiv Shankar on 5.5.71 wherein Shiv Shankar was identi fied by Budh Sen, Dinesh Shankar and Shyam Behari but Raj Kishore was identified only by Dinesh Shankar. In the subse quent test identification parade held for Om Kumar on 27.7.71 none of the witnesses was able to identify him. The defence of all the accused was one of denial. Since accused Om Kumar was not identified by any of the witnesses at the test identification parade and since his name was not 968 mentioned in Exhibit Kha 1 the Sessions Judge acquitted him of the charges and convicted only the two appellants and Raj Kishore. The High Court acquitted Raj Kishore because he had been identified only by Dinesh Shankar and not by the other witnesses but, however, confirmed the conviction of these two appellants and it is against such confirmation by the High Court, the appellants have preferred these Appeals. Before dealing with the case of Subash we can conven iently deal with the appeal of Shiv Shankar. Admittedly he was not known to any of the eye witnesses and his name does not also find a place in the First Information Report Exhib it Kha 1. His name came to be known only through Subash when he was questioned in the jail on 7.4.1971. Even if it were so, it is not understandable why the Investigating Officer should have taken three weeks to question Subash after his surrender in Court on 17.3.1971. Be that as it may, even after getting the name and address of Shiv Shankar from Subash, the Investigating Officer has failed to trace him and arrest him till 14.6.1971. Shiv Shankar was an employee in the office of the Central Excise Department at Bareilly itself. It is, therefore, difficult to believe that the Investigating Officer would not have been able to trace him and arrest him for nearly 9 weeks after coming to know of Shiv Shankar 's name and address from Subash. As a matter of fact, the Investigating Officer has stated in his evidence that he visited the house of Shiv Shankar two or three times to arrest him but Shiv Shankar was not to be found. If Shiv Shankar was absent from the house the Investigating Officer could have easily learnt from the neighbours where he was working and where he had gone and located him and arrested him. It is not the prosecution case that Shiv Shankar was absconding. In such circumstances it is difficult to accept the prosecution case that the Investigating Officer could not trace and arrest Shiv Shankar till 14.6.71 in spite of coming to know on 7.4.71 itself that he was one of the assailants of Ram Babu. Apart from this infirmity we further find that Shiv Shankar was not put up for test Identification parade promptly. The identification parade has been held three weeks after his arrest and no explanation has been offered for the delay in holding the test identification parade. There is, therefore, room for doubt as to whether the delay in holding the identification parade was in order to enable the identifying witnesses to see him in the police lock up or in the jail premises and make a note of his features. Over and above all these things there remains the fact that a 969 sufficiently long interval of time had elapsed between the date of occurrence when the witnesses had seen Shiv Shankar for a few minutes and the date of the test identification parade. It is, no doubt, true that all the three witnesses had correctly identified Shiv Shankar at the identification parade but it has to be borne in mind that nearly 4 months had elapsed during the interval. It is relevant to mention here that neither in Exhibit Kha I nor in their statements during investigation, the eye witnesses have given any descriptive particulars of Shiv Shankar. While deposing before the Sessions Judge they have stated that Shiv Shankar was a tall person and had 'sallow ' complexion. If it is on account of these features the witnesses were able to identi fy Shiv Shankar at the identification, parade, they would have certainly mentioned about them at the earliest point of time because their memory would have been fresh then. Thus in the absence of any descriptive particulars of Shiv Shan kar in Exhibit Kha 1 or in the statements of witnesses during investigation, it will not be safe and proper to act upon the identification of Shiv Shankar by the three wit nesses at the identification parade and hold that he was one of the assailants of Ram Babu. As pointed out in Muthu Swami vs State of Madras, A.I.R. 1954 S.C 4 where an identifica tion parade is held about 2 1/2 months after the occurrence it would not be safe to place reliance on the identification of the accused by the eye witnesses. In another case Mohd. Abdul Hafeez vs State of Andhra Pradesh, A.I.R. 1983 S.C. 361 it was held that where the witnesses had not given any description of the accused in the First Information Report, their identification of the accused at the Sessions trial cannot be safely accepted by the court for awarding convic tion to the accused. In the present case there was a long interval of nearly 4 months before the test identification parade was held and it is difficult to accept that in spite of this interval of time the witnesses were able to have a clear image of the accused in their minds and identify him correctly at the identification parade. Mr. U.R. Lalit, learned counsel for Shiv Shankar further contended that Shiv Shankar had certain distinctive features like scars on the face, reddish lips etc., and these marks of identification should have been furnished to the witness es before they were called upon to identify Shiv Shankar at the identification parade. We do not think it necessary to go into the merits of this argument in the light of our conclusion already reached. As the conviction of Shiv Shan kar is based solely with reference to his identification at the identification parade, he has to be given the benefit of doubt and acquitted in the light of our finding. According ly, Shiv Shankar 's appeal has to succeed. 970 Coming now to the appeal of Subash it was strenuously contended by Mr. Frank Anthony, learned counsel that the prosecution evidence suffers from numerous infirmities and as such the Sessions Judge and the High Court ought not to have convicted him. His further argument was that in any case the benefit of doubt given to Om Kumar and Raj Kishore, ought to have been given to Subash also. Mr. Anthony argued that Exhibit Kha 1 could not have been given at 1.12 p.m. because there is no evidence to show when the report was sent to the Magistrate and when it was received by him. The learned counsel referred to Gurdev Singh and others vs The State, [1963] Punjab Law Reporter, 409 where the dangers ensuing from a First Information Report not being lodged promptly have been pointed out. We are unable to accept the argument of Mr. Anthony because there are no materials to warrant an inference that Exhibit Kha 1 had been given later but ante dated to cover up the delay in making the report. It is true that the First Information Report sent to Court does not contain the Magistrate 's endorsement regarding the time of its receipt, but Ram Kishan, Head Constable (P.W. 5) has deposed that the special report was despatched to the Magistrate at 1.20 p.m. itself through constable Chiman Lal and that the General Diary contains an entry to that effect. It was seriously urged by Mr. Anthony that the motive put forward for the occurrence Was of a flimsy nature and it is unbelievable that for non payment of repair charges Subash would have attacked Ram Babu along with his compan ions. This argument has to fail because Dinesh Shankar has clearly deposed that there was an altercation between Subash and Ram Babu there on four days earlier and Ram Babu took away the machine part without paying repair charges to Subash. There is, therefore, nothing improbable in Subash having nurtured a grievance against Ram Babu and wanting to settle scores with him. The evidence of the eye witnesses is clearly to the effect that Subash told his companions on seeing Ram Babu, that he is the person who had quarrelled with him and taken away the machine part without paying the repair charges. Making common cause of his grievance Su bash 's companions had also joined him in perpetrating an attack on Ram Babu. The intent of Subash in launching an attack on Ram Babu can be gauged from the fact that when Dinesh Shankar tried to intervene, he had prevented him and inflicted a stab injury on him also. The further argument of Mr. Anthony was that Budh Sen did not have proper eye sight, that Shyam Behari was a chance witness and 971 that Bhuvan Chand named in Exhibit Kha 1 had failed to support the prosecution case and as such there is no accept able evidence to convict Subash. He also stated that even though Dinesh Shankar is an injured witness, there is no guarantee his evidence is truthful. None of these conten tions in our opinion, has any merit. Budh Sen has stated that his eye sight is poor without glasses but with specta cles he can see well. It is not the case of the appellant that Budh Sen was not wearing his spectacles at the time of the occurrence. In so far as Dinesh Shankar and Shyam Behari are concerned, their presence at the scene cannot admit any doubt because their names find a place in Exhibit Kha I. Moreover Dinesh Shankar has sustained an injury on his left thigh. The evidence of these witnesses has been accepted by the Session Court and the High Court and we see no reason to take a different view. In so far as Bhuvan Chand (C.W. 1) is concerned, the prosecution has satisfactorily explained why he was not cited as a witness. He had no doubt furnished the name of Raja Ram alias Raj Kishore to Budh Sen but he subse quently backed out fearing reprisal at the hands of the accused. Mr. Anthony argued that even if his contentions are not accepted, Subash can be convicted only for an offence under Section 324 Indian Penal Code for the injury caused to Ram Babu as well as Dinesh Shankar. We may mention here that the Sessions Judge had framed a separate charge against the appellant Subash under Section 324 Indian Penal Code in addition to the charge under Section 302 read with Section 34 Indian Penal Code. Mr. Anthony invited our attention to State of U.P. vs Hari Prasad, ; and Ugar Ahir vs State of Bihar, A.I.R. 1965 S.C. 277 to contend that when the sub stratum of the prosecution case fails, the entire case has to fail. We find the facts in those cases were entirely different and hence they can have no relevance to this appeal. In the present case, the prosecution version fully survives in spite of the acquittal of the other ac cused for want of proof of indentity. The last argument of Mr. Anthony was that in any event when the other accused persons are acquitted, Subash alone cannot be convicted under Section 302 read with Section 34 Indian Penal Code in the absence of evidence to show that he caused any of the fatal injuries on Ram Babu. This argument is devoid of any merit. The case of Subash stands on a different footing from that of the other accused because he has been clearly named and the particulars of his profession and address have been furnished in Exhibit Kha 1. All the witnesses have stated that he was known to all of them. In contrast the names of the other accused were not known to the eye witnesses and the name of Raj Kishore alone had been furnished to Budh Sen by Bhuvan Chand. 972 Besides attacking Ram Babu Subash had also attacked Dinesh Shankar. He was absconding and had later surrendered himself in court. No test identification parade was held for him because his identity was never in doubt. He had a grudge against Ram Babu and it was on his instigation the attack on Ram Babu had been launched. His case, therefore, stands on a distinctively different footing from that of the other accused persons. Even though the other accused are acquitted it is only for want of proof of their identity and not because the eye witnesses had not seen the occurrence or that the occurrence had taken place in a different manner. Subash cannot, therefore, escape the consequences of the attack jointly committed by him and his accomplices in furtherance of their common intention even though the other accused stand acquitted for want of acceptable proof of their identity. Mr. Anthony referred us to the decision in Vijay Kumar vs State of J & K, A.I.R. 1982 S.C. 1022 to contend that when the other accused stand acquitted Subash also should be acquitted of the charge under Section 302 read with Section 34 Indian Penal Code. The facts in that case bear no comparison with the facts in this case. On the other hand Amir Hussain vs State of U.P., A.I.R. 1975 S.C. 2211 will be the decision apt for consideration in this case. In the above case 10 persons were acquitted by the Sessions Judge and three alone were convicted under Section 302 read with Section 34 Indian Penal Code. Among those three, two were acquitted by the High Court and consequently only one of the accused stood convicted. The said accused appealed to this court and contended that since the other two accused had been acquitted, he should also be acquitted of the charge under Section 302 read with Section 34 Indian Penal Code. Repelling the contention this Court held as follows: "Much stress has been laid on behalf of the appellant upon the fact that despite the evidence of the above mentioned four eye witnesses, the High Court has acquitted Kari muddin and Mohd. Ibrahim accused. It is, in our view, not necessary to express an opinion on the point as to whether those two accused were rightly acquitted or not. All that we can say is that the benefit of doubt which resuit ed in the acquittal of the other two accused would not vitiate the conviction of the appel lant in case the evidence adduced against him is found to be satisfactory and convincing. The material on record establishes that the appellant had a motive to join in the assault on Ibrahim Pradhan. The appellant held out a threat and report about it was lodged by Ibrahim deceased at the police station about 973 3 1/2 months prior to the present occurrence. The evidence about the motive lends assurance to the evidence of the eye witnesses regarding the complicity of the appellant. We would, therefore, maintain the conviction of the appellant. As regards the sentence, it may be stated that the only injury which is attribut ed to the appellant is an incised wound on the right arm of Ibrahim. The incised wound which was found on the scalp of Mehandi Hasan was ascribed by the eye witnesses to Karimuddin who has been acquitted. In view of the fact that a comparatively minor injury was at tributed to the appellant and he is being vicariously held liable for the fatal injuries caused by the other culprits, we consider it to be a fit case in which we might substitute the lesser sentence for the extreme penalty of death. We accordingly maintain the conviction of the appellant but reduce his sentence to that of imprisonment for life. " We are, therefore, of the view that even though the other accused stand acquitted and even though there is no evidence that Subash caused one of the fatal injuries, he cannot escape conviction under Section 302 read with Section 34 Indian Penal Code when his participation with three other assailants in the attack on Ram Babu has been established beyond reasonable doubt by the prosecution. We, therefore, confirm his convictions and the sentences awarded therefor. In the result Crl. Appeal No. 287 of 1978 will stand dismissed while Crl. Appeal No. 288 of 1978 will stand allowed. Appellant Subash will surrender himself to custody failing which he should be arrested for serving out the sentence. Appellant Shiv Shankar will stand acquitted of the convictions under Section 302 read with Section 34 Indian Penal Code and 324 read with Section 34 Indian Penal Code and his bail bonds will stand cancelled. N.P.V. Crl. Appeal No. 287/78 dismissed. Appeal No. 288/78 allowed.

The prosecution alleged that there was a dispute between the appellant in Appeal No. 287 of 1978 and the deceased in regard to payment of repair charges for a machine part and that three or four days later this appellant alongwith others attacked the deceased when he was accompanied by P.W. 1 and P.W. 2. It was further alleged that while the appel lant in Appeal No. 288 of 1978 caught hold of the deceased, the appellant in the first appeal and two others repeatedly stabbed him with knives and caused several injuries. P.W. 2 was also injured when he tried to intercede. The deceased and P.W. 2 were taken to hospital where the deceased was pronounced dead. P.W. 1 presented a complaint at the Police Station. The appellant in the first appeal absconded and surren dered before the court later. On questioning, he named the assailants, who were arrested on different dates. Test indentification parades were held for two accused persons wherein the appellant in the second appeal was identified by three witnesses, but the other accused was identified by only of them. In the subsequent identification parade held for another accused, none of the witnesses was able to identify him. All the accused were tried and the two appel lants and another accused were convicted under Section 302 read with Section 34 Indian Penal Code and Section 324 read with Section 34 Indian Penal Code for having committed murder of the deceased and caused hurt with a knife to P.W. 2 and were awarded imprisonment for life and three years ' rigorous imprisonment respectively, the sentences to run concurrently. The fourth accused who was not identified by any one of the witnesses at the identification 963 parade and whose name was not mentioned in the First Infor mation Report, was acquitted. The High Court in appeal confirmed the conviction of the two appellants but acquitted the third accused on the ground that he had been identified by only P.W. 2 and not by other witnesses. In the appeal to this Court, it was submitted on behalf of the appellant in Criminal Appeal No. 287 of 1978 that the prosecution evidence suffers from numerous infirmities and as such, the trial court and the High Court ought not to have convicted him, that in any case the benefit of doubt given to the two of the other accused ought to have been given to him, that there was an attempt to cover up the delay in making the report, that the motive put forward for the occurrence was of a flimsy nature and it was unbelieva ble that for non payment of repair charges the deceased would have been attacked alongwith his companions, that P.W. 1 did not have proper eye sight, that P.W. 3 was a chance witness and that C.W. 1 failed to support the prosecution case, and that even though P.W. 2 was an injured witness, there was no guarantee that his evidence is truthful. It was further urged that the appellant could be convicted only for an offence under Section 324 Indian Penal Code for the injury caused to the deceased as well as P.W. 2, that as the sub stratum of the prosecution fails, the entire case had to fail and that when the other accused persons were acquitted, the appellant alone cannot be convicted under Section 302 read with Section 34 I.P.C., in the absence of evidence that he caused any of the fatal injuries on the deceased. It was submitted on behalf of the appellant in Criminal Appeal No. 288 of 1978 that neither his name nor any of his characteristics were mentioned in the First Information Report by any of the eye witnesses, that he was falsely implicated, that there was no motive for him to murder the deceased, that one of the prosecution witnesses had alto gether denied his presence, that there was delay in his arrest and ho1ding of the identification parade and he was exposed to the identifying witnesses by not covering his distinctive features, that the prosecution had failed to prove beyond reasonable doubt his participation in the commission of the occurrence and that when the other ac cused, one of whose name figured in the First Information Report, were acquitted by giving the benefit of doubt. he should also have been given the same benefit of doubt. Dismissing the appeal of the appellant in Appeal No. 287 of 1978 and allowing the appeal of the appellant in Appeal No. 288 of 1978, this Court, 964 HELD: 1. When participation of the appellant with the other assailants is established beyond reasonable doubt by the prosecution, he cannot escape the consequences of the attack committed by him and his accomplices in furtherance of their common intention and conviction under Section 302 read with Section 34 Indian Panel Code even though the other accused stand acquitted and even though there may be no evidence that the accused caused one of the fatal injuries. [973E] 2. The other accused were acquitted only for want of acceptable proof of their identity and not because the eye witnesses had not seen the occurrence or that the occurrence had taken place in a different manner. Therefore, there is no merit in the contention that when the other accused persons were acquitted, the appellant in Criminal Appeal No.287 of 1978 alone cannot be convicted under Section 302 read with Section 34 Indian Penal Code, in the absence of evidence to show that he caused any of the fatal injuries on the deceased. The appellant, therefore, cannot escape the consequences of the attack jointly committed by him and his accomplices in furtherance of the common intention. [972B E] 3. There is nothing improbable in the appellant having nurtured a grievance against the deceased and wanting to settle scores with him. The evidence of the eye witnesses was clearly to the effect that the appellant told his com panions on seeing the deceased that he was the person who had quarreled with him and taken away the machine part without paying the repair charges. Making common cause of his grievance, the appellant 's companions had also joined him in perpetrating an attack on the deceased. The trial court and the High Court were right in accepting the evi dence of these witnesses. [970F G] 4. There is no merit in the contention that the appel lant can be convicted only for an offence under Section 324 Indian Penal Code for injury caused to the deceased as well as P.W. 2. The trial court had framed a separate charge against the appellant under Section 324 Indian Penal Code in addition to the charge under Section 324 read with Section 34 Indian Penal Code. There is also no merit in the conten tion that when the sub stratum of the prosecution case fails, the entire case has to fail. The prosecution version fully survives in spite of the acquittal of the other ac cused for want of proof of identity. [971 D F] 5. Where there is delay in holding an identification parade, it would not be safe to place reliance on the iden tification of the accused by the eye witnesses. [969D E] 965 6. Where the witnesses had not given any description of the accused in the First Information Report or in the state ments during the investigation, their identification of the accused at the trial cannot be safely accepted by the court for convicting the accused. [969E] 7. The appellant in Criminal Appeal No. 288 of 1978 was not arrested for nearly nine weeks after coming to know of his name and address from the other appellant. It was not the case of the prosecution that the appellant was abscond ing. Apart from this infirmity, the appellant was not put up for test identification parade promptly and it was held three weeks after his arrest and no explanation was offered for the delay in holding it. There is, therefore, room for doubt as to whether the delay in holding the identification parade was in order to enable the identifying witnesses to see him in the police lock up or in the jail premises and make a note of his features. A sufficiently long interval of time had elapsed between the date of occurrence when the witnesses had seen the appellant for a few minutes and the date of the identification parade. [968D H; 969A] 8. Although all the three witnesses had identified the appellant at the identification parade, after nearly four months, in the absence of any descriptive particulars of the appellant in the First Information Report or in the state ments of witnesses during the investigation, it would not be safe and proper to act upon the identification of the appel lant by the three witnesses at the identification parade and hold that he was one of the assailants of the deceased. [969A D] 9. As the conviction of the appellant was based solely with reference to his identification at the parade, he has to be given the benefit of doubt and acquitted. [973E] Muthu Swami vs State of Madras, AIR 1954 SC 4; Mohd. Abdul Hafeez vs State of Andhra Pradesh, ; Gurdev Singh and others vs The State, 1963 Punjab Law Re porter, 409; State of U.P. vs Hari Prasad, ; ; Ugar Ahir vs State of Bihar, AIR 1965 SC 277; Vijay Kumar v: State of J & K, AIR 1982 SC 1022; and Amir Hussain vs State of U.P., AIR 1975 SC 2211, referred to.

vl Appeal Nos. 17 and 18 of 1989. From the Judgment and Order dated 3.10.1988 of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal Nos. E/2 123 of 1987 C and E/2 124 of 1987 C in Order Nos. 738 and 739 of 1988 C, K. Parasaran, V. Balachandran and M.V. Madhava Rao for the Appellant. Ashok H. Desai, Solicitor General, Ms. Indu Malhotra and P. Parmeshwaran for the Respondents. These are two appeals under section 35 L of the (hereinafter referred to as 'the Act ') They arise out of the claim of M/s Rohit Pulp and Paper Mills Ltd. (hereinafter referred to as 'the assessee ') for partial exemption from excise duty in respect of the art paper and chromo paper manufactured by it. The assessee is having a factory at Khadki in which different varieties of paper and paper boards are manufac tured. The factory does not have a bamboo pulp plant. It uses waste paper and cereal straw which are considered to be unconventional raw materials for the manufacture of paper and paper board. The pulp used by the assessee contains more than 50% by weight of pulp made from these unconventional raw materials. 'Paper and paper board ' are goods falling under item 17(1) of the first schedule to the Act. Two notifications were issued on 1st March, 1984 under rule 8(1) of the Cen tral Excises Rules, 1944 in respect of the above item. The first of them, being notification No. 24 of 1984, restricted the excise duty on items falling under the aforesaid item in the manner following: 802 section No. Description Rate 1. Printing and writing paper. Ten per cent ad valorem paper plus one thousand rupees per metric tonnes. All sorts of paper commonly Ten per cent ad valorem known as kraft paper (inclu plus one thousand three ding paper and paper boards hundred and eighty five of the type known as kraft rupees per metric tonne. liner or corrugating medium) of a substance equal to or exceeding 65 grammes per sq. metre 3. Paper board of the following Ten per cent ad valorem varieties, namely, pulp board plus one thousand eight duplex board and triplex board. hundred and ten rupees per metric tonne. Paper and paper boards, other Ten per cent ad valorem than those specified in S.Nos. plus one thousand four 1 to 3. hundred and thirty rupees per metric tonne. The second notification, notification No. 25 of 1984, is the one with which we are directly concerned here. It pro vides for a concession in respect of paper and paper boards falling under item 17(1) of the Schedule, manufactured out of pulp containing not less than 50 per cent by weight of pulp made from materials (other than bamboo, hardwoods, softwoods, reeds or rags) and cleared on or after the 1st day of April in any financial year. The concessional rates prescribed were as below: section No. Description Rate Conditions 1. (i) Printing and wri Rs.450 per provided that the ting paper metric tonne total quantity of clearances, if any, of all vari (ii) All sorts of paper Rs.450 per eties of paper and commonly known as metric tonne paper boards in the kraft paper (inclu preceding financial ding paper & paper year, by or on be boards of the type half of a manufac known as kraft liners turer, from one or or corrugating medium) more factories, or of a substance equal to from a factory by or exceeding 65 grammes or on behalf of one per square metre. or more manufactu rers did not exce ed 3,000 metric tonnes. 803 (iii) Others Rs.560 per metric tonne. (i) Printing and writing Rs.730 per Provided that the writing paper metric tonne. total quantity of clearances of all varieties of paper (ii) All sorts of papers Rs.730 per & paper boards in commonly known as metric tonne. the preceding fin kraft paper (including ancial year, by or paper and paper boards on behalf of a ma of the type known as nufacture, from kraft liners or corru one or more facto gating medium) of a ries or from a substance equal to or factory by or on exceeding 65 grammes behalf of one or per square metre. more manufacturers , exceedings 3,000 metric tonnes but did not exceed 7,500 metric ton nes. (iii) Others Rs.900 per metric tonne. (i) Printing and Rs.900 per Provided that the writing paper metric tonne. total quantity of clearances of all (ii) All sorts of Rs.900 per varieties of paper paper common metric tonne. & paper boards in ly known as the preceding fin Kraft paper & nancial year, by (including pa or on behalf of a per & paper manufacturer, from boards of the one or more facto type known as kraft ries or from a fa liners or corruga ctory or on behalf ting medium) of a of one or more substance equal to manufacturers, ex or exceeding 65 gram ceeding 7,500 met mes per square metre. tric tonne but did not exceed 16,500 metric tonnes: (iii) Others Rs.1.120 per metric tonne. 804 4. [This para, added by notification No. 92/84 dated 18.4.84 added another concessional rate where the clearances exceed ed 10,500 but did not exceed 24,000 metric tonnes on the same lines as above but this does not need to be set out here]" The grant of the above concessional rates were, however, subject to certain important conditions set out in the provisoes to the notification. These provisoes read: "Provided that the factory does not have a plant attached thereto for making bamboo or wood pulp. Provided further that the exemption contained in this notification shall not apply to cigarette tissue, glassing paper, grease proof paper, coated paper (including waxed paper) and paper of a substance not exceeding 25 grammes per square metre. " Another notification No. 45 of 1985 dated 17.3.1985 has been relied upon in support of the contention of the Union of India and hence this may also be set out here. It pre scribed rates on paper and paper board falling under item 17(1) in the following manner: section No. Description Rate 1. Printing and writing paper (i) coated paper Ten percent ad valorem plus one thousand five hundred and five rupees per metric tonne. (ii) of a substance not ex Ten percent ad valorem ceeding 25 grammes per plus one thousand five square metre hundred and five rupees per metric tonne. (iii) Others Ten percent ad valorem plus one thousand five hundred and five rupees per metric tonne. All sorts of paper com Ten percent ad valorem monly known as kraft plus one thousand five paper (including paper hundred and eighty five and paper boards of the rupees per metric type known as kraft liner tonne. or corrugating medium) of a substance equal to or exceeding 65 grammes per square metre. 805 3. Coated paper (including Ten percent ad valorem waxed paper) and paper of plus one thousand nine a substance not exceeding hundred and thirty 25 grammes per square rupees per metric metre (other than those tonne. specified in Sl. No.1) 4. Glassine paper, cigarette Ten percent ad valorem tissue and grease proof plus one thousand nine paper. hundred and thirty rupees per metric tonne 5. Paper board of the follow Ten percent ad valorem ing varieties, namely, pulp plus one thousand eight board, duplex board and hundred and ten rupees triplex board. per metric tonne. Paper and boards, other Ten percent ad valorem than those specified in plus one thousand four Sl. No.1 to 5. hundred and thirty rupees per metric tonne The assessee seems initially to have paid excise duty on the goods manufactured by it in terms of notification No. 24/84 but later seems to have thought of claiming the con cessional rates prescribed by notification No. 25/84. The company was manufacturing art paper and chromo paper. It is common ground that these two types of paper fall under category "printing and writing paper". It is also common ground that these two articles also fall under the descrip tion "coated paper" used in the second proviso. Since coated paper is taken by the proviso out of the purview of the notification No. 25 of 1984, the Excise Department refused to permit the assessee to avail of this concession in re spect of its manufactured goods. This treatment by the Excise Department has also been confirmed by the Central Excise and Gold Control Appellate Tribunal (CEGAT). The Tribunal disposed of the matter very briefly. It observed: 806 "37. That brings us to the second question whether art paper and chromo paper were eligible for the exemption granted under notification No. 25 of 1984. We have carefully consid ered arguments of the appellants. We have perused the noti fication No. 24 of 1984 as amended and note that the second proviso excludes from the exemption, among others, coated paper (including waxed paper). There is no denial that art paper and chromo paper are coated papers. It may be correct that these are not, like other papers mentioned in second proviso, industrial varieties of papers and are writing and printing varieties. All the same when the proviso, as it is worded, is clear there is no warrant for us to supply words to the proviso to the notification. We, therefore, find against the appellants in this regard and hold that art and chromo paper would not be eligible for exemption under notification No. 25 of 1984." (emphasis added) The assessee is aggrieved by this order of the Tribunal and hence the present appeals. Sri K. Parasaran, appearing for the appellant, raises an ingenious contention. He urges that though the expression 'coated paper ' has generally a wide connotation and includes coated papers of all varieties, it should be given a re stricted meaning in the context in which it appears in the proviso. It is submitted that in the paper business, paper is broadly of two varieties, "industrial paper" and "cultur al paper". Paper used for printing or writing is treated as cultural paper. On the other hand, industrial paper is paper which is used for various purposes which may be broadly described as industrial purposes, such as wrapping, packing sanitary use and the like. It is submitted that though the notification intended to grant a concession. to small facto ries manufacturing paper out of unconventional raw material. it was decided to deny the concession to certain kinds of paper. These exceptions have been set out in the proviso. They are: (1) cigarette tissue, (2) glassing paper, (3)grease proof paper, (4) coated paper (including waxed paper), and (5) paper of substance not exceeding 25 gm. per square metre in weight (which may be compendiously described as light paper). It is argued that a common strain runs through all these five categories. The first three varie ties, namely, cigarette tissue, glassing paper and grease proof paper admittedly fall under the category of industrial paper. Likewise, paper of a substance not exceeding 25 gm. per square metre in weight is invariably used for 807 industrial purposes and this is so found by the Tribunal. The word 'coated paper ', it is urged, must be read in this context. Since the other items set out in the proviso are items of industrial paper, it stands to reason that though 'coated paper ', in a wider sense, may include all categories of coated paper, the denial of concession by the proviso is to be restricted only to coated paper falling under the industrial variety. In other words, it is submitted that the word 'coated paper ' should be interpreted by applying the principle of "Noscitur A Sociis" or on the analogy of the "Ejusdem generis" principle. This contention, it is submit ted, is re inforced by two considerations. The first is that the Government must have had some idea or principle in putting together the exceptions and there is no conveivable principle other than the one enunciated. The second consid eration is the addition of the words used in parenthesis along with 'coated paper ' viz. "(including waxed paper)". It is pointed out that waxed paper obviously means coated paper because waxed paper is nothing but paper coated with wax and would have anyhow been covered by the exception. Neverthe less, it was considered necessary, it is said, to specifi cally include it in order to make it clear by this illustra tion that only industrial paper like waxed paper is taken out from the concession. The words in parenthesis are, in other words, the words illustrative of the limitation to be read into the expression 'coated paper '. It is finally argued that, even if the words of the proviso are capable of being construed in a wider manner so as to deny exemption to all kinds of coated paper, the Court should apply the well established principle of construction of taxing statutes that an ambiguous provision should be interpreted in favour of the subject. On the other hand, the learned Solicitor General submits that if there are two possible views of the proviso, the Court should not interfere with the conclusion reached by the Tribunal which reflects one of two possible and plausi ble views. On the interpretation of the proviso, the Solici tor General submits that there is no principle of interpre tation by which the plain and natural meaning of the word 'coated paper ' can be abridged nor, he says, is there any thing in the context to warrant such a limitation. He re futes the suggestion that, in commercial parlance, there is a clear cut distinction between industrial and cultural paper. He does not agree that light paper can only be indus trial paper and refers to the terms of the 1985 notification in support. He points out that if coated paper meant only industrial paper, as contended for by the assessee, the expression in parenthesis was totally unnecessary. He submits that there is a distinction between coated paper and impregnated paper. As waxed paper could fall under 808 either of these categories, there was a possibility of some one contending that paper impregnated with wax is not 'coated paper '; that is why it became necessary to add the parenthesis to clarify that both kinds will be 'coated paper ' for the purposes of the proviso. He submits for these reasons that the view taken by the Tribunal was the correct one and that the appeals should be dismissed. We have considered the contentions urged on both sides and we have come to the conclusion that there is force in the appellant 's contentions. All the three notifications we have extracted above draw a distinction between printing and writing paper on the one hand and other types of paper on the other. They also show that the duty on printing and writing paper is generally less than that on the other varieties of paper. Though paper can be classified into various varieties, it does appear that one such classifica tion is between industrial paper and cultural paper. "The Dictionary of Paper" published by the American Paper and Pulp Association (Second Edition) contains the following definition: Industrial Papers A very general term which is used for to indicate papers manufactured for industrial uses as opposed to those for cultural purposes. Thus, building papers, insulative papers, matching paper etc. would be considered industrial papers whereas writing and printing papers would be cultural papers. Now the proviso denies the concession extended by notifica tion No. 25/84 to certain types of papers. It is true that no meticulous reasons can always be made available or dis covered for variations in rates of duty as between various types of goods and the absence of some common thread in relation to a set of goods treated alike may not necessarily render the classification irrational or arbitrary. But, at the same time, one can legitimately postulate that the denial of a concession to a group proceeds on the basis of some aspect or feature common to all items in the group. If such a principle can be conceived of which would rationalise the inclusion of all the items, it would be quite reasonable and proper to give effect to a construction of the notifica tion as will accord with that principle. It is this which the appellant has attempted to do and we are reclined to think that the ratiocination of the exceptions suggested, far from being artificial or far fetched, is a plausible and likely one that the Government could have had in mind and that it should be accepted. 809 As mentioned earlier, the concession of the notification is denied to five kinds of paper. Three of them, undoubtedly and indisputably, are varieties of industrial paper. This is indeed common ground and it has also been supported by reference to the definitions in the Dictionary of Paper and elsewhere which it is unnecessary to set out here. The fourth is what we have referred to as 'light paper ' not exceeding a particular weight. On behalf of the assessee, it is contended that this is also only industrial paper. In support of this contention, reference is invited to the tables appended to the Dictionary of Paper which indicate that there cannot be printing and writing paper of weight less than 26 gms per sq. metre. It is also pointed out that the Tribunal has also given a finding to this effect in para 37 of its order. The learned Solicitor General, on the other hand, points out that section No. 1 (ii) of the 1985 notification itself clearly shows that there can be "printing and writing paper of a substance not exceeding 25 gramms per sq. metre". On behalf of the assessee, on instructions, it is submitted that this classification proceeds on a totally unreal basis and that there is no such printing and writing paper in existence. We cannot, however, assume that the 1985 notifi cation proceeds on an erroneous basis. 1t is sufficient for our purposes to take it, on the basis of the record in this case, that light paper is, by and large, industrial paper without altogether excluding all possibility that it is used occasionally for cultural purposes also. The classification set out in the 1985 notifications also lends some support to the contentions urged. The five varieties of paper we are concerned with are found in serial Nos. 3 and 4 of this notification and serial Nos. 1 and 3 reflect a contrast between coated paper and light paper used for cultural purposes (item No. 1) and that used for other (industrial) purposes (item No. 4). On this basis, then, it is clear that tour out of the five varieties of paper which are denied the benefit of the concession seem to constitute industrial paper. In fact even if, as urged for the Union of India, only three of ' these items are of the industrial variety while the other two could be either, it will not still be unreasonable (though, may be, a little less plausible) to draw an inference that only industrial paper failing in those two categories are intended to be comprehended in the classification rather than assume, for no detectable reason, that all paper of these two varieties alone are excluded from the concession. We think, therefore, that the appel lants are on firm ground in submitting that the expression 'coated paper ' in the proviso should draw colour from the context in which it is employed and receive an interpreta tion consistent therewith than its literal one, which in its widest sense, may be comprehensive enough to include all coated paper, industrial or otherwise. 810 The principle of statutory interpretation by which a generic word receives a limited interpretation by reason of its context is well established. In the context with which we are concerned, we can legitimately draw upon the "nosci tur a sociis" principle. This expression simply means that "the meaning of a word is to be judged by the company it keeps. " Gajendragadkar, J. explained the scope of the rule in State vs Hospital Mazdoor Sabha, ; in the following words: "This rule, according to Maxwell, means that, when two or more words which are susceptible of analogous meaning are coupled together they are understood to be used in their cognate sense. They take as it were their colour from each other, that is, the more general is restricted to a sense analogous to a less general. The same rule is thus inter preted in "Words and Phrases" (Vo. XIV, p. 207): "Associated words take their meaning from one another under the doctrine of nosciture a sociis, the philosophy of which is that the meaning of a doubtful word may be ascertained by reference to the meaning of words associated with it; such doctrine is broader than the maxim Ejusdem Generis. " In fact the letter maxim "is only an illustration or specific application of the broader maxim noscitur a sociis". The argument is that certain essential features or attributes are invariably associated with the words "business and trade" as understood in the popular and conventional sense, and it is the colour of these attributes which is taken by the other words used in the definition though their normal import may be much wider. We are not impressed by this argument. It must be borne in mind that noscitur a sociis is merely a rule of construction and it cannot prevail in cases where it is clear that the wider words have been deliberately used in order to make the scope of the defined word correspondingly wider. It is only where the intention of the Legislature in associating wider words with words of narrower significance is doubtful, or otherwise not clear that the present rule of construction can be usefully applied. It can also be applied where the meaning of the words of wider import is doubtful; but, where the object of the Legislature in using wider words is clear and free of ambiguity, the rule of construc tion in question cannot be pressed into service. " 811 This principle has been applied in a number of contexts in judicial decisions where the Court is clear in its mind that the larger meaning of the word in question could not have been intended in the context in which it has been used. The cases are too numerous to need discussion here. It should be sufficient to refer to one of them by way of illustration. In Rainbow Steels Ltd. vs C.S.T., ; this Court had to understand the meaning of the word 'old ' in the context of an entry in a taxing tariff which read thus: "Old, discarded, unserviceable or absolute machinery, stores or vehicles including waste products . . " Though the tariff item started with the use of the wide word 'old ', the Court came to the conclusion that "in order to fall within the expression 'old machinery ' occurring in the entry, the machinery must be old machinery in the sense that it has become non functional or nonusable". In other words, not the mere age of the machinery, which would be relevant in the wider sense, but the condition of the machinery analogous to that indicated by the words following it, was considered relevant for the purposes of the statute. The maxim of noscitur a sociis has been described by Diplock, C.J. as a "treacherous one unless one knows "the socictas to which the socii belong" (vide: Letang vs Coopex, ; The learned Solicitor General also warns that one should not be carried away by labels and Latin maxims when the word to be interpreted is clear and has a wide meaning. We entirely agree that these maxims and prece dents are not to be mechanically applied; they are of as sistance only in so far as they furnish guidance by compen diously summing up principles based on rules of common sense and logic. As explained in Collector of Central Excise vs Parle Exports (P) Ltd.; , at p. 357 and Tata Oil Mills Co. Ltd. vs C.C.E.; , at p. 545 6 in interpreting the scope of any notification, the Court has first to keep in mind the object and purpose of the notifi cation. All parts of it should be read harmoniously in aid of, and not in derogation, of that purpose. In this case, the aim and object of the notification is to grant a conces sion to small scale factories which manufacture paper with unconventional raw materials. The question naturally arises: Could there have been any particular object intended to be achieved by introducing the exceptions set out in the provi so? Instead of proceeding on the premise that it is not necessary to look for any reason in a taxing statute, it is necessary to have a closer look at the wording of the provi so. If the proviso had referred only to 'coated paper ', no special object or 812 purpose would have been discernible and perhaps there would have been no justification to look beyond it and enter into a speculation as to why the notification should have thought of exempting only 'coated paper ' manufactured by these factories from the purview of the exemption. But the notifi cation excepts not one but a group of items. If the items mentioned in the group were totally dissimilar and it were impossible to see any common thread running through them again, it may be permissible to give the exceptions their widest latitude. But when tour of them undoubtedly, at least three of them can be brought under an intelligible classification and it is also conceivable that the Govern ment might well have thought that these small scale facto ries should not be eligible for the concession contemplated by the notification where they manufacture paper catering to industrial purposes, there is a purpose in the limitation prescribed and there is no reason why the rationally logical restriction should not be placed on the proviso based on this classification. In our view, the only reason . able way of interpreting the proviso is by understanding the words 'coated paper ' in a narrower sense consistent with the other expressions used therein. In the view we have taken it is unnecessary to consider the other contentions urged before us: (i) whether the words "(including waxed paper)" are words indicative of the limi tation sought to be placed on the words "coated paper" or they are only intended to make it clear that even paper impregnated with wax will not be entitled to exemption; and (ii) whether, if the notification is capable of two equally plausible interpretations, the one in favour of the subject should be upheld or the one taken by the Tribunal should be confirmed. For the reasons discussed above, we accept the appel lant 's submission that 'coated paper ' in the second proviso refers,only to coated paper used for industrial purposes and not to coated varieties of printing and writing paper. The Tribunal 's order is set aside and the appellant held enti tled to the concessional rates specified in notification No. 25184. The appeals are allowed. But we make no order as to costs.

Notifications No. 24 and 25 of 1984 under rule (1) of the Central Excise Rules, were issued on 1.3.1984 in respect of paper and paper board falling under item 17(1) of the first schedule to the . While notification No. 24 of 1984 restricted the excise duty on certain items, notification No. 25 of 1984 provided for a concession in respect of paper and paper boards manufactured out of pulp containing not less than 50 per cent by weight of pulp made from materials (other than bamboo, hardwoods, softwoods, reeds or rags) and cleared on or after the 1st day of April in any financial year, subject to certain important conditions set out in the provisoes to the notifi cation. Under the provisoes, the concessional rates were applicable only if the factory did not have plant attached to it for making bamboo, wood pulp and the exemption would not apply to cigarette tissue, glassing paper, grease proof paper, coated paper (including waxed paper) and paper of a substance not exceeding 25 grammes per square metre. Another notification No. 45 of 1985 dated 17.3.1985 was also issued prescribing rates on paper and paper board failing under the aforesaid item including coated paper. The appellant assessee had a factory in which different varieties of paper and paper board were being manufactured, using waste paper and cereal straw containing more than 50 per cent by weight of pulp made from the unconventional raw materials. The factory did not have a bamboo pulp plant. The assessee was manufacturing art paper and chromo paper. These two types of paper generally fell under catego ry of printing and writing paper. These two articles also fell under the description coated 798 paper used in the second proviso to the notification No. 25 of 1984. The appellant initially paid excise duty on the goods manufactured by it in terms of notification No. 24 of 1984, but later claimed concessional rates prescribed by notification No. 25 of 1984. Since coated paper was taken out of the purview of notification No. 25 of 1984, by the proviso, the Excise Department refused to permit the asses see to avail of this concession in respect of its manufac tured goods. This was confirmed by the Central Excise and Gold Control Appellate Tribunal. In the appeal before this Court, on behalf of the appel lantassessee it was contended that though the expression 'coated paper ' had generally a wide connotation and included coated papers of all varieties, it should be given a re stricted meaning in the context in which it appeared in the proviso, that in the paper business, paper was broadly two varieties, "industrial paper" and "cultural paper", that while paper used for printing or writing was treated as cultural paper that used for various purposes, broadly described as industrial purposes, such as wrapping, packing, sanitary use and the like, was industrial paper, that since a common strain ran through all the five categories men tioned in the proviso, inasmuch the first three varieties, admittedly fell under the category of industrial paper and the last one was invariably used for industrial purposes, and so found by the Tribunal, the word 'coated paper ', must be read in that context, and should be interpreted by apply ing the principle of "Noscitur A Sociis" or on the analogy of the "Ejusdem generis" principle and that even if the words of the proviso were capable of being construed in a wider manner so as to deny exemption to all kinds of coated paper, the Court should apply the well established principle of construction of taxing statutes that an ambiguous provi sion should be interpreted in favour of the subject. On behalf of the respondent it was contended that there was no principle of interpretation by which the plain and natural meaning of the word 'coated paper ' could be abridged nor was there anything in the context to warrant such a limitation, that there was no 'clear cut distinction between industrial and cultural paper, and that it could not be said that light paper could only be industrial paper. Allowing the appeals, this Court, HELD: 1. 'Coated paper ' in the second proviso to notifi cation No. 25 of 1984 refers only to coated paper used for industrial purposes and not to coated varieties of printing and writing paper. The 799 appellant is, therefore, entitled to concessional rates specified in the notification. [812F G] 2.1 The expression 'coated paper ' in the proviso should draw colour from the context in which it is employed and receive an interpretation consistent therewith than its literal one, which in its widest sense, may be comprehensive enough to include all coated paper, industrial or otherwise, [809G H] 2.2 The concession of the notification is denied to five kinds of paper. Three of them are varieties of industrial paper. The fourth is light paper, not exceeding a particular weight. Light paper is by and large industrial paper and is also used occasionally for cultural purposes also. The five varieties of paper are found in serial Nos. 3 and 4 of the 1985 notification and serial Nos. 1 and 3, reflect a con trast between coated paper and light paper used for cultural purposes (item No. 1) and that used for other (industrial) purposes (item No. 3). On this basis, it is clear that four out of the five varieties of paper which are denied the benefit of the concession constitute industrial paper. In fact, even if, only three of these items are of the indus trial variety, while the other two could be either, it will not still be unreasonably (though may be, a little less plausible) to draw an inference that only industrial paper falling in those two categories are intended to be compre hended in the classification rather than assume, for no detectable reason, that all paper of these two varieties alone are excluded from the concession, [809E G] 2.3 Though no meticulous reasons can always be made available or discovered for variations in rates of duty as between various types of goods and the absence of some common thread ' in relation to a set of goods treated alike may not necessarily render the classification irrational or arbitrary, it can legitimately be postulated that the denial of a concession to a group proceeds on the basis of some aspect or feature common to all items in the group. If such a principle can be conceived of which would rationalise the inclusion of all the items, it would be quite reasonable and proper to give effect to a construction of the notification as will accord with that principle. [808F G] 2.4 In interpreting the scope of any notification, the Court has first to keep in mind the object and purpose of the notification. All parts of it should be read harmonious ly in aid of, and not in derogation, of that purpose. [811F] 800 Collector of Central Excise vs Parle Exports (P) Ltd., ; and Tata Oil Mills Co. Ltd. vs C.C.E.; , , referred to. In the instant case, the aim and object of the notifica tion is to grant a concession to small scale factories which manufacture paper with unconventional raw materials. If the proviso had referred only to coated paper no special object or purpose would have been discernible and perhaps there would have been no justification to look beyond it and enter into a speculation as to why the notification should have thought of exempting only coated paper manufactured by these factories from the purview of the exemption. But the notifi cation excepts not one but a group of items. If the items mentioned in the group were totally dissimilar and it were impossible to see any common thread running through them, again, it may be permissible to give the exceptions their widest latitude. But when four of them undoubtedly, at least three of them can be brought under an intelligible classifi cation and it is also conceivable that the Government might well have thought that these small scale factories should not be eligible for the concession contemplated by the notification where they manufacture paper catering to indus trial purposes, there is a purpose in the limitation pre scribed and there is no reason why the rationally logical restriction should not be placed on the proviso based on this classification. [811H; 812A C] The only reasonable way of interpreting the proviso is by understanding the words 'coated paper ' in a narrower sense consistent with the other expressions used therein. [812D] 3. The principle of statutory interpretation by which a generic word receives a limited interpretation by reason of its context is well established. The expression noscitur a sociis simply means that the meaning of a word is to be judged by the company it keeps [810A B] In the context of the instant case, this principle can be legitimately drawn upon. However, the latin maxims and precedents are not to be mechanically applied; they are of assistance only in so far as they furnish guidance by com pendiously summing up principles based on rules of common sense and logic. [811E F] State vs Hospital Mazdoor Sabha, ; ; Rainbow steels Ltd. vs C.S.T.; , and Lethang vs Coopex, ; , referred to. 801 "The Dictionary of Paper" published by the American Paper and Pulp Association (Second Edition), referred to.

Civil Appeal No. 1127 of 1985. From the Judgment and order dated 29.8.84 of the Delhi High Court in S.A.O. No. 40 of 1984. Rajinder Sachhar and Mrs. Rani Chhabra for the Appellants. A.K. Ganguli and E.M.S. Anam for the Respondents. The Judgement of the Court was delivered by 327 SABYASACHI MUKHARJI, J. This appeal by special leave is directed against the judgement and order of the High Court of Delhi dated 29th August, 1984. One Jagan Nath, since deceased, was the original tenant of the premises in question. He died during the pendency of this appeal here. His sons have been substituted. The tenancy in question started on 1st January, 1962. It appears that on 7th November, 1967 notice was addressed to Shri Baldev Raj, describing him as sole proprietor of M/s Bindra Tent House, New Delhi, for eviction. There was an increase in rent in July, 1970. The respondent herein filed the petition against the appellant herein Jagan Nath under section 14(1)(a) and 14(1)(b) of the Delhi Rent Control Act, 1958 (hereinafter called the Act) for eviction of the appellant from the premises consisting of one room forming part of premises No. N 80, Kirti Nagar, New Delhi, as the appellant herein had not paid rent with effect from 1st May, 1975 till 30th April, 1977 at the rate of Rs.75 per month despite service of the demand notice dated 8th January, 1976. It was the further case of the respondent herein that the appellant had after 9th June, 1962 sublet, assigned or otherwise parted with possession of the premises to Shri Baldev Raj Bindra and Sat Pal Bindra without the consent in writing of the respondent landlord. The suit was filed before the Additional Rent Controller and the same was contested on various grounds. It was contended that the petition was not maintainable because of non joinder of Shri Baldev Raj Bindra and Sat Pal Bindra. The premises in question is residential cum commercial. It was stated that Shri Baldev Raj Bindra and Sat Pal Bindra are the sons of the original appellant, since deceased. The said tenant was in exclusive possession of the premises and was carrying on his business therein with which, it was stated, Baldev Raj and Sat Pal had no concern. They are the sons of the tenant, since deceased, and had constituted a Hindu Undivided Family. No demand notice was ever served upon the tenant. The tenant tendered the rent to the landlord by money order for an amount of Rs.450 which he refused to accept. The Additional Rent Controller so far as the ground of nonpayment of rent was concerned held that there was a compliance with the order passed under section 15(1) of the Act. The Additional Rent Controller gave the tenant the benefit under section 14(2) of the Act. The petition of the landlord on the ground of non payment of rent was, therefore, dismissed. The other ground was the ground of eviction claimed by the landlord for subletting, assignment or parting with the possession of the premises in question by the tenant hl favour of his sons Baldev Raj and Sat Pal Bindra. The landlord in his deposition had stated that since 328 1st July, 1971 Baldev Raj and Satpal were running their business in the name of M/s. Bindra Tent House in partnership and they were in possession of the premises in question. The tenant had no concern with the business carried on in the demised premises and the tenant had retired. The tenant in his cross examination had stated that he had sent partnership document and Form II to the Income tax Department. 13 The landlord had denied the suggestion that the said Jagan Nath was in possession of the premises and his sons had been helping him from the very beginning. The landlord had produced on the record one statement made by the appellant herein, Jagan Nath before the Income Tax officer, photostat copy of which is Exhibit A.W. 3/1 on the record which indicated that Jagan Nath who was the proprietor of the Bindra Tent House sold the same for Rs.18,000 on 1.1.1970 to his sons Baldev Raj and Sat Pal and he got cash of Rs.8,000 and he gifted the other amount into two equal shares to his sons Baldev Raj and Sat Pal. In his statement, Jagan Nath had stated that Sat Pal and Baldev Raj had entered into a partnership in the same name M/s. Bindra Tent House in the same premises. This document was heavily relied upon before us by Shri Sachhar in aid of his submissions that the tenant had parted with possession. There is another document Exhibit A.W 2/1. According to this document which is a photostat copy of the stamp vendor register, non judicial papers for Rs.13, Rs.2 and Rs.20 were purchased by Baldev Raj for partnership purposes in the name of M/s. Bindra Tent House. Our attention was also drawn to the fact that an application for electricity connection was made by Sat Pal Bindra in the name of M/s. Bindra Tent House on 25th July, 1975 as the sole proprietor of the same. From these and other documents, it was contended that there was parting of possession and as such the tenant was liable to be . evicted. The Additional Rent Controller ordered the eviction under section 14(1)(b) of the Act. He held that there was no subletting by the tenant, Jagan Nath since deceased but he had unlawfully parted with the possession of the demised premises in favour of his sons Sat Pal and Baldev Raj without the consent in writing of the landlord. During the pendency of the appeal the tenant preferred an application under order 6 Rule 17 of the Code of Civil Procedure seeking permission to amend his written statement. The appellant contended that the landlord filed eviction petition in respect of the said premises against the appellant and his two sons which was assigned to Shri A.P. Chaudhary, Additional Rent Controller. Another objection raised was that the property was taken on rent by M/s. Bindra Tent House 329 and, therefore, the petition for eviction was not maintainable. The application had been contested in which it had been admitted that the earlier petition for eviction was filed but according to the respondent it was not properly instituted and the same was withdrawn. It was denied that the application was not maintainable. The Tribunal on an analysis of the matter came to the conclusion that belated amendment could not be permitted. It was emphasised that the tenant had admitted in the written statement that he was a tenant in the property in question. He could not subsequently be allowed to wriggle out of this situation and withdraw the admission. If the amendment was allowed, they would take valuable right of the other side and altogether a new plea would be taken, it was held. This cannot be permitted. In this connection, the Rent Tribunal relied upon the observations of the Assam High Court in Subashini Majumdar and another vs Krishna Prasad Mahatoo and Ors., A.I.R. 1956 Assam 79. The same view was reiterated by this Court in M/s. Modi Spinning and Weaving Mills Co. Ltd. and another vs M/s. Ladha Ram and Co., [1977] l SCR 728 where the proposed amendment introduced an entirely new case seeking to displace the other side completely from the admission made then. It was held that such an amendment could not be allowed. We are of the opinion that the Rent Tribunal was therefore right in refusing the amendment on the basis of the aforesaid principle. The Tribunal on an analysis of evidence and facts came to the conclusion that there was no merit in the appeal and dismissed the appeal and affirmed the eviction order. The High Court on an analysis of the evidence and relevant authorities came to the conclusion that there was no substantial question of law and dismissed the second appeal. Hence this appeal. The question for consideration is whether the mischief contemplated under section 14(1)(b) of the Act has been committed as the tenant had sublet, assigned, or otherwise parted with the possession of the whole or part of the premises without obtaining the consent in writing of the landlord. There is no dispute that there was no consent in writing of the landlord in this case. There is also no evidence that there has been any subletting or assignment. The only ground perhaps upon which the landlord was seeking eviction was parting with possession. It is well settled that parting with possession meant giving possession to persons other than those to whom possession had been given by the lease and the parting with possession must have been by the tenant; user by other person is not parting with possession so long as the tenant retains the legal possession himself, or in other words there 330 must be vesting of possession by the tenant in another person by divesting himself not only of physical possession but also of the right to possession. So long as the tenant retains the right to possession there is no parting with possession in terms of clause (b) of section 14(1) of the Act. Even though the father had retired from the business and the sons had been looking after the business, in the facts of this case, it cannot be said that the father had divested himself of the legal right to be in possession. It the father has a right to displace the possession of the occupants, i.e., his sons, it cannot be said that the tenant had parted with possession. This Court in Smt. Krishnawati vs Shri Hans Raj, had occasion to discuss the same aspect of the matter. There two persons lived in a house as husband and wife and one of them who rented the premises, allowed the other to carry on business in a part of it. The question was whether it amounted to sub letting and attracted the provisions of sub section (4) of section 14 of the Delhi Rent Control Act. This Court held that if two persons live together in a house as husband and wife and one of them who owns the house allows the other to carry on business in a part of it, it will be in the absence of any other evidence, a rash inference to draw that the owner has let out that part of the premises. In this case if the father was carrying on the business with his sons and the family was a joint Hindu family, it is difficult to presume that the father had parted with possession legally to attract the mischief of section 14(1)(b) of the Act. Shri Ganguly appearing for the landlord contended that the con duct of the tenant, Jagan Nath had been as sitting on the fence and avoiding the issue. It is true that Shri Ganguly rightly pointed out that Jagan Nath, the erstwhile tenant had not been fair and frank. But this is no ground to disentitle him to the benefit of the law if the facts have been proved that he had not parted with possession. After all, it has to be borne in mind that this is a residential cum commercial premises. Jagan Nath was carrying on business in part of the building with his two sons. Jagan Nath had died, therefore, it will be just and proper to presume that they were carrying on business, though perhaps the stand of the Jagan Nath was not always fair. In these days of acute shortage of accommodation both for living and for vocation, one has to take the reality with a pinch of salt and the manner in which Shri Jagan Nath has conducted himself would not disentitle him the benefit of the law in the present climate. In the view we have taken, this appeal must be allowed and the judgment and order of the High Court of Delhi and the Courts below are set aside. The eviction order is accordingly set aside. 331 It has, however, to be borne in mind that rent in these areas has increased enormously. So while exercising our jurisdiction under Article 136 of the Constitution, we will enhance the rent to four times. We are told that the mesne profit at present payable was Rs.75 per month. We direct that mesne profit/rent should be Rs.300 per month. We further direct that this will not prejudice the rights of the respondent herein to file any proceedings for eviction on the ground of bona fide need, if there is such a need or on any other ground available to the respondent for eviction under the Act. We give this direction in view of the facts alleged in the affidavit of Shri Chander Bhan Mehta affirmed on '6th April, 1988. About the correctness or validity of the statements made therein, we had no occasion to examine in this appeal. We have also taken into consideration the affidavit of Shri Baldev Raj Bindra affirmed on the 2nd May, 1988 about the veracity of which also we express no opinion. In the facts of this case, the appellants will pay to the respondent the costs of the appeal. R.S.S. Appeal allowed.

The respondent landlord had filed a petition against the appellant tenant under section 14(1)(a) and 14(1)(b) of the Delhi Rent Control Act, 1958 for eviction from a residential cum commercial premises, inter alia, on the ground that the appellant had sublet, assigned or otherwise parted with possession of the premises to his sons who were running their partnership business in the name of Bindra Tent House with which the tenant had no concern. The tenant contested the petition on the ground that he was in exclusive possession of the premises and was carrying on his business therein with the help of his sons who were members of his Joint Hindu Family. In support of his plea that the tenant had parted with possession, the landlord had produced documentary evidence which included copy of a statement made by the tenant before the Income Tax officer, which indicated that the tenant had sold his proprietary business to his sons. The Additional Rent Controller held that there was no subletting by the tenant, but he had unlawfully parted with the possession of the premises in favour of his sons and as such was liable to be evicted. During the pendency of the appeal the tenant sought permission under order 6 Rule 17 of the Code of Civil Procedure to amend his written statement to state that the property was taken on rent by M/s Bindra Tent House. The Tribunal did not permit this belated amendment as this would have introduced an entirely new case. On merits, the Tribunal dismissed the appeal of the tenant. The High Court did not find any substantial question of law in the tenant 's second appeal and dismissed the same. Allowing the appeal, it was, 326 ^ HELD: (1) The only ground perhaps upon which the landlord A was seeking eviction was parting with possession. It is well settled that parting with possession meant giving possession to persons other than those to whom possession had been given by the lease and the parting with possession must have been by the tenant. User by other person is not parting with possession so long as the tenant retains the legal possession himself, or in other words, there must be vesting of possession by the tenant in another person by divesting himself not only of physical possession but also of the right of possession. So long as the tenant retains the right to possession there is no parting with possession in terms of clause (b) of section 14(1) of the Act. [329G H; 330A] (2) Even though the father had retired from business and the sons had been looking after the business in the facts of this case, it cannot be said that the father had divested himself of the legal right to be in possession. [330B] (3) In the instant case, if the father was carrying on the business with his sons and the family was a joint family, it is difficult to presume that the father had parted with possession legally to attract the mischief of section 14(1)(b) of the Act. [330D E] (4) In these days of acute shortage of accommodation both for living and for vocation, one has to take the reality with a pinch of salt and the manner in which the original tenant has conducted himself in shifting his defence would not disentitle him to the benefit of the law. [330Gl Subashini Mojumdar vs Krishna Prasad Mahatoo, A.I.R. ; M/s Modi Spinning and Weaving Mills Co. Ltd. vs M/s Ladha Ram and Co., ; and Smt. Krishnawati vs Shri Hans Rai, , referred to.

iminal Appeals Nos. 176 to 178 of 1961. Appeals by special leave from the judgment and order dated August 10, 1961, of the Patna High Court in Cr. A. No. 152 of 1961 and Death Reference No. 3 of 1961. Sushil Kumar Jha, Subodh Kumar Jha and B. C. Prashad, for the appellants. C. K. Daphtary, Solicitor General of India and section P. Verma, for the respondents. 434 1962. April 26. , J. This judgment will govern Criminal Appeals nos. 177 and 178 also. All these three appeals arise out of the same trial. The learned Additional Sessions Judge, Monghyr who conducted the trial convicted the appellant, Ramchandra Chaudhary who is appellant in Criminal Appeal No. 177 of 1961 for an offence under section 302 Indian Penal Code. He also convicted Baleshwar Rai alias Nepali Master, appellant in this appeal and Jogendra Chaudhary, appellant in Criminal Appeal No. 178 of 1961 of an offence under section 302 read with section 34, Indian Penal Code. He sentenced each of the three to death. Their appeals were dismissed by the High Court of Patna, and sentences of death passed against them were confirmed by it. They have come up before this Court by special leave. The prosecution story is briefly as follows On March 17, 1959 at about 8.00 p.m. the chaukidars of the village Fateha had assembled,. as usual, in the 'crime centre ' of the village. Their names are Anandi Paswan, (deceased), Misri Paswan (P.W.2), Baleshwar Paswan (P.W.3) and Narain Paswan. Anandi Paswan and Misri Paswan were lying on a chouki. Anandi Paswan had a 'bhala ' and a muretha ' while Misri Paswan had a 'pharsa ' and a 'muretha '. These weapons is well as the shirt of ,he deceased were kept on the chouki. The other two choukidars were lying on the ground. The crime centre is housed in the 'dalan ' of Tilak. Chaudhary (P.W.6). One other person, Srilal Chaudhary, (P.W. 7), the brother of Tilak Chaudhary, was also lying there on the khatia on the north east of the said 'dalan '. In an adjacent room were P.W.11 Nathuni Chaudhary alias Durga Das and P.W.12 Ramchander Jha. 435 According to the prosecution a little before 9.00 p.m. someone from outside called out "Darogaji". On hearing this, the deceased Anandi Paswan and Misri Paswan got up. It was a moonlit night and they saw Ramchander Chaudhary, Jogendra Chaudhary and another person, who was later identi fied to be Nepali Master, standing closeby. As soon as they went towards the appellants, Jogendra Chaudhary and Nepali Master caught the deceased while Ramchandra Chaudhary caught Misri Paswan. Both Ramchandra Chaudhary and Jogendra Chau dhary had guns with them which were slung across their shoulders. These three persons then took the deceased and Misri Paswan to the road to the East of the 'dalan ', running north to south, and proceeded southward. Neither the deceased nor Misri Paswan raised any cry, apparently because they were threatened that if they did so, they would be shot. When this party reached the place to the west of one Peare Sao 's house and to the east of the house of Rampratap Tanti (P.W. 5). the deceased called for Rampratap 's help, and freeing himself from the clutches of his captors started running way westward. , Upon this Ramehandra Chaudhary let go the hand of Misri Paswan and fired at the deceased. Misri Paswan then ran into the house of Peare Sao and took shelter there. While entering that house, he heard a second gun shot. His presence in the house was detected by. Ajo(P.W. 8), the wife. of Peare Sao who forced him to leave the house. Thereafter he came out into the lane and concealed himself behind the door. After the moon had set and it became dark, he went to the house of Fakir Paswan (P.W. 4), which is to the east of the house of Peare Sao, and narrated the occurrence to him. He mentioned Ramchandra and Jogendra as the two persons who has taken part in the incident. In the early hours of the morning he went to the place where gun shots were fired, and found Anandi Paswan, chaukidar lying dead in a 436 ditch by the side of the road, face downwards. He noticed that Anandi Paswan had received two gun shot wounds on his back. Thereafter he went home and contacted the other chaukidar, Narain Paswan and Baleswar Paswan. He placed them in charge of the dead body and then went to the police station along with Ramdeo, son of the deceased. He lodged the first information report at the police station. After recording it, the junior Sub Inspector of police commenced investigation and after completing it submitted a charge sheet against the three appellants on March 15, 1959. It is the prosecution case that the appellants are "veteran criminals" and the chaukidars used to report about their movements and that this was the motive for the murder. It was further said that the deceased had helped the Dalsingsarai police in arresting one Motia Mushar, who was the ploughman of the appellant Ramchandra, in a dacoity case. All the appellants denied having participated in the incident. The defence is that a false case has been concocted by the police. The main evidence against the appellant is that of P.W. 2, Misri Paswan. He has actually named Ramchandra Chaudhary and Jogendra Chandhary in the first information report. Regarding the third appellant, he stated that 'he was unknown. Ramchandra and Jogendra have been identified not only by Misri Paswan, but also by five other wit. nesses, Narain Paswan, Rampratap Tanti, Srilal Chaudhary, Nathuni Chaudhary and Ramchander Jha. All these, five persons had an opportunity to see the appellants because, it may be recalled, some of them were in the 'dalan ' and some in the adjacent room when the appellants came near there and one of them cried out "Darogaji". Their evidence has been accepted 437 as true and adequate not only by the learned Sessions Judge who had an opportunity to see and hear the witnesses depose but also by the High Court. Their evidence cannot be reappraised in their appeals by special leave. The learned counsel, however, said that in so far as Jogendra Chaudhary is concerned, common intention to commit murder had not been established. The existence of common intention has always to be inferred from facts. Here it has been established that all the three appellants came together. Two of them, Ramchandra and Jogendra had guns, with them. The prosecution has established to the satisfaction of the learned Additional Sessions Judge and the High Court that as Anandi Paswan was giving information to the police about the movements of the appellants and had also taken the major part in getting one Motia Mushar arrested in a dacoity case, Ramchandra nursed a ' grievance against Anandi. The inference, therefore, must be that he had come with the intention of taking revenge on Anandi Paswan by killing him and the other two appellants who accompanied him shared that intention. As the High Court has pointed out, this is made clearer by the statement of Misri Paswan to the effect that Ramchandra said at the time of the incident that 'his (servant) Motia was taken away forcibly and then Jogendra asked the deceased sarcastically, "Where is your military today ?" In the circumstances, therefore, there can he no doubt that common intention to commit murder was established not only with respect to Jogendra but also with respect to Nepali Master who was all along with them. On behalf of Nepali Master the learned counsel contended that he has been identified at the test identification parade by one witness only and that the other persons did not turn up for identification and, therefore, it is not legally permissible to base 438 the identification by only one person. It is sufficient to say that even the evidence of a single witness can sustain the conviction of an accused person if the court which saw and heard him depose regards him as a witness of truth. However, in this case, Nepali Master was identified not by one witness only but by two witnesses (P. W. 7) Srilal Choudhary and (P. W. 9) Dukhi Mahto. It was said that Srilal is an old man of 75 and has a weak eyesight and therefore his evidence should be kept out of account. He is evidence has been believed by the learned Sessions Judge as well as by the High Court and we cannot reassess it. It was contended before the High Court and is also contended before us that as the test identification was held long time after his arrest, the evidence of these two witnesses could not be believed. This circumstance was also considered by the High Court and it observed : "The contention is attractive; but, in view of exhibit 6, it is difficult to accept the same". Exhibit 6 is an anonymous letter written to Senior. Sub Inspector, Kashi Nath (P. W. 22), of which the only portion which has been admitted in evidence reads thus: "The rascal Anandia Choukidar spoiled the life of that poor Mushar by instigating the section 1 of Police of Dalsingsarai and subsequently he also spied against us for nothing". This document along with ex. 3, dated June 9, 1959, which is admittedly in the handwriting of Nepali Master, was sent to the Government handwriting expert. Both the documents were examined by him. In his evidence he has stated. "The Board of Experts consisting of myself, Chatterjee and Srivastava examined 439 these independently and our unanimous opinion was that exhibit 3, tallied with disputed writings (Ext. " This being so, the admission contained in Ext. 6 as to the motive is clearly admissible under section 21 of the Evidence Act. The High Court was, therefore, right in holding that Ext. 6 afforded corroboration to the evidence of (P. W. 7) Srilal Chaudhary and (P. W. 9) Dukhi Mahto. It is then contended that exhibit 6 is hit by s.162 of the Criminal Procedure Code because it was received by the Sub Inspector during the course of the investigation. Section 162 of the Criminal Procedure Code only bars proof of statements made to an investigating officer during the course of investigation. Section 162 does not say that every statement made during the period of investigation is barred from being proved in evidence. For a statement to come within the purview of section 162, it must not merely be made during the period of investigation but also in the course of investigation. The two things, that is, "the period of investigation" and " 'course of investigation ' are not synonymous. Section 162 is aimed at statements recorded by a police officer while investigating into an offence. This is clear from the opening words section 162. They speak only of statements made to a police officer during the course of investigation. This implies that the statement sought to be excluded from evidence must be ascribable to the enquiry conducted by the investigating officer and not one which is de hors the enquiry. A communication like Ext. 6 will not fall within the ambit of such statements. In this view we hold that the document in question is not hit by section 162 of the Criminal Procedure Code and the High Court was right in admitting it in evidence. There is no substance in the appeals and they are, therefore, dismissed. Appeal dismissed.

Section 162 of the Code of Criminal Procedure only bare proof of statement made to an investigating officer during the course of investigation. It does not say that every statement made during the period of investigation is barred from being proved in evidence. For a statement to come within the purview of section 162, it must not merely be made during the period of investigation but also in the course of investigation. The two things, "the period of investigation" and "Course of investigation" are not synonymous. Section 162 is aimed at statements recorded by a Police Officer while investigating into an offence. This is clear from the opening words section 162. They speak only of statement made to a police officer during the course of investigation. This implies that the statement sought to be excluded from evidence must be ascribable to the enquiry conducted by the investigating office and not one which is de hors the enquiry.

Civil Appeal No. 883 and 898 905/75. Appeals by Special Leave from the: Judgment and Order dated 20 2 75 of the Karnataka High Court in Writ Petition Nos. 5825/74 and 5818, 5820, 5821, 5822, 5823, 5824, 5828 and 5829 of 1974. R.B. Datar for the Appellants in all the appeals. V.P. Raman, Addl. Genl (In CA 883/75) and N. Nettar for RR 1 and 2 in all the appeals. The Judgment of the Court was delivered by JASWANT SINGH J. This judgment shall dispose of Appeals Nos. 883 and 898 to 905 of 1975 which are, directed against the common judgment dated February 20, 1975 of the High Court of Karnataka at Bangalore dismissing writ petitions Nos. 5825, 5818, 5820, 5822 to 5824, 5828 and 5829 of 1974 on the ground that the appellants had no right to maintain the same. The circumstances leading to 'these appeals are: The appellants held the posts of Shambogues on hereditary basis under the Mysore Village Offices Act, 1908. In writ peti tion No. 133 of 1959 entitled Gazula Daseratha Rama Rao vs State of A.P. & Ors. (1) decided on December 6, 1960, this Court held that a law which recognised the custom by which a preferential right to, an office vested in the members of a particular family was not consistent with the fundamental right guaranteed by Article 16 of the Constitution; that a custom which is recognised by law with regard to a heredi tary office must yield to a fundamental right and_section 6(1) of the Madras Hereditary Village Offices Act/II of 1895 in so far as it made discrimination on the ground of descent only was violative of the ' fundamental right under Article 16(2) of the Constitution and was void. With a view to giving effect to tile principle settled by this decision, the Legislature of the. then State of Mysore comprising the territories the erstwhile States of Mysore and Coorg and certain parts of the erstwhile Stales of Bombay, Hyderabad and Madras enacted the Mysore Village Offices Abolition Act, 1961 (Act XIV of 1961) (hereinafter referred to as 'the Abolition Act ') abolishing all the hereditary village offices including the office of Shambogue or village Ac countant created under the Mysore Village Offices Act, 1908. Pursuant to sub section (3) of section 1 which autho rise.d the State Government to fix a date for the commence ment of the Act, the Government of Mysore issued a notifi cation on January 9, 1963 notifying that the Abolition Act would come into force with effect from February 1, 1963. (1) ; 1961 S C. 564. 6 112 SCI/77 628 Shortly after the according of the assent to the Aboli tion Act by the President on July 8, 1961, the Governor of Mysore flamed rules called the Mysore General Service (Revenue Subordinate Branch) Village Accountants (Cadre and Recruitment) Rules, 1961 in exercise of the powers vested in him under the proviso to Article 309 of the Con stitution and other powers enabling him in that behalf. These Rules, as evident from their title, were designed to regulate the recruitment, pay and other conditions of serv ice of Village Accountants. Rule 10 of the 1961 Rules which was in the nature of a non obstante provision provided for the initial recruitment to the posts of Village Accountants to be made from amongst persons holding the posts of village officers on the date of commencement of those Rules provided that such persons had passed the S.S.L.C. examination or an equivalent examination and their age did not exceed 40 years on the said date. By a proviso which was introduced in the year, 1963, it was provided that in the event of persons satisfying the qualifications mentioned in Rule 7 not being available even after the vacancies are twice advertised, the recruitment should be made from amongst persons holding the posts of village officers who were not more than 50 years of age on the date of commencement of the said Rules and who had passed the Lower Secondary or Vernac ular Final or equivalent examination. By a notification issued on January 6, 1963, the Govern ment of Mysore directed the Deputy Commissioners to appoint persons recruited under the 1961 Rules as village account ants and relieve the then holders of their offices. On the issue of the aforesaid notification dated January 9, 1963, a number of writ petitions under Article 226 of the Constitution were filed in the High Court challenging the legality and constitutional validity of the Abolition Act on the ground that it was a piece of colourable legislation. During the pendency of the writ petitions, an ad interim order staying the operation of the aforesaid Notification dated January 9, 1963 was issued by the High Court. As a consequence of the stay order, the appellants and a number of other persons who were holding tile posts of Shambogues under the Mysore Village Offices Act, 1908 had to be con tinued by the State Government in the posts held by them. The writ petitions were eventually dismissed by the High Court by its judgment dated December 9, 1963 which was confirmed by this Court vide its judgment dated January 21, 1966 rendered in B.R. Shankaranarayana & Ors. vs State of Mysore(1). Thus the constitutional validity of the Abolition Act was finally upheld by the Court. During the pendency of the appeals against the judgment of the High Court dated December 9, 1963, the State Legislature enacted the Karnataka Land Revenue Act, 1964 (hereinafter referred to as 'the Act ') which came into force on April 1, 1964. Section 16 of the Act provides for the appointment of Vil lage Accountants and the continuance of village accountants hold the said posts immediately before the commencement of the Act. Sub section (1) of section 16 lays down that, subject to the general orders of the State Government and the Divisional Commissioner, the Deputy Commissioner can appoint Village Accountants for villages or groups of vil lages. Sub section (2) of section 16 provides that the (1) A.I.R. 1966 S.C. 1571. 629 persons holding the office of the Village Accountant before the commencement of the Act, shall be deemed to be Village Accountants for such villages till another person is ap pointed under sub section (1 ) of section 16. Thus sub section (2) of section 16, it would be seen, was designed to cover the case of the persons who had perforce to be continued as Shambogues because of the aforesaid stay order issued by the High Court despite the abolition of those posts by the Abolition Act. The 1961 Rules were repealed and replaced by another set of Rules called the Karnataka General Services (Reve nue. Subordinate Branch) Village Accountants (Recruitment) Rules, 1970 (hereafter referred to as the 1970 Rules) made by the State Government in exercise of the powers conferred by sections 16 and 17 of the Act. Rules 4 and 5 of the 1970 Rules which were amended from time to. time stood as follows on the relevant date : "4. Recruitment. (1) Recruitment to the cadre of village Accountant shah be made by direct recruitment from amongst : (i) persons who have served as Village Offi cers; (ii) local candidates whether in service or not, who have put in a total of not less than one year of service as on 1st January, 1970, if sufficient number of eligible persons are not available under (i); (ii) persons who have been regularly recruited as Panchayat Secretaries in accordance with the rules in force at the time of the re cruitment and working as Panchayat Secretaries who have passed the S.S.L.C. examination or any other examination declared as equivalent thereto by the State Government if sufficient number of eligible persons are not available under (ia) ; (iii) persons who are regularly recruited as Panchayat Secretaries in accordance with the rules in force at the time of recruitment and working as Panchayat Secretaries who (a) have passed the Middle School examination or any other examination declared as equiva lent thereto by the State Government; and (b) have put in not less than 10 years of service as Panchayat Secretaries as the case may be if sufficient number of eligible persons are not available under (ii); 630 (c) are not more than 50 years of age as on 1st April, 1967; (iv) xx xx xx (v) others, if sufficient number of persons are not available under any of the above categories. (2) No persons other than the persons referred to in categories (ii) and (iii) of sub rule (1) "shall be eligible for appoint ment under these rules unless he has passed the S.S.L.C. examination or any examination declared by State Government as equivalent thereto. (3) The limit for appointment under sub rule (1) shall be (i) 33 years in the case of a person belonging to any of the Scheduled Castes or Scheduled Tribes; and (ii) 28 years in the case of others as on 1st January, 1970. Provided that in the case of person who have served as Village Officer or as Panchayat Secretary such age as on 1st April, 1967, shall not exceed 50 years. Provided further that in the case of local candidates, such age shall be as on 1st Janu ary, 1965: Explanation For the purpose of this rule "ViIIage Officer" means a person who held a 'Village Office ' other than in inferior village office as defined in the Karnataka Village Offices Abolition Act, 1961 (Karnataka Act 14 of 1961)." "5. Committee for selection (1) There shall be a Committee for each district consisting of the Deputy Commissioner of the District, the Assistant Commissioner, shall be the Chairman of the Committee and one of the members appointed by the Deputy Commission er shall be the Secretary. (2) The Committee shall call for applica tion for appointment as village Accountants and make selection in the manner laid down in the Mysore State Civil Services (Direct Recruitment by Selection) Rules, 1967. (3) The decision of the Committee shall be final subject to the approval of the Division al Commissioner. (4) The list approved by the Divisional Commissioner shall be published and appoint ments shall be made in order in which the names of persons selected are arranged in the said list. " 631 Pursuant to the 1970 Rules, applications were invited by the Recruitment Committee in the year, 1972 to fill up the posts of Village Accountants in the District of Has san. After sorting out the applications received in re sponse to the: advertisement, the Committee interviewed the applicants who. were eligible for appointment and prepared a list of the selected candidates for appointment as Village Accountants. This list was quashed by the High Court by its judgment dated November 19, 1972 rendered in writ petition No. 1871 of 11972 entitled Komari Gowda vs State of Mysore & Ors. and the Committee was directed. to select the candidates afresh in accordance with law. Consequently the Committee again interviewed the eligible candidates and prepared a fresh list of the selected candi dates which was published in the Karnataka Gazette on May 30, 1974. Thereafter, the Deputy Commissioner, ' Hassan issued orders of appointment of the candidates who were selected by the Recruitment Committee. Some of the candi dates thus selected were posted as Village Accountants under section 16(2) of the Act to the villages in which the appellants were functioning. As the. appellants had to give up their posts in consequence. of the aforesaid fresh appointments under section 16(2) of the Act, they filed the aforesaid writ petitions impugning (i) the validity of rules 4 and 5 of the 1970 Rules on the ground that they were violative of Articles 14 and 16 of the Constitution, (ii) the selection and appointment of respondents 3 to 191 as Village Accountants and praying that a writ of mandamus be issued directing respondents 1 and 2 to continue them as Village Accountants under section 16(2) of the Act. The writ petitions having been dismissed by the High Court as stated above. , the appellants have come up in appeal to this Court. The sole question that requires to be determined in these appeals is whether the appellants could maintain that aforesaid writ petitions. It is well settled that though Article 226 of the Constitution in terms does not describe the classes of persons entitled to apply thereunder, the existence of the right is implicit for the exercise of the extraordinary jurisdiction by the High Court under the said Article. It is also well established that a person who is not aggrieved by the discrimination complained of cannot maintain a writ petition. The constitutional validity of the Abolition Act abolishing all hereditary village offices including the office of the Shambogue or Village Accountant having been upheld by this Court in B.R. Shankanarayana & Ors. vs State of Mysore (supra), and the first preference in the matter of appointment of Village Accountants having been given by Rule 4 of the 1970 Rules to all persons. belonging to the category and class of the appellants who had served as Village Officers, the appellants who did not apply for appointment as Village Accountants in response to the afore said notification issued by the Recruitment Committee and did not possess the prescribed qualification, could not complain of the unconstitutionality of the 1970 Rules or of the infringement of, Articles 4 and 16 of the Constitution which merely forbid improper or invidious distinctions by conferring rights or privileges upon a class of persons arbitrarily selected from out of a larger group who. are similarly circumstanced but do not exclude the laying down of selective tests nor prevent the Government from laying general educational 632 qualifications for the post in question. The High Court was, therefore, right in holding that the appellants have no right to maintain the aforesaid writ petitions. The appeals accordingly fail and are dismissed but without any order as to costs. P.H.P. Appeals dismissed.

The appellants held the post of Shambhogues on hereditary basis under the Mysore Village Offices Act 1908. This Court in the case of Gowla Dasrath Ramarao held that a law which recognises the custom by which a preferential right to an office vested in the members of a particular family was not consistant with the fundamental right guaranteed by Article 16 of the Constitution and that the Madras Hereditary Village Offices Act of 1895 in so far as it made discrimina tion on the ground of descent only was violative of Article 16(2) of the Constitution and, therefore, void. With a view to give effect to the said judgment of this Court Mysore Village Offices Abolition Act of 1961 was enacted abol ishing all the hereditary Village Offices including the office of Shambhogues or Village Accountants created under the Mysore Villages Offices Act 1908. The President gave his assent to the said Act. Thereafter, the Governor of Mysore framed Mysore General Services (Revenue Subordinate Branch) Village Accountants (Cadre and Recruitment) Rules, 1961, to regulate the recruitment, pay and other conditions of service of Village Accountants. Rule 10 provided for the initial recruitment to the post of Village Accountants to be made from amongst persons holding posts of Village Offi cers on the date of commencement of those rules provided they fulfilled certain educational qualifications and were below a certain age Challenge to the constitutional validi ty of the said Act was negatived by this Court in the case of B.R. Shankaranarayana & Ors. vs State of Mysore AIR. The State Legislature enacted the Karnataka Land Revenue Act 1964 Section 16 of the said Act provides for the appointment of Village Accountants and the continu ance of Village Accountants hold the said post immediately before the commencement of the Act. Section 16(e) provides that persons holding the office of the Village Accountant before the commencement of the Act shall be deemed to be village Accountants for such villages till other persons were appointed. The 1961 rules were repealed and replaced by Karnataka General Services (Revenue Subordinate Branch) Village Accountants (Recruitment) Rules. Rules 4 and 5 lay down the eligibility of the persons for the ap pointment as Village Accountant .and the constitution of a Committee for selection and the method of selection. The Recruitment Committee invited applications, interviewed the applicants who were eligible and prepared a list of selected Candidates and, thereafter, issued the order of appointment. As the appellants had to give up their posts in consequence of the fresh appointments they filed the present writ peti tions impugning the validity of rules 4 and 5 of the 1970 Rules on the ground that they were violative of Articles 14 and 16 of the Constitution and challenging the selection and appointment of respondents Nos. 3 to 191 as Village Ac countants and for a direction that they should be continued as Village Accountants. The High Court dismissed the writ petitions. Dismissing the appeals, HELD: 1. Though Article 226 of the Constitution in terms does not describe the classes of persons entitled to apply thereunder, the existence of the right is implicit for invoking the exercise of the extraordinary jurisdiction by the High Court under the said Article. It is well estab lished that a person who 627 is not aggrieved by the discrimination complained of cannot maintain a writ petition. The constitutional validity of the Abolition Act abolishing all hereditary Village Offices having been upheld by this Court, the appellants who did not apply for appointment as Village Accountants in response to the notification inviting applications, since they did not possess the. prescribed qualifications, could not complain of the unconstitutionality of the 1972 Rules or of the infringement of Articles 14 and 16 of the Constitution. The High Court, therefore, was right in holding that the appellants have no right to maintain the writ petitions. [631 E H 632 A]

ivil Appeal No. 1045 of 1972. From the Judgment and Order dated 7.2.1972 of the Madras High Court in Appeal No. 549 of 1963. K. Ramkumar for the Appellants. K. Raj Choudhary, B.R. Agarwal and Ms. Sushma Manchanda for the Respondents. The Judgment of the Court was delivered by KANIA, J. This is an appeal by Special Leave against a judgment of a Division Bench of the Madras High Court deliv ered on February 7, 1972. Respondents Nos. 1 to 5 along with one other person filed a representative suit on behalf of themselves and other members of the Thousand Yadhava Community residing in Ramayanachavadi Street and the other adjoining lanes in North Masi Street, Madurai Town and adjoining villages against original appellant No. 1 herein, for an order 3 directing him to render true and proper accounts of the management of the properties of the Thousand Yadhava Commu nity including the Sri Ramasami Sri Navaneetha Krishnasami Devasthanam Temples and their properties and to pay to the plaintiffs the amount ascertained as payable on such rendi tion of accounts with interest and other reliefs. Original appellant No. 1 herein was the trustee of the said temples. He died during the pendency of the appeal before us and his two sons have been joined as appellants Nos. 1(i) to 1(ii) in this appeal. We propose to refer to the parties by their descriptions in the suit for the sake of convenience. Very briefly stated, according to the plaintiffs, the said temples were private religious trusts and the defendant had committed several acts of mismanagement in respect of the properties of the said trusts. The defendant denied these allegations. He, inter alia, contended that the suit as framed was not maintainable in law, in view of the provi sions of the Tamil Nadu Hindu Religious and Charitable Endowments Act, 1959 (hereinafter referred to as "the said Act."). The Trial Court dismissed the suit on the ground that it was barred by the provisions of the said Act. The Trial Court held that the said temples were not private temples belonging to the aforesaid community, namely, Thou sand Yadhava Community. The Trial Court took the view that the Thousand Yadhava Community must be regarded as a section of the Hindu Community and in that case both the temples would be covered by the provisions of section 6(20) of the said Act. Sub section (20) of section 6 defines the meaning of the word 'temple ' for the purpose of the said Act and, very briefly stated, lays down that it is a place used as a place of public religious worship and dedicated to or for the benefit of the Hindu Community or any section thereof, as a place of public religious worship. The Trial Court took the view that, although this question could be decided primarily only by the Endowment Board and Civil Court has no jurisdiction to go into it, it could go into that question incidentally as was done by the Trial Court. As a conse quence of this conclusion, the Trial Court held that the suit was barred by the provisions of the said Act and was not maintainable at law. The plaintiffs preferred an appeal against this decision to the Madras High Court. A Division Bench of the Madras High Court after examining the provi sions of the said Act held that the Trial Court was not right in dismissing the suit in toto even with regard to the relief of accounting. The High Court held that defendant No. 1 (original appellant before us) admitted that he was elect ed in 1949 as the trustee of the said temples at a meeting of the members of the community. The 4 said Act does not contain any provision for rendition of accounts. A party seeking relief of accounting cannot ap proach the Deputy Commissioner or any other authority under the said Act and hence, the Civil Court is not barred either expressly or by necessary implication from entertaining a suit in so far as it was for the relief of accounting. Following upon this reasoning, the court allowed the appeal and passed a preliminary decree against defendant No. 1 for rendition of accounts while dismissing the suit in all other respects. The High Court did not decide as to whether the said temples were private temples or could be regarded as public religious endowments falling within the definition of the term 'temple ' as defined in sub section (20) of section 6 of the said Act. Defendant No. 1 along with some others filed a petition for Special Leave before this Court and by an order dated April 24, 1972. Special Leave was granted by this Court but was confined to the question whether it was within the power of the Civil Court to direct accounts to be taken without deciding the question whether the temple is a public temple or a private temple. At the hearing of the appeal before us, Mr. Ram Kumar, learned Counsel for the appellants conceded that if the said temples were private temples as contended by the plaintiffs in the said suit, the defendant as the trustee was liable to render accounts of his management of the said trust to them as beneficiaries. It was, however, submitted by him that in case the said temples were not private temples but were temples as defined in sub section (20) of section 6 of the said Act to which we have already referred earlier, the suit for rendition of accounts was not maintainable in view of the provisions of the said Act and hence, it was not open to the High Court to have passed a decree for rendition of accounts without deciding whether the said temples were public temples or private temples. He drew our attention to sub section (20) of section 6 of the said Act which defines the term 'temple ' for the purpose of the said Act. We have already referred to that definition of the said term 'tem ple ' earlier. Suffice it to state here that under that definition only public temples of the nature stated earlier could be regarded as temples. Sub section (17) of section 6 defines the term 'religious endowment ' or 'endowment ' and it is sufficient for the purpose of this appeal to note that it means property belonging to or given or endowed for the support of maths or temples for the purposes set out there in. Section 108 of the said Act runs as follows. 5 "108. Bar of suits in respect of administra tion or management of religious institutions etc. No suit or other legal proceeding in respect of the administration or management of a religious institution or any other matter or dispute for determining or deciding which provision is made in this Act shall be insti tuted in any. Court of law, except under, and in confirmity with, the provisions of this Act. " Section 63 of the said Act deals with the power of the Deputy Commissioner to hold inquiries into and decide the disputes and matters set out therein. It inter alia confers on him the power to hold inquiries in connection with the property and funds of the temples within the meaning of the said Act. Against the order of the Deputy Commissioner, an appeal is provided under section 69 to the Commissioner and section 70 lays down that a person aggrieved by an order passed by the Commissioner under the provisions set out in clauses (i) and (ii) of sub section (1) thereof can file a suit in a Civil Court. Sub section (2) of section 70 pro vides that an appeal shall lie to the High Court against the decree of the Civil Court under sub section (1) of section 70. Chapter VIII of the said Act deals with the topic of Budgets, Accounts and Audit. Section 87 of the said Act provides that the trustee of every religious institution shall keep regular accounts of all receipts and disburse ments and provides that these accounts have to be audited by the auditors appointed in a prescribed manner. After the audit is completed, the auditor is required under section 88 to send a report to the Commissioner or the Deputy Commis sioner or the Assistant Commissioner as provided therein. Section 90 deals with the rectification of defects disclosed in the audit and order of surcharge against trustee etc. It is.interesting to note that sub section (6) of section 90 provides that an order of surcharge under this section against a trustee shall not bar a suit for accounts against him except in respect of the matters finally dealt with by such order. In the appeal before us a perusal of the plaint shows that the suit was filed not on behalf of any particular beneficiary or group of beneficiaries but by a certain persons claiming to belong to the beneficiary community, namely, the Thousand Yadhava Community, and the suit was a representative suit instituted on behalf of themselves and other members of the community. There is no doubt that in respect of a public trust, beneficiaries as a class can file a suit against the trustee for rendition of accounts, sub ject to the bar imposed by. 6 section 92 of the Code of Civil Procedure, 1908. It was with a view to prevent ' reckless and harassing suits being brought against the trustees of public trusts that section 92 was enacted requiring that two or more persons having interest in the suit could institute such a suit only with the consent in writing of the Advocate General. However, we find that in view of the provisions of section 5 of the said Act, sections 92 and 93 of tile Code of Civil Procedure have ceased to apply to the Hindu Religious and Charitable Endow ments in the concerned State. Hence the ' bar, if any, to .the institution of a suit like this has to be found only in the provisions of the Act. We have already set out earli er the provisions of section 108 of the said Act which is analogous to section 93 of the Madras Hindu Religious and Charitable Endowments Act, 1951 (hereinafter referred to as "the said Act of 1951") which was repealed by the said Act. Many of the powers of the Deputy Commissioner under the said Act to which we have already referred earlier are similar to the powers conferred by section 57 of the said Act of 1951. Sections 63 and 64 of the said Act which deal with the powers of the Deputy Commissioner are in pari materia with the provisions of sections 57 and 58 of the said Act of 1951. Section 90(6) of the said Act provides that an order of surcharge under this section made against the trustee shall not bar a suit for accounts against him and we find a similar provision in sub section (7) of section 74 of the said Act of 1951. The schemes of the two Acts are largely similar. In Sri Vedagiri Laxmi Narasimha Swami Temple vs Induru Pattabhirami Reddy; , a question arose before this Court as to whether a suit by the present trus tee against the previous trustee of a temple was barred by reason of the provisions of the said Act of 1951. It was argued in that case that the Act in question provides a complete machinery for deciding disputes in regard to ac counts and, therefore, no suit for accounting against an ex trustee can be filed at all in a Civil Court. After analysing the scheme of the said Act of 1951, and the provi sions of the relevant sections of that Act, which we have referred to earlier that argument was rejected by a Division Bench of this Court. It was pointed out by Subba Rao, C.J., who delivered the judgment of this Court that the scope of the auditor 's investigation is limited. It is only an effec tive substitute for the trustee himself furnishing an audit ed account. It was held that Chapter VII of the said Act of 1951 only provides for a strict supervision of the financial side of the administration. Chapter VII does not provide for determining a dispute in respect of rendition of account and does not bar a suit for that relief. Section 74(7) of the said Act of 1951 was not a bar to the maintainability of such a suit. The same reasoning applies to the case before us. In our opinion, Chapter VIII of the said Act has no bearing on the ques 7 tion of the liability of a trustee to render accounts to the beneficiaries as a group or class and it does not provide for determining or deciding a dispute in respect of such rendition of accounts and hence, section 108 of the said Act does not bar a suit like the one filed by respondent No. 1 before us. We are of the view that the High Court did not commit any error in passing a decree for rendition of ac counts without deciding the question whether a temple was a public or private trust. In the result, the appeal fails and is dismissed with costs fixed at Rs.2,000 to be divided between the respond ents equally. Y. Lal Appeal dis missed.

This is defendant 's appeal by Special Leave. Respondents 1 to 5 alongwith one other person filed a representative suit on behalf of themselves and other members of Thousand Yadhava Community against the appellant No. 1 Defendant for an order directing him to render true accounts of the management of the properties of the Thou sand Yadhava Community including the Sri Ramasami Sri Navneetha Krishnasami Devasthanam Temples and their proper ties and pay to them the amount ascertained as payable on such rendition of accounts. The appellant was the Trustee of the said temples. The case of the plaintiffs respondents was that the said temples were private religious trusts and the appellant as trustee had committed several acts of misman agement in respect of the properties. The appellant defendant denied those allegations and contended that the suit as framed was not maintainable in view of the provisions of the Tamil Nadu Hindu Religious and Charitable Endowments Act, 1959. The Trial Court dismissed the suit. It held that the said temples were not private temples belonging to the said community, and that both the temples were covered by the provisions of section 6(20) of the Act, and as such the suit was barred by the provisions of the Act and thus not main tainable. The plaintiffs preferred appeal to the High Court against the order of the Trial Court. The High Court allowed the plaintiffs appeal and passed a preliminary decree against the appellant No. 1 defendant for rendition of accounts while dismissing the suit in other respects. The High Court took the view that a party seeking relief of accounting cannot approach the Deputy Commissioner or any other authority under the Act and hence the Civil Court was not barred either expressly or by necessary implication from entertaining the suit so far 2 as it was for accounting. However the High Court did not decide the question as to whether the Temples were private temples or could be regarded as public religious endowments. Defendant No. 1 filed the appeal, by special leave. Dismissing the appeal, this Court, HELD: There is no doubt that in respect of a public trust, beneficiaries as a class can file a suit against the Trustee for rendition of accounts subject to the bar imposed by Section 92 of the Code of Civil Procedure 1908. [5H; 6A] Chapter VIII of the Act has no bearing on the question of the liability of a trustee to render accounts to the beneficiaries as a group or class and it does not provide for determining or deciding a dispute in respect of such rendition of accounts and hence, Section 108 of the said Act does not bar a suit like the one filed by Respondent No. 1. [6H; 7A B] Sri Vedagiri Laxmi Narasimha Swami Temple vs Induru Pattabhirami Reddy, ; , referred to.

Civil Appeal No. 254 (N) of 1974. Appeal by special leave from the judgment and order dated the 30th November, 1972 of the High Court of Orissa in O.J.C. No. 129 of 1970. Gobind Das and B. Parthasarathi, for the appellant. B. P. Maheshwari and Suresh Sethi, for respondent No. 1. The Judgment of the Court was delivered by UNTWALIA, J. The State of Orissa has preferred this appeal by special leave from the judgment and order of the High Court passed in Writ Petition filed by respondent No. 1. Respondent No. 2 was appointed by promotion to the post of Joint Director of Industries, Government of Orissa in supersession of the claim of respondent No. 1. The High Court has quashed the said order and directed the appellant to consider the case of respondent No. 1 for promotion to the post of Joint Director according to his seniority in the combined cadre formed by Resolution dated 2 10 1967. Rule 3(1) (ii) of the Orissa Industries Service Rules, 1971 has been struck down as being violative of Article 16 of the Constitution of India. Respondent No. 1 was appointed as a lecturer in Mining in the Orissa School of Mining Engineering? Keonjhargarh on 6 2 1960. The said School was brought under the administrative control of the Industries Department of the Government of Orissa in pursuance of a Resolution dated 18 2 1960. The service of respondent No. 1 thereupon stood transferred under the administrative control of the Industries Department with effect from 21 3 1960. The post of the lecturer in the Mining Engineering School was upgraded by order of the State Government made in August, 1960. The petitioner was brought into the common cadre of the Industries Department of Government of Orissa and while he was so continuing, he was appointed as Principal of the Mining Engineering School. The provisional appointment made was regularized by the Industries Department by a notification dated 19 12 1962, a copy of which was Annexure D/2 to the Writ application. This notification clearly shows that at that time respondent No. l was treated as an officer of the Industries Department. Then came a Resolution of the Government dated 21 4 1964. The common cadre of the Industries department was bifurcated into two. A separate cadre was created for teaching posts of Engineering Schools in Orissa including the Mining Engineering School. Respondent No. 1 exercised his option to remain in the teaching cadre of the Industries Department. As per Resolution of the Government dated 2 10 1967 the two separate cadres in the Industries Department were again amalgamated and merged into one. Consequently the cadre of the teaching staff of the Engineering Schools including the Mining Engineering School and that of the administrative state became a single combined cadre. 6 L 839 Sup Cl/75 302 Even then respondent No. I was not considered for promotion to the post of Joint Director when respondent No. 2 who was junior to him was promoted to the post. Feeling aggrieved by the non consideration of his case for promotion, respondent No. 1 filed the writ application in the year 1970. During the pendency of the writ application, the Governor of Orissa framed the orissa Industries Service Rules, 1971 hereinafter called the Rules, under proviso to Article 3()9 of The Constitution. Respondent No. 1 amended his writ application, 1 made out a case of discrimination in the framing of the Rules and attacked them as being violative of Articles 14 and 16 of the Constitution. In paragraph S of the counter filed by the appellant the formatio of a combined cadre by Resolution dated 2 10 1967 was admitted. But it was asserted that in spite of the merger of the two cadres into one the intention of the Government was to treat the post of the Principal cf a Mining Engineering School as an ex cadre post under the Industries Department. The Mining Engineers were excluded from the junior grade of service under the Industries Department in accordance with the Rules of 1971. Earlier also, respondent No. 1 got class I post out of turn treating him as belonging to ex cadre post. The High Court has come to the conclusion that before 21 4 1964 there were no separate cadres for the teaching and the administrative staff of the Industries Department. The cadre was one. It was bifurcated in 1964 and the two bifurcated cadres were again united and merged into one on and from 2 10 1967. There was, therefore, no justification at all in not considering the case of respondent No. 1 for promotion to the post of Joint Director as all persons in the combined cadre eligible for promotion had to be considered. Respondent No. 1 was senior to respondent No. 2 in the combined cadre and yet his claim was ignored on a ground which was not substantiated. The relevant rule was discriminatory and had no reasonable nexus with the object of the Rules. The judgment of the High Court was handed down on the 30th November, 1972 long before the issuance of the notification dated 27th June, 1975 by the President of India under Article 359(1) of the Constitution. The rule was declared ultra vires on the ground of J violation of Articles 14 and 16. The State of orissa was the appellant before us. It was, therefore, agreed on all hands that this appeal was not a proceeding pending in this Court for the enforcement of the right under Article 14 of the Constitution and was, therefore, not suspended. The enforcement of the right was made by the delivery of the High Court judgment and the State merely wanted in this appeal a deletion of that enforcement. Mr. Gobind Das, learned counsel for the appellant, submitted that the posts of the teachers in the Mining Engineering School in Orissa including the posts of the Principal have always been treated as ex cadre posts in the Industries Department. The teachers and the Principal of the Mining Engineering School were not considered for promotion to the posts of Administrative Department because few persons 303 were available to man the posts in the Mining Engineering School. It was because of this reason that the case of respondent No. 1 was not considered and the Rules were also framed with that object in view. In any view of the matter, counsel submitted, that the whole of Rule 3(1) (ii) ought not to have been declared as void and only the offending portion ought to have been struck down. The main part of the argument put forward on behalf of the appellant does not stand scrutiny and must be rejected. It could not be seriously disputed that respondent No. 1 was an officer of the Industries Department and appointed to the post of the Principal of the Mining Engineering School in that Department. There is nothing to indicate that the post of the Principal or of the teacher of any Engineering School or of the Mining Engineering School was an ex cadre post. Then came the Resolution date(l 21st April, 1964. The new scales of pay were fixed for the teachers in Engineering in The Engineering Schools including the Mining Engineering School in the State of Orissa The contention of Mr Das that this fixation of scales was only for the Engineering Schools and not for Mining Engineering School is not correct. Clearly all Engineering Schools were placed on the same looting and paragraph 3 of` this Resolution runs as follows: "The teaching posts in Engineering Schools which till now were included in common cadre with other posts in the Directorate of Industries will be placed in a separate cadre to which the above scale of pay will apply. Then came the merger resolution after about three years on the 2nd October, 1967 a copy of which was Annexure I to the writ application. The subject of the notification, Annexure l, is ' 'formation of a combined cadre for the officers of the Industries Department". It was clearly mentioned hl This notification that after the teaching posts were placed in a separate cadre "it was felt that the promotion prospects would be bleak due to the formation of a separate cadre for teachers in view of the limited posts available for promotion". Hence formation of separate cadre for teachers was considered not to be beneficial to them. So the combined cadre was brought into force with effect from the date of the issue of the Resolution dated 2nd October, 1967 in supersession of the earlier decision to have a separate cadre for teachers. Lastly it was stated in this Resolution "The conditions of service of all the officers will be governed by a set of cadre rules to be framed later on". No rules were framed until the framing of the Rules in 1971. As against a categorical statement in the Resolution dated 2 10 1967 there was nothing whatever to show that the post of a teacher or the Principal in the Mining Engineering School was treated as an ex cadre post and on a separate footing for the purpose of promotion to the administrative posts. The non consideration of the case of respondent No. 1 at the time respondent No. 2 was promoted to the post of Joint Director in or about the year 1969 was wholly arbitrary, unjustified and illegal. The High Court was right in making the order which it did on the writ application of respondent 304 As against the purpose and object of the merger of the cadre mentioned in the Resolution dated 2 10 1967 we find Rule 3 of the Rules going contrary to them. Rule 9(1) of the Rules says: "Promotions to the posts of Senior grade in Class I shall be made from among the members of the Junior grade in Class I :" Constitution of the service is provided in Rule 3. We are concerned with Rule 3(1). It reads as follows: "3 ( 1 ) The cadre of the service shall consist of two branches, viz., Class I and Class ii, the former comprising two grades, viz., the Senior grade and the Junior grade, as indicated below: (i) The Senior grade shall include posts of Joint Directors and officers of equivalent status as may be declared by Government from time to time. (ii) The Junior grade shall include the posts of Deputy Directors, Senior Lecturers in Engineering Schools and such other posts as may be declared by Government from time to time to be of equivalent status, besides the posts of Principal. Engineering Schools (except Mining Engineering) and Polytechnics which carry a special scale of pay. Clause (ii) of the Rules when it says in the first part that the "junior grade shall include the posts of Deputy Directors, Senior Lecturers in Engineering Schools" it means clearly Senior Lecturers in Engineering Schools not excluding Mining Engineering School. But in the last part when in the junior ;grade were included the posts of Principals, Engineering Schools by the words "except Mining Engineering" given in the parenthesis, the post of the Principal of the Mining Engineering School was excluded. It was so done during the pendency of the writ application of respondent No. 1 and without any reasonable and sound basis for making a discrimination a propos the post of the Principal of the Mining Engineering School. We find no justification for making the distinction in the junior grade of Class I service in the case of the Principal of Mining Engineering School. The rule in that regard has rightly been held to be violative of Articles 14 and 16 of the Constitution by the High Court. But striking down of the whole of clause (ii) of Rule 3(1) of the Rules was not necessary. Only the words in parenthesis had to be deleted and struck down on that account. That would serve 305 the purpose of making the posts of Principal of all Engineering Schools including the Mining Engineering School being the posts in the junior grade, Class I. For the reasons stated above, we find no merit in this appeal. It is accordingly dismissed but subject to the clarification made above with costs payable to respondent No. 1. V.P.S. APPeal dismissed.

Rule 3(1)(ii) of the Orissa Industries Service Rules, 1971, provided that the junior grade of the service shall include the posts of Deputy Directors, Senior lecturers in Engineering, Schools etc. besides the posts of Principal, Engineering Schools (except Mining Engineering) and Polytechnics which carry a special scale of pay. The 1st respondent was appointed a lecturer in a Mining Engineering School. In 1960, the School was brought under the administrative Control of the Industries Department of the State Government, and the respondent became an officer of the Industries Department. Later. he was appointed Principal of the School. In 1964, there was a bifurcation of the common cadre of the Department, and a separate cadre for teaching posts of Engineering Schools in the State was created. In 1967, the two cadres were again merged forming a combined cadre for the officers of the Industries Department. The reason given for the merger was that the separate cadre for teachers was not beneficial to them because, promotion prospects for them were bleak in view of the limited posts available for promotion. After the merger, in 1969, even though the 1st respondent was senior to the 2nd respondent, the latter was promoted as Joint Director superseding the former. The High Court quashed the order and struck down r. 3(1)(ii) as violative of article 16. Dismissing the appeal to this Court, ^ HELD: (1) In the resolution of 1967 merging the two cadres it was stated that the conditions of service of all the officers will be governed by a set of cadre rules to be framed later, but no such rules were framed at the time of promotion of the 2nd respondent. The 1971 rules were framed during the pendency of the writ application, filed by the 1st respondent, in the High Court. There was, therefore, at the time of promotion of the 2nd respondent, nothing to show that the post of a teacher or the Principal of a Mining Engineering School WAS treated as an ex cadre post and on a separate footing for the purpose of promotion to the administrative posts. [303G H] (2) Rule 3(1)(ii) when it says in the first part Senior lecturers in Engineering Schools, it includes senior lecturers of Mining Engineering School also. Even when the two cadres were separated, all Engineering Schools including Mining Engineering Schools were placed on the SAME Footing. But, in the last part of the rule when referring to the post of Principal, the Principal of a Mining Engineering School is excluded. The exclusion is without any justification or reasonable basis. [304E H] Therefore, the rule is violative of articles 14 and 16 and the non consideration of the case of the 1st respondent at the time of promotion of the 2nd respondent was wholly arbitrary and illegal. [33H; 304H] (3) It is however not necessary to strike down the entire rule 3(1)(ii). It is sufficient if the words 'except Mining Engineering ' are struck down and deleted. [304H]

Civil Appeals Nos. 2557/69, 20/70, 1423 1434, 1733, 2474, 2575 2578/72, 95 105, 1318, 1371 74, 2040/73, 2100 2102/74 and 120, 121 & 536 of 1975. From the Judgment and Order dated 24 9 69, 16 8 71, 25 1 72, 16 2 72, 11 2 72, 10 2 72, 22 11 72, 21 7 72, 8 2 72, 25 7 72, 31 5 72 and 4 3 75 of the Kerala High Court in W.A. Nos.809/69, 846 47, 855, 867, 894 and 940 of 1969, 261/71 and 957 58,983,988 and 1021/69,942/69, 427/71, 458, 415, 407, 408 & 68 of 1971 and 211, 241/70, 3 and 7/71, 342/72, 36, 42 and 43 of 1971 and 559 Civil Appeal No. 2117 of 1972. Appeal by Special Leave from the Judgment and Order dated 17 8 71 of the Kerala High Court in W.A. No. 1021 of 1969. Lal Narain Sinha, Solicitor General of India, A. G. Puddissery for the Appellant in C.A. No. 2557/69. V. A. Seyid Mohammed and K. M. K. Nair for the Appellant in C.A. No. 20/70. A. K. Sen (In C.A. Nos. 1423/72), M. P. Jha (In C.A. 1423/72), A. G. Puddissery (In all the petitions) for the appellants in C.As. 1423, 1434, 1735, 2474, 2575, 2576 78/72, 1318, 1371, 1374, 2040/73, 2100 2102/74, 120 121, 536/75. P. C. Chandi, K. M. K. Nair and K. R. Nambiar for the Appellants in CAs. 2117/72 and 95 105/73). section V. Gupte, Ajay Ray and P. Mathai, O. C. Mathur, K. J. John and J. B. Dadachanji for the Appellants in CA. No. 1457/71. G. Rathi, Advocate General for the State of Orissa and B. Parathasarthy for the Appellant in C.A. Nos. 1652/74. Vinoo Bhagat for the Appellants (In C.As. 1653 54774). section V. Gupte (In CA. No. 2557/69), P. Mathai, Ajay Ray, O. C. Mathur K. John, J. B. Dadachanji and Mrs. section Bhandare (In C.A. No. 20/70 for Respondent Nos. 1 (In CA. No. 2557/69) & (In CAs. Nos.20/70, 1423 24/72). G. B. Pai, K. J. John, O. C. Mathur, J. B. Dadachanji and P. K. Kurian (In CAs. 1733/72) for Respondent No. 1 (In CAs. 1426 1429, 1431 1434, 1733/72, 2577 78, 95 96, 99 100 and 102 105/73). N. Sudharkaran, P. Mathai and P. K. Pillai for Respondent Nos. 1 (In CA. No. 2575/72) and (C.A. No. 1425/72). K. R. Nambiar for Respondent No. 2 (In CA. No. 2575/72, 2576 78/72 and 2040/73). Miss Lily Thomas for Respondent No. 1 (In CA. No. 2576/72). A. section Nambiar for Respondent No. 1 (In CA. No. 2578/72). N. Sudharkaran for Respondent No. 1 (In CA. No. 97773). G. B. Pai (In CA Nos. 2100 2102/74, 121/75), P. Mathai (In CA. 1318/75) Ranjit Mahanty, Ajay Ray (In CAs. No. 1652/74) and O. C. Mathur, K. J. John and J. B. Dadachanji (In all matters) for Respondent No.1 (In C.A. No. 1318/73, 2100 2102/74, 121/75) for the Respondents (In C.As. 1652/74). Lal Narain Sinha, Solicitor General of India (In C.A. No. 1457/71) A. G. Puddissery for the Respondent (In CA. No. 1457 and 1641/71). 560 T. section Krishnamoorthy Iyer, P. Mathai, N. Sudharkaran and P. K. Pillai for Respondent No. 1 (In CA. No. 1371 and 1374/73) and (In C.A. No. 1373/73) K. M. K. Nair for Respondent No. 2 (In C.As. 1371 1374/73). G. L. Sanghi, P. Mathai, K. J. John, O. C. Mathur and J. B. Dadachanji for Respondent No. 1 (In CA. No. 1372/73). G.Rathi, Advocate General for the State of Orissa and B. Parthasarthy for Respondents (In CAs. 1653 1654774). P. K. Pillai for the Intervener (In CA. No. 20/70). G. L.Sanghi, P. V. Kapur, U. K. Khaitan (for Ferro Alloys Corpn.) K. R. Choudhry K. Raj Choudhry (for A.P. Electricity Board) for the Intervener (In C.A. No. 1652/74). section Balakrishnan for Respondent No. 1 (in CA. No. 2040/73). Note: Mrs. Sunanda Bhandare, Advocate appeared for the applicant intervener in CA. 1457 and 1642/71 and CA. 1652 1654/74 and Mr. B. Sen, Senior Advocate, appeared for Respondent No. 1 (In CA. 20/70 and applicant intervener in CA. No. 1652/74). The Judgment of the Court was delivered by Alagiriswami, J. A. C. Gupta, J. gave a dissenting Opinion. ALAGIRISWAMI, J. The validity of the Kerala State Electricity Supply (Kerala State Electricity Board and Licensees Areas) Surcharge Order 1968 is in question in these appeals. That Order was passed in exercise of the powers conferred by section 3 of the Kerala Essential Articles Control (Temporary Powers) Act, 1961. It obliges the Board to collect surcharges from non licensee consumers of electricity even though the Board may have entered into long term contracts with them with regard to the rate at which electricity is to be supplied to them. The Act is one to provide, in the interest of the general public for the control of the production, supply and distribution of, and trade and commerce in, certain articles. Section 2(a) of the Act defines "essential articles" as meaning any article (not being an essential commodity as defined in the Essential Commidities Act, 1955) which may be declared by the Government by notified order to be an essential article. Section 3 enables the Government, if of opinion that it is necessary or expedient so to do for maintaining or increasing the supplies of any essential article or for securing their equitable distribution and availability at fair prices, to make notified orders providing for: (a) regulating by licences, permits or otherwise the production or manufacture of any esential article: (b) controlling the price at which any essential article may be bought or sold; 561 (c) regulating by licences, permits, or otherwise the storage, distribution, transport, disposal, acquisition, use or consumption of any essential article; (d) prohibiting the withholding from sale of any essential article ordinarily kept for sale; (e) requiring any person holding in stock any essential article to sell the whole or a specified part of the stock to the Government or to an officer or agent of the Government or to such other person or class of persons and in such circumstances as may be specified in the order; (f) regulating or prohibiting any class of commercial or financial transactions relating to any essential article, which, in the opinion of the authority making the order, are, or if unregulated are likely to be detrimental to the public interest; (g) collecting any information or statistics with a view to regulating or prohibiting any of the aforesaid matters; (h) requiring persons engaged in the production, supply or distribution of, or trade or commerce in any essential article to maintain and produce for inspection such books, accounts and records relating to their business and to furnish such information relating thereto as may be specified in the order; (i) regulating the processing of any essential article; (j) exercising over the whole or any part of an existing undertaking, such functions of control and subject to such conditions, as may be specified in the order; (k) any incidental and supplementary matters including in particular the entering and search of premises vehicles, vessels and aircraft, the seizure by a person authorised to make such search of any article in respect of which such person has reason to believe that a contravention of the order has been, is being or is about to be committed, the grant or issue of licences, permits or other documents, and the charging of fees therefor. In exercise of the powers under section 2(a) electricity was declared as an essential article in 1965. Electricity is the only article declared as an essential article under the Act so far and in spite of the wide powers with regard to making of notified orders under section 3 the impugned Surcharge Order is the only order so far made. It provides, as already stated, for levying of a surcharge on supplies of electricity made to bulk consumers, many of whom are respondents in these appeals. The validity of the Act itself is not seriously questioned except in one respect which we shall deal with later; but it is contended that by the declaration of electricity as an essential article under the Act, the 562 Act impinges upon various matters either in List I or List III of the Seventh Schedule to the Constitution. According to Mr. Gupte, who appeared for the respondent in Civil Appeal No. 2557 of 1969, the legislation is repugnant to the Electricity Act, 1910 and the , in particular the latter, which falls within Entries 43 and 44 of List I. According to Mr. B. Sen, who appeared for the respondents in Civil Appeal No. 20 of 1970, the Act trenches upon the field occupied by the which falls partly under Entry 43 of List I and partly under Entry 38 of List III. According to Mr. G. B. Pai, who appeared for the 1st respondent in Civil No. 1733 of 1972 the 1948 Act falls within Entry 44 of List I and the Kerala Act impinges upon that field. On the contrary, the Solicitor General appearing on behalf of the Kerala State Electricity Board contends that the Kerala Act falls under Entries 26 and 27 of List II of the Seventh Schedule to the Constitution. There is, in the arguments on behalf of the respondents, a certain amount of confusion. The question of repugnance arises only in case both the legislations fall within the same List III. There can, therefore, be no question of repugnance between the Electricity Act and the on the one hand and the Kerala Act on the other, if the former fall in List I or List III and the latter in List II. If any legislation is enacted by a State Legislature in respect of a matter falling within List I that will be without jurisdiction and therefore void. The scope of the legislative powers of the Parliament and the State Legislatures is now well settled. They are found in Article 246 of the Constitution, which reads : 246. (1) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the "Union List"). (2) Notwithstanding anything in clause (3), Parliament and, subject to clause (1), the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the "Concurrent List"). (3) Subject to clauses (1) and (2), the Legislature of a State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in the Constitution referred to as the "State List"). (4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included in a State notwithstanding that such matter is a matter enumerated in the State List. " 563 In view of the provisions of Article 254, the power of Parliament to legislate in regard to matters in List III, which are dealt with by clause (2) is supreme. The Parliament has exclusive power to legislate with respect to matters in List I. The State Legislature has exclusive power to legislate with respect to matters in List II. But this is subject to the provisions of clause (1) (leaving out for the moment the reference to clause 2). The power of Parliament to legislate with respect to matters included in List I is supreme notwithstanding any thing contained in clause (3) (again leaving out of consideration the provisions of clause 2). Now what is the meaning of the words "notwithstanding" in clause (1) and "subject to" in clause (3) ? They mean that where an entry is in general terms in List II and part of that entry is in specific terms in List I, the entry in List I takes effect notwithstanding the entry in List II. This is also on the principle that the `special ' excludes the `general ' and the general entry in List II is subject to the special entry in List I. For instance, though house accommodation and rent control might fall within either the State List or the Concurrent List, Entry 3 in List I of Seventh Schedule carves out the subject of rent control and house accommodation in cantonments from the general subject of house accommodation and rent control (see Indu Bhusan vs Sundari Devi(1). Furthermore, the word `notwithstanding ' in clause (1) also means that if it is not possible to reconcile the two entries the entry in List I will prevail. But before that happens attempt should be made to decide in which list a particular legislation falls. For deciding under which entry a particular legislation falls the theory of "pith and substance" has been evolved by the Courts. If in pith and substance a legislation falls within one List or the other but some portion of the subject matter of that legislation incidentally trenches upon and might come to fall under another List, the Act as a whole would be valid notwithstanding such incidental trenching. These principles have been laid down in a number of decisions. In re The Central Provinces and Berar Act No. XIV of 1938(2) Sir Maurice Gwyer observed, with reference to the corresponding provisions of the Government of India Act, as follows : "It will be observed that by s.100(1) the Federal Legislature is given exclusive powers enumerated in the Federal Legislative List, "notwithstanding anything in the two next succeeding sub sections" of that section. Sub section (2) is not relevant to the present case, but s.s.(3) is, as I have stated; the enactment which gives to the Provincial Legislatures the exclusive powers enumerated in the Provincial Legislative List. Similarly Provincial Legislatures are given by s.100(3) the exclusive powers in the Provincil Legislative List "subject to the two preceding sub sections", that is s.ss. (1) and (2). Accordingly, the Government of India further contend that, even if the impugned Act were otherwise within the competence of the Provincial Legislature, it is nevertheless invalid, because the effect of the 564 non obstante clause in s.100(1), and a fortiori of that clause read with the opening words of s.100(3), is to make the federal power prevail if federal and provincial legislative powers overlap." He observed further : "Only in the Indian Constitution Act can the particular problem arise which is now under consideration; and an endeavour must be made to solve it, as the Judicial Committee have said, by having recourse to the context and scheme of the Act, and a reconciliation attempted between two apparently conflicting jurisdictions by reading the two entries together and by interpreting, and, where necessary, modifying, the language of the one by that of the other. If indeed such a reconciliation should prove impossible, then, and only then, will the non obstante clause operate and the federal power prevail; for the clause ought to be regarded as a last resource, a witness to the imperfections of human expression and the fallibility of legal draftsmanship. " In Subrahmanyan Chettiar vs Mutuswami Goundan(1) the same learned C.J. observed : "Section 100(3) of the Constitution Act provides that a Provincial Legislature has the exclusive power of legislating with respect to the matters enumerated in List II, the Provincial Legislative List. But this power is expressly stated to be subject to the provisions of s.100(1), which give an exclusive power to the Federal Legislature to legislate with respect to the matters enumerated in List I, the Federal Legislative List. Hence, though Parliament has no doubt done its best to enact two lists of mutually exclusive powers, it has also provided, ex majori cautela, that if the two sets of legislative powers should be found to overlap, then the federal legislation is to prevail. And the reason for this is clear. However carefully and precisely lists of legislative subjects are defined, it is practically impossible to ensure that they never overlap; and an absurd situation would result if two inconsistent laws, each of equal validity, could exist side by side within the same territory. " In the same case Sulaiman, J. observed : "On a very strict interpretation of s.100, it would necessarily follow that from all matters in List II which are exclusively assigned to Provinicial Legislatures, all portions which fall in List I or List III, must be excluded. Similarly, from all matters falling in List III, all portions which fall in List I must be excluded. The section would then mean that the Federal Legislature has full and exclusive power to legislate with respect to matters in List I, and has 565 also power to legislate with respect to matters in List III. A Provincial Legislature has exclusive power to legislate with respect to List II, minus matters falling in List I or List III, has concurrent power to legislate with respect to matters in List III, minus matters falling in List I. In its fullest scope, section 100 would then mean that if it happens that there is any subject in List II which also falls in List I or List III, it must be taken as cut out from List II. On this strict interpretation there would be no question of any real overlapping at all. If a subject falls exclusively in List II and no other List, then the power of the Provincial Legislatures is supreme. But if it does also fall within List I, then it must be deemed as if it is not included in List II at all. Similarly, if it also falls in List III, it must be deemed to have been excluded from List II. The dominant position of the Central Legislature with regard to matters in List I and List III is thus established. But the rigour of the literal interpretation is relaxed by the use of the words "with respect to" which as already pointed out only signify "pith and substance", and do not forbid a mere incidental encroachment. " In Governor General in Council vs Province of Madras(1) the Judicial Committee of the Privy Council observed : "For in a Federal Constitution, in which there is a division of legislative powers between Central and Provincial legislatures, it appears to be inevitable that controversy should arise whether one or other legislature is not exceeding its own, and encroaching on the other 's constitutional legislative power, and in such a controversy it is a principle, which their Lordships do not hesitate to apply in the present case, that it is not the name of the tax but its real nature, its "pith and substance" as it has sometimes been said, which must determine into what category it falls." In Prafulla Kumar Mukherjee and Others vs Bank of Commerce, Limited, Khulna(2) the Judicial Committee of the Privy Council quoted with approval the observations of Sir Maurice Gwyer C.J. in Subrahmanyan Chettiar 's case (supra) to the effect : "It must inevitably happen from time to time that legislation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that blind observance to a strictly verbal interpretation would result in a large number of statutes being declared invalid because the legislature enacting them may appear to have legislated in a forbidden sphere. Hence the rule which has been evolved by the Judicial Committee, whereby the impugned statute is examined to ascertain its `pith and substance, ' or 566 its `true nature and character, ' for the purpose of determining whether it is legislation with respect to matters in this list or in that. " They also held : "Thirdly, the extent of the invasion by the Provinces into subjects enumerated in the Federal List has to be considered. No doubt, it is an important matter, not, as their Lordships think, because the validity of an Act can be determined by discriminating between degrees of invasion, but for the purpose of determining what is the pith and substance of the impugned Act. Its provisions may advance so far into Federal territory as to show that its true nature is not concerned with Provincial matters, but the question is not, has it trespassed more or less, but is the trespass, whatever it be, such as to show that the pith and substance of the impugned Act is not money lending but promissory notes or banking ? Once that question is determined the Act falls on one or the other side of the line and can be seen as valid or invalid according to its true content. This view places the precedence accorded to the three lists in its proper perspective. " The matter has been elaborately discussed in Union vs H. section Dhillon(1). All the relevant earlier decisions have been considered there and for the purpose of these cases it is not necessary to enter into any further discussion on this aspect. Having discussed the question of the legislative field it might be necessary to discuss the question as to what happens if it should be held that the matter under consideration in these cases falls within the Concurrent List, that is, Entry 38 in List III as contended in the alternative by some of the respondents. As already mentioned the question will arise only if it should be held that the Kerala State Act falls under Entry 38 as contended by Mr. B. Sen. If the impugned legislation falls under List III then the question of repugnancy of that legislation with the existing law or the law made by Parliament, as the case may be, will have to be considered. Both the 1910 Act as well as the 1948 Act are existing law as contemplated under Article 372 of the Constitution. An existing law continues to be valid even though the legislative power with respect to the subject matter of the existing law might be in a different list under the Constitution from the list under which it would have fallen under the Government of India Act, 1935. But after the Constitution came into force an existing law could be amended or repealed only by the legislature which would be competent to enact that law if it were to be newly enacted. In that sense both the 1910 Act and the 1948 Act could be amended or repealed by the Parliament and also by the State Legislature if it obtains the Presitential assent to an Act amending or repealing the 1910 Act or 1948 Act (leaving aside for the moment the question whether they 567 fall wholly or partly under Entries 43 and 44 of List I of the Seventh Schedule to the Constitution). That the question of repugnancy can arise only with reference to a legislation falling under the Concurrent List is now well settled. In A. section Krishna vs State of Madras(1) after referring to section 107 of the Government of India Act, 1935, which is in terms similar to clause (1) of Article 254, this Court observed: "For this section to apply, two conditions must be fulfilled : (1) The provisions of the Provincial law and those of the Central legislation must both be in respect of a matter which is enumerated in the Concurrent List, and (2) they must be repugnant to each other. It is only when both these requirements are satisfied that the provincial law will, to the extent of the repugnancy, become void. " To the similar effect is the decision in P. N. Kaul vs The State of J&K(2). The whole question of repugnancy is elaborately discussed in J & K State vs M. section Farooqi(3). Let us now, therefore, consider what in its pith and substance is the subject matter of the Kerala Act. Is it an Act dealing with incorporation, regulation and winding up of trading corporations, including banking, insurance and any financial corporations but not including cooperative societies (Entry 43); or incorporation, regulation and winding up of corporations, whether trading or not, with objects not confined to one State, but not including universities (Entry 44)? Clearly the Act itself does not deal with any of these subjects. It is true that the notification issued under section 2(a) declaring electricity as an essential article enable orders to be made under section 3 of the Act. But the only question we are concerned with in this case is the validity of the surcharge order. No notified order has been made under any of the powers conferred on the State by section 3 except the impugned Surcharge Order. If the Act had stood as it is or even if the notification had stood as it is nobody would have any cause for complaint. It is only by the issue of the Surcharge Order that the respondents have been affected. It is for the purpose of deciding the question of the validity of the Surcharge Order that we have to decide the validity of the declaration under section 2(a) of electricity as an essential article. Does the notification make the legislation one relating to electricity under Entry 38 of List III ? Was it necessary to get the President 's assent for this notification as contended of the respondents ? Quite clearly no Presidential assent to the notification. Article 254(2) does not contemplate assent to notifications issued under the Act. The Article contemplates Presidential assent only to laws made by the Legislature of a State. We shall later deal with the question whether the assent of the President to the Act after the 1965 notification declaring electricity as an essential article validates that notification. The Electricity Act 1910 and the can be said to cover the whole field relating to electricity under Entry 568 38 of List III of the Seventh Schedule. We are clearly of the opinion that the argument of Mr. Pai that the 1948 Act falls under Entry 44 of List I has no substance. It does not deal with the incorporation, regulation and winding up of a corporation with objects not confined to one State. The Central Electricity Authority created by that Act is not an incorporated body, whereas the various State Electricity Boards are incorporated. The Act deals with the incorporation and regulation of the State Electricity Boards. Where a State Electricity Board is to operate beyond the limits of the State for which it is constituted, it is done only by means of an agreement with the other State in which it is to operate. The Statement of Objects and Reasons of that Act does not help his contention. The coordinated development of electricity in India on a regional basis, for which the Government felt it necessary to bring in legislation which resulted in the cannot show that it deals with the incorporation and regulation of an inter State corporation. The statement itself proceeds on the basis that the executive power will vest in the Provinces, which means that the legislation falls in the Concurrent List. The Statement of Objects and Reasons also mentions the necessity for the constitution of semi autonomous bodies like Electricity Boards to administer the grid systems. The Electricity Boards, as already mentioned, are confined to the jurisdiction of States. The Statement of Objects and Reasons itself shows that what was contemplated was a legislation under the Entry in the Concurrent List. The Statement of Objects and Reasons, however, mentions Entry 33 of the Federal List of the Government of India Act, 1935 as the Entry under which the legislation was undertaken. That Entry corresponds to Entries 43 and 44 of List I of Seventh Schedule to the Constitution. Therefore, the Statement of Objects and Reasons does not show that the falls under Entry 44. The question then is whether it falls within Entry 43. The fact that the Statement of Objects and Reasons mentions Entry 33 of List I (of the Government of India Act) as the legislative head under which the legislation was being undertaken is not conclusive. We have, therefore to consider whether the falls under Entry 43 as contended by some of the respondents. There is no doubt that the Act does deal with the incorporation and regulation of the Electricity Boards, but the question is whether in pith and substance it is a legislation regarding the constitution and regulation of the Electricity Boards falling under Entry 43 of List I or on electricity falling under Entry 38 of List III. The object of the as seen from the preamble is to rationalise the production and supply of electricity and to take measures conducive to electrical development. In the Statement of Objects and Reasons it is stated that "there is necessity for the constitution of semi autonomous bodies like Electricity Boards to administer the grid system on quasi commercial lines, and that such Boards cannot, however, be set up by Provincial Governments under the existing Constitutional Act as they would be in the nature of trading corporations within the meaning of Entry 33 of the Federal Legislative List. " The Statement of Objects and 569 Reasons though not relevant for the purpose of interpreting the sections of the Act, will throw light upon the object of the legislature from the historical viewpoint. Let us now look at the Act itself. Section 3 provides for the constitution of a Central Electricity Authority. It says that the Central Government shall constitute a body called the Central Electricity Authority to exerise such functions and perform such duties and in such manner as the Central Government may prescribe or direct. Section 5 provides for the constitution and composition of State Electricity Boards. Section 6 says that the Government of any State may in lieu of constituting a Board under section 5 enter into an agreement with the Government of a contiguous State to provide that the Board constituted for the latter State shall exercise the functions of a Board under the Act in the former State. Section 7 deals with the effect of inter State agreement as contemplated in section 6. Section 8 provides for terms and conditions of appointment of the members of the Board. Section 9 relates to the qualifications of the members of the Board. Section 10 deals with removal or suspension of the members of the Board. Section 10A gives power to the State Government to declare void certain transactions in connection with which a member has been removed under the provisions of section 10 on 12 provides that the Board shall be a body corporate. Section 14 provides for the meetings of the Board. Section 15 deals with the appointment of the staff by the Board. Section 16 states that the State Government shall constitute a State Electricity Consultative Council for the State and provides for constitution of that body. Section 17 provides for the constitution of a Local Advisory Committee. Section 18 describes the general duties of the Board. Section 19 says that the Board may supply electricity to any licensee or person requring such supply in any area in which a schme sanctioned under Chapter V is in force. Section 20 provides for power of the Board to engage in certain undertakings. Section 21 concerns the power of the Board in relation to water power. By section 22 the Board is invested with power to conduct investigations, experiments and trials for the improvement of the methods of transmission, distribution and supply etc. of electricity. Section 24 deals with the power of the Board to contribute to contribute to certain associations engaged in generation, distribution and supply of electricity. Section 25 says that the Board may, from time to time, appoint qualified persons to be Consulting Engineers to the Board. Section 26 says that the Board shall have all the powers and obligations of a licensee under the . Section 28 concerns the preparation of scheme for establishement of generating stations etc. Section 29 provides for publication and sanctioning of schemes prepared under section 28. Section 30 deals with the matters to be considered by the authority in recommending a scheme. Sections 31 and 32 also relate to sechemes. Section 34 deals with controlled stations. Section 35 provides for the supply by the Board to licensees owning generating stations while section 36 gives power to the Board to close down generating stations. Section 37 provides for Purchase of generating stations of undertaking or main transmission lines by the Board. Section 38 makes provision for establishing new generating stations by 570 the Board. Section 39 deals with the arrangements to be made with the licensee for operation of the Board 's generating stations. Section 40 makes provision regarding the connections with main transmission lines purchased by the Board. Section 41 relates to the use by the Board of transmission lines. Section 42 provides for power of the Board for placing wires, poles etc. Section 43 describes the powers of the Board to enter into arrangements for purchase or sale of electricity ' under certain conditions. Section 44 places certain restrictions on establishment of new generating stations or major additions or replacement of plant in generating statons. Section 45 says that if any licensee fails to close down his generating station, pursuant to a declaration of the Board under section 36, or if any person establishes or acquires a new. generating station, the Board may authorise any of its officers to enter upon the premisess of such station and shut down the station. Section 46 provides for Grid Tariff. It says that a tariff to be known as the Grid Tariff shall, in accordance with any regulations made in this behalf, be fixed from time to time by the Board in respect of each area for which a scheme is in force, and tafiffs fixed under the section may, if the Board thinks fit, differ for different areas, and subsection (2) of that section provides that the Grid Tariff shall apply to sales of electricity by the Board to licensees in other so required under any of the first, second and third schedules and shall also be applicable to sales of electricity by the Board to licensees in other cases. Section 47 vests power in the Board to make alternative arrannements with licensees. Section 49 makes provision for sale of electricity by the Board to persons other than licensees. Section 50 says that the Board should not supply electricity in certain circumstances. Section 55 provides that licensees should comply with the directions of the Board. Section 63 says that the State Government may make subventions to the Board for the purpose of the Act. Section 64 provides for loans by the State Government to the Board. Section 65 gives power to the Board to borrow. Section 66 provides for guaranteeing of loans raised by the Board by the State Government. Section 67 provides for priority of the liabilies of the Board. Section 68 makes provision for depreciation reserve. Secton 69 deals with the accounts of the Board and their audit. Section 76 provides for arbitration of all disputes arising between the State Government or the Board and licensee or other person. Section 78 vests power in the State Government to make rules. Section 78A says that in the discharge of its functions, the Board shall be guided by such directions on question of policy as may be given to it by the Government. Section 79 vests power in the Board to make regulations. Section 81 says that all members, officers and servants of the Board shall be deemed to be public servants within the meaning of section 21 of the Indian Penal Code. It would be obvious that one part of the Act does deal with the constitution of the Board, the incorporation of the Board and the regulation of its activities. But the main purpose of the Act is for rationalising the production and supply of electicity. The regulation contemplated in Entries 43 and 44 is not regulation of the business of production, distribution and supply of electricity of the corporation. As the 1910 and 1948 Acts together form a complete code, with res 571 pect to Entry 38 in List III the Board is only an instrument fashioned or carrying out this object. The provision regarding the incorporation and regulation of the Electricity Board should be taken to be only incidental to the provision regarding production, supply and distribution of electricity. It was observed by this Court in R. C. Cooper vs union(1) "The argument raised by Mr. Setalvad, intervening on behalf of the State of Maharashtra and the State of Jammu and Kashmir, that the Parliament is competent to enact Act 22 of 1969, because the subject matter of the Act is "with respect to" regulation of trading corporations and matters subsidiary and incidental thereto and on that account is covered in its entirety by Entries 43 and 44 of List I of the Seventh Schedule cannot be upheld. Entry 43 deals with incorporation, regulation and winding up of trading corporations including banking companies. Law regulating the business of a corporation is not a law with respect to regulation of a corporation. In List I entries expressly relating to trade and commerce are Entries 41 & 42. Again several entries in List I relate to activities commercial in character. Entry 45 "Banking" Entry 46 "Bills of exchange, cheques, promissory notes and other like instruments; Entry 47 "Insurance"; Entry 48 "Stock exchanges and future markets", Entry 49 "Patents, inventions and designs. " There are several entries relating to activities commercial as well as non commercial in List II Entry 21 "Fisheries", Entry 24 "Industries . "; Entry 25 "Gas and Gas works"; Entry 26 "Trade and commerce": Entry 30 "Money lending and money lenders"; Entry 31 "Inns and Inn keeping"; Entry 33 "Theaters and dramatic performances, cinemas etc.";. We are unable to accede to the argument that the State Legislatures are competent to legislate in respect of the subject matter of those entries only when the commercial activities are carried on by individuals and not when they are carried on by corporations. Therefore the provisions in the 1948 Act regarding the Board 's functions do not make it one falling under Entry 43 of List I. In Ramtanu Housing Society vs Maharashtra(2) this Court had dealt with the Maharashtra Industrial Development Act, 1961 and the question whether the Maharashtra Development Corporation formed under the Act was a trading corporation. In holding that the legislation fell under Entry 24 of the State List and not under Entry 43 of the Union List this Court observed . (1)[1970] 3 S.C.R.530. (2)[1971] 1 S.C.R.719. 572 "The Act is one to make a special provision for securing the orderly establishment in industrial areas and industrial estates of industries in the State of Maharashtra, and to assist generally in the organisation thereof, and for that purpose to establish an Industrial Development Corporation, and for purposes connected with the matters aforesaid. The Corporation is established for the purpose of securing and assisting the rapid and orderly establishment and organisation of industries in industrial areas and industrial estates in the State of Maharashtra. Broadly stated the functions and powers of the Corporation are to develop industrial areas and industrial estates by providing amenities of road, supply of water or electricity, street lighting, drainage . Or otherwise transfer any property held by the Corporation on such conditions as may be deemed proper by the Corporation. The principal functions of the Corporation in regard to ' the establishment, growth and development of industries in the State are first to establish and manage industrial estates at selected places and secondly to develop industrial areas selected by the State Government. When industrial areas are selected the necessity of acquisition of land in those areas is apparent. The Act, therefore, contemplates that the State Government may acquire land by publishing a notice specifying the particular purpose for which such land is required. . Where the land has been acquired for the Corporation or any local authority, the State Government shall, after it has taken possession of the land, transfer the land to the Corporation or that local authority It is in the background of the purposes of the Act and powers and functions of the Corporation that the real and true character of the legislation will be determined. . . Industries come within Entry 24 of the State List. The establishment, growth and development of industries in the State of Maharashtra does not fall within Entry 7 and Entry 52 of the Union List. Establishment, growth and development of industries in the State is within the State List of industries. .Acquisition or requisition of land falls under Entry 42 of the Concurrent List. In order to achieve growth of industries it is necessary not only to acquire land but also to implement the purposes of the Act. The Corporation is therefore established for carrying out the purposes of the Act. The pith and substance of the Act is establishment, growth and organisation of industries, acquisition of land in that behalf and carrying out the purposes of the Act by setting up the Corporation as one of the limbs or agencies of the Government. The powers and functions of the Corporation show in no uncertain terms that these are all in 573 aid of the principal and predominant purpose of establishment, growth and establishment of industries. The Corporation is established for that purpose. We, therefore, hold that the Act is a valid piece of legislation. " In the present case the incorporation of the State Electricity Boards is merely for the rationalisation of the production and supply of electricity. for taking measures conducive to Electrical development and for all matters incidental thereto. The incorporation of the Electricity Boards being incidental to the rationalisation of the production and supply of electricity and for being conducive to electrical development, the 1948 Act in pith and substance should be deemed to be one falling under Entry 38 of List III. Furthermore, Electricity Boards are not trading corporations. They are public service corporations. They have to function without any profit motive. Their duty is to promote co ordinated development of the generation, supply and distribution of electricity in the most efficient and economical manner with particular reference to such development in areas not for the time being served or adequately served by any licensee (Section 18). The only injunction is that as far as practicable they shall not carry on their operations at a loss (Section 59). They get subventions from the State Governments (Section 63). In the discharge of their functions they are guided by directions on questions of policy given by State Governments (Section 78A). There are no shareholders and there is no distribution of profits. This is another reason why the 1948 Act cannot be said to fall under Entry 43 of List I. The question, therefore, is whether the impugned legislation falls under Entry 38 of List III or Entries 26 and 27 of List II and if the former, whether it is repugnant to the existing law on the subject. that is, the 1910 and 1948 Acts and if that were so, whether that repugnancy has been cured by Presidential assent ? Even assuming that part of the 1948 Act is legislation with respect to incorporation and regulation of a trading corporation, falling under Entry 43 of List I of Schedule Seven, the rest of it will fall under Entry 38 of List III. That part of the Act relating to the regulation of the activities regarding production and distribution of electricity would, as we have shown, fall under the Entry 'Electricity '. The Kerala Act has nothing to do with the incorporation and regulation of the Electricity Board and, therefore, it can only relate to Entry 38 of List III, if at all. The argument of the learned Solicitor General appearing on behalf of the Kerala Electricity Board in support of his submission that the legislation falls under Entries 26 and 27 of List II may be summarised as follows: Those entries do not enable the State Legislatures to legislate with regard to all conceivable goods like arms, ammunition, atomic minerals etc. as was argued by Mr. Sen. A legislature while legislating with respect to matters within its competence should be deemed to know its limits and its legislative authority and should not be deemed to be legislating beyond its jurisdiction. One thing that has always 574 got to be kept clear in one 's mind is that there may be more than one aspect with regard to a particular subject matter. "Essential articles ' is a term which has acquired a definite connotation in Indian legislative practice and is not a vague or a general term. In the Government of India Act 1935 Entries 27 and 29 in List I correspond to Entries 26 and 27 of List II in the Constitution. There was no entry in that Act corresponding to Entry 33 of List III of the Constitution. Section 102 of that Act enabled the Federal Legislature to legislate in the State List during the emergency. During the World War the Defence of India Act 1939 enabled the Central Government to make such rules as appeared to it necessary or expedient for maintaining supplies and services essential to the life of the community. Rule 81 of the Defence of India Rules dealt with maintaining supplies and services essential for the life of the community and electricity was specifically referred to as an article within the scope of that rule Many orders regarding electricity were made during the course of that war like Electricity Control order, 1942 of Bihar. When the proclamation of emergency was revoked on 1.4.1946 the laws made by the Federal Legislature with respect to matters included in the Provincial Legislative List would have ceased to have effect and therefore the British Parliament enacted India (Central Government and Legislative) Act, 1946 enabling the Federal Legislature to make laws with respect to trade and commerce (whether or not within the Province ) in, and production, supply and distribution of cotton, woollen textiles, papers, foodstuffs etc. and in exercise of that power the Central Legislature enacted Essential Supplies (Temporary Powers) Act, 1946 for continuance of powers to control production, supply and distribution etc. In respect of articles not covered by the Central Act the Provinces passed similar laws regarding other essential commodities, for instance, Madras Essential Articles Control and Requisitioning Act, 1949 in respect of ten articles including electricity. At present electricity is the only article included within the scope of that Act. The was passed by Parliament on 1.4.55. Essential commodity was defined in that Act. It practically included every matter regarding industry within the legislative competence of Parliament. Thus the word 'essential commodity ' is an expression corresponding to a commodity essential to the life of the community. It is not, therefore, open to the authority exercising powers under section 2(a) of the Kerala Act to declare any and every commodity as an essential commodity. That Act deals with essential articles not being essential articles dealt with by the Central Act of 1955. It is not an Act with respect to the incorporation or regulation of trading corporations and therefore does not all under Entry 43 or 44 of List I. It is not a legislation with respect to electricity and therefore does not fall under Entry 38 of List III. Electricity being beyond doubt an essential article may be declared to be an essential article under the Act. In that case the power exercised is not in relation to electricity qua electricity but electricity as an essential article. The Act therefore in pith and substance is with respect to trade and commerce and production, supply and distribution. We agree that this is the correct view. It is not a permanent legislation with respect to electricity but a temporary one dealing with a temporary situation. There can be no 575 doubt about the argument on behalf of the Board that the Surcharge order is necessary for its survival and existence without which there can be no production or supply of electricity. That is why it is a matter falling under Entries 26 and 27 of List II. It is no valid criticism of this view to say that the powers of the Board under the 1948 Act are overridden by the Surcharge order and the order is therefore repugnant to the 1948 Act. Indeed the Board is more than willing, it is anxious, for the Surcharge order to be made. It is not necessary to resort to section 59 for this purpose. This is a simple case of a contract being overridden in exercise of statutory powers. In the alternative it is argued as follows: The Kerala Act insofar as it deals with electricity can be deemed to be legislation under Entry 38 in List III. Though the Act itself has not declared any article as an essential article, when a declaration was made under section 2(a) in 1965 declaring electricity as an essential article for the purposes of the Act, it became part of the Act. When the President assented to the Kerala Act in 1962 it may be that it cannot be deemed that he had assented to it on the basis that the provisions of that Act were repugnant to some Act made by Parliament or some existing law in the concurrent field because there was nothing in the Act itself which made it repugnant to any Act passed by Parliament or any existing law. But when he assented in 1967 to the Act extending the life of the Kerala Act by another two years the declaration of electricity as an essential article had been made and should be deemed to have become part of the Act. So far we are in agreement with the argument of the learned Solicitor General. But when he goes further and argues that insofar as the consequence of such declaration was that the State Government was enabled to make orders regarding production, supply and distribution of electricity, there was a possibility of such orders being repugnant to the provisions of the Electricity Act, 1910 and the and therefore any such repugnance was cured by the assent given by the President, we cannot agree. We agree that the assent should be Deemed not merely to the substitution of the words "five years" by the words "seven years" in the Kerala Act, but to the Act as a whole, that is, as amended by the 1967 Act and any repugnance between the Kerala Act and the Electricity Act, 1910 and the should be deemed to have been cured by such assent. When assenting to the 1967 Act the President should naturally have looked into the. whole Act, that is, the 1961 Act as amended by the 1967 Act. But the declaration itself did not create any repugnancy with the 1948 Act. It was in 1968 that the Surcharge order was made, in pursuance of which the bills were served on the various respondents in these appeals and demands made for enhancing charges for electricity. And it was the Surcharge order that can be said to create the repugnancy if at all. It is only actual repugnancy that can be cured by Presidential assent and not the possibility of repugnancy. Mr. Krishnamoorthy Iyer appearing for the respondents in Civil Appeals Nos. 1371 and 1373 74 of 1973 is therefore right when he argues that the declaration of electricity as an essential article in 1965 did not in any way affect the rights of the respondents but only the 576 Surcharge order of 1968 and that as the bills for enhanced charges for electricity were served on the respondents in 1968 before the 1969 amendment of the Act the Surcharge order and the demands made were not cured of their repugnancy till the 1969 Amendment Act was assented to by the President assuming that there is such repugnancy. It there is such repugnancy by virtue of the Surcharge order the assent of the President can cure the repugnancy between the Kerala Act and the 1910 and 1948 Acts only if it is subsequent to the Surcharge order. It is the exercise of the power under section 3 of the Kerala Act that is alleged to have created the repugnancy. We do not pause to consider whether there is in fact any repugnancy between the Surcharge order and the 1948 Act. The question still remains whether when a declaration is made under section 2(a) of the Act declaring an article as an essential article or an order is made under section 3 such a declaration or order becomes part of the Act ? In England even where an Act declares that subsidiary legislation shall have effect as if enacted in the Act it does not preclude the Court from calling in question the subsidiary legislation where it is inconsistent with the provisions of the Act Minister of Health vs The King(1). But it would appear that where the statute provides for the laying of the rules before Parliament and the Parliament could have annulled them, such a provision would make the subordinate legislation beyond challenge Institute of Patent Agents vs Lockwood (2). In India many statutes both of Parliament and of State Legislatures provide for subordinate legislation made under the provisions of those statutes to be placed on the table of either the Parliament or the State Legislature and to be subject to such modification, amendment or annulment, as the case may be, as may be made by the Parliament or the State Legislature. r Even so, we do not think that where an executive authority is given power to frame subordinate legislation within stated limits, rules made by such authority if outside the scope of the rule making power should be deemed to be valid merely because such rules have been placed before the legislature and are subject to such modification, amendment or annulment, as the case may be, as the legislature may think fit. The process of such amendment, modification or annulment is not the same as the process of legislation and in particular it lacks the assent either of the President or the Governor of the State, as the case may be. We are therefore, of opinion that the correct view is that notwithstanding the subordinate legislation being laid on the table of the House of Parliament or the State Legislature and being subject to such modification, annulment or amendment as they may make, the subordinate legislation cannot be said to be said unless it is within the scope of the rule making power provided in the statute. What happens then to a declaration made under section 2(a) or an order made under section 3 If such a declaration or order is not within the scope of the Act it should be held to be not valid. Does the subsequent assent of the President to an Amending Act, which as (1) [1931] A.C.494. (2)[1894] A.C.347. 577 we have shown earlier in effect amounts to an assent to the whole Act, cure this defect ? We consider that the declaration itself can still be attacked if the power to make such a declaration is beyond the scope of the power delegated. Whether the power delegated can be attacked on the ground of excessive delegation of the legislative powers or on the ground that in so conferring the legislative power on the executive authority the legislature has abdicated its function or the legislature itself could not have me such a law is ' a different question. There is a slight difference between such a situation and the one where it is held that the declaration is beyond the scope of the Act. That electricity is an essential article and therefore the 1965 declaration under section 2(a) declaring electricity as an essential article is valid cannot be disputed. It is not disputed that an article which is not in fact an essential article cannot be declared to be an essential article. The next question to be considered, therefore, is whether the declaration or the order can be said to be bad on the ground either that there was excessive delegation or that the legislature can be said to have abdicated its powers ? In The Queen vs Burah(1) it was observed: "Their Lordships agree that the Governor General in Council could not by any form of enactment, create in India, and arm with general legislative authority, a new legislative powers. not created or authorized by the Council 's Act. Nothing of that kind has, in their Lordships ' opinion, been done or attempted in the present case. What has been done is this. The Governor General in Council has determined, in the due and ordinary course of legislation, to remove a particular district from the jurisdiction of the ordinary Courts and offices, and to place it under new Courts and offices, to be appointed by and responsible to the Lieutenant Governor of Bengal; leaving it to the Lieutenant Governor to say at what time that change shall take place; and also enabling him, not to make what laws he pleases for that or any other district, but to apply by public notification to that district any law, or part of a law, which either already was, or from time to time might be, in force, by proper legislative authority, "in the other territories subject to his government." The Legislature determined that, So far, a certain change should take place; but that it was expedient to leave the time, and the manner, of carrying it into effect to the discretion of the Lieutenant Governor. and also, that the laws which were or might be in force in the other territories subject to the same Government were such as it might be fit and proper to apply to this district also; but that, as it was not certain that all those laws, and every part of them, could with equal convenience be so applied, it was expedient, on that point also, to entrust a discretion to the Lieutenant Governor This having been (1) 5.L.R.178,194. 578 done as to the Garo Hills, what was done as to the Khasi and Jaintia Hills ? The Legislature decided that it was fit and proper that the adjoining district of the Khasi and Jaintia Hills should also be removed from the jurisdiction of the existing Courts, and brought under the same pro visions with the Garo Hills, not necessarily and at all events but if and when the Lieutenant Governor should think it desirable to do so; and that it was also possible that it might be expedient that not all, but some only, of those provisions should be applied to that adjoining district. And accordingly the Legislature entrusted, for these purposes also, a discretionary power to the Lieutenant Governor. Their Lordships think that it is a fallacy to speak of the powers thus conferred upon the Lieutenant Governor (large as they undoubtedly are) as if, when they were exercised, the efficacy of the acts done under them would be due to any other legislative authority than that of the Governor General in Council. Their whole operation is, directly and immediately, under and by virtue of this Act (XXII of 1869) itself. The proper Legislature has exercised its judgment as to place, person, laws, powers; and the result of that judgment has been to legislate conditionally as to all these things. The conditions having been fulfilled, the legislation is now absolute. Where plenary powers of legislation exist as to particular subjects, whether in an imperial or in a provincial Legislature, they may (in their Lordships ' judgment) be well exercised, either absolutely or Conditionally. Legislation, conditional on the use of particular powers, or on the exercise of a limited discretion, entrusted by the Legislature to persons in whom it places confidence, is no uncommon thing; and, in many circumstances, it may be highly convenient. The British Statute Book abounds with examples of it: and it cannot be sup posed that the Imperial Parliament did not, when constituting the Indian Legislature, contemplate this kind of conditional legislation as within the scope of the legislative powers which it from time to time conferred. " We are of opinion that the power conferred by the Kerala Act is a case of conditional legislation as contemplated in the above decision. The various types of powers that can be exercised under that Act are enumerated in it. Only the article with reference to which those powers are to he exercised is left to be determined by the executive. That will vary from time to time; at one time salt may be an essential article, at another time rice may be an essential article and on a third occasion match boxes. It is the executive that would be in a position to judge when and under what circumstances an article becomes an essential article and therefore it is necessary to 579 control the production, supply and distribution or trade and commerce in a particular article. The corresponding Madras Act, the Madras Essential Articles Control and Requisitioning (Temporary Powers) Act, 1949 originally had ten articles included in the schedule as "essential articles" with powers to add others to the schedule. It now contains only one article in the schedule, electricity. It cannot therefore be said to suffer from the vice of excessive delegation either. Subsequent decisions of this Court only emphasize this point. We may however refer to two recent decisions of this Court. In State of Punjab vs Khan Chand(1) dealing with East Punjab Movable Property (Requisitioning) Act, 1947 this Court held as follows: "The Act confers uncontrolled power on the State Government or the officers authorised by it to requisition any movable property. No guidelines have been laid down regarding the object or the purpose for which it becomes necessary or expedient to requisition a movable property. Even the authority requisitioning movable property is not required to specify the purpose for which it has become necessary or expedient to requisition that property. There is no provision in the Act that the power of requisitioning movable property can be exercised under the Act only for a public purpose nor is there any provision that powers under the Act can be exercised only in an emergency or in some special contingency. Hence the provisions of the Act violate Articles 14 and 19 of Constitution The Act did not even. provide for suitable machinery for determining the compensation payable to the owner of the movable property nor did it contain any guiding principles for determining the amount of compensation. But in the very same decision it was observed: 'Considering the complex nature of problems which have to be faced by a modern State, it is but inevitable that the matter of details should be left to the authorities acting under an enactment. Discretion has, therefore, to be given to the authorities concerned for the exercise of the powers vested in them under an enactment. " This decision considered the relevant decisions on the subject and is not against the view which we have taken We must, however, refer to the decision of this Court in Gwalior Rayon Mills vs Asst. Commr. T.(2) relied upon by the respondents. In that case it was found that the Parliament had laid down legislative policy and had not abdicated its legislative function. It is necessary to refer to the view taken in that case by the majority judgment that it is not correct to say that if the legislature can repeal an enactment, it retains enough control over the authority making the subor (1) A.I.R.1974 S.C.543. (2) A.I.R l974 S.C.1660. 580 dinate legislation and, as such, it is not necessary for the legislature to lay down legislative policy, standard or guidelines in the statute. That was, of course, not the argument on behalf of the appellants in this case. But having regard to the fact that reference was made to the decision in Cobb & Co. Ltd. vs Kropp(1) which is very often relied upon for contending that if the legislature conferred certain powers on an executive authority it could be upheld because the legislature could any time repeal the legislation and withdraw such authority and discretion as it had vested in that authority, it is necessary to look a little more closely into that judgment. The main dispute there was about the State Transport Act, 1960 passed by the legislature of Queensland. It was attacked on the ground that it unlawfully and unconstitutionally delegated to the Commissioner for Transport sovereign plowers of the legislature of Queensland to impose and levy taxes and would constitute an unlawful and unconstitutional transfer of sovereign power of legislature to the Commissioner or an abdication of such power in his favour. There were various other contentions to which it is not necessary to refer. In the same case the validity of the State Transport Facilities Act, 1946 was also in question. Under the 1946 Act, however, a determination or a decision of the Commissioner was to be submitted to the Minister for his confirmation. Stable J. described this provision as one under which 'the commissioner had a Parliamentary hand on his shoulder '. After referring to the various provisions of the Acts as well as the powers of the Queensland Legislature the Privy Council rejected the argument that the effect of the Acts was to create a new legislative authority. The Privy Council pointed out that it cannot rationally be said that there was any abandonment or abdication of power in favour of a newly created legislative authority, and referred to the observations of the Privy Council in the Queen vs Burah (supra). The Privy Council then went on to point out that ' nothing comparable with "a new legislative power" armed with "General authority" has been created by the passing by the Queensland Legislature of the various Transport Acts. Reference was then made to the decisions in Hodge vs The Queen(2) and Powel vs Apollo Candle Company Ltd.(3) and it was pointed out that the Queensland Legislature preserved its own capacity insect and retained perfect control over the Commissioner for Transport. It was in that context that they added "inasmuch as it could at any time repeal the legislation and withdraw such authority and discretion as it had vested in him". This portion of the observations cannot be relied upon in every case where the question of excessive delegation arises to justify it merely on the ground that it is open to the legislature to repeal the legislation and withdraw the authority. This would be apparent from the extract from the judgment of Stable J. which immediately follows thereafter: "obviously Parliament cannot directly concern itself with all the multitudinous matters and considerations which necessarily arise for daily and hourly determination within (1)[1967] 1 A.C.141. (2)(1883)9 App. Cas.117 P.C. (3)(1885)10App. Cas.282 P.C. 581 the ramifications of a vast transport system in a great area in the fixing of and collection of licensing fees. So, as I see it on the face of the legislation, Parliament has lengthened its own arm by appointing a commissioner to attend to all these matters, including the fixing and gathering of the taxes which Parliament itself has seen fit to impose. The commissioner has not been given any power to act outside the law as laid down by Parliament. Parliament has not abdicated from any of its own power. It has laid down a framework, a set of bounds, within which the person holding the office created by Parliament may grant, or refrain from granting licenses, and fix, assess, collect or refrain from collecting fees which are taxes." and the succeeding observations to the following effect: "The legislature were entitled to use any agent or any subordinate agency or any machinery that they considered appropriate for carrying out the objects and purposes that they had in mind and which they designated. They were entitled to use the Commissioner for Transport as their instrument to fix and recover the licences and permit fees. They were not abrogating their power to levy taxes and were not transferring that power to the commissioner. What they created by the passing of the Transport Acts could not reasonably be described as a new legislative power or separate legislative body armed with general legislative authority (see R. vs Burah, 3 App. Nor did the Queensland legislature "create and endow with its capacity a new legislative power not created by the Act to which it owes its own existence" (see In re The Initiative and Referendum Act. ; P.C.). In no sense did the Queensland Legislature assign or transfer or abrogate their powers or renounce or abdicate their responsibilities. They did not give away or relinquish their taxing powers. All that was done was done under and by reason of their authority. It was by virtue of their will that licence and permit fees became payable. ' We agree with the view taken by the majority of this Court in Gwalior Rayon Mills ' case. In the result we hold that the Kerala Act, the 1965 declaration under section 2(a) and the 1968 Surcharge order under section 3 are all valid The result is that the appeals will have to be allowed; but in Civil Appeals Nos. 1425, 2575, 2576 of 1972 and 97, 1373 and 1374 of 1973 a question regarding Article 14 has been raised which has not been considered by the High Court. In these cases the High Court will deal with that question alone and dispose of the matter afresh. In Civil Appeal No. 1372 of 1973 the respondent is what is called a sanction holder under section 28 of the , 191 582 and as such a licensee within the meaning of that term n clause (6) of section 2 of the . The respondent has no objection to collecting the surcharge from those to whom it supplies electricity. The respondent 's contention is a limited one that it need not pay surcharge on the electricity which it consumes. We consider this contention well founded and it is supported by the provisions of clause (3) and (8) of the Surcharge order which read together leave no room for doubt on that point. Clause (3) reads as follows: "3. Notwithstanding anything to the contrary contained in any agreement entered into with any consumer or the conditions of service agreed upon by the Kerala State Electricity Board; the Kerala State Electricity Board shall levy a surcharge in accordance with clause 5 on all supplies of electrical energy made by it either directly or through licensees: Provided that no surcharge under this order shall be levied on (a) Bulk supplies of energy to the licensees; (b) Low Tension supplies of energy for domestic residential purposes; (c) Low Tension supplies of energy for agricultural purposes. " The respondent is a licensee and bulk supplies have been made to the licensee. It is not a consumer to whom the Board supplies electrical energy directly or through a licensee. It cannot be said that in consuming electricity itself the respondent is supplying electricity to itself. The Surcharge order clearly makes a distinction between the consumer on the one hand and the licensee on the other and makes no provision for surcharge in the case of consumption of electricity by a licensee. It would be therefore declared that the respondent in this appeal need not pay the surcharge on the electricity consumed by it. There will be no order as to costs. GUPTA, J. I regret I am unable to agree that the Kerala Essential Articles Control (Temporary Powers) Act, 1961 and the declaration and the surcharge order made respectively under sections 2(a) and 3 of that Act are valid. In my opinion the Kerala act is an invalid piece of legislation and as such the declaration and the surcharge orders are of no consequence. It is not necessary to restate the facts which have been set out fully in the Judgment of brother Alagiriswami J.; I shall briefly state the reasons for the view I have taken.n The State Lagislature has power to make laws only with regard to matters specified in List II and List III in the Seventh Schedule of the Constitution subject to the provisions of article 254(2). The Kerala Act, as its long title shows, is in Act to provide for the control of the produc 583 tion, supply and distribution of, and trade and commerce in, "certain articles". The Preamble of the Act also states that it was passed as it was considered expedient to provide for the control of the production, supply and distribution of, and trade and commerce in, "certain articles", Sec. 1(3) of the Act provides that the Act would remain in force for five years from the date of its commencement which was in January 1962. Sec.3(1) empowers the State Government to make provisions by a notified order for regulating or prohibiting the production supply and distribution of any 'essential article ' and trade and commerce therein if the Government thought it was expedient so to do for maintaining or increasing the supplies or for securing the equitable distribution of such essentiai articles. Sec. 2(a) defines essential article as any article not being an essential commodity as defined in the which the Government by notified order might declare to be an essential article. The definition leaves it to State Government to decide what should be an essential article for the purpose of the Act. The Legislature is of course presumed to know the limits of its competence and assuming it is permissible to attribute similar knowledge to the Government as to the bounds of its authority under sec. 2(a), an essential article may be any article covered by any of the entries in List 11 or List III except the classes of commodities mentioned as essential commodity in the . Until therefore, the Government issued a notification on December 10, 1965 under sec. 2(a) declaring electrical energy to be an essential article almost four years after the act came into force, it was not possible even to guess what the Act was about. Thus the Act as passed had no positive content, it was an empty husk and its insubstantiality, if by itself not, an ill validating factor, exposes the want of a declared legislative policy in the Act. The Act does not give any indication as to the nature of the articles in respect of which it sought to control the production, supply and distribution, and trade and commerce. It confer on the Government the authority to declare any article an essential article and to exercise the aforesaid powers in respect of that article. The Act does not provide any guidance or lay down any test to ascertain what makes an article essential for the purpose of the Act. The reference to the in sec. 2(a) which defines 'essential article ' is merely to exclude from its purview the commodities covered by the ., and only serves to emphasize its indefiniteness and makes it more difficult to find any clue to the nature of the articles the Legislature had in mind in enacting the Kerala Essential Articles Control (Temporary Powers) Act, 1961. Almost the entire legislative field was left open to the Government to choose from and decide according to their own lights what should be an essential article. It hardly needs repetition that the Legislature cannot delegate the essential legislative function, which means that the Legislature must declare the policy of the law and provide a standard for the guidance of the subordinate law making authority. The Kerala Act authorises the Government to declare any article as essential, except those mentioned in the , without laying down any define criteria or standards. This, I think, is surrendering unguided and un 584 canalised power to the executive. I do not see how the Act can be called an instance of conditional legislation this is not a case where the Legislature having determined the policy has left the details to be supplied by the executive authority. I cannot think of a case where the Legislature 's self effacement could be more complete. In my opinion the power conferred on the Government by the Kerala Act exceeds the limits of permissible delegation. I may now refer to another aspect of the case. As stated earlier, the Kerala Essential Articles Control (Temporary Powers) Act, 1961 came into operation in January 1962 and was to remain in force for five years from the date of its commencement. However, the life of the Act was extended by successive amending Acts passed in 1967, 1969 and 1970. article 254(2) of the Constitution provides: "Where a law made by the Legislature of a State with respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in that State: Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to, amending, varying or repealing the law so made by the Legislature of the State." It appears that the President had given his assent to the principal Act of 1961 and also to the successive amending Acts extending the life of the principal Act. The Act as it was passed in 1961 does not appear to contain any provision which was repugnant to any Central Act or existing law, that being so, the assent given to it seems redundant and of no consequence. (obviously, article 254(2) contemplates an existing repugnancy and not possible future inconsistencies. in December 10, 1965 the State Government issued a notification declaring electrical energy to be an essential article under sec. 2(a) of the Act, and on June 1, 1968 the State Government made the Kerala State Electricity Supply Surcharge order in exercise of the powers conferred by sec. The surcharge order made in 1968 following the declaration of electrical energy as an essential article in 1965 is said to be in conflict with the provisions of the and the Electricity Supply Act,1948. Both these Acts are existing laws. It was argued that assent of the President received for the amending Acts of 1967, 1969 and 1970 cured the repugnancy introduced by the surcharge order. Assuming that assent given to the amending Acts would have the effect of curing the repugnancy, if any, in the principal Act, the question remains where the declaration and the surcharge order part of the Act under which they were made ? If they were not, if the order declaring electrical energy as an essential article and the surcharge order were outside the Act, then the assent given to the Act could not cure 585 the repugnancy arising from these two orders. article 254(2) requires the State legislation containing the repugnant provision to be reserved for the consideration of the President before he gives his assent to it. Could it be said that the declaration and the surcharge order were provisions in the Kerala Essential Articles Control (Temporary Powers) Act 1961 ? this Court considered a similar question though in a different context in Chief Inspector of Mines vs Lala Karam chand Thappar.(1) In that case this Court was examining the effect of the repeal of the Mines Act, 1923 on the regulations framed under that Act. Mines Act, 1923 was repealed and was re enacted with certain modifications as the . Sec. 29 of the 1923 Act empowering the Central Government to make regulations consistent with the Act for specified purposes was reenacted in the 1952 Act as Sec. Regulations were made in 1926 under sec. 29 of the 1923 Act, but no regulations had been made under sec. 57 of the 1952 Act at the relevant date in 1955. The question was whether in view of sec. 24 of the General Clauses Act the Mines Regulations of 1926 could be said to have been in force at the relevant date as there was nothing in the later providing otherwise, and the regulations were not inconsistent with the re enacted provisions. Sub sec. (4) of sec. 31 of the 1923 Act laid down, inter alia, that regulations and rules made under the Act would have the effect "as if enacted in this Act." overruling the contention that the regulations became part of the Act in view of sub sec. (4) of sec. 31 and that with the repeal of the Act the regulations also stood repealed as part of that Act, this Court observed at page 23 of the report: "The true position appears to be that the rules and regulations do not lose their character as rules and regulations even though they are to be of the same effect as it contained in the Act. They continue to be rules subordinate to the Act, and though for certain purposes, including the purpose of construction, they are to be treated as if contained in the Act, their true nature as subordinate rule is not lost. There is thus at least one decision of this Court which seems to support the view that the orders made by the State Government under sec. 2(a) and sec. 3(1) of the impugned Act could not be called part of the Act; this Act does not even say that such orders are to be treated as if enacted in the Act. This is an important aspect of the case, and I do not think it can be assumed or taken for granted without further consideration that these orders formed part of the Act and the President 's assent (1)[1962] 7 L925SlupCI/75 586 to the Act cured the repugnancy created by the surcharge order. However, as I have already held the Act to be invalid on the other ground. I prefer not to express any concluded opinion on this point. In may judgment the Kerala Essential Articles Control (Temporary Powers) Act, 1961 is invalid on the ground of excessive delegation. I would therefore dismiss the appeals but without any order as to costs. ORDER In view of the decision of the majority. the appeals are allowed and Civil Appeals Nos. 1425, 2575, 2576 of 1972 and 97, 1373 and 1374 of 1973 are remanded to the High Court. There will be no order as to costs. P. B. R .

In exercise of powers conferred by s.2(a) of the Kerala Act, the State Government declared 'electricity ' as an essential article in 1965. In 1968, the State Government passed an Order called the Kerala State Electricity Supply (Kerala State Electricity Board and Licensees Areas) Surcharge Order, 1968, under s.3 of the Kerala Act, by which, the State Electricity Board was required to collect surcharge from non licensee consumers of electricity even though the Board may have entered into long term contracts with them with regard to the rate at which electricity was to be supplied to them. The respondents, who were bulk consumers of electricity, questioned before the High Court the validity of the order. The order having been struck down by the High Court, in appeal to this Court, the respondents supported the judgment of the High Court on the grounds: (i) The Kerala Act is repugnant to the Electricity Act, 1910 and the (both of which are Central Acts) and, in particular the latter, which falls within Entries 43 and 44 of List I; and that the State Act trenches upon the field occupied by the 1948 Act which falls partly under Entry 43 of List I and partly under Entry 38 of List III. On behalf of the appellants it was contended that the Kerala Act falls under Entries 26 and 27 of List II, and in any event, the Presidential assent to the Kerala Act has cured the repugnancy. Allowing the appeal (per majority Alagiriswami, Bhagwati, Goswami and Sarkaria, JJ.): ^ HELD: The Kerala Act, the declaration of 'electricity ' as an essential article under section 2(a), and the Surcharge Order made under section 3, are valid. [581 G] 1. The question of repugnance arises only in case both the legislations fall within the same List, namely, List III. If any legislation is enacted by a State Legislature in respect of a matter falling within List I that will be void. There can, therefore, be no question of repugnance between the Electricity Act, 1910 and the . 1948 on the one hand, and the Kerala Act on the other if the first two Acts fall in List I or List III and the State Act in List II. [562 D] Indu Bhushan vs Sundari Devi ; referred to. 553 2. (a) The words "notwithstanding" in clause (1) and "subject to" in clause (3) of article 246 of the Constitution mean that where an entry is in general terms in List II and part of that entry is in specific terms in List I the entry in List I takes effect notwithstanding the entry in List II. This is also on the principle that the 'special" excludes the "general" and the general entry in List II is subject to the special entry in List I. [563 C] (b) The word "notwithstanding" also means that if it is not possible to reconcile the two entries the entry in List I will prevail. But before that happens attempt should be made to decide in which List a particular legislation falls. For deciding under which entry a particular legislation falls, the theory of "pith and substance" has been evolved by Courts. If in pith and substance a legislation falls within one list or the other, but some portion of the subject matter of that legislation incidentally trenches upon and might come to fall under another List, the Act as a whole would be valid notwithstanding such incidental trenching. [563 D E] (c) Both the 1910 Act as well as the 1948 Act are existing law as contemplated under article 372 of the Constitution. An existing law continues to be valid even though the legislative power with respect to the subject matter of the existing law might be in a different List under the Constitution from the List under which it would have fallen under the Government of India Act, 1935. But, after the Constitution came into force an existing law could be amended or repealed only by the Legislature which would be competent to enact that law if ' it were to be newly enacted. [566 G] 3(a) The Statement of Objects and Reasons though not relevant for the purpose of interpreting the sections of an Act, will throw light upon the object of the Legislature from the historical point of view [569 A] (b) The 1948 Act was enacted for the purpose of co ordinated development of electricity in India on a regional basis. The Statement of objects and Reasons states that there was necessity for the constitution of semi autonomous bodies like Electricity Boards to administer grid system on quasi commercial lines. The Act deals with the incorporation and regulation of Electricity Boards. It created a central authority (which is not an incorporated body) as well as various provincial Electricity Boards (which are incorporated bodies). A Provincial Electricity Board located in one Province and operating in a neighbouring Province could carry on its operations by agreement with the other Province or Provinces. The jurisdiction of an Electricity Board, however, was confined mainly to the jurisdiction of an Province under the Act the executive power vested in the Provinces. The Statement of objects and Reasons further says that the semi autonomous Electricity Boards contemplated under the Act could not be set up by provincial Governments under the then existing constitutional Act as they would be in the nature of trading corporation within the meaning of entry 33 of the Federal Legislative List of the Government of India Act, 1935. [568A H] 4. The argument that the 1948_Act falls under entries 43 and 44 of List I has no substance. [568 A] (a) A reading of the Statement of Objects and Reasons shows that the 1948 Act was a legislation under an entry in the Concurrent List. Although the Statement of objectcs and Reasons mentions entry 33 of the Federal List of the Government of India Act, 1935 (corresponding to entries 43 and 44 of List I of the Seventh Schedule to the Constitution) it does not show that the 1948 Act falls under entry 44. Nor is the fact that entry 33 of List I of the Government of India Act, 1935 was mentioned in the Statement of objects and Reasons a conclusive test. [568 E] (b) From an examination of the provisions of the 1948 Act it would be obvious that one part of the Act deals with the constitution of the Board,the incorporation of the Board and the regulation of its activities. But the main purpose of the Act is for, rationalising the production and supply of electricity. The regulation contemplated in entries 43 and 44 of List I is not regulation of the business of production, distribution and supply of electri 554 city of the Corporation. The provision regarding the incorporation and regulation of Electricity Boards should be taken to be only incidental to the provisions regarding production, supply and distribution of electricity. Therefore, the provisions of the 1948 Act regarding the Board 's functions do not make it one falling under entry 43 of List I. [570 H; 571A] R. C. Cooper vs Union and Ramtanu Housing society vs Maharashtra ; followed. (c) The 1948 Act in pith and substance, should be deemed to be one falling under entry 38 of List III. In the Present case the incorporation of the Stage Electricity Boards is merely for the rationalisation of the production and supply of electricity, for taking measures conducive to electrical development and for all matters incidental thereto. Furthermore, Electricity Boards are not trading corporations; they are established to promote co ordinated development of the generation, supply and distribution of electricity on a no profit no loss basis. In the discharge of their functions, they are guided by directions on questions of policy given by the State Governments. There are no shareholders and there is no distribution of profits. This is another reason why the 1948 Act cannot be said to fall under entry 43 of List I. [573 B D] (d) Even assuming that part of the 1948 Act is a legislation with respect to incorporation and regulation of a trading corporation, falling under entry 48 of List I of Schedule Seven, the rest of it will fall under entry 38 of List III. The Kerala Act has nothing to do with the incorporation and regulation of the Electricity Boards and, therefore, it can only relate to entry 38, List III, if at all. [573 F G] (e) The 1910 and 1948 Acts together form a complete code with respect to entry 38 in List III and the Board is only an instrument fashioned for carrying out this object. [571 A] (f) Therefore both the 1910 Act and 1948 Act could be amended or repealed by the Parliament and also by the State Legislature if it obtains Presidential assent to an Act amending or repealing the 1910 Act or 1948 Act. [566 H] A. K. Krishna vs State of Madras ; ; P. N. Kaul vs The State of J & K. [1959] Supp.2 SCR 270 and J & K State vs M. section Farooqi ; , referred to. (g) The assent of the President should be deemed not merely to the substitution of the words five years by the words seven years in the Kerala Act but to the Act as a whole and any repugnance between the Kerala Act on the one hand and the 1910 Act and 1948 Act on the other should be doemed to have been cured by such assent. The Kerala Act in so far as it deals with electrieity can be deemed to be legislation under entry 38 of List III Though the Act itself has not declared any article as an essential article, when the declaration was made under s.2(a) in 1965 it became part of the Act. When the President assented to the Amendment Act of 1967 the declaration of electricity as and essential article had been made and should be deemed to have become a part of the Act. [575 F; C] (5) But the Kerala Act is a matter falling under entries 26 and 27 of List II. [575 A] (a) "Essential article" is a term which has acquired a defining connotation in Indian legislative practice and is not a vague or a general term. "Essential commodity" defined in the includes practically every matter regarding industry within the legislative competence of Parliament. The term "essential commodity" is an expression corresponding to a commodity essential to the life of the community. It is not open to the authority exercising powers under s.2(a) of the Kerala Act to declare and any every commodity as an essential commodity. That Act deals with esential articles not being essential article dealth with the by Central Act of 1955. It is not a legislation with respect to electricity and, therefore, does not fall under entry 38 of List III. Electricity, being beyond doubt an essential article may be declared to be an essential article under the Act. In that case the power 555 exercised is not in relation to electricity qua electricity but electricity as an essential article. The Act, therefore in pith and substance is with respect to trade and commerce and production, supply and distribution of electricity. It is not a permanent legislation with respect to electricity but a temporary one dealing with a temporary situation. [574 A; F H] (b) The Surcharge order was necessary for the survival and existence of the Board without which there can be no production or supply of electricity. It is no valid criticism of this view to say that the powers of the Board under the 1948 Act are over ridden by the Surcharge order and the order is, therefore, repugnant to the 1948 Act. The Board was anxious to make no Surcharge order. This is a simple case of a contract being over ridden in exercise of statutory powers. [575 B] 6(a) It is not correct to say that in so far as the consequence of a declaration under s.2(a) of the Kerala Act was that the State Government was enabled to make orders regarding production, supply and distribution of electricity, there was a possibility of such orders being repugnant to the provisions of the 1910 Act and the 1948 Act and, therefore, any such repugnancy was cured by the assent given by the President. It is only the actual repugnancy that can be cured by Presidential assent and not the possibility of repugnancy. [575 G] (b) No Presidential assent was possible to the notification article 254(2) does not contemplate Presidential assent to notifications issued under the Act. The Article contemplates Presidential assent only to laws made by the Legislature of a State. [567 G] 7(a) Notwithstanding the fact that subordinate legislation is laid on the table of House of Parliament or State Legislature and being subject to such modification, annulment or amendment as they may make the subordinate legislation cannot be said to be valid unless it is within the scope of the rule making power provided in the statute. Where an executive authority is given power to frame subordinate legislation within stated limits, rules made by such authority, if outside the scope of the rule making power should not be deemed to be valid merely because such rules have been placed before the Legislature and are subject to such modification, annulment or amendment as the Legislature may think fit. The process of such amendment, modification or annulment is not the same as the process of legislation and in particular it lacks the assent either of the President or the Governor of the State. [576 E G] Minister of Health vs The King, and Institute of Patent Agents vs Lockwood, referred to. (b) If a declaration made under section 2(a) or an order made under s.3(a) is not within the scope of the Act, it should be held to be not valid. [576 H] (c) A declaration can still be attack if the power to make such a declaration was beyond the scope of the power delegated. even if subsequent to the declaration the Act was amended and the President had given his assent to the to Amending Act.[577 A] (d) But the power conferred by the Kerala Act is a case of conditional legislation. The various types of powers that can be exercised under that Act are enumerated in it. Only an article with reference to which those powers are to be exercised is left to be determined by the Executive. That will vary from time to time. It is the Exceutive that would be in a position to judge when and under what circumstances an article becomes an essential article and, therefore, it is necessary. to control the production, supply and distribution of trade. and commerce in that article.[578 H] The Queen vs Burah (5 L.R.178@ 194) State of Punjab vs Khan Chand ; and Gwalior Rayon Mills vs Asst. Commr. S.T. ; followed. 556 The Kerala Essential Articles Control (Temporary Powers) Act, 1961 is an invalid piece of legislation on the ground of excessive delegation and the declaration and Surcharge order made respectively under s.2(a) and s.3 of that Act are of no consequence.[582 G] 1(a) The definition of essential article leaves it to the State Government to decide what should be an essential article for the purpose of the Act. The legislature is, of course presumed to know the limits of its competence and assuming it is permissible to attribute similar knowledge to the Government as to the bounds of its authority under s.2(a) an essential article may be any article covered by any of the entries in List II or List III except the classes of commodities mentioned as an essential commodity in the . Until, therefore, the Government issued a notification under s.2(a) declaring electrical energy to be an essential article almost four years after the Act came into force, it was not possible even to guess what the Act was about. Thus the Act as passed had no positive content, it was and empty husk and its insubstantiality, if by itself not an invalidating factor, exposes the want of a declared legislative policy in the Act. The Act does not provide any guidance or lay down any test to ascertain what makes an article essential for the purpose of the Act. The reference to the in s.2(a) which defines "essential article" is merely to exclude from its purview the commodities covered by the and only serves to emphasise its indefiniteness and makes it more difficult to find any clue to the nature of the articles the Legislature had in mind in enacting the Kerala Act. Almost the entire legislative field was left open to the Government to choose from and decide according to their own lights what should be an essential article. [583 C G] (b) The Legislature cannot delegate the essential legislative function, which means that the Legislature must declare the policy of the law and provide a standard for the guidance of the subordinate law making authority. The Kerala Act authorises the Government to declare any article as essential except those mentioned in the without laying down any definite criteria or standards. This is surrendering unguided and uncanalised power to the executive. The Act cannot be called an instance of conditional legislation. The powers conferred on the Government by the Kerala Act exceed the limits of permissible delegation. [583 H] (c) The Kerala Act of 1961 was to remain in force for a period of five years from January 1962. The Principal Act as well as the Amending Acts of 1967, 1969, and 1970 received the assent of the President. But the Act as passed in 1961 did not appear to contain any provision which was repugnant to any Central Act or existing law; that being so, the assent given to it seems redundant and of no consequence. Article 254(2) contemplates an existing repugnancy and not possible future inconsistencies. [Obiter: Assuming that assent given by the President to the amending Acts would have the effect of curing the repugnancy between the declaration under s.2(a) and the Surcharge Order under s.3 of the principal Act on the one hand and the Central Acts of 1910 and 1948 on the other, If the declaration and the Surcharge Order were outside the Act,could not cure the repugnancy arising from these two orders.[584 H] The orders made by the State Government under s.2(a) and s.3(1) of the impugned Act could not be called part of the Act. The Act did not even say that such orders were to be treated as if enacted in the Act. The President 's assent could not be said to have cured the repugnancy created by the Surcharge order. [585 G] Arguments for the appellant: The impugned Kerala Act is a legislation under Entry 26 of List II (Trade and Commerce). It may also fall under Entry 27, List II (Production, Distribution and Supply of Goods). Assuming that the Electricity Supply Act falls under Entries 43 and/or 44 of List I, the State Legislature is competent 557 to pass legislation relating to the trading and commercial activities of the Corporation set up under the Central Act passed under Entry 43 and/or 44 of List I. Assuming that the Kerala Act encroaches on the powers of the Electricity Board under s.49, such encroachment is incidental and is justified under the doctrine of pith and substance. Assuming that the Central legislation as well as the State legislation falls under Entry 38 of List III, there is no repugnancy or conflict between the powers of the Board under s.49 and the impugned Act and the orders because they are made within the provisions of the Act and to aid and support the powers of the Board. If the surcharge had not been introduced the Electricity Board would not have been able to carry on the business and would have been compelled to close down its business. Arguments on behalf of Electricity Board: The Act applies to essential commodities i.e. all essential commodities as understood at the time of legislation in 1962. In view of the programme of industrialisation, and the limited scope of the Central , the present Act was conceived. The background of the Act strongly indicates the content of the expression 'essential commodities ' as meaning the same thing as "essential to the life of the community". Under the impugned Act by s.2(a) the power to select the articles for control is delegated to the State Government. The power to take orders for control is delegated both to the State Government and authorised officers. The articles falling within the Central are excluded from the purview of the Act not because control of those articles is not desired but because the State Government have the necessary powers under the Central Act itself. The definition in s.2(a) should be understood to mean "essential articles" notified by the State Government and essential articles should be understood as those which are essential to the life of the community. The word 'control ' in the preamble is indicative of the limited scope of the Act. This interpretation saves the Act from the vice of abdication of essential legislative function by the Legistature. The preamble to the Act is a key note to the understanding of an Act as well as the Statement of Objects and Reasons clearly indicates the scope and purpose of the Act. "Trade and Commerce" as well as "supply and distribution" must be in respect of articles or goods but on that account it will not be permissible to dissect the Act and make it relatable to each commodity over which control is imposed. The pith and substance of the Act makes them fall within List II, Entries 26 and 27. The law is not a law relating to electricity as such nor relating to the incorporation or power of the Electricity Board established under the Electricity Supply Act, 1948. The Supply Act, 1948, as clearly expressed in the preamble and worked out in the Act through several agencies including the Board shows that the pith and substance of the Act is development of electricity and falls within List III, Entry 31 of the Government of India Act. The incorporation of State Electricity Board for each State is only one of the means of achieving the objective. Moreover, the Board is not a trading Corporation since it is not created to earn profits but to carry out development and supply energy at the most economical rate. Each Board is established by a State. The whole law falls in the Concurrent List and in any event not under List I, Entry 43 because the Board is not a trading corporation nor does it fall under Entry 44 because the Board is a State Board for the State. The Supply Act was passed under the Government of India Act, 1935 and was an "existing law" and not an impediment to the State passing a law within its competence. There is no conflict between the impugned notification and the exercise of powers of the Board under s.40 of the supply Act. Assuming that both the legislations fall under List III, the President 's assent to the impugned Act was operative, the conflict was immaterial. 558 Arguments for the respondent: The Electricity Supply Act of 1948 is relatable partly to List I entry 43 and 44 (Government of India Act List I Entry 33) and partly to List III Entry 38 (Government of India Act List III Entry 31). Part of the Act is concerned with the constitution and powers of the Electricity Board which is something like the memorandum and Article of a Limited Company and another part of the Act may be said to be concerned with electricity. The Kerala Act is a vague piece of legislation. The Articles to which this Act may apply are not mentioned. It is only after the power under the Act is exercised that it is possible to say whether it would conflict with any other legislation. The impugned Act may be applicable to Articles relatable to as many as 20 legislative entires from List I, II and III at the discretion of the Government. Regulation and Control with regard to many of the matters are covered by existing Central Acts such as Industries Regulation and Development Act, Factories Act, Central Excise and Salt Act, Defence of India Act, , Electricity Supply Act, 1948. Every aspect of electricity in respect of generation, control price fixation must be relatable to entry 38 of List I and not Entry 26 or 27 of List II. The Central Legislature has already legislated on all these aspects in the of 1910 and Supply Act 1948. If these were the subject matter of Entries 26 and 27 of List II, the Central Legislature could not have legislated. Any argument on the basis that the Electricity Supply Act 1948 is existing law, is not relevant because the 1948 Act has been extensively amended in 1956 and 1966 and these amendments relate to the field of control under the Kerala Act, if the same is applied in respect of electricity. The Presidential assent given to the Kerala Act could be said to be an assent within the meaning of Article 254 since at the time when the assent was given the Act did not disclose any inconsistency with any Central Act since the items to which the Kerala Act was applicable did not appear in the statute. The conflict arose only when an order was made by the State Government applying the Act to electricity. No steps were even taken to incorporate in the Act the commodities to which the Act could apply and to take President 's assent thereon. The Kerala Act suffers from excessive delegation because at the will of the State Government the Act could be made applicable to any article, except those covered by the . The State Government could apply the Act even to items falling in List I since there is no guideline.